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Innovation offers the carrot of spectacular reward or the stick of destitution. JOSEPH SCHUMPETER
Innovations come in many forms, but one thing they all have in common, and which they share with biological innovations created by evolution, is that they are enhanced forms of improbability.
It is astronomically improbable that the atoms in an iPhone would be neatly arranged by chance into millions of transistors and liquid crystals, or the atoms in an eider duckling would be arranged to form blood vessels and downy feathers, or the firings of neurons in my brain would be arranged in such a pattern that they can and sometimes do represent the concept of ‘the second law of thermodynamics’.
Innovation, like evolution, is a process of constantly discovering ways of rearranging the world into forms that are unlikely to arise by chance – and that happen to be useful. The resulting entities are the opposite of entropy: they are more ordered, less random, than their ingredients were before. And innovation is potentially infinite because even if it runs out of new things to do, it can always find ways to do the same things more quickly or for less energy.
Innovation, then, means finding new ways to apply energy to create improbable things, and see them catch on.
The Nobel Prize-winning economist Edmund Phelps defines an innovation as ‘a new method or new product that becomes a new practice somewhere in the world’.
What made most of us, not just in the West but in China and Brazil too, unprecedentedly rich, so the economic historian Deirdre McCloskey says, was ‘innovationism’: the habit of applying new ideas to raising living standards.
Nor was the scientific revolution of Galileo and Newton responsible, for most of the innovations that changed people’s lives at least at first owed little to new scientific knowledge and few of the innovators who drove the changes were trained scientists. Indeed many, such as Thomas Newcomen, the inventor of the steam engine, or Richard Arkwright of the textile revolution, or George Stephenson of the railways, were poorly educated men of humble origins. Much innovation preceded the science that underpinned it.
The surprising truth is that nobody really knows why innovation happens and how it happens, let alone when and where it will happen next.
Serendipity plays a big part in innovation, which is why liberal economies, with their free-roving experimental opportunities, do so well. They give luck a chance.
Innovation happens when people are free to think, experiment and speculate. It happens when people can trade with each other. It happens where people are relatively prosperous, not desperate. It is somewhat contagious. It needs investment. It generally happens in cities.
It cannot be easily predicted, as many a red-faced forecaster has discovered. It runs mostly on trial and error, the human version of natural selection. And it usually stumbles on great breakthroughs when looking for something else: it is heavily serendipitous.
The chief way in which innovation changes our lives is by enabling people to work for each other. As I have argued before, the main theme of human history is that we become steadily more specialized in what we produce, and steadily more diversified in what we consume: we move away from precarious self-sufficiency to safer mutual interdependence.
Innovation often disappoints in its early years, only to exceed expectations once it gets going, a phenomenon I call the Amara hype cycle, after Roy Amara, who first said that we underestimate the impact of innovation in the long run but overestimate it in the short run.
Whenever you see a successful business, someone once made a courageous decision. PETER DRUCKER
Virtually all the gigantic amounts of energy that go into making my life and yours happen come from the conversion of heat to work.
heat and work.
Swan was the only one whose work was thorough enough and whose patents were good enough to force Edison to go into business with him. The truth is that the story of the light bulb, far from illustrating the importance of the heroic inventor, turns out to tell the opposite story: of innovation as a gradual, incremental, collective yet inescapably inevitable process.
Invention, he famously said, is 1 per cent inspiration and 99 per cent perspiration. Yet in effect what he was doing was not invention, so much as innovation: turning ideas into practical, reliable and affordable reality.
The story of nuclear power is a cautionary tale of how innovation falters, and even goes backwards, if it cannot evolve.
And the industry remains insulated almost entirely from the one known human process that reliably pulls down costs: trial and error.
The transcontinental railroads in the United States were all failures, resulting in bankruptcies, except the one privately funded one.
The fossil-fuel dependence of the modern world is roughly the same today – at about 85 per cent of primary energy – as it was twenty years ago. The vast majority of society’s need for energy is supplied by heat. What will eventually depose the ‘impellent use of fire’, that strange link between heat and work that came into the lives of humanity around the year 1700 and is still vital to the world? Nobody yet knows.
trolley problem so beloved of moral philosophers: do you divert a runaway truck from a line where it will kill five people to another line where it will kill one?
So, yet again, innovation proves to be gradual and to begin with the unlettered and ordinary people, before the elite takes the credit. That is perhaps a little unfair on Jenner, who, like Lady Mary Wortley, deserves fame for persuading the world to adopt the practice. Napoleon, despite being at war with Britain, had his armies vaccinated, on the strength of Jenner’s advocacy, and awarded Jenner a medal, calling him ‘one of the greatest benefactors of mankind’.
Vaccination exemplifies a common feature of innovation: that use often precedes understanding.
So the source of the invention of chlorination, like that of vaccination, is enigmatic and confused. Only in retrospect can it be seen as a disruptive and successful innovation that saved millions of lives. It evolved rather slowly, probably from serendipitous beginnings in largely mistaken ideas.
The story of penicillin reinforces the lesson that even when a scientific discovery is made, by serendipitous good fortune, it takes a lot of practical work to turn it into a useful innovation.
