Official - much modern Innovation isn't

There is no problem - Economist


Well, I don't know - you co-write a manifesto (Big Potatoes Innovation Manifesto) in 2009 railing about the main issue with modern Innovation, i.e that its been watered down to safe, easily funded, short term ROI "Continuous Improvement" (see some previous blog posts on this), and that R&D spending is draining down the plughole even faster than bankers' bonusses are rising (a true measure of where Western society places its value, and why it's going bankrupt) - and people tell you that you are being too alarmist, contrarian, just seeking controversy. This was not a popular message at the time.

Then this week, at the beginning of 2013, 3 articles appear in the same week - the Economist, Wired on Larry Page of Google, and the BBC all covering the dilution of innovation.

The Economist one is really a reflection of the "corporate comfort zone" resistance we have found, as it bye-lines "The idea that innovation and new technology have stopped driving growth is getting increasing attention. But it is not well founded". Their argument, beautifully written as always, is that Innovation is there - it is just that we can't see it, that Innovation takes longer than you think anyway, and - an Economist drum they always bang - is that there is Too Much Regulation, which is slowing diffusion down. That these 3 arguments are contradictory is avoided by much circumlocution of the issue that even their own data shows - something has slowed down drastically (see chart, above). They also take the oppotunity to pooh-pooh Paul Romer's 80's research, that ease of access to cheap global labour meant that OECD countries took the foot of the Innovation pedal (despite the visible evidence of reducing R&D spend over these same decades) - but then The Economist Luffs Globalisation, so no surprises there either. It really is one of the more disingenuous attempts to explain away vast swathes of data all pointing in the opposite direction.

Maybe the best way of illustrating the poverty of modern "Innovation" in the consensus the Economist defends is to look at the interview Larry Page had with Steven Levy in Wired (linked above), and this summary paragraph:

Larry Page lives by the gospel of 10x. Most companies would be happy to improve a product by 10 percent. Not the CEO and cofounder of Google. The way Page sees it, a 10 percent improvement means that you’re basically doing the same thing as everybody else. You probably won’t fail spectacularly, but you are guaranteed not to succeed wildly.

That’s why Page expects his employees to create products and services that are 10 times better than the competition. That means he isn’t satisfied with discovering a couple of hidden efficiencies or tweaking code to achieve modest gains. Thousand-percent improvement requires rethinking problems entirely, exploring the edges of what’s technically possible, and having a lot more fun in the process.

Now its a puff piece, sure - but it makes clear what the Google ambition for "Innovation" is. It also possibly goes a way to explaining why Google is where it is today, and many of those The Economist would defend...aren't.

The last piece was a BBC piece looking at the career of Mario Capecchi, who studied genetics at Harvard but concluded it had become a bastion of 'short-term intellectual gratification' (In my view one of the main causes of the popularity of "Innovation as Continuous Improvement" - it is easy to predict progress, so everyone looks liek a winner, it's easy to understand what they are doing as as it isn't "novel", and it rocks no existing boats). So he went to the University of Utah and set up the Eccles Institute of Human Genetics. His work there on the 'knockout mouse' is the foundation stone for mucch of gene therapy and won a Nobel Prize.

What the BBC article points out is that the problem with this 'short-term intellectual gratification' model of Innovation is that despite an illusion of progress every year, there is an inevitable "decrease in returns", as continuously improving the existing thing will always eventually reach a point of no further benefit. People like Capecchi however "look like they are failing" - until of course they succeed and hit the new idea. As the BBC points out, some researchers never do hit the new things all their lives, and the piece shows that overall, in a new study of medical research, the places that do follow the harder path and go after radical Innovation, despite not being able to show a year on year progress, are the ones that hit the home runs - and measured over a longer timeframe of several decades, that is what makes all the difference. They are the more effective approach.

Update - this piece has been picked up on Y Combinator and elsewhere asking the question "Is an obsession with Lean and Agile killing true innovation?"

I can see why it arose, as "Lean" is used these days to describe a bunch of techniques, Continuous Improvement among them, to reduce all wastage in an existing process. I think there is the potential for the "Lets Not Innovate" issue to emerge with "Lean" thinking - initially is an easy win, progress is predictable, everyone looks good, it is improving what is already being so there are fewer political battles to fight, investment is returned in short timescales. Accountants, funders and bosses love this therefore, so yes I think the obsession with Lean - or more accurately with the low hanging fruit it picks - is an enemy of Innovation if people forget to also invest in Innovation (finding the next fruit tree). Lean then falls over when the product/process has been "leaned out" (or more typically you get a hyperbolic curve, where the costs of going from 70% to 80% to 90% Lean rise massively, with 100% being near infinity). The risk (as can be seen in quite a few industries) is that if the enterprise spends all its time and braincells on going Lean with the current technology cycle, then it doesn't innovate for the next wave - poor ROI, dont you see - and gets sidewiped. Being the Leanest movie rental business store on the planet does not save you from Netflix, etc etc*.

Agile is slightly different, it is (re)designing existing processes so that they have resilience and flexibility - but in a Lean World though you can't use capacity redundancy in the design, so it has to be done with multi-skilling/multi tasking/multi purpose assets, culling all lead times, and breaking the product into very modular parts, so any set of operations/workers/etc can be rapidly shuffled to face a new situation. My experience of "Agile" - in both manufacturing and software - is that it is fine within bounds of capacity fluctiuation, but can't cope easily with rapid up-spikes. But I don't see Agile as an enemy of Innovation per se, in fact with ite emphasis on groupwork, multi-skilling, resource sharing and so on I think its probably an ally. But I would note that a disproportionately large amount of "change the world" innovation does not fit in any set process, and happens when there is space, time (and money) to dream of blue skies, and put pies in them.

*Arguably Blockbuster - or any major bricks n' mortar retailer - could have invented their industry NetFlix by applying some Lean analytical approaches (Value Engineering, say) to its supply chain - but this very seldom happens, as it requires a "leap" (aka Innovation and Risk) to go to online while the Lean methodology favours continuous, incremental improvement of what is (and the company gets hooked on short-term gratification). Which of course leaves the space open for startups....