Innovation Matters
The January 12th issue of The Economist presented a case for the death of innovation, writing that despite all of the new gadgets that appear every day, truly ground-breaking new inventions don’t seem to be showing up like they used to. To The Economist this is troubling because of its implications for future productivity and growth; but to an IT manager, it’s a pretty alarming suggestion in itself. If the technology used by business only undergoes incremental improvements then it’s a known quantity that just needs to be nudged along, like the HR department’s operation. We prefer to believe that our role is to be far-seeing, to react to change in creative ways, prepared to turn the company’s strategy around when a disruptive innovation appears. Without a landscape in which the ground may shake at any moment, calling for anticipatory insight and outside-the-box reaction, the management of IT would be a much less interesting undertaking. If all we’re doing is polishing a commodity, the argument for a seat amongst the C-suite knights is harder to make. Without innovation, IT decisions don’t have a fundamental impact on the direction of any organization but are merely keeping the lights on. If you believe, as I do, that it’s possible to derive enormous strategic advantages by making informed and insightful choices around the selection and deployment of technology, then something doesn’t smell right about The Economist’s remonstration.
In fact, there’s something familiar about it too. Ten years ago, Nicholas Carr wrote in the Harvard Business Review that IT had become a commodity, of no strategic importance. His now notorious article, “IT Doesn’t Matter” (and subsequent book “Does IT Matter?”), compared IT to other revolutionary technologies like railroads and electrification. He argued by analogy that IT no longer provides any competitive advantage since it’s generally available to all. As long as you and your competitors are reasonably efficient, one company can’t use technology to gain on others. Any failure to embrace a technological advance is a management problem, not strategic differentiation.
The problem with this view is that it treats IT as a single technology on one evolutionary path. In reality, IT is a myriad of technologies, with each advance in hardware, software, protocols and standards on its own S-curve taking it from cutting edge to commodity on its own path and pace. Different organizations are going to be differently placed to take advantage of new innovations owing to internal expertise, product characteristics, development cycles, resources and a host of other factors. The choices that IT managers make to ensure these factors favor their own organization and are not shared with competitors is the essence of strategy. Carr’s argument might apply to a mature technology like internet connectivity; but decisions regarding the adoption of newer technology like internet cloud services will remain strategically critical to the enterprise.
In the same way, The Economist’s article oversimplifies the nature of innovation. The argument examines the problem in three ways: technology’s contribution to economic growth, measures of the pace of new invention, and subjective impressions about the rate of change. In the first instance it’s apparent that there are too many factors in the economy to be able to ascribe any particular invention or set of innovations to some percentage increase in GDP. The mechanics of any connection are opaque, with gains accruing long after the instigating invention, and possibly lasting for a very long time afterwards. It’s also the least important consideration in my view. Certainly as managers we ought to worry about the value added by any new advance; but let’s accept that any innovation worth discussing is going to have value somewhere at some point. Then we can stop worrying about the macro-economic picture and just consider the possibility that the frequency of innovation we have come to assume will be a factor in our careers, and perhaps part of why we’ve chosen to work in IT in the first place, is actually heading into the doldrums. And here I think there’s even less to worry about.
Just as Carr blithely lumped each new advance in hardware, software, networking and so on into one collective: “IT”, there is a tendency to look at research and invention in one field and taking it as a proxy for the pace of innovation across the board. It’s tempting to make this approximation because innovation isn’t a thing that can be measured across domains on a single scale. Revolutionary advances create their own metrics. Can you compare leaps in microprocessor speeds to the numbers of new pharmaceuticals? Discoveries in sub-atomic particle physics to those in proteomics? Any measurement of innovation is going to suffer from a selection bias: the kind of innovations for which the metric was devised will become less frequent as the domain for which the metric was designed matures. As a simple illustration, consider the metric of technology IPOs. Some consider this a bellwhether for the health of the IT industry; but will that be as meaningful now that so many ideas are being developed with Kickstarter?
Another obvious metric would be patent applications, were it not widely recognized that the patent approval process has broken down, especially in the IT domain. The problem is so bad that there is a whole business model, the patent troll, aimed at subverting the patent system. This does at least illustrate how a system designed for one environment and purpose, i.e. to serve a manufacturing economy, will fail when the environment is overtaken by dramatic change and the systems are unable to adapt.
Alternatively, consider the quantity of academic research as an indicator of the pace of innovation. It would be reasonable to expect increases in the number of articles published in scientific journals to correlate to the number of new ideas entering the world. Granted the picture is bound to be more nuanced than that, with growth in some subject areas resulting in more innovation than in others. New fields arrive with an explosion of new ideas which then taper off; yet the overall rate of growth in published research is constant overall, implying that there are new fields of study opening up all the time. This alone suggests that innovation continues apace, whether it is recognized or finds practical application or not. On the other hand, the annual increase in academic publishing tracks closely the increase in funding and researchers in a field, so it’s hard to say which is chicken and which is egg. People will write articles on their work whether or not it represents significant innovation. Also, the volume of research continues to grow even after the initial burst of revolutionary work that forms the foundation of a new field. This suggests that the relationship between academic articles and innovation may not be tight.
There may be a fundamental problem with the idea of measuring the pace of innovation in the first place. If you can compare the new to the old, it’s not truly innovative. All one can accurately track are the incremental refinements that are meaningful within the existing paradigm. The ground-breaking innovations that The Economist is concerned about are by definition impossible to recognize upon arrival. Only with hindsight can we say something was a game changer. That’s why some of the pundits are convinced innovation is diminishing: humans grow used to viewing and analyzing the world by looking at it in certain ways; we don’t notice the changes taking place outside of our field of vision unless our noses are rubbed in them. Anyone who has spent more than two or three decades conscious will have had the experience of future shock. Most of us have looked at a friend or colleague, shaken our heads and said “Remember how inefficient/incomplete/unreliable/slow this was when we did it ten years ago?” It takes time to realize how much has changed; but that doesn’t mean there hasn’t been much going on recently. If you don’t see the ground shifting around you, fear not, it is happening. You’re just too close to see it. Wait until the new maps are published in a couple of years, then you’ll be amazed by what you lived through.
It’s also possible to become a little blasé as the new wonders mount up. Bullet trains, Segways, electric sports cars are met with a yawn and “Where’s my flying car?” Innovation must meet a pretty high bar to raise an eyebrow these days. It’s not that there’s no innovation, it’s just that our expectations are so high. But keep an eye out all the same so you don’t miss it; sooner or later the game changer will hit your industry and there will be no waving your copy of The Economist, and crying “they said innovation was over!”
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