Purvankit khadatkar's Key Ideas from How Innovation Works: Serendipity, Energy and the Saving of Time
by Matt Ridley

• Every idea is a combination of other ideas. Innovation happens when ideas have sex. It occurs where people meet and exchange goods, services and thoughts. The inventors of motor cars did not have to invent wheels or steel. 
• Most inventors find that they need to keep "just trying" things. Tolerance of error is therefore critical. An element of playfulness helps, too. Innovators who just like playing around are more likely to find something unexpected. 
• Innovation always requires collaboration and sharing. Even the simplest object is beyond the capacity of any one human being to understand. 

• Amara's law states that people tend to overestimate the impact of new technology in the short run and underestimate it in the long run. Gene editing, GPS and AI are some examples where Amara's hype cycle is observed. It could also be playing a role in the story of crypto.
• The bigger the cities get, the more productive and efficient they become, in terms of their use of energy to create improbability. It is always possible to raise living standards further by lowering the amount of a resource that is used to produce a given output. Growth is therefore indefinitely "sustainable".

• The invention of the light bulb was independently achieved by 21 people. There may be conscious competition between these but it was impossible for light bulbs not to be invented in the 1870s. 2 paradoxes arise:

1. The individual seems dispensable. If Edison wasn't born, the world still would have light bulbs. But this is precisely what makes such achievements remarkable: any of the billions of rivals could have won, but only some emerged.
2. This makes innovation look predictable, yet it isn't. It is obvious that search engines would be the biggest fruit of the internet. But no one saw it coming.

It is believed that the main source of innovation has been the government support of research, and that government should therefore adopt an industrial policy of directed innovation. This is a myth.

While it is not impossible that governments can aim for, create and perfect an innovation, it doesn't happen very often. Far more inventions and discoveries emerge by serendipity and the exchange of ideas.

• There is a widely held belief that science leads to technology, which leads to innovation. While this can happen sometimes, it is just as often the case that invention is the parent of science: techniques and processes that work are developed, but the understanding of them comes later.
• Examples: Steam engines led to the understanding of thermodynamics, powered flight of aerodynamics, and animal breeding of genetics. 

• Big companies are bad at innovating because they are too bureaucratic, have too big a vested interest in the status quo and stop paying attention to the interests, actual and potential, of their customers.
• Thus for innovation to flourish it is vital to have an economy that encourages or at least allows outsiders, challengers and disruptors to get a foothold. 

• The justification for intellectual property- patents and copyright is that it is necessary to encourage investment and innovation. The trouble is, the evidence clearly shows that while intellectual property helps a little, it also hinders and the net effect is to discourage innovation.
• A further problem is that patents undoubtedly raise the cost of goods. This slows down the development and spread of innovation. 
• Finally, patents tend to favour inventions rather than innovations: upstream discoveries of principles, rather than a downstream adaptation of devices to the market. 

• The main ingredient that leads to innovation is freedom. Freedom to exchange, experiment, imagine, invest and fail. Freedom for the consumers to reward the innovations they like. Not freedom in the lawless sense, just the general idea that if something is not specifically prohibited, then the assumption should be that it must be allowed.
• Freedom is why innovation cannot be easily planned because neither human wishes nor the means of their satisfaction are easy to anticipate. This is why nobody really knows how to cause innovation because no one can make people want something.

• The ability of Western economies to generate innovation has become weaker. Incomes appear to be stagnating and opportunities for social mobility drying up. The cause is not too much innovation, but too little. The West may still do new things in science and arts but is slowing down in innovating products. 
• China's innovation engine,however, has fired up. Their speed could be explained by work. Willingness to put in the hours, to experiment and play. But they have authoritarian restraints, which hinder innovation. Perhaps India or Brazil will pick up the challenge and keep innovation happening.