Kodak was the roll film manufacturer that went down poetically. The term “Kodak Moment” went from describing analog images of great experiences, to symbolizing a lack of adaptability with catastrophic consequences.
Not only was Kodak out-competed by the digital camera: it was, to a great extent, also Kodak that invented it. Instead of using their own invention to adapt, they put it in a drawer. It went as it had to go.
Kodak is not alone. When a smash hit is threatened, most people go into denial. Typical symptoms are:
- Belief that old success will continue.
- Inability to create new giving.
- Leaders who continually defy warnings.
The state has become large, and it has taken up much of the space that private actors could use.
Norway has become an oil and gas exploration empire, but this economy is no longer sustainable. We have to adapt, and it is urgent. Building a new economy that provides similar incomes will take decades.
What is unique about Norway is that for the past 50 years the state has had the role of primary value creator, through centralized control, strict regulations and direct ownership in the oil and gas sector. The state has become large, and it has taken up much of the space that private actors could use.
The state is in practice the country’s largest company.
The model is built to exploit one natural resource, and to redistribute the wealth fairly. There is no experience to suggest that it will work equally well to build a new, diverse economy based on knowledge and innovation.
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On the contrary, both data and experiences point in a different direction. Nevertheless, the state continues to grow.
Is that Norway’s camera roll? Are we in a “Kodak Moment” – a carbon moment?
Innovation is deeply unpredictable. Successes are ridiculed, ideas declared genius fail miserably. No one knows who will succeed, or where the next breakthrough will come.
Innovation is driven by zealots. With their insights and visions, they have the drive to create something groundbreaking and big.
Not even the most experienced entrepreneur or investor, or politician or bureaucrat for that matter, can know. Approximately 9 out of 10 start-up companies never become large enough to provide the contribution we need. We need many teams and many attempts to succeed.
The state cannot look for winners like it looks for oil. Or understand in advance where it is best to bet. It is not psychic.
Innovation is driven by zealots. The data is clear: You get the furthest when the founders retain their influence. With their insights and visions, they have the drive to create something groundbreaking and big. If there are too many cooks, the outcome will be less value-creating – for the company and society.
The state cannot lead such a development. Individuals have to do that.
Innovation needs a soil where ideas, technologies and people influence each other. Such ecosystems are self-regulating, diverse and highly adaptable.
The state sets the framework with laws and regulations. Society sets a framework with values and attitudes. The rest is up to creativity.
Ecosystems are built with “pay it forward”: When you succeed, you help the next in line by investing, giving advice and support. They are expected to do the same, when they themselves succeed. This is how Silicon Valley was built, and we can do the same – perhaps with a better value base.
The state is hierarchical, and seeks control and predictability. It is suitable for setting framework conditions, but does not have the flexibility needed to be the innovator itself.
The state has created a strong distrust that shakes the crown’s argument for high tax pressure: Political predictability.
Entrepreneurs in Norway do not react to current policies, because they do not want to pay taxes or have stopped caring about Norwegian values. They react because the state is perceived as seriously inhibiting.
The state imposes extra personal risk on them, by taxing them as if they were rich, longer before they know whether they will succeed. It makes it difficult for them to keep control of their scaling-up company, with tax bills they can’t afford to pay – unless they’ve been mediated beforehand. It makes it difficult to attract the necessary foreign expertise, who receive an exit tax when they return home – even if the company went bankrupt after they moved.
There is more, but worst of all: The state has created a strong distrust that shakes the crown’s argument for high tax pressure: Political predictability. This has led to a capital drought, lost opportunities and a critical loss of momentum.
Are we leaving a highly educated population in the drawer?
Our social democratic neighbors show that it is possible. Sweden, Denmark and Finland have succeeded in building knowledge-driven economies.
The tax debate is about business, but it concerns us all. After 50 years with the state in the driver’s seat, we lack references and role models that show what value creation can be, and who the future value creators are.
Meanwhile, the government stands its ground. They are supposed to support innovation and entrepreneurship, while at the same time the state becomes bigger and business smaller. Is it a value struggle or a power struggle?
We don’t have to let go of our values. We can strengthen them. We can use the spirit of service, and we can build on the trust and willingness we have to share and help each other.
Our social democratic neighbors show that it is possible. Sweden, Denmark and Finland have succeeded in building knowledge-driven economies. They have a state less than half the size of the Norwegian one, in relation to the number of inhabitants.
Stockholm is on the top list of Europe’s best startup ecosystems. Swedish economy is 20 times as innovative as ours. They have been true to themselves, they have let diversity in.
What will future generations say, if we defy these experiences and fail? What do we answer, when they ask why we doubted old success?
It is time to decide on some overarching questions, and rather let the solutions follow from the answers we arrive at:
- What will we live on after the oil?
- How should we maintain our values? What else should we let go?
- Small differences are today a much-discussed value. What additional values do we have? Where does trust, dialogue, diversity and individual freedom stand?
We are all lucky to live in Norway. We must adapt if future generations are to be able to say the same.