Innovation Is Dead. It Was Killed By Innovation

Posted on October 30, 2011
Filed Under Business, Critical Thinking |

Every few days I find a new article about how innovation is dead and speculating about what killed it. Scott Adams opined a while back that a lack of boredom was the root cause. Others are blaming the rise of cubicles.

This “innovation is dead” meme seems to be gaining some traction. And why not? If you follow the startup world, you probably don’t see anything on Techcrunch and think “wow, what an amazing idea.” The flow of new startups consist of ideas that were all pretty predictable by anyone who regularly reads all the major tech blogs. Most companies are a new mix of the following words: mobile, social, app, sharing, cloud, food, travel, communicate, recommend, group, shopping, coupon. If you want to start a company that gets funded by VCs, pick 3 of those words and go.

I’ve been thinking about this a lot and I wonder, is innovation really dead? You probably wish I could give you a nice short answer that gets to the point and doesn’t require you to think, but I can’t. Issues like this are almost always more complex and nuanced than the analyses we give them, particularly when those analyses are written in a few hundred words on a blog. So I’m sorry to say that, the best I can do is lay out a series of causes, some affecting our perception of innovation, and some affection the reality of innovation, that interact in complex ways. Let’s start by addressing how innovation is measured.

How Do We Measure Innovation?
There are lots of ways to measure innovation. The most common ways seem to be patents granted and venture capital dollars invested. By either measure, we seem to be on part or better than the past.

We also think a lot about innovation as a productivity booster, the kind of 1+1 = 3 solution that drives the economy forward. I don’t know if we have less of those types of innovation or not, but if you listen to the pundits on the talk shows, they seem to believe that we don’t.

So why does it “feel” like we are less innovative?

Why We Feel Less Innovative
The main reason that I think the “innovation is dead” meme is spreading is that we see fewer things that surprise us. When I think about the times in my life I saw something and thought “wow, very innovative,” it was usually something that surprised me. It was an object that either did something I didn’t expect, or did it it a way I didn’t expect it to. Why does this happen less often now? I suspect it is due to the proliferation of online media. We know about so much, and we know so early, that few things take us by surprise. So perhaps we are as innovative as we have ever been, but it doesn’t seem like it because our learning about these new innovations is more incremental and less of a sudden discontinuity that we might have experienced in the past.

Is Innovation Really Dead?
I honestly don’t know if we are less or more innovative than we used to be. Rather than take a stand on that question, I want to make two cases. First, I want to assume we are less innovative and make the case for why that might be. Second, I want to assume we are just as innovative, if not more, and explain why we might think we are less innovative in spite of that.

Why Are We Less Innovative? - Argument 1
Power curves have made us less innovative. That, in summary, is my argument for why we innovate less than we use to.

The internet has made power curves, instead of bell curves, the norm. When we are awash in information, and the economics of so many industries break down, it causes the economics to move towards a power curve model where blockbusters make all the money and most everything else loses money. We continue to invest because we hope we have one of the blockbusters.

The power curve economy is a function of increased demand for attention, the scale of the internet’s reach, social networks, and our need for novelty. But why do power curves hurt innovation? My answer to that question assumes a bit of determinism, which I don’t want to argue in this post, but bear with me and see if this makes sense.

Our brains are giant input/output machines. Decades ago, two different people received very different inputs into their brains, based on where they lived, what they read, who they knew, etc. People in the same geographic regions had similar inputs and tended to think more alike. But human interests naturally vary, so they inevitably had different interests outside of core day to day life issues, and when they investigated those other interests, they did so through the structural thought lens of the rest of their world (this structural thought lens is the one determined by geography). So what you had was people with very different experiences, very different neural inputs, all looking at some intellectual issue from their varying perspectives. The result was different outputs for the same set of industry inputs. In other words, two people researching a cancer drug or designing a computer chip or whatever had all the same inputs with respect to that project, but they ran them through very different neural structures, the ones that were build up over years of living different lives. And thus, you got some randomness in the outputs - this randomness, when it was able to be turned into something useful, is what we called innovation.

But that doesn’t happen today. Why? Because the internet has made us more alike than we think we are. Because of power laws, we all read the same articles, admire the same companies and people, use the same products, etc. Our neural inputs for all aspects of life are more similar than they have ever been.

I know you are thinking “no Rob, on the contrary, the internet has been the friend of the little guy. Now we get access to ideas we never had access to before.” Bullshit. The internet propagates the ideas that are most easy to propagate, regardless of truth value or even usefulness. The power law nature of the internet has turned everything into novelty and entertainment. It has made us lose the serendipity of finding that diamond in the rough, and by making information easier to access, it has encouraged consolidation around the same pieces of information.

Don’t believe me? Research backs up the fact that scholarship is narrowing. I think the exact same thing is happening to innovation.

A recent study, however, suggests that despite this cornucopia, the boom in online research may actually have a “narrowing” effect on scholarship. James Evans, a sociologist at the University of Chicago, analyzed a database of 34 million articles in the sciences, social sciences, and humanities, and determined that as more journal issues came online, new papers referenced a relatively smaller pool of articles, which tended to be more recent, at the expense of older and more obscure work. Overall, Evans says, published research has expanded, due to a proliferation of journals, authors, and conferences. But the paper, which appeared in July in the journal Science, concludes that the Internet’s influence is to tighten consensus, posing the risk that good ideas may be ignored and lost - the opposite of the Internet’s promise.

