Building innovation cultures and their origins
And how this all changes with distributed networks and intelligence
Innovation is always the child of freedom.
It is about the exchange of ideas and collective intelligence.
All ideas are rooted in one another. And so innovation is evolutionary by nature, and not reliant on singular moments of invention. Instead, it always relies on iteration.
We often talk about innovation as the route to systemic disruption. Most of us, however, only see the breakthrough. The moment when any given technology or company shatters and disrupts any given market. But what we don’t see is the sweat.
“Genius is 1 percent inspiration and 99 percent perspiration.” Edison
It’s a cliche, but true.
The fundamental error that is commonly made is that the invention is innovation. No. The invention is the prototype; it is an idea. Innovation is the proliferation of that idea in any given market, which then results in a systemic change to that market.
Take the iPhone. Each of its core technologies - sensors, solid-state memory, GPS, internet, cellular communications, microchips, and the touchscreen - came from research efforts that relied on funding support from the U.S. government and military. So Pickerty and Mazzucato argue, the innovation was not Apple’s but the states’. Now robbed of its dividend.
But this is to misunderstand the nature of innovation. These technologies changed the world in spite of the state, not because of it. It required Steve Jobs and all the folks at Apple, to figure out how to package these inventions and technologies in such a way that they could be accessible to the consumer, and in so doing radically changing the market and our lives.
Remember Norman Borlaug
We can demonstrate this point another way by telling the story of Norman Borlaug, one of the heroes of the 20th century.
Norman Borlaug developed short-strawed, high-yield varieties of dwarf wheat. Effectively kicking off the green revolution in the subcontinent, and turning India from a country on the edge of famine into a net exporter.
Where did he get his idea from?
He picked it up in a bar in Buenos Aires from Burton Bayles. Who got it in turn from Orville Vogel, who got it from Cecil Salmon, who in turn got it from Inazuka in Japan, and so on.
He was building on the shoulders of giants.
From there, it took his own remarkable research and experimentation, followed by massive collaboration in the Indian market with the state, farmers, and geneticists to succeed in solving the problem.
The result of this innovation is that today, we are able to sustain populations way beyond the projections of 50 years ago, feeding nearly seven billion people, while farming only 38% of the land surface of the planet. Had we wanted to feed that many people by using the techniques, varieties, and fertilizers of the 1950s, 84% of our land surface would have had to be cultivated.
Ideas without that exchange and collaboration cannot evolve into a state capable of success. Without adoption at scale, the idea cannot proliferate. And without proliferation, you innovate nothing.
Collaboration and exchange, or collective intelligence
We are all nodes in a network.
Humanity's key to achievement has not been individual intelligence, but the phenomenon of networking, allowing for the division of labour through trade and specialisation. The correlation between advances in technology and connected population size is one we can measure, as the nodes in the human neural network are drawn together.
We can track the concentration of innovation in key states or cities over time, from California today to Victorian Britain, Renaissance Florence, and Ancient Greece. This happens, as Matt Ridley demonstrates, not just because each geography shared the “fundamental elements of freedom and incentive”, but because of the contained ecosystem in which, "ideas can have sex".
Today, however, I would argue these networks no longer need to be so centralised, but can instead be distributed.
In the 20th and 21st centuries, our collective intelligence has grown exponentially with the arrival of high-speed transportation, telecommunications, and the internet. The proliferation and optimisation of this technology, increasing our ability to exchange information, have created more distributed networks, reducing to some extent the need for people to cluster.
With the exception of things such as manufacturing, for example, which requires physical infrastructure, almost everything else can be done remotely and across vast distances.
Exchange can happen anywhere. No longer is access or opportunity so constrained by where we live.
But if the historical trend has changed, and for the first time, the exchange of ideas can effectively happen anywhere - a distributed collective intelligence - does this change the way we should be incentivising or encouraging innovation? Or even how we think about building and scaling new ventures.
Innovation in distributed networks and teams
The work of physicist Geoffrey West recently produced a remarkable discovery; cities scale according to a predictable mathematical formula called a power law. As their populations grow, their infrastructure needs decline, and social drivers increase.
In other words, as a result of greater collective intelligence, we see a superlinear growth in social drivers (scientific discovery, artistic creation, books published, startups founded, and so on).
Today, cities still dominate our landscapes and the way the majority of us live. 2010 was the first year in human history that more people lived in cities than in rural communities. By 2020, this number had risen to over fifty-six percent. But more and more, we consume, live, and exchange digitally; cryptocurrency, social media, remote work tools, e-commerce, and even our sex lives. The need for physical infrastructure, the city, to facilitate this on mass, is dissipating. And so we become less reliant on the centralised model of living.
This is not to say that cities will vanish or cease to serve a purpose. Human beings are social animals. We crave convenience. Are stimulated by the crowd.
But if we are no longer limited by the need for physical infrastructure or proximity to others, our ability to be innovative is massively enhanced. The power law of scale becomes less restrained, less limited. Our networks may be distributed, but as a result, are larger and more powerful. The shackles are off, and exponential growth in the “superliner” is a very real possible outcome.
The pandemic has now further accelerated this process. Increased remote working, opening up new talent pools for employers. Flexibility on where you choose to live, accelerating migration away from uncompetitive states like California (with high pollution, cost of living, and tax), to Texas, Colorado, or Florida. Fragmenting supply chains in the hunt for greater resilience (if covid demonstrated only thing it is that single points of production and liner supply chains do not respond well to global crises), spreading population density even further.
The way we consume, educate, travel, trade; all change, even if only by a fraction. The effect will be to distribute population away from single superclusters but without the decline in innovation that would have resulted in the past.
Building innovation cultures today, a checklist for founders
What does this mean on a practical level when building a new venture …
To start with, building strong cultures in remotely distributed teams is difficult and, more often than not, gets messy. The jury is definitely still out.
However, whichever way you choose to function as a team, there are certain things you can do to ensure that innovation is one of the cultural pillars you build on.
Avoid the path of least resistance - Human nature is to try to solve the easiest problem first. Do not do this! Tackle your biggest challenges first. If it is not solved, you will have learned faster and only accelerated your internal ideation process.
Incentivise good failure - We are programmed to seek success, and typical incentive structures reinforce this. This will often result in teams wasting resources and time in an effort to validate any chosen strategy instead of pivoting and changing tack.
10x over 10% mindset - Rethink the quantity over quality approach. Instead of viewing everything as a nail, try to understand what the perfect nail will look like in the future and determine what components are currently lacking to produce it.
Allow for chance - Creativity can only stem from rigorous learning and exchange within a team. Cultures that encourage knowledge-sharing, open feedback loops internally and externally, will always be more innovative.
In the day-to-day, founders at the earlier stages of ideation will often make the mistake of tethering themselves to the eureka moment, that moment of invention. I advise avoiding this. Instead, always be iterating. Allow the idea to evolve and change, and you will be more likely to succeed in bringing your real solution to market.
For any founder in those early ideation phases, searching for market fit, “fail fast” remains the best approach. To do this well, focus on the problem, not the solution. Look for the highest hurdle to clear when building anything, the kill factor. Be rigorous in your research and testing. But allow for weird creativity and serendipitous discovery. And above all …
Always be iterating.
📖 Reading …
"How Innovation Works" Matt Ridley
"Knowledge and Power: The Information Theory of Capitalism" George Gilder
"The Moonshot Factory Operating Manual" Astro Teller
"Scale: The Universal Laws of Life and Death in Companies" Geoffrey West