Real innovation is not about "disruption" or new technologies. It is about problem solving.
”Don’t reinvent the wheel”. It is a classic saying, and cheesy as it can be it does offer real wisdom. In most places at most times most things are done in a certain way for a reason. We can disagree with the reasons, but there are reasons. Even though the freewheeling free money era died from complications from Covid we still live with some of the after effects of the age of the innovator. No praise was higher, no ambition greater, the long 2010’s was defined by innovators who were in turn venerated for their geniuses. In an age where the internet was widely available why were we stuck with cable television and regular taxis?
The thing about true innovation though is that it is productive and lead to a stable new way of doing things. Most of the so-called innovation Silicon Valley darlings did turned out to be a flash in the pan; often because their business models were not scalable. Airbnb and Uber are instructive examples. Airbnb was founded on the idea that people would let their homes for short term rental at a lower price than a hotel in the same area would. That works well when most letters are regular people who do it occasionally for some extra cash but as the Airbnb platform became the default option for tourists looking to book accommodations the letters professionalised and the price differential decreased. Professional full time Airbnb hosts turn out to be worse than hotels though, as hotels are able to have better staff for cleaning and reception and better amenities due to economies of scale. Uber too has seen a sharp increase in price compared to when the service launched, as well as worse service for both drivers and riders. Much like with Airbnb, Uber has over the course of its life found out that there was a reason why taxi services where run the way they were, and why their prices were what they were. The streamers headed up by Netflix is another great example. Netflix was cheaper and better than cable when it launched but for ever year which goes by the streamers adopt more and more of the cable business model. It started with producing their own shows and films, then making sure to have exclusive rights, then they rediscovered the idea of releasing a new series one episode per week, next came the introduction of ads. We are one or two steps away from ending up exactly where cable would have been if it had an on-demand streaming function.
Innovation is genuinely a positive force for the most part, and I don’t mean to say that no innovations came about by the Silicon Valley crowd in the last decade. But it is generally true that the more someone, be that a person or a company, talks about innovation the less innovative they are. Real innovation is about problem solving, and the key to solving a problem is understanding it. Valley tech firms clearly did not understand why the industries they sought to disrupt were set up the way they were, and as such their innovations were doomed to fail. To quote another saying: “need is the mother of invention”. Just like there is no need to reinvent the wheel there was no need to reinvent hotels, taxis, or cable television.
If you liked this post you can read a previous post about US student protests here or the rest of my writings here. It'd mean a lot to me if you recommended the blog to a friend or coworker. Come back next Monday for a new post!
I've always been interested in politics, economics, and the interplay between. The blog is a place for me to explore different ideas and concepts relating to economics or politics, be that national or international. The goal for the blog is to make you think; to provide new perspectives.
Written by Karl Johansson
Cover photo by Johannes Plenio from Pexels, edited by Karl Johansson