How Innovation Works (Matt Ridley)
How Innovation Works is a curious book. Partly a synthesis of historical tales of innovation, and partly an ideologically-driven exploration of innovation's causes, it manages to be an enjoyable read without adding anything very new to the subject at hand.
Somewhat strangely laid out, the book consists initially of short tales of a great many important innovations in computing, medicine, health, transport, energy, food and more. This is an entertaining read, with dozens of anecdotes you might expect at a Rory Sutherland TED Talk, but treads a well travelled path for anyone with a passing interest in the history of ideas or invention. What then follows, is a summary of the causes (or at least prerequisites) of innovation, and some of its key characteristics. Ridley is an optimistic, free-market libertarian, and his biases can be detected in his assessment; that being said they are largely correct and well-evidenced in much of the Design Thinking literature. That there isn't a new theory or original schema regarding innovation is a disappointment, but perhaps it is more a symptom of the elusiveness of the topic than a failing of the book.
Innovation is, according to Ridley, distinct from invention. It is one thing to have an idea, but the work required to make it a viable product able to supplant it's predecessor is often the crucial step - and one that historically receives less credit than is deserved. As Thomas Edison said, invention is 1% inspiration, 99% perspiration. Nor is innovation necessarily a technological advance - it may be that an innovation allows us to do the same thing more cheaply, rather than something new. The sharing economy is no doubt innovative, but is simply a way to extract more value from existing resources, be it homes, cars or office space. A more prosaic example given by Paul Romer is the coffee cup lid - making all sizes of cup able to use the same sized lid is one of thousands of minor innovations capitalism creates to make an economy more efficient.
Both examples show how we can create and consume more with fewer total resources, as pointed out by Andrew Mcafee in his book More From Less, cited here by Ridley. This seeming alchemy, the main driver of growth in any economy, was noticed by Adam Smith in The Wealth Of Nations. The two most famous passages from that book were the description of the pin factory, and the metaphor of the invisible hand. Whilst most economists concentrated on the allocative efficiency of 'the invisible hand' of the market, the pin factory, in which increased specialisation led to ever increasing returns to capital, is the more important lesson for growth. From artificial light to fracking, innovation improves our wellbeing by making it cheaper for humans to do more using fewer resources or less time.
Another key insight is that innovation is a gradual, piecemeal process; that history's eureka moments are mostly the result of myth-making, and of our desire for hero worship and consequent customs like the Nobel Prize. When we ask the question 'who invented the computer', there is no intelligible answer. Computers progressed over a period of decades in different parts of the world, with numerous firms, governments and individuals making important contributions - innovation is very much a team sport. Ridley takes economist Mariana Mazzucato to task for her insistence of the importance of government's role in innovation in this respect. If innovation was at least as prevalent in the 19th century when there was no government R&D as it was in 20th century when it was he asks, how can government be a prerequisite? Ridley dismantles Mazzucato's citing of various government-funded technologies contributing to the iPhone, with the compelling demonstration of alltechnology having precursors. A beaver may look up at the Hoover Dam and claim it was based on his idea, but there is a long journey involved in which many actors (including sometimes government) deserve credit.
That innovation is often serendipitous and unintentional is, again not breaking any new ground. Most people know the story of Alexander Fleming's accidental discovery of Penicillin, and countless other examples (Viagra, Instagram, Teflon, the Post-It Note). What is interesting is that it is also, according to Ridley, inexorable. This is evidenced by the fact that so many inventions happened simultaneously and independently in different parts of the world by different people, “six different people invented or discovered the thermometer, five the electric telegraph, four decimal fractions, three the hypodermic needle, two natural selection.”. If something new is an unexpected surprise, how can it so often 'emerge' from several unconnected sources at almost exactly the same time? The answer may lie in the idea that so much innovation is recombinant, that is, a product of the merging of two existing technologies or ideas. The hover board is an idea in popular culture that is yet to exist, but as and when the technology is sufficiently advanced it will no doubt emerge. This underpins the primacy of viability over ideation. So innovations happen when the technology is ready to make something viable, not when someone thinks of it.
Another aspect of innovation identified is the need for trial and error. The Wright Brothers were unbelievably prolific in prototyping of every aspect of their flying machines, and this process is an essential ingredient of new innovation coming to fruition. The reason we don't have widespread, zero emission, perfectly safe nuclear power is, according to Ridley the near impossibility of trial and error in that technology. The cost of error is too great. Throughout the book Ridley rails against the precautionary principle, and so it is not clear whether he is lamenting this fact about nuclear or merely illustrating it; nonetheless he takes aim at governmental bureaucracy as an impediment to progress.
The fact that innovation often takes place in a particular time and place is undeniable, and of course this can be attributed to the fertile exchange of ideas. But it can also be explained in the type of regime under which innovators operate, from the correct amount of intellectual property protection afforded (Ridley thinks less is more), to the active resistance to change by the status quo. 'Fragmented governance' is how Ridley describes the best regimes for promoting innovation - progress stagnated in places as diverse as Egyptian, British, Russian, Ottoman, Ming, Inca, Han and Roman Empires, when centralisation meant resources were diverted to wars, laws or corruption. In the city states of Renaissance Italy and Ancient Greece, and the local governance of Silicone Valley argues Ridley, the authorities hands-off approach allowed innovation to flourish. It is here that it feels like Ridley may have missed a trick in his argument. The list of ways in which innovation takes place is mostly demonstrable and established elsewhere, but it also fits snuggly into his free-markets-as-evolution worldview. Where I feel he could have taken this further is using Karl Popper's arguments from The Open Society and its Enemies. Popper's genius in that book is in demonstrating not that capitalism is superior to communism despite it's inefficiencies of resource allocation (as was widely held in the postwar west), but that economic growth will always be superior in free societies than planned ones, because ideas can be falsified. This insight may seem obvious now, but was a supremely powerful one during the cold war, and it seems to me to embody much of the innovation thinking here. Yet Popperian falsification is entirely absent from How Innovation Works.
Matt Ridley is correct when he says that “innovation is the most important fact about the modern world, but one of the least well understood". Whilst his book is well written and entertaining, it feels like a book by a man who is being paid to write a book, rather than a forceful exposition of any original ideas. If, as I suspect, this book is no longer in print 20 years from now, our understanding of innovation will be none the worse for it.