Is innovation dying? If yes, what is killing it?
This is a bit of follow up to my blog post last week. Peter Thiel, well-known tech entrepreneur, has for a while argued that technology innovation has severely decelerated (with the exception of the computer business).
His ideas are presented and somewhat debated in these three articles from earlier this year, among others:
- Other Than In Computers, Civilization Basically Stopped Progressing In The 1960s
- A Conversation with Peter Thiel
- Debating the Future of Technology: Peter Thiel and George Gilder
He cites the rapid slowing of the last 200 years of progress in the US and Europe, noting that while existing technology is spreading elsewhere through globalization, new technology is not leaping forward in the US. He feels we’ve forgotten how to innovate.
Of course, the debate with Gilder makes clear that trying to measure how much progress and innovation has occurred is a bit like the old line: how do you measure the length of a string? (Depending upon the string you pull, it could be any length.)
Thiel is a libertarian and identifies government regulation as the proximate cause of this deceleration. No doubt, bad regulation exists and bad regulations can be a heavy hand on the wheels of progress.
But his perspective (as summarized in the first article) is broader than that:
speaking of “developed” versus “developing nations” is implicitly bearish about technology because it implies some convergence to the “developed” status quo. As a society, we seem to believe in a sort of technological end of history, almost by default.
This has bothered me too, but it points to a different cause than regulation and a set of solutions that involve the government.
As long as we measure our economy in industrial terms (GDP) and give short shrift to the value of post-industrial, often intangible, goods and services, we will persist in this sense of stalled progress.
If the problem is that we are telling ourselves that leap-forward innovation is at an end, then we need leaders who can help develop and propagate a new vision of the future – and who can then help change the culture that has created the problem. This is true leadership, not the 5-point policy programs that result in a press release and not much else.
The US government’s reduction in investment in basic research has also been a negative factor – particularly when it shies away from underwriting many grants for ideas that have no immediately obvious value, which is exactly the kind of thing that leads to things of obvious value ten years later. (The Fortune 500 corporations are also guilty of this shortsightedness.)
Another culprit is the “shareholder is always right” mantra, which has become the American legal standard over the last couple of decades. This fiduciary standard has discouraged CEOs from making big innovation bets with long-term returns, since most of their shareholders have adopted a short-term outlook. For a good assessment of this and other issues, see Lynn Stout’s article, Challenging the Long-Held Belief in ‘Shareholder Value’ where she describes the negative consequences when companies are run with the primary decision making criteria being maximizing return to shareholders.
This isn’t the whole story, but it points to a fundamental weakness in the way we think that is slowing us down. What will it take to change that? If you have ideas, let us know.
© 2012 Norman Jacknis August 8, 2012