Iceland, back from the brink

  What do 350,000 inter-galactic citizens, a spa in the middle of a powerplant and a brilliant space age vocalist have in common?  Iceland.



What do 350,000 inter-galactic citizens, a spa in the
middle of a powerplant and a brilliant space age vocalist have in common?  Iceland.

Most people think financial collapse when they think
Iceland.  That’s a shame.  The people of Iceland are coming together,
looking forward and doing some exceptional things.  We can all learn from their experience, but
all we’re hearing about is that McDonald’s left the country recently after 16

My colleagues from the Kellogg Innovation Network
(KIN), a network of innovation leaders from across sectors worldwide, visited
Iceland in December to discover what’s really going on and work with the
country’s leaders to help map a path forward. 
We were all energized by what we discovered.


Jorn Bang Andersen, a KINian from the Nordic
Innovation Centre, part of the Nordic Council, arranged the visit.  Jorn and I built a team of Kellogg faculty,
alumni and a couple of Jorn’s associates in Europe, including Patrick Crehan of
CKA and the Club of Amsterdam.  We
visited nearly 20 companies and met with members of the country’s ministerial
and trade promotion staffs.  We’re in the
midst of working with the Icelanders to develop our recommendations.  In the meantime, we’d like more people to
know about Iceland’s exceptional story.

We were impressed by the creativity and scope of
entrepreneurial activity in this country of 320,000 people.  Everyone has heard of Iceland’s primary
export, Björk, so it’s not a surprise that the island nation has a vibrant
creative community from product design to music.  We were struck by how many public buildings,
offices, restaurants—really, everywhere—displayed original art.  The country is infused with the arts of all
kinds, perhaps both inspiration from and response to the climate and stunning
but often-barren landscape.

One online multi-player virtual world company, CCP,
founders of Eve Online, boasts 350,000 subscription paying members worldwide–
more than Iceland’s population.  One of
CCP’s 400 staff members worldwide includes a full-time economist who creates
quarterly economic states of the universe reports for the Eve Online
community.  True economic analysis of an
emerging virtual world.


We also visited companies in the healthcare and
industrial biotechnology sectors.  Ossur
is a $400-milllion revenue orthopedics company considered top-of-the-line
worldwide.  Their prostheses have been
banned from use in various sporting events as many believe the limb replacement
devices confer an unfair advantage.  A
truly bionic quandary.  Orf  is a start-up biotechnology company growing
genetically modified plants that produce high value research proteins, with
plans to produce proteins for the cosmetics and nutriceuticals industries.  The company grows its products in specially-designed
greenhouses powered by the Iceland’s green, astonishingly efficient geo-thermal
power plants.

Geo-thermal energy is one of the most compelling
components of Iceland’s economy.  As a
result of ongoing volcanic activity at the confluence of the tectonic plates of
Eurasia and North America, Iceland is blessed not only with nearly free energy,
but also a long tradition of geo-thermal technology and know-how that leads the
world.  Electricity is so cheap that
aluminum producers such as Alcan have located massive factories in the country,
given the high energy requirements of aluminum smelting.

But they do much more than just create cheap
electricity.  Albert Albertsson, a
director with HS Energy, one of the country’s leading electricity providers,
explained that geo-thermal plants can create an entire ecosystem of
opportunities for various ventures.  In
addition to Orf, other companies locate next to the power plant to benefit from
the electricity and copious amounts of hot water provided by the plant. 


The most compelling example is Blue Lagoon, a world
renowned spa, clinic and skin care products company.  Blue Lagoon’s CEO, Grímur Sæmundsen, explained
that people started frequenting the hot waters of the lagoon in the 1970s well
before the spa was constructed.  The
construction of the geo-thermal plant opened hot water and released a world of
microorganisms, many of which people felt had significant healing properties,
especially for people with psoriasis.  Sæmundsen
and his partners founded Blue Lagoon to build a world class spa around the
site.  They have since added a research
facility and a range of skin care and beauty products. Blue Lagoon’s
researchers have identified over 100 microorganisms unique to the lagoon as
well as two primary organisms they believe to be responsible for the water’s
healing effects.  Ongoing research with
universities around the world is helping to develop the healthcare applications
and the spa includes a wing for guests seeking longer-term treatment regimes.

Iceland has a long road ahead to pay down a debt
equivalent to over 800% of GDP, but many Icelanders understand that the only
good way out in the long run is to create substantial new value through
innovation and entrepreneurship.  As one
business leader put it, “We’ve been on our own in the middle of the North
Atlantic for 1,000 years.  We’ll figure
this one out, too.” 

more from Robert Wolcott and Michael Lippitz on how corporate entrepreneurs can
take their vision to market and help their companies Grow From Within.


Wolcott and Michael Lippitz are leading authorities on innovation and corporate
entrepreneurship at the Kellogg School of Management at Northwestern
University, and co-authors of
 Grow From Within: Mastering Corporate Entrepreneurship and
Innovation (McGraw Hill, 2009). In the past six years, they have
studied more than 30 companies across industry sectors and developed an ongoing
dialogue with them about corporate entrepreneurship through the Kellogg
Innovation Network (KIN).