1.2 Innovation Relies On Recombination, Chance And Collaboration

1.2 Innovation Relies On Recombination, Chance And Collaboration

  • 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. 

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How Innovation Works: Serendipity, Energy and the Saving of Time

How Innovation Works: Serendipity, Energy and the Saving of Time

by Matt Ridley

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4.1 An Innovation Famine
  • 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. 

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2.2 Big Companies Are Bad At Innovation
  • 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. 

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2. Economics of Innovation: Innovation Is A Bottum-Up Phenomenon

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.

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1.4 Innovation is Inevitable
  • 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.

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1.3 Innovation's Hype Cycle, And Increasing Efficiency
  • 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".

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2.1 Innovation And Science
  • 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. 

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4. How Innovation Works
  • 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.

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thomas jefferson

Liberty is the parent of science and of virtue, and a nation will be great in both in proportion as it is free.

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3. Resistance To Innovation: Intellectual Property
  • 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. 

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john steinbeck

Ideas are like rabbits. You get a couple and a learn how to handle them, and pretty soon you have a dozen.

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1. Innovation Essentials: Innovation is Gradual
  • Innovation is nearly always a gradual thing. Eureka moments are rare and possibly non-existent. 
  • It is because of human nature and the intellectual property system that innovation is often described as heroic breakthroughs. It is all too easy and tempting for whoever makes a breakthrough to magnify its importance, forget about rivals and predecessors, and ignore successors who make the breakthrough into a practical proposition.
  • Nationalism makes the problem worse. The importing of a new idea gets confused with the inventing of a new idea.

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peter theil

We wanted flying cars; instead we got 140 characters.

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1.1 Innovation V/S Invention, And Serendipity
  • Innovation is the turning of an idea or invention into a workable, affordable device that actually delivers benefits to people.
  • Innovation is often serendipitous: Serendipity is an accidental discovery that is beneficial in some way. It is a well-known attribute of innovation. Post-it notes, genetic fingerprinting, and Kevlar(used in bulletproof jackets) are some examples of serendipitous innovations.

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WILLIAM PETTY

When a new invention is first propounded in the beginning every man objects and the poor inventor runs the gauntloop of all petulant wits.

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Innovation at work

When you look at great geniuses like Newton, for example, it can be easy to imagine that their ideas and work came exclusively out of their minds. But that is seldom how it works.

Innovation doesn’t occur in a vacuum. Regardless of how unique a work seems, if you look a bit closer, you will always find that the creator mastered what other people had already figured out.

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Standing on the Shoulders of Giants: The Key to Innovation

fs.blog

"There was nothing special about the brains of the moderns; it was their trade networks that made the difference – their collective brains"

We owe our progress as a species to the advent of trade which drove all the innovations.

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The Rational Optimist

The Rational Optimist

by Matt Ridley

Two of the biggest innovations

Two of the biggest innovations of modern times are cars and airplanes. At first, every new invention looks like a toy. It takes decades for people to realise the potential of it.

  • Adolphus Greely, a brigadier general, was one of the first people outside the car industry to consider the usefulness of a "horseless carriage." He bought three cars in 1899 for the U.S. Army to experiment with. It was envisioned to be used as transportation of light artillery such as machine guns, to carry equipment, ammunition, and supplies.
  • The Wright brothers saw the prospects of their new flying machine to be used as a reconnoitering agent in a time of war. The U.S. Army purchased the first "flyer" in 1908.

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When The Magic Happens

collaborativefund.com