“Winners are inadvertently picked,” says Evans. “It drives out diversity.”

This is why so many new internet startups look the same - because everyone gets their business knowledge about how to run a company and what ideas to pursue from Hacker News. When you read sites like that, you get all the same neural inputs as everyone else who reads sites like that, which means your neural outputs are going to be similar as well.

And we are just reaching the point where a generation has grown up with the internet, which is why we are seeing this innovation decline now. This generation has more in common with each other, and is less diverse in their thought patterns than any generation before, because the internet picks winners. It picks idea winners, style winners, and winners in any other field it touches.

I bet if you pulled data about books and musical tastes from Facebook according to age, you would find that the younger the cohort, the more consolidated their tastes.

In short, what I am arguing is that more than ever before, we all read the same things, watch the same things, and learn the same things, and the result of a less diverse input stream is a less diverse output stream. Bye bye innovation.

We Are Still Innovative, But It Has Taken A New Form
That last argument was crap. By any measure of innovation are doing more than ever before. The problem is that the parts of the economy where we see the most innovation is changing.

Product innovation is the innovation we are used to. But building a product has become so easy that it seems every niche, every type of twist on every idea, is filled as soon as it is imagined. The problem now is that this proliferation of products has led to a proliferation of marketing messages that leaves us overwhelmed on a daily basis.

Mass marketing used to be the thing. You could push your ad out on one of the big three tv networks and reach a big chunk of America. Now that world is dying. And with it, we have the rise of long tail marketing. It’s because of that mix: easy products, avalanche of marketing messages, difficulty of mass marketing, that we see a structural change in where we innovate. These days, we innovate around marketing.

Innovation happens when it gets rewarded, and the rewards for product innovation are smaller than they used to be. It’s easy to get stuff built and it’s easy to copy new product innovations and be a fast follower, so your returns to product innovation are dropping.

But marketing… returns to marketing innovation are climbing. In a crowded world, getting your message out matters more, and is more difficult, than before. If you can figure it out, the gains can be huge. Look at Dropbox. I don’t buy this BS that the key was a great product. Why? Because there are LOTS of great products out there that don’t gain users as fast as Dropbox. A great product is necessary but not sufficient for good marketing in this day and age. Dropbox’s real innovation was in their marketing.

Hubspot is another example of marketing innovation. Their product started as a CMS, and I remember wondering why anyone would use Hubspot when there were hundreds of other paid and free CMSs on the market. Hubspot is crushing it, and it isn’t because of their product innovation - it is because of their marketing innovation.

That is the gist of my second argument. We are as innovative as ever, but that innovation has taken on a new form. The innovation is all around marketing. And because of that, because we are used to product innovation, it seems like we are innovating less.

Innovation Killed Us
Maybe my first argument is true. Maybe the second one is true. Maybe it’s a combination of the two that is true. Or maybe they are both crap. But there is one thing I know for sure - we are here because we were so innovative in the past. And most things in this world reach a level of diminishing marginal returns. Success makes future success less likely past a certain point, and maybe innovation has already passed that point.

So how can we revive innovation? Well, I think that since innovation put us in this position, it’s the best thing to get us out. I think we will see innovation that restores the serendipity to our intellectual lives, and breaks the stranglehold that power laws, social networks, and popularity have over our neural inputs. I don’t know when this will happen, so in the meantime, if you want to be more innovative, take some time to unplug from the world of power laws and plug in to something random, something old, something no one else is reading or watching or hearing. Vary your inputs, and maybe you will be the one to have that new output that restarts our innovations.


3 Responses to “Innovation Is Dead. It Was Killed By Innovation”

  1. Thomas Powell on October 31st, 2011 2:05 pm

    My physical therapist probably provided the best insight into this.

    Your [athletic] performance doesn’t increase on a straight line or in a smooth curve–you sputter, spurt, setback, repeat; you also may improve in ways that are not perceptible in your frame of reference.

    *Maybe* we’re going through a consolidating setback or sputter, trying to absorb what we’ve learned. Maybe we’ve been so used to digging a deeper hole that don’t recognize that we’re in the process of widening the hole.

  2. Nick Huhn on November 7th, 2011 3:25 am

    I used to think there was something wrong with me when I didn’t get a reference to pop culture, current event, or must-see blog/article/video/team/etc. Lately, however, I thank my lucky stars that my information channels and experiences are more often disparate and distanced from the vast majority of others’.

    Something ‘innovative’ will likely stem from these aspersions to ‘the norm’… Always seems to anyway; good call.

  3. Innovation Is Dead. It Was Killed By Innovation | BFW News on November 7th, 2011 4:15 am

    [...] Read the Full and Original Article [...]

  • About Rob

    Rob is co-founder of He likes value investing, the Rolling Stones, college basketball, artificial intelligence, economic history and people who think independently.