Welcome to the Innovation Economy

innovation worldPhoto by Riccardo Annandale via Unsplash

Innovating has always been an important human activity.  It’s led to tools and agriculture and cities and an ever-increasing quality of life.  This work was — in the past — largely the domain of the privileged few.  Kings and queens spurred innovation by spending money to create ever-advancing ships, castles, and weaponry. Even in the Industrial Age, only a few families had enough wealth to afford the kind of education that empowered James Watt and Thomas Newcomen to create the steam engine. Only people and organizations with enough resources were able to create the next great thing.  

But we’ve now reached an inflection point in the evolution of innovation.  No longer the bastion of the elite, innovation is being democratized.  Every year, individuals from humble backgrounds break onto the scene with billion-dollar companies. Take Instagram.  The photo sharing app was built by a pair of entrepreneurs in their twenties over the course of just eight weeks.  Two years later, they sold their company to Facebook for a billion dollars.  Of course, Instagram isn’t the only story of David defeating Goliath.  Slack, Uber, Netflix, and hundreds startups like them faced competition from some of the largest corporations in existence — but they all won.

Why is this change happening? Three societal forces have pushed us to this inflection point: Abundance, Access, and Automation.

abundancePhoto by NeONBRAND via Unsplash

Abundance

Throughout history, scare resources defined the world order. However, in most of the world today, the defining feature of social, economic, and cultural life is abundance.  Peter Drucker, who fans describe as the “inventor of modern management,” remarked on this new reality, noting, “For the first time – literally – substantial and rapidly growing numbers of people have choices.”  Though poverty still exists, there is actually far less of it than there used to be.  The world GDP has increased sixfold over the last few decades.  During that same period, the world’s poverty rate was cut in half.

This massive increase in wealth is driving the advancement of innovation.  Because people are spending less time fulfilling basic needs like finding sources of food, they have more time to spend pursuing ideas that will enhance quality of life.

accessPhoto by NASA via Unsplash

Access

Not only are we better off, but we’re also more connected.  The rise of telecommunications and ultimately the Internet have allowed us to share and collaborate to an unprecedented degree.  There are now 3.9 billion people on the internet.  Thanks to the smartphone, that capability is now available to us 24/7 no matter where we are.  As consumers, this means we have access to a wealth of information and can make incredibly informed decisions (like which retirement funds to invest in and which funny cat video is actually worth our time).  

As creators, the benefit is twofold.  First, we can easily lookup specialized knowledge without having to pay for advanced classes.  Want to know more about color theory or DNA sequencing?  The answers are just a Google search away.  Want to dive deeper? Take an online course through Khan Academy. Second, we have access not just to more information but also to more people. It’s now easier than ever to collaborate with anyone from anywhere.  Slack, Google Docs, Allo, Duo, Hangouts, text messages, email, phone calls, GoToMeeting, and Snapchat all bring us closer together — and those are just the apps I’ve used in the last day!  With nearly unlimited access to information and each other, it’s easier than ever to come up with something new.  

automationPhoto by Dominik Scythe via Unsplash

Automation

Of course, it’s not enough to just think of something new.  You’ve actually got to build it.  In the past, this kind of production could only really happen in the context of large organizations.  Bell Labs and Xerox PARC were infamous skunkworks responsible for developing the foundation for much of the technology you’re using the read this.

But automation is changing the rules of the game.  Robots can assemble cars, and software can detect tumors. That’s GREAT news for entrepreneurs and innovation in general. Instead of needing to raise money to hire hundreds employees, we can launch a company with just a few people and a whole lot of software. We can be leaner than ever, using far less capital to get new businesses off the ground.

brave new worldPhoto by Alexandre Chambon via Unsplash

 

Brave New World

This is both incredibly exciting and rather terrifying.  Unleashing billions of humans on the task of making our lives better means we’re going to see change occur more rapidly than ever before.  But for organizations whose success depends on the status quo and the safety of their massive scale, the prospect of rapid change is scary.  In order to continue to survive and thrive, they are going to have to develop the capability to embrace — and even drive — change by becoming experts at innovation.

The changes brought about by Abundance, Access, and Automation mean that organizations can no longer can rely on the same old strategies to get ahead and survive in a competitive marketplace.  We’re playing on a different battlefield now that requires new strategies.  The winners will be those who embrace the innovation economy.

Published by Ben Haefele

Product Designer. Innovator. Aspiring Ping-Pong Master.

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