From the lightbulb to the iPhone, technological innovation is largely responsible for the revolutionary increases in mankind’s standard of living over the last several centuries. But innovation itself is still largely misunderstood, often imagined in the public consciousness as the doing of a sole scientist in a laboratory somewhere having a “eureka” moment and stumbling onto a discovery. In his new book, How Innovation Works: And Why It Flourishes In Freedom, British journalist Matt Ridley attempts to reshape the way we think about innovation, describing how societies can encourage it — and how they often do the opposite.
Ridley lays out a unique vision of innovation based on what he calls the “Infinite Improbability Drive,” the notion that there are infinite combinations of atoms, widgets, and ideas. In his telling, innovation is simply the “process of constantly discovering ways of rearranging the world into forms that are unlikely to arise by chance — and that happen to be useful.” Invention, then, is not the same thing as innovation. For an idea to be truly innovative, it must be scalable and capable of catching on.
Ridley attempts to debunk the idea that innovation is ever a truly individual effort. He cites the example of Thomas Edison, historically considered the inventor of the lightbulb. But while it is in some sense true that Edison invented the lightbulb, Ridley notes that 21 different people had either independently designed or meaningfully improved the lightbulb by 1880.
“The story of the light bulb,” Ridley writes, “far from illustrating the importance of the heroic inventor, turns out to tell the opposite story: of innovation as a gradual, incremental, collective yet inescapably inevitable process.” In this, he does not mean innovation is inevitable in all circumstances but that in societies hospitable to innovation, advances and discoveries do not depend on the actions of a single individual.
He also points to the example of automobile pioneer Henry Ford. Ford, Ridley writes, “developed little that was technically new.” Instead, he took the work of others — cars had been around for 30 years before the debut of the Model T Ford in 1908 — and “made it ubiquitous and cheap.”
Rather than being the work of lone geniuses, innovation happens through a long process of trial and error. Edison, for example, tried 6,000 different plants before discovering that bamboo could work as a component of the lightbulb. Ridley also stresses the role of serendipity and luck in innovation. From the development of inoculation to the discovery of penicillin, he recites example after example showing that innovation often happens when people can capitalize on a fortuitous coincidence.
Ridley uses this new vision of innovation as collaborative, gradual, and lucky to explain why some societies foster innovation while others quash it. “Innovation happens … when ideas have sex,” he writes. “It occurs where people meet and exchange goods, services and thoughts.” And because trial and error is so integral to this process, Ridley argues that overly cautious, highly regulated societies will not see meaningful levels of innovation.
“The astonishing safety record of the modern airline industry has been achieved, quite literally, by trial and error,” Ridley offers as an example. “This improvement in safety has happened in an era of deregulation and falling prices.”
He contrasts this with the complete lack of innovation in nuclear power in recent decades, a field in which regulators have made it all but impossible to try new ideas.
Ridley uses the example of the 2011 Fukushima nuclear disaster to illustrate the unintended consequences of regulations that stifle innovation. The Fukushima reactor, constructed in the 1970s, “had huge safety flaws … simple design mistake[s] unlikely to be repeated in a more modern design. It was an old reactor and would have been phased out long since if Japan had still been building new nuclear reactors.” What happened, sadly, was that costly regulations and red tape, ostensibly rooted in safety concerns, had made constructing new nuclear plants so expensive and difficult that people kept using the old ones — with tragic results.
Ridley puts the perils of restricted trial and error quite simply: “If Thomas Edison had needed to get special regulatory approval for every one of the 6,000 plant samples he tested as a filament in a light bulb, he would never have found bamboo.”
Ridley similarly decries crony capitalism and regulatory capture for stopping innovation in its tracks. “There is likely to be a backlash against any new technology, usually driven partly by vested interests but clothing itself in the precautionary principle,” he explains. He uses the historical example of coffee to make his point.
Although coffee is now widely consumed, governments across Europe and the Middle East tried, with little success, to ban it during the 16th and 17th centuries. Entrenched interests such as winemakers wanted to squash a new competitor, while autocratic rulers were concerned that coffee shops would turn into refuges for political dissent.
Yet regulatory hostility to innovation is hardly a vestige of history. As Ridley explains, it is shockingly prevalent throughout the European Union, and he cites it as one of the main reasons for Europe’s slow economic growth relative to that of the United States. Ridley notes, too, that the U.S.’s federalist system long allowed for innovation thanks to varying levels of taxation and regulation between the states. But as the federal government has grown stronger, innovation has nosedived. He cites declining rates of economic growth and various other statistics to substantiate the claim that innovation is drying up. For instance, Ridley notes that new business formation rates dropped from 12% in the late 1980s to 8% in 2010 and that, according to the Organisation for Economic Co-operation and Development, startup rates are falling across the developed world.
The main drawback of How Innovation Works is that it is hardly accessible to the average reader. While journalists or think tank employees might be willing to plow through Ridley’s elaborate prose, it’s hard to imagine that most people will be willing to follow his narrative through an endless bombardment of anecdotes, historical tangents, names, and details.
Yet this doesn’t make Ridley’s message any less important. As he points out, “Without innovation we face a bleak prospect of stagnant living standards leading to political division and cultural disenchantment. With it, we face a bright future of longevity and health, more people leading more-fulfilled lives, astonishing technology achievements and a lighter impact on the planet’s ecology.”
Brad Polumbo is a freelance journalist and former fellow at the Washington Examiner.
