At the risk of restating the obvious, it would seem that the most notable thing that happened in the world of innovation in 2011, at least as far as the business world is concerned, was the sad death of Steve Jobs.

His biography sits at number one on the best seller lists, and when was the last time a book about innovation held that spot?  I don’t think it’s ever happened before!

But that is what the biography of Job is really about: how this extraordinary man managed not only to express his unique vision through decades of breakthrough work, and how he managed at the same time to organize a company around his efforts, and then how that company came to be valued as one of the top companies in the world, just behind (or above, depending on the stock market on any given day) the world’s mightiest oil behemoths.

What else happened in 2011?  Were there any great commercial breakthroughs?  None come to mind, although there are some pretty interesting collapses going on around us.  Research in Motion and Nokia both continued their tremulous declines (and that Jobs fellow had a part to play in their misfortunes).

There was interesting progress in the auto industry, as well, with impressive turnarounds at GM and Chrysler in the US, the return of Fiat to the American market, Nissan pushing ahead with the electric Leaf, and Toyota’s continuing progress with the expansion of the hybrid Prius line.

But the thing I found most interesting about innovation in the auto industry in 2011 combines two broad and very important trends in the economy:  the increasing attention being paid to intellectual property, and the still rising influence of China in the global market.

The underlying story, still unresolved at the time I write this, is GM’s attempt to discard the Saab brand, and the attempt by Swedish Automobile to rescue the brand and the company from the rubbish heap.  Saab, being originally a Swedish company, maintains iconic status in its homeland, where a feverish effort is ongoing to save the company by raising enough money to keep it alive.

So let’s say you needed $130 million or so to resurrect a dormant auto company – where would you look for the money?  In Europe?  Hardly likely, given the ongoing aura of economic collapse that Greece, Italy, Spain, and Ireland have brought to the Euro.  In the US?  Not likely either – it’s crowded in the US auto market, and Saab was never well admired there.  India?  The Tatas are busy digesting Jaguar, so probably not, unless one of the Ambani billionaires wants to own a car company.

But what about China?  Ah, yes.  The Euros are looking to borrow a few billions from China, which is looking more and more like the world’s piggy bank, and we know the Chinese are busily acquiring assets with their accumulated trillions.  So yes, let’s go ask the Chinese.

And lo and behold, here’s a check for $135 million, made out to GM, so that Saab can live, the Swedes can preserve their company, and the Chinese can gain control of another nice, industrial asset.

But wait, there’s a glitch.  GM refuses to cash the check.  Come on, it’s $135 million.  Who would turn down $135 million?  And why?

This is where it gets really interesting. Because the reason that GM does not want to sell Saab to a Chinese-backed Swedish group is that it doesn’t want Saab’s intellectual property to fall under Chinese control.  That’s because GM knows full well, as does everyone with their eyes open, that China is the next big market that the auto industry can look to for future growth, and they also know that competitive advantage in the car business is largely driven by technical expertise.  Ergo, selling your technical know-how to China so they can use it to compete with you is not astute strategy.

(The value of technical expertise in the auto industry is one reason why GM and Ford have traditionally been 2 of the world’s heaviest investors in R&D, i.e., in innovation.)

So at least we can say that folks at GM are paying attention.  NOT selling their IP to China, even for $135 million, is a farsighted move.

The underlying issue is the value of IP more generally, and we’re seeing new emphasis by corporations around the world in figuring out how to get value for their IP; hence, another major event in July of 2011 was the sale of Nortel’s IP portfolio of more than 6,000 patent assets for a princely sum of $4.5 billion to a consortium headed by Apple, Microsoft, RIM, and Ericcson, which outbid Google and Intel.

Valuing, buying, and selling IP portfolios is becoming a new commercial specialty, also a new-ish trend in 2011.  Certainly it is a trend that is gaining momentum.

So anyway, back to Saab and GM and China.  The two big trends that collide in this story are the valuation of IP and its increasing importance in commerce, and the relationship between China and the rest of the world.  And as you can see, this story embodies a complex relationship.

China, due to its enormous industrial prowess in the 1990s and 2000s, has accumulated trillions of dollars of capital, which, like any investor, it must put to work.  But investing that much money is not a simple matter (and there is probably a team of thousands of even tens of thousands of people who invest the capital and manage those assets).  And of course a major investment goal is to produce a return for the Chinese nation, not only in immediate financial gains, but also in creating future value in the knowledge economy, which is enhanced competitiveness.

I don’t know what’s in the Saab IP portfolio, but there is every reason to suppose that it is indeed valuable.  Meanwhile, GM’s Buick subsidiary is a leading luxury brand in China, and aspires to grow there.

So here we have a story that combines intellectual property, massive flows of capital, global geopolitics, future markets, and sadly for them, there sit the Swedes in the middle, trying to sustain something which has sentimental value but which has now, as we see, become a piece on the larger economic chessboard sitting between the two largest economies in the world.

And that is largely the story of innovation, in 2011 and 2012, and beyond:  for innovation lies at the intersection of an industrial economy transitioning to a knowledge economy; at the intersection of capital, investment, and intellectual property; at the intersection of brands and nations; and at the intersecting trade routes of geopolitical competition (and occasionally conflict) at the largest scale, the world economy.

So what did we see in 2011?  We saw the sad demise of a man, a great man surely, whose vision and talent became the basis of a mighty corporation.  The tools his company produced are used daily, hourly, minute by minute, by millions of people to connect to that same huge global economy that Saab is caught in the middle of.

At the micro scale, innovation is a man and a company.   At the macro scale, innovation is a brand, and technical expertise, and then suddenly it’s economic competition between nations.

This is where you found innovation in 2011.

And this is where you will find it still in 2012.  And 2013.  And 2014.  Etc.

Innovation shapes individual lives, just as it shapes the destiny of brands, and of nations.  Indeed, innovation has shaped, and will continue to shape, the destiny of human civilization.  Which leads to perhaps the most important question of all:  How will you innovate in 2012?

Happy Holidays!

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