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“How can we become innovative, like MIT, and the startup companies of Route 128 and Silicon Valley?” That’s the most frequently asked question I’ve heard in the last 25 years, as individuals and organizations in Europe and Asia, but also in the United States, strive to get on the bandwagon of high-tech innovation. Thousands of books and magazine articles purport to answer this question. Yet the ones I’ve seen don’t quite match the ingredients I have found to be important among the most successful of the MIT Lab for Computer Science’s 60-some startups.

Two ingredients, risk-aware capital and a high-tech infrastructure, are obvious, but rarely in place. In Europe and Asia investors talk about risk, but their psyches propel them toward the comfort of guarantees. They are not prepared to lose 10 startups for a 100-fold appreciation in the one that makes it big. In the United States, where capital is usually risk-aware, it is often greedy and lacks staying power-two additional avenues to failure. And in many regions of the world, there is little infrastructure in the form of silicon foundries, design houses, and the human experts behind them to ensure that a fledgling high-tech company will have quick and easy access to such key resources.

Perhaps the most important ingredient of successful innovation is the creative technological idea that serves a pressing human need. This kind of creativity, in turn, requires a schizophrenic combination of rationality and insanity that’s outside our ordinary experience. Imagine that all current inventions in the world and all their possible logical extensions and uses are inside a huge balloon. People are pretty good at extending these ideas further, using logic and common sense. But their results, being logical extensions of what’s already there, stay within the balloon. To escape these old ideas and come up with something that is radically new, the balloon must be punctured with something that defies reason-a new idea that is akin to a form of insanity. Yet most insane ideas fail to be creative; they’re simply insane. That’s why successful innovators, after coming up with an idea that seems crazy, must be able to shift seamlessly to a rational dissection of the idea’s merits and pitfalls. When this interplay between insanity and rationality converges, look out! A creative idea has been born.

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