Innovation works very well indeed

Matt Ridley – former science editor of The Economist and prolific popular science writer – has tackled a slippery subject in his book How Innovation Works’. He succeeds in painting a vibrant and at times counter intuitive picture of this process. One that policy makers and public alike can usefully ponder.

A major contribution is demystification.  He trashes the model of a tortured genius locked in the lab. Innovation comes from lots of people, competing or in concert, working by trial and error, sharing or stealing knowledge. It occurs when the conditions are right, because it bubbles out of the accumulation and testing of knowledge (hence the prevalence of simultaneous invention from calculus to light bulbs). ‘Ideas having sex’ is his metaphor of choice. And this tends to happen where innovators can gather and experiment free of restrictions.   

He makes more valuable points exposing popular misconceptions about innovation.

First, he shows the extent of systematic error in trying to predict innovation and its impact.  An error repeated again and again is to over-hype benefits in the early stages (eg, the first dotcom bubble or railways) and to underestimate the long-term flow (eg, online shopping). It really is trial and error accumulating knowledge over time.

Secondly, he suggests that most of us (including policy makers) have a pretty distorted view of what the benefits have been (and what the risks are).  And he does it so well with the killer statement:

“By the middle of the current century, the world will be feeding nine billion people from a smaller area of land that it fed three billion from in 1950.” 

That ought to stop every thinking person in their tracks and make one itch to probe weak and fashionable assumptions about environmental degradation.

Thirdly, he teases out by vivid example the public preoccupation with very limited risks (for example, genetic modification, drug testing or nuclear power) and the role played by environmental and safety campaigners in feeding and channeling these impulses.

He makes a compelling case that the risks are frequently overstated, the recoverability from error understated, and the long-term benefits of the process misunderstood.  He slates the European Union for its introduction of the ‘precautionary principle’ into its 2008 constitution.

The implication is that innovation will flourish where it is allowed to.  Second movers like Europe will only be able to pick and choose from other people’s results under the careful direction of their bureaucrats.  This difference in approach may be a profound test of economic models.

His book also raises some pretty important questions for small highly-specialised economies like NZ.  Its long-term productivity will be determined by how well its people use their particular endowments in response to both internal and external innovation.  

He argues that biotechnology is one of those areas that has promised much and looks like it might soon be delivering a lot more.  This suggests the need for NZ to be at the cutting edge of innovation in land use and grassland farming, and to permit the rapid adoption of the world’s innovations in the chain of support and service industries (from cheesemaking to accountancy).

Ridley’s thesis can be a little frightening when you realise that there is no responsible adult in charge and innovation cannot be best managed by consensual committees, protocols and procedures.  But it is immensely inspiring if one perceives innovation as a universal phenomenon, whenever driven people with a thirst for knowledge are allowed to gather and do their thing.

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