Monday, April 19, 2010

How Sharing Increases Innovation (part 2)

I believe there is a strong tie between sharing and the ability to innovate. This post will walk you through the logic.

Innovation is built on these things:
1. The existence of problems and the desire to solve them
2. The ability to apply new ways of thinking to these problems
3. The cost of the inputs needed to solve the problem (skills, data, resources, devices, networks)
4. The ability to iterate, adapt, evolve and scale.

1. PROBLEMS: Frankly, there is no dirth of problems and some kinds of people really like to think about how to solve them if they have the time. So problem-solving people who have at least some time on their hands try to problem-solve and people who don’t have time, can’t. [Why are there so many fewer historical examples of women doing remarkable innovative things? Well, duh…]

The ability to apply NEW ways of thinking, with an emphasis on the word “new.” Problems that are kept hidden in discipline silos don’t get any new thinking applied to them. See all the great work done by Innocentive, that gets problems out of silos and opens them up to a diverse group of solvers.

3. THE COST OF INPUTS. Here is where I want to linger for a bit. There is a whole world of inputs that could come at much lower cost – wherever there is excess capacity, an underused resource that has already been paid for and which therefore has lots more value locked up in it! If only we could get people, companies, governments to “share” more – to make sure that their unused unneeded excess capacity was made available to others to make use of.

Exactly when are we NOT willing to share?
• When we believe that abundance only comes from hoarding and we perceive that everything is rivalrous (see previous post).
• When we have just witnessed a communal sharing debacle (Chinese cultural revolution) or when goods really are rivalrous.
• When things really are scarce, there is just simply not enough to go around and so we hoard to protect our closest family.
• When things are abundant, why bother?

If we look at these reasons for not sharing excess capacity (and thus facilitating a whole lot more innovation), I see lots of room for improvement. We have to stop our rapid and prejudiced assumption that sharing reduces our own personal abundance. There are lots and lots of goods that are non-rivalrous (the new push towards open data for example), and many once-rivalrous goods that can now be shared (cars) thanks to technology. We’ve also come to appreciate that anything with a network effect actually has a much higher value the more it is shared (carsharing, ridesharing, social networks, mesh networks, the internet).

Recently I’ve been doing a lot of writing and talking on this topic of increasing openness.

4. EXPERIMENTATION & EVOLUTION. The ability to experiment, iterate, adapt and evolve. In some cases, even if we deliver up items 1-3, there are some sectors in which we still don’t get much innovation because of institutional or government barriers. The status quo has developed a whole set of rules and regulations to protect existing ways of doing things, as well as protect the health and safety of people. I would put the automotive, housing, and a good piece of the telecommunications sectors into this category.

Sometimes the rationale is good and sometimes it isn’t. In any event, if we are going to see successful innovation, we have to let small scale (some volume) experiments flourish without many of the safety and regulatory requirements we place on large volume sellers of goods and services. Bureaucratic and even well-meaning red tape just make experimentation impossible.

A quote I heard from Tom Watson, founder of IBM: “if you want to improve your success rate, double your failure rate.” And a far less elegant quote from Robin Chase: “if you want to improve your innovation rate, open up more data, devices, networks, platforms, sources, and stuff.”

Read more!

Wednesday, April 14, 2010

Thinking about Scarcity & Abundance

I keep turning the concepts scarcity and abundance in my head. Mind games are tidier when you think in the purest, most extreme forms. Let's consider the human condition to be constant flight from scarcity and constant seeking of abundance. There are two ways to get to that abundance:

I get some stuff, call it mine, and guard it. Now I’m in control. The more stuff I call my own, the safer I am from a world of scarcity. Just about everybody in America and most capitalist societies can identify with this instinct. And the result is that we are incredible hoarders and have recently doubled the amount of physical stuff we buy, doubled the weight of stuff we put into landfills, and built huge amounts of stuff-storage facilities across our country (see Juliet Schorr’s work).

Our legal systems and corporate protection of intellectual property follows these same instincts. We write patents to be absolutely as broad as possible so that someday, we’ll have access to any future value that might possibly be found in these ideas – whether or not we think up this future value, whether it is in our area of business, whether or not it is in our geography of interest. All ours.

Another perspective on scarcity-avoidance is exactly the opposite. Everything I get, I pool with my community. It is all ours. When things are going good, I contribute. When things are going badly, I am protected by the good fortune of others in my community. We recognize this approach in socialist and communist societies.

It’s curious that both approaches are trying to protect and maximize periods of abundance, and they are exactly opposite from one another.

Academics have refined the idea of stuff to think about “rivalrous” as opposed to “non-rivalrous” goods. Rivalrous goods are ones that we can’t use at the same time, or that get used up. My stash of fancy English toffee is rivalrous. If I don’t hide it, my kids will see it as something available to the “family community” and eat it all up. My abundance quickly becomes my scarcity. Conversely, sitting in the sun on a beautiful spring day: non-rivalrous. Plenty of sun, plenty of space.
Once upon a time, TV viewing was rivalrous. Your oldest brother always got to choose, and that was it. Today, we have Tivo, we have hulu, we have many TVs and PCs. TV-show watching is non-rivalrous.

Zipcar is another example of how we turned what was perceived as a rivalrous good – cars, that I needed to own in order to feel abundance – into a (mostly) non-rivalrous one. There is always a car around the corner when you need it; why bother to own one and have it sit idle much of the day?

So what do I conclude about the Western solution to our search for abundance through ownership?

1. Not everything is rivalrous, even though our knee-jerk reaction is to treat everything this way.
2. There is a lot of wasted value – an enormous amount of excess capacity is going idle because of our erroneous prejudice.
3. Technology can turn rivalrous goods into non-rivalrous ones.

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Thursday, April 8, 2010

Mom Driving Update (2)

It is almost exactly one year since my mom (84) totaled her car and began a new life without the driving crutch. I wrote earlier about her path towards acceptance: relief, accommodation, reality sets in, satisfaction.

Here is a quote from an email she wrote me this morning about her day yesterday:

"I have made a lot of wonderful friends since I gave up my driver's license. I am getting out more to movies, eating out and visiting with neighbors."

See! Our lives actually can get better when we drive less and share rides.

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