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When Geopolitics Gains the Upper Hand

Not only do innovations have to be good – they also have to overcome geopolitical hurdles

Innovations are relatively easy to recognize because they make things fundamentally better, faster, or easier. But where do “things new” come from? How do they come into being? There are no definitive answers to these questions, even if a number of innovation researchers believe they have identified an underlying system. If innovation were that straightforward, however, not only would it be possible to run sure-fire innovation workshops, but, says Steinbeis Entrepreneur Dr. Andrej Heinke, there would be mechanisms to protect the ideas of innovative individuals.

Of course, one could argue that some innovation systems are more likely – on average – to lead to new solutions. One immediately thinks of Silicon Valley, the greater Boston area, the Pearl River Delta, Bavaria and Baden-Wuerttemberg, or the startup community in Israel. The systems in these areas are even home to individual places and establishments representing shining examples of institutions of excellence, such as Stanford University, which became the nucleus for Silicon Valley, or the Max Planck Institutes, which have spawned a large number of Nobel Prize winners, building on the legacy of the Kaiser Wilhelm Institutes.

Stanford University – once a foundation, now an innovation system

As an example, however, Stanford clearly shows that its beginnings as a university were a long way from establishing an obvious path of development that would result in Hewlett-Packard, Google, or OpenAI. It began as the foundation of a railroad magnate in memory of his son, Leland Stanford Junior, who died young, and as an institution, it was fashioned after the then-leading universities of Heidelberg and Berlin, which both embraced Humboldt’s philosophy of uniting science and research. This laid a foundation for success in the middle of countryside occupied by somewhat barren orchards. Stanford University was also quick to adopt the motto of Ulrich von Hutten: The winds of freedom are blowing. These were a sign of good things to come, but like a good wine, the institution needed time to mature and attract the right talent. In addition, without millions of dollars in government funding – channeled into bolstering STEM subjects and fundamental research during the Cold War – Stanford would be virtually unknown as a household name today. It was a similar story with MIT, Caltech, and even Harvard.

But despite these oases in the countryside, innovation is similar to court proceedings: You never see institutions in the dock – only ever individuals. There are currently 21 Nobel laureates teaching at Stanford and another nine former lecturers have passed away. The memorial service for Nobel Chemistry and Peace Prize winner Linus Pauling will be long remembered. During the ceremony, his students described the variety of his influences and ideas, and paid tribute to his non-conformity. Then there was Douglas Osheroff, the Nobel Prize winner for physics, who one night discovered that helium-3 is a bonafide superfluid. This was initially considered a mistake, but actually turned out to be a stubborn truth. What all these people have in common is that they were not born geniuses, but they did possess a strong sense of curiosity and the determination to get to the bottom of things. Above all, they never allowed themselves to be distracted by the arguments of others, who said “it won’t work” or “it’s never been done before.”

Why innovation is dictated by geopolitics

It is noticeable that all innovative locations share the same defining features: tolerance, diversity, and the exchange of ideas. Prohibited thought or ideological edicts are not found there. “During my visit to the Google campus in Mountain View, only a stone’s throw from Stanford, I met people from Russia, Israel, India, China, and Europe – many of whom now have American citizenship,” reports Steinbeis Entrepreneur Andrej Heinke. It’s like a magnifying glass, clearly highlighting how successful the United States has been for many decades as a hotbed of innovation. To the most talented people in the world, the US is the place of longing and fulfillment. The combination of freedom, financing options, laboratory equipment, and the startup mentality is proving difficult to copy. This makes visa hurdles, entry quotas for people from certain countries, and geopolitical requirements all the more threatening to this patchwork. What exactly is meant by that?

Since around 2016, a particularly negative aspect of the three pillars of Sino-American relations – partnership, competition, and rivalry – has come to the fore, reflected in the Biden doctrine of “small yard, high fence.” And the sanctions imposed on October 7, 2022, prohibiting the export of technology used to produce semiconductors smaller than 14 nanometers, were certainly seen by China as an economic declaration of war. The import of this date remains to be fully comprehended, but it also divides the world of innovation into a time of “before and after.” Ever since that day, innovation can no longer be separated from geopolitics.

“How many times have I met engineers at companies that are convinced one or other technology must come out on top just because it’s good,” says Heinke. This is an important prerequisite, but it is no longer enough by itself, because if geopolitical rules are not observed – such as subsidies offered under industrial policies, or tight sanctions – for a long time, even the best of technologies will struggle to succeed.

A multipolar innovation landscape

To make matters worse, in addition to the American sanctions, the world of geopolitics is increasingly multipolar – with Chinese, European, Russian, Japanese, South Korean, and all kinds of other guidelines now in place. Not only do these overlap, but in some cases they directly contradict one another. All of this must be taken into account in the innovation landscape from the very beginning, because if you’re not willing to check for hindrances until after project completion, it becomes increasingly likely that you will be confronted by some nasty surprises, and they will eat up a lot of time and many resources – and impede success.

The experts at the Steinbeis Consulting Center for Corporate Foresight provide advice and information on key opportunities and threats from a geopolitical standpoint. In many cases, the questions they hear from others are more important to them than providing quick answers, because it is not until a problem has been understood that the right experts can be identified to solve those problems – and ensure they do not get worse. Taking stock also means recognizing that hurdles are likely to grow bigger in the coming years and finding solutions will likely become more difficult. But if this is all about historical turning points, it is important to acknowledge that even the world of innovation cannot remain neutral.


Dr. Andrej Heinke (author)
Steinbeis Entrepreneur
Steinbeis Consulting Center Corporate Foresight (Stuttgart)