Reed's Ruminations: A Blog by Dan Reed

Innovation Friction

Friction, it's a topic I remember well from basic physics, where the inclined plane, mechanical advantage, and static and dynamic friction were aily academic exercises of differential and integral calculus. (There were far more interesting than those interminable train problems, the ones we all remember of the following form: "One train leaves Chicago at 2pm, traveling east at 30 MPH. Another train leaves Cleveland at 3:30pm, traveling west at 40 MPH. Where must at least one train shift to another track to avoid a collision?") Personally, my interests always ran much more to electromagnetism, fields and waves. I suppose that is why I am in computer science rather than civil engineering.

However, this is not a treatise on lubricants, magnetic fields and the right hand rule, but rather a few thoughts on how the coefficient of friction affects innovation. What enables some groups, companies and regions and even countries to be innovative over long periods, whereas others struggle to adapt to changing technologies, economic circumstances and social expectations?

Success and Cultural Hysteresis

Paradoxically, success often limits innovation. If one is successful with a particular approach, product or process, whether it be making widgets or telling stories, that very success reinforces the value of the current approach. After all, one is successful, and conventional wisdom would suggest that "if it ain't broke, don't fix it." Yet that very resistance to change inhibits rapid response to changing circumstances. (You knew I would slip an E&M concept in there somewhere.) It is the classic innovator's dilemma.

What I find most interesting is that outsiders tend to opine in retrospect that the group should have seen change coming, much like one of those colliding trains, and responded with alacrity. Of course, the reality is that there usually were people in the organization who saw discontinuity ahead and pushed for change. After all, the computing industry is filled with former employees of Digital Equipment Corporation, the original Silicon Graphics, SUN Microsystems and other highflying technology companies who were advocates of change, prophets unheeded in their own company.

Countries, Like Companies

Technology change, despite its many challenges, is relatively easy. Culture change is far more difficult, for people and organizations cling to the familiar as if it were a life raft adrift in an endless sea. The lesson is, as Andy Grove famously opined, to be always paranoid, questioning one's assumptions and practices, and watching alternative technologies and business models very carefully. Even with diligence and relentless execution, exigencies can still disrupt.

Although I am neither an economist nor a cultural historian, I suspect similar rules apply to countries and other large economic blocks. There was a time in the 15^th and 16^th centuries, the Age of Discovery, when Portugal and Spain were world powers. There was also a period in the 19^th century when the sun never set on the British Empire. More recently, the political, cultural and economic hegemony of the United States defined the American Century.

In no way am I suggesting that the sun is now setting on American innovation, far from it. However, continued success is not a birthright; it is a consequence of environment, opportunity and concerted and sustained action. In these difficult economic times, it is incumbent upon all of us realize that continued success accrues to those who are prepared and willing to seize opportunities and adapt to changing circumstances, even when – especially when – change is difficult.

Innovation is the lubricant that reduces economic friction and illuminates the future with coherent light.

Globally Interconnected, Globally Worried

I spent my childhood in a small town, where the human population (825) was substantially outnumbered by the wildlife. It was a place where time seemed to move slowly and events from the outside world percolated slowly into the local environment and rarely affected us immediately. The single individual who filled the role of reporter, editor, circulation manager, printer and advertizing executive of the local newspaper struggled each week to fill its pages with "news." After all, there were only so many deaths, marriages and births to report.

The slowmoving world of my youth has been eclipsed by instant communication, where news flows across the planet in milliseconds, from farflung sources to a globally distributed audience. It has all been made possible by the explosive growth of inexpensive computing systems, mobile communications, the worldwide fiber network, and the rise of cloud services and social networks. Today, there are few places on the planet where one can be truly incommunicado. (See The World Is Small.)

In a world of global interconnectedness, we are united not only by ubiquitous and nearly instantaneous communications but also by coupled economic systems. The European sovereign debt crisis , pressure on the Euro, the fractious debate over raising the United States' debt limit and the interdependence economies and global trade mean that we truly are residents of Marshall McLuhan's global village.

Although the free flow of information is a wonderous thing, the concomitant decline in social and economic hysteresis now means that single events can have global effects on a frighteningly small timescale. Sometimes this can be humorous (e.g., the latest news on an entertainer's social antics), other times it isnewsworthy (e.g., a world sporting event), and still other times, it is profound (e.g., a social or government revolution).

The rapid, worldwide response to news of economic uncertainty has been both newsworthy and worrisome. It has affected European, U.S. and Asian financial markets, with fear and uncertainty in each driving response in the others. Without doubt, it is an exercise in global crowd psychology and behavorial economics that has implications for individuals, families and their future.

In a world where information traveled by sailing ship or steamship, our economic markets were much less tightly coupled. Consequently, there was time for more reflection and deliberation, even if the global markets may not have been efficient in a market sense. I am not suggesting we return to that past. We cannot, nor would we wish to do so.

Like all complex systems, our global economic and social environment operates on multiple time scales. Some of these are amenable to human reflection, others are increasingly driven by real-time communication. It is important that we remain cognizant of the power and value of timely reflection and discussion and of the personal effects of our market actions. (See Disruptive Innovation: Changing Lives.)