Real disruption happens when a new technology combines with a change in the business model to reshape a sector from the bottom up, Hermann Hauser tells the Times of Malta.

To take and adapt a line from the classics, ‘innovation’ is the one word that launches a thousand interpretations. And while every interpretation has the seed of subjective truth in it, none carries the full weight of a rounded definition.

And that is testament to the complex nature of innovation. So complex, in fact, that it manages to score seemingly discordant notes in one harmony. Innovation is both singular – the fruit of one mind, one of Malcolm Gladwell’s outliers, so to speak, bent towards a stubborn end – but also plural, requiring the input of collaborative minds.

Innovation happens in a flash, the proverbial eureka moment – but it also requires time, for ideas to simmer, insights to take full flavour, and models to be tested over and over again.

Innovation is based on precious ideas – and yet ideas are not enough, as they need to be developed into viable solutions. Innovation feeds on past experience, but is also insatiable and hungers for the future.

Serial entrepreneur Hermann Hauser knows a thing or ten about innovation. The Austrian-born innovator has developed and financed over 100 high-tech companies, including Acorn Computers, which developed the ARM processor technology – the latter, found in billions of mobile phones today, was recently sold to SoftBank Group for almost €30bn. He also co-founded Amadeus Capital Partners – the firm has backed more than 135 companies, helped develop several unicorns – startup companies valued at over $1 billion – and raised over €1bn for investment.

As a fellow of the Institute of Physics and of the Royal Academy of Engineering, an honorary fellow of King’s College, Cambridge, a distinguished fellow of the UK Chartered Institute for IT, and a member of the Government’s Council for Science and Technology (UK), Dr Hauser has also inspired and mentored generations of entrepreneurs.

In a recent interview, Dr Hauser commented that while Europe has a phenomenal reputation for world-class research, its ability to make the best out of this research is not at par with that in the US.

“In my opinion, Europe still has three main problems in high-tech,” he told the Times of Malta. “First, Europe lacks experienced high-tech and fast growth management talent. It also suffers from not having growth venture capital able to write €50m to €100m cheques for projects that can enter super growth periods of the company’s development.

“Moreover, the continent doesn’t have founder-led, large tech companies willing to work with smaller tech companies to try revolutionary but risky projects in collaboration by, for instance, swift integration with their IT systems.”

Dr Hauser links these three main elements to Europe’s education system, saying that we need more entrepreneurship courses.

“That also explains why I run an entrepreneurship summer school every year in Alpbach, Tyrol,” he added.

By having clear, transparent and enforceable rules, innovations like blockchain can be translated into a wealth of opportunities

Dr Hauser also links innovation with an element of risk. That said, while large economies such as Germany or France can afford to take a risk, the EU’s smallest member state – despite its current economic boom – can hardly afford to not get it right first time.

“Malta has a good history of getting it right,” Dr Hauser said. “Becoming a full EU member state was one – as this gave the country access to a market of over 500 million consumers. Also, Malta has established a high-quality regulatory environment for new financial innovations like blockchain – by having clear, transparent and enforceable rules, innovations like blockchain can be translated into a wealth of opportunities.”

Malta is being touted as ‘Blockchain Island’. But how realistic is this way forward? 

“There are examples of small countries like Singapore, Hong Kong and Gibraltar creating an attractive environment for disruptive innovation,” Dr Hauser said. “There are a number of conditions for this to work: good high-speed telecoms infrastructure, solid enforceable legal system, good integration with the EU financial hubs of Frankfurt and London, and a welcoming immigration environment of talented people.”

In a recent interview with Bloomberg, Prime Minister Joseph Muscat said that blockchain can also serve as a tool to help Malta fight corruption.

“Automated know-your-customer and anti-money laundering tools, combined with the inalterability of blockchain data, can have a big impact on corruption,” Dr Hauser said.

This week, Dr Hauser will be delivering a talk, entitled ‘Blockchain: the disruption in finance’ at the Delta Summit.

“There are four new technologies which will change our lives in the next five to 10 years: AI and machine learning, blockchain and smart contracts, synthetic biology and quantum computing,” he said.

“Real disruption happens when a new technology, like blockchain, combines with a change in the business model to reshape a sector from the bottom up. During my talk at Delta, I will show how this happened with my most successful company, ARM, which has a 95 per cent market share in microprocessors for mobile phones. It now outsells Intel 20:1. The reason is that the technical breakthrough of RISC (Reduced Instruction Set Computer) combined with a change in the business model from selling chips (Intel) to selling licences (ARM).

“This is about to happen in the car industry where the technology is machine-learning for autonomous driving and the change in the business model is transport as a service rather than owning your own car.

“It is also about to happen in the financial sector as blockchain – especially in conjunction with smart contracts – will remove the intermediary from many parts of the financial system. The technology is distributed ledger technology (DLT) plus smart contracts and the change in the business model is the obsolescence of a trusted intermediary as strangers can participate in transactions mediated by the mathematically sound technology of DLT.”

Hermann Hauser, KBE, is a fellow of the Royal Society, of the Institutes of Physics at the Royal Academy of Engineering and honorary fellow of the Kings College. He also founded the Hauser Forum at Cambridge, co-founded the Hermann Hauser Institute for Entrepreneurship Cambridge in Tyrol, Austria, and is chairman of the advisory board for the Cambridge Blockchain Hub, a centre for DLT learning, research, and venture creation in Cambridge, UK.

Dr Hauser will be speaking at the Delta Summit on Thursday and Friday.

www.delta-summit.com

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