Wednesday, June 10, 2009

Promises Kept - Why Innovation works

I read the recent article in Business Week - The Failed Promise of Innovation - with a measure of expectation and regret. Here's a magazine that has as one of its leading lights Bruce Nussbaum, who is constantly writing about innovation and hosting innovation panels and events, yet either honestly believes that innovation has "failed" to meet its promises or is simply waving the flag at the bull. Of course Nussbaum wrote that innovation was "dead" at the end of 2008.

The article which suggests that innovation has failed leads in with the following paragraph:

But there's growing evidence that the innovation shortfall of the past decade is not only real but may also have contributed to today's financial crisis. Think back to 1998, the early days of the dot-com bubble. At the time, the news was filled with reports of startling breakthroughs in science and medicine, from new cancer treatments and gene therapies that promised to cure intractable diseases to high-speed satellite Internet, cars powered by fuel cells, micromachines on chips, and even cloning. These technologies seemed to be commercializing at "Internet speed," creating companies and drawing in enormous investments from profit-seeking venture capitalists—and ordinarily cautious corporate giants. Federal Reserve Chairman Alan Greenspan summed it up in a 2000 speech: "We appear to be in the midst of a period of rapid innovation that is bringing with it substantial and lasting benefits to our economy."


If you read the above carefully you'll see that innovation has failed in the eyes of this author because, for all intents and purposes, we don't have the jet backpack that we were promised. If we were promised a gadget or gizmo by the folks in Disney's Tomorrowland that we don't yet have, well, innovation has failed.

Perhaps a more enlightened and reasonable argument is that innovation happened, just not where we expected it. A tremendous amount of innovation happened in financial services - some of it bad, yes, but some of it will prove out to be great. Let's look at Prosper or other micro-lending sites for example. A tremendous amount of innovation happened in personal communications - the iPhone and other cell phones are merging the telephonic needs with computing needs and other needs.

Let's look back at that quote again and consider it from a different angle. Why don't we have cars that run on fuel cells? Well, we can, it's just that the conditions haven't matured for fuel cells to be the dominant mode of propulsion. Gasoline and diesel engines, along with hybrids are still more efficient than fuel cells. An innovation or great idea holds promise, but it must succeed in the marketplace. Fuel cells hold great hope, and will become a significant source of propulsion when gasoline remains above four dollars a gallon or when Congress decides to mandate their use. Does this mean that innovation "failed"? No, just that some of these concepts identified above were talked about years ahead of their time. Micromachines and MEMS provide another great example.

Many projectors that we use every day or televisions we have at home are powered by a MEMs device - the Digital Light Processor from Texas Instruments. There are MEMs devices out in the world today, we are just beginning to see them enter the market. While the idea was great, developing the manufacturing capability to produce them took - wait for it - innovation in manufacturing techniques. Just because we can envision a MEMs device doesn't mean that we had the capability to produce them with very low error rates at volume.

Innovation isn't dead, and it hasn't failed to meet unreasonable expectations or promises. Instead of creating these false peaks and unrealistic expectations about innovation, perhaps we should simply create the environment where innovation can thrive and get out of the way. Some of the biggest impediments to innovation aren't technological or even monetary, they are cultural and bureaucratic. The next article written about this will certainly suggest that since innovation has "failed" in the private sector, perhaps the Federal Government should create specific programs to "manage" and fund innovation in specific segments, which will lead us directly to where Japan was in the 1980s with MITI, a failed corporatist policy.

Innovation is supposed to fail, frequently and with consequences. Taking risks means that some of the ideas HAVE to fail for others to succeed. Edison didn't create the best, most effective lightbulb on his first try - he failed repeatedly and what we see today is only the success based on a tremendous number of attempts.

If we look carefully, innovation has happened all around us, and we'd be foolish to suggest that innovation has "failed". If it didn't happen in the markets we'd hoped, or in the timeframes we'd hoped, then perhaps the market demand guided innovation to happen in the places where consumers demanded it most.
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posted by Jeffrey Phillips at 5:14 AM

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