I’m still in Italy, where one of the topics of conversation is the recent special issue of The Economist, which discussed some of the problems that the economy here has experienced during the Berlusconi years (the special articles are summarised and linked here).

Paul Kedrosky points to a response to this issue, where a reader quotes this great scene with Orson Welles from The Third Man:

Watching Welles deliver the quote is worthwhile, but in case you can’t access it, here is what he says:

“In Italy for 30 years under the Borgias they had warfare, terror, murder, and bloodshed, but they produced Michelangelo, Leonardo da Vinci and the Renaissance. In Switzerland they had brotherly love, they had 500 years of democracy and peace, and what did that produce? The cuckoo clock.”

There are a few innovation lessons in this, including:

• Geography still matters: Welles talks about different innovation regimes in Italy and Switzerland, which he believes are the outcomes of differing political systems. And one of the key issues addressed by The Economist is the continuing economic divide between the North and South of Italy. Even in our highly interconnected world, geography still matters.

  Geography matters because face-to-face is still the best way to communicate. And it matters because different political and cultural systems have a big impact on how easy or hard it is to execute great new ideas.

  After to Silicon Valley, Northern Italy is the most-studied innovation region in the world, a point that was brought home again in the conference that John & I just attended. One point that is very clear from this research is that this innovative region functions very differently from Silicon Valley. You could make a pretty good argument that instead of trying to recreate Silicon Valley all around the world, local governments might be better of trying to recreate Florence and Milan.

• New innovations crowd out old technologies: one really important lesson here is that if you haven’t already done so, you must watch The Third Man – it’s a masterpiece. I know a lot of people that don’t like watching black and white films, but The Third Man uses the media perfectly. Director Carol Reed and Photographer Robert Krasker use light unbelievably well in this film – it is one of the best looking movies I’ve ever watched.

  However, this use of light is a skill that seems to be getting crowded out by new technologies. If you’ve seen any of the recent spate of 3D movies, it’s pretty obvious that no one is thinking much at all about light. Once Roger Deakins retires, it may well become a lost art.

  New innovations crowd out old ones – something that you can see if you watch The Third Man (which you must!).

• Diversity drives innovation: I’m not sure I agree with Welles that it was murder, treachery and betrayal that led to Michelangelo, da Vinci and the Renaissance. I’m currently reading The Pursuit of Italy by David Gilmour**, and it is clear that one of the drivers of Italy’s Renaissance era innovation was the enormous cultural diversity present there.

  This was in part a result of the country being so easy to invade, which led to this diversity of culture, thought and world views. This kind of diversity drives innovation.

Within an organisation, you might be as peaceful as the Swiss and still come up with more than just the cuckoo clock. The way to do this is to ensure that you have a mix of backgrounds within your people. Different areas of expertise, different nationalities, different educational backgrounds – it’s differences that create interesting edges and intersections in knowledge.

**The book also makes it clear that the regional innovation differences within Italy haven’t been deterministically caused – there was a time when Naples and South were well head of the North culturally and technologically.