Failure is only the opportunity to begin again more intelligently. HENRY FORD
The story of the internal-combustion engine displays the usual features of an innovation: a long and deep prehistory characterized by failure; a shorter period marked by an improvement in affordability characterized by simultaneous patenting and rivalries; and a subsequent story of evolutionary improvement by trial and error.
in the early years of computers, mobile phones and many other innovations, the inventors thought they were developing a luxury good for the upper-middle classes. It took a farmer’s son from Detroit to turn the car from a luxury invention into an everyman innovation: an affordable utility for ordinary people.
Innovation is not an individual phenomenon, but a collective, incremental and messy network phenomenon.
Pause in awe at what innovation does. For the entire history of humanity before the 1820s, nobody had travelled faster than a galloping horse, certainly not with a heavy cargo; yet in the 1820s suddenly, without an animal in sight, just a pile of minerals, a fire and a little water, hundreds of people and tons of stuff are flying along at breakneck speed. The simplest ingredients – which had always been there – can produce the most improbable outcome if combined in ingenious ways. Early in the following century, people are taking to the air, or piloting their own carriages along roads, once
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clergymen forbade their parishioners from eating potatoes in England as late as the early eighteenth century, for the magnificently stupid reason that they are not mentioned in the Bible.
In Ireland the potato fuelled a population explosion that soon threatened to be a Malthusian disaster.
Fritz Haber. An ambitious, prickly, restless genius, sensitive about his Jewish background and suspecting (rightly) that anti-Semitic discrimination was holding him back from the glittering prizes that were his due, but also fiercely nationalistic on behalf of imperial Germany, Haber too saw the fixing of nitrogen as a golden goal. It would effectively make ‘bread from air’ in the arresting phrase of Haber’s modern biographer, Thomas Hager.
This fifty-year story of how dwarfing genes were first found in Japan, cross-bred in Washington, adapted in Mexico and then introduced against fierce opposition in India and Pakistan is one of the most miraculous in the history of humankind. Thanks to Inazuka–Borlaug genetic varieties, and Haber–Bosch nitrogen fertilizer, India not only fed itself, proving the forecasts of worsening starvation wrong, but became an exporter.
Ernst Berliner was studying flour moths at the Research Institute for Cereal Processing in Berlin. A shipment of flour from a mill in Thuringia contained diseased caterpillars, and the disease quickly spread to the flour moths being bred in the laboratory. Berliner isolated the bacterium behind the infection and named it Bacillus thuringiensis. It turned out to be the same creature that had been killing the Japanese silkworms. Bt, as it came to be known, possessed an ability to kill the caterpillars of any moth or butterfly because of a gene for producing a crystallized protein that was lethal
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So the innovation path that led from the discovery of a bacterial disease in silkworms more than a century ago has led to dramatically reduced crop loss, pesticide use and environmental damage. Most crops are now also herbicide-tolerant so that they can be combined with effective weed control without the soil-damaging practice of ploughing. Some are also being engineered to be resistant to fungal disease or drought. Others are being engineered to fix their own nitrogen with the help of bacteria, greatly improving yields.
Innovation in food production has spared land and forest from the plough, the cow and the axe on a grand scale by increasing the productivity of the land we do farm. It turns out that this ‘land sparing’ has been much better for biodiversity than land sharing would have been – by which is meant growing crops at low yields in the hope that abundant wildlife lives in fields alongside crops.
the acreage of wild land and nature reserves is steadily increasing, while forest cover has stopped declining and in many places is now increasing, so that overall there has been a 7 per cent increase in tree cover since 1982. By the middle of the current century, the world will be feeding nine billion people from a smaller area of land than it fed three billion from in 1950.
When zero is added to a number or subtracted from a number, the number remains unchanged; and a number multiplied by zero becomes zero. BRAHMAGUPTA, the year 628
Considering how indispensable Indian numbers are to modern life, and how impossible it would be to live without them, this innovation was extraordinarily important, and it is bizarre how late it enters the story of Western civilization. The whole of the classical world and early-medieval Christendom got by with a system of counting that made multiplication virtually impossible, algebra unfathomable and accounting primitive.
The idea of standard containers, boxes of uniform size and shape pre-loaded at factories with goods and lifted on and off ships without being opened, was not new. Railways had been experimenting with standardized containers for decades, and trucks too.
The vast container trade across the oceans that today is vital to the world economy is his legacy. Today, some ships carry more than 20,000 20-foot containers each; they can be unloaded and reloaded in just three days. McLean is the father of modern trade, but invented nothing very novel, let alone high tech. If he had not made this revolution, somebody else would probably have done it. But he did it.
The lesson of wheeled baggage is that you often cannot innovate before the world is ready. And that when the world is ready, the idea will be already out there, waiting to be employed: in America, at least. Nothing like this happened in Communist Russia or Mao’s China.
The restaurant industry is addicted to innovation. It experiences rapid turnover as once-fashionable eating spots give way to new ones, with zero protection from government for those who prefer to resist innovation, zero subsidy for those who wish to innovate and zero overall strategy from experts. It is as close as you can get to a permissionless innovation system.
Innovation is a process of search and recombination of existing components’, a point also made by Joseph Schumpeter in the 1930s: ‘Innovation combines components in a new way’.
People with spare time can pick up people who need car rides. People with spare rooms can rent them out to people who need somewhere to stay on holiday. People with expertise can lend it to people who need it. People with things to sell find people looking to buy things. These activities were happening before the internet but are becoming much more lucrative and widespread as the world goes online. Not many people saw this coming, though it should have been obvious.
The sharing economy is a form of more from less, or growth by shrinkage – economic enrichment caused by using resources more frugally.
