Friday, May 30, 2008

An interesting Thread on Innovation

Robin Hanson has initiated an interesting discussion thread with this posting on the Overcoming Bias blog.

One of the interesting issues with innovation in organizations is whether invention policy is internalized, externalized, or mixed. Of course, an invention is something which is new globally, while an innovation in an organization is simply something new within that organization. Obviously, most innovations in organizations are not new inventions, but rather adoptions of things invented elsewhere.

Progress would seem to depend on both invention and innovation. Disruptive inventions, such as the Internet or the telephone, are especially visible and important. Incremental innovations which improve productivity little by little over the long run are also very important for development.

I guess that "long wave" theory suggests that there are times when lots of inventions occur, and others when inventions are less frequent. Thus the period when inventors were exploiting the potential of steam power and the American system of manuracturing, that when inventors were exploiting the opportunities provided by electification, and that when inventors were exploiting the potential of digital electronics and transistors seem to be periods of high frequency of inventions.

The creation of the industrial research laboratory in the early part of the 20th century lead, I believe, to a trend toward internalization of invention in large organizations capable of commercializing those inventions..

I have read that in the 1940's, during the epoch of powerful radio networks, the recording industry centralized and internalized the selection of new artists and content. With the creation of the television industry and the development of local radio stations playing music for niche markets, there was a need for more innovation and a process by which the recording content was diversified by means of the development of new innovators outside the big record companies.

These days in areas like biotechnology, we see large firms with the ability to effectively market innovative products buying up the successful innovating firms from a broad spectrum of technology start ups.

We also see the United States outsourcing innovation in a couple of senses. U.S. firms are starting research labs in Asia, and adopting innovations created by foreign subsidiaries and suppliers. Alternatively, the United States provides a welcoming environment for technological entrepreneurs from abroad, as the success of Asian-born innovators in Silicon Valley illustrates.

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