Earlier I posted a link to an excerpt in the Wall Street Journal from a new book by Steven Johnson, called “Where Good Ideas Come From: The Natural History of Innovation.” A very fascinating piece overall, but the part that struck me was where Johnson talks about how innovation occurs when ideas are freely shared, rather than being walled up behind artificially-imposed boundaries:
The premise that innovation prospers when ideas can serendipitously connect and recombine with other ideas may seem logical enough, but the strange fact is that a great deal of the past two centuries of legal and folk wisdom about innovation has pursued the exact opposite argument, building walls between ideas. Ironically, those walls have been erected with the explicit aim of encouraging innovation. They go by many names: intellectual property, trade secrets, proprietary technology, top-secret R&D labs. But they share a founding assumption: that in the long run, innovation will increase if you put restrictions on the spread of new ideas, because those restrictions will allow the creators to collect large financial rewards from their inventions. And those rewards will then attract other innovators to follow in their path.
The problem with these closed environments is that they make it more difficult to explore the adjacent possible, because they reduce the overall network of minds that can potentially engage with a problem, and they reduce the unplanned collisions between ideas originating in different fields. This is why a growing number of large organizations—businesses, nonprofits, schools, government agencies—have begun experimenting with more open models of idea exchange.
Organizations like IBM and Procter & Gamble, who have a long history of profiting from patented, closed-door innovations, have embraced open innovation platforms over the past decade, sharing their leading-edge research with universities, partners, suppliers and customers. Modeled on the success of services like Twitter and Flickr, new Web startups now routinely make their software accessible to programmers who are not on their payroll, allowing these outsiders to expand on and remix the core product in surprising new ways.
Earlier this year, Nike announced a new Web-based marketplace it calls the GreenXchange, where it has publicly released more than 400 of its patents that involve environmentally friendly materials or technologies. The marketplace is a kind of hybrid of commercial self-interest and civic good. This makes it possible for outside firms to improve on those innovations, creating new value that Nike might ultimately be able to put to use itself in its own products.
In a sense, Nike is widening the network of minds who are actively thinking about how to make its ideas more useful, without adding any more employees. But some of its innovations might well turn out to be advantageous to industries or markets in which it has no competitive involvement whatsoever. By keeping its eco-friendly ideas behind a veil of secrecy, Nike was holding back ideas that might, in another context, contribute to a sustainable future—without any real commercial justification.
So, the gist is that real innovation happens, not when the profit motive is paramount, but when ideas are freely able to bounce off of each other, leading to serendipitous consequences that the original creators could not have foreseen; as in the process of evolution itself, an idea can mutate into something that eventually is so far removed from its origins as to seem dropped in from above, deus-ex-machina style.
Not too long after that excerpt was published, the WSJ decided to assign someone to do a review of Johnson’s book. And who did they pick, but dear, sweet, deluded Megan McArdle.
Her review begins promisingly enough:
In the physical universe, chemical reactions are limited by the molecules that are close to one another and the ease with which they can meet up. You can run an electrical current through a chemical bath and synthesize the basic amino acids that form the building-blocks of human life. You cannot synthesize a llama.
So in the field of human knowledge. New ideas are limited by the supply of existing ideas and by the speed with which those ideas can combine to form new ones. The ancients could build accurate astronomical models but could not generate a theory of gravity; they needed better telescopes, better measurements and a theory of calculus. “If I see farther than other men,” said Isaac Newton, “it is because I stood on the shoulders of giants.”
This idea, the importance of proximity, is one of the first concepts that Steven Johnson introduces in “Where Good Ideas Come From.” In many ways, it is the heart of the book, defining not just what innovations are possible at a given time, but also how innovation gets done within the current frontiers of human knowledge. In Mr. Johnson’s telling, innovation is most likely to occur when ideas from different people, and even different fields, are rapidly banging against one another; every so often the ideas will spawn some radical new combination. The most innovative institutions will create settings where ideas are free to move, and connect, in unexpected ways.
But then her desire to reduce the complexity of all human society to a simple monetary transaction begins to take hold:
It turns out that Mr. Johnson himself has a big idea, but it’s not a particularly incisive one: He proposes that competition and market forces are less important to innovation than openness and inspiration. The book includes a list of history’s most important innovations and divides them along two axes: whether the inventor was working alone or in a network; and whether he was working for a market reward or for some other reason. Market-led innovations, it turns out, are in the minority.
Certainly it is true that great discoveries happen in government projects or academic labs; it would be foolish to declare that only market incentives can produce transformative ideas. But Mr. Johnson’s list ultimately proves less about the market’s shortcomings than about the shortcomings of the great-discovery model of innovation on which he dwells. Markets may be less effective at delivering radical new ideas, but they excel at converting those ideas into useful tools.
See? See? Without the Invisible Hand of the Marketplace, the internet would never have developed to the point where even the most graphic and debasing S&M pornography would be available at the click of a mouse.
Reverence for the great-discovery model of innovation is what prompts critics of the pharmaceutical industry to declare that all the “real work” of drug discovery is done in university labs, often with taxpayer funding. Drug companies, we are often told, simply steal the ideas and monetize them. And yet what “Big Pharma” does is no less crucial to drug discovery than the basic research that takes place in academia. It is not enough to learn that a certain disease process can be thwarted by a given molecule. You also have to figure out how to cheaply mass-produce that chemical, in a form that can be easily taken by ordinary patients (no IV drugs for acid reflux, please). And before the drug can be approved, it must be run through the expensive human trials required by the Food and Drug Administration.
The endless creativity of the human animal is one of the differences between us and a chimpanzee poking sticks into an anthill in search of a juicy meal. But another one is our capacity for the endless elaboration and refinement of ideas—particularly in a modern economy. Toyota’s prowess at this sort of incremental improvement is legendary, even radical. Wal-Mart, it is said, was responsible for 25% of U.S. productivity growth in the 1990s. That’s not because Sam Walton emerged from his lab one night waving blueprints for a magic productivity machine. The company made continual, often tiny, improvements in the management of its supply chain, opening thousands of stores along the way and putting the benefits within reach of virtually every American.
Now, one caveat: I haven’t read Johnson’s book, but judging by the excerpt that ran in the WSJ, he does anything but “revere” the “great discovery model of innovation.” In fact, as far as I can tell, what he reveres is the ability of small discoveries to play off of each other, leading to ever more complex solutions to nagging problems. So, even though I haven’t read the book (it’s on my list, as soon as I finish the other 17 books that I already own, which includes the new Stephen Hawking opus, and I expect to finish that one by 2014 at the earliest) I will employ the infallible “Megan McArdle is Always Wrong (corollary: About Everything)” axiom, and assume that Johnson is spot on about everything he says.
Megan, remember, believes that corporations have the right to do whatever they want, no matter how much pain they cause to actual living, breathing human beings, because…well, I’m not sure why, other than the fact that large corporations pay her to promote such an anti-human world view. So, of course, as far as she is concerned, there can be no innovation without someone profiting, without winners and losers, without profiteers and ripped-off but well-meaning doofuses. The very notion of open-source software must give her hives. However can one afford to pay for Himalayan salt and iPads unless one jealously guards one’s intellectual property, and charges a pretty penny for others to borrow it?
I’ll close this with another selection from the excerpt of Johnson’s book, which seems to be some advice that Megan may wish to take to heart:
The trick to having good ideas is not to sit around in glorious isolation and try to think big thoughts. The trick is to get more parts on the table.