If you want innovation, go to Switzerland. According to the Global Innovation Index, those Swiss are the most innovative people on the planet. Next is the UK, then Sweden. The Dutch are pretty damn innovative too, coming in at number four. Then you have the good old USA rounding up the top 5.

My fellow Canadians? Less innovative, apparently. We’re at #16. Those damn Luxembourgians and Icelanders even beat us (ranking 9th and 13^th respectively). But hey, we beat the Japanese (19) and we’re miles ahead of China (29), Russia (48) and India (81).

Pillars of Innovation

So, what makes a country innovative? And, by extension, what lessons can we learn about encouraging innovation generally? The publishers of the index look at five pillars of innovation: Institutions, Human Capital and Research, Infrastructure, Market Sophistication and Business Sophistication.

If you look at these, it makes sense that the better off the country, the more innovative it will be. These are the countries that can invest in education and the infrastructure needed to support innovation. I would also add risk taking to the prerequisites of innovation. I suspect that may be why my fellow Canadians are less innovative on average than Americans.

But, if you talk to Sandy Pentland, there is another factor to consider: Physics. Specifically, Social Physics.

The Physics of Innovation

If we look at innovative environments, the most successful example is a city. Cities, especially some cities, are hot beds of innovation. New York, for example, or San Francisco, or Boston, continually crank out more innovative ideas per person than most places you could name. Why are cities more innovative, per capita, than rural regions? Sure, there are aspects of the five pillars there: good universities, lots of smart people, sophisticated marketers. But the main reason may come down to the nature of networks you find in a city.

Alex “Sandy” Pentland just happens to live in an innovative city – Boston. And he works at MIT, one of the most innovative institutions in the world. There he heads up perhaps the single most innovative department, the Entreneurship Program at MIT’s Media Lab. So, it’s fair to say that Pentland knows a thing or two about innovation. But what really fascinates Pentland is the way people connect and, by doing so, spread ideas. This is what he refers to as “Social Physics.”

Some cities promote innovation because they promote a certain type of network connectivity. In order for innovative ideas to spread, there needs to be two types of connection: exploration and engagement. The first offers a clue to why cities may be particularly innovative. Sparks of creativity tend to come from interface areas, or the edges of social groups, where different ideas and viewpoints come into contact with each other. If you’re surrounded by people who look, speak and think the same way you do, you get an “echo chamber.” There is no diversity in your exploration. But if you’re in an environment that lends itself to encountering diverse ideas and points of view, your exploratory connections become “mash-ups” of innovation. As Steve Jobs said, “Creativity is just connecting things. When you ask creative people how they did something, they feel a little guilty because they didn’t really do it, they just saw something. It seemed obvious to them after a while. That’s because they were able to connect experiences they’ve had and synthesize new things.” But you can only see that “something” if you’re in an environment that allows connections.

Back to those Swiss

So, the five pillars of innovation aside, perhaps the Swiss advantage in innovation comes from the fact that it’s a pretty small country that has 8 million people and 4 official languages. Also, 74% of those people live in a city. That mean’s that there are lots of social “edges” coming into contact with each other.

Once they settle on a language, I’m guessing the Swiss have some pretty interesting conversations.