Innovation

Technology, Regulation, Capitalism, and Innovation

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An interesting and very dynamic presentation from venture capitalist Bill Gurley on the topic of regulatory capture.

Cases that he discusses include municipal wi-fi projects, electronic medical records systems, and Covid testing.

In response to Bill’s presentation, Sophie @netcapgirl says:

it’s lowkey a shame because the origins of the digital era are rooted in a collaborative environment between government & industry (and academia) that are hard to imagine today. for instance, JC Licklider (instrumental in the computer revolution) held positions at ARPA, MIT & IBM

They’re both right, IMO–Bill is correct about malign impact of regulatory capture on innovation, and Sophie is correct about the historical importance of government involvement in digital innovation.


So what conclusions should we derive from this polarity?

 

Worthwhile Reading & Viewing

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Artificial Intelligence and the limits of language.  Is it possible to truly understand statements represented in language without knowing something about the world outside of language?

The abolition of school discipline…basically, the public school equivalent of shutting down police departments.  The article at the link discusses the consequences.

How did Amazon Web Services become so successful?  The track record of companies that developed information technology for their own use and then decided to market it to other users has not been very good:  AWS is a major exception.

Can capitalism save Hollywood?

The nature of America’s university administrators, as observed by Stephen Hsu.  More here.

The mother of Dietrich Bonhoeffer, a major figure in the German anti-Nazi resistance, refused to send her children to public schools:

She was openly distrustful of the German public schools and their Prussian educational methods. She subscribed to the maxim that Germans had their backs broken twice, once at school and once in the military, she wasn’t about to entrust her children to the care of others less sensitive than she during their earliest years.

Analysis of trends in scientific publications suggests that truly disruptive research is becoming less common.  The article at the link argues that ideological capture of institutions has been a major cause of reduced innovation.  See also this related article.

Joseph Flaherty reacts to a small carving of a water bird, created 33000 years ago:  “Imagine your greatest of grandparents, pursued by frost and ravenous megafauna through an endless German winter, huddled in a lean-to lit and warmed by an open fire, deciding to carve this bird to make their child smile, to impress their mate, or simply for the joy of creation.”

Not Just Invention, But Deployment

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…progress requires both.  An interesting article from Derek Thompson, at The Atlantic: Why the Age of American Progress Ended.

Link via Katherine Boyle at Twitter,  who also links a tweet from Tobi Lutke:

The biggest cultural problem holding us back is that society holds the production of criticism at similar importance to that of building. It isn’t. But the critics inherited the airwaves from the builders.

and adds:

Arguably critics often have more power than builders. A society that praises experts over innovators is already a dying society.

The Atlantic article is long but worth reading: I think it makes a number of important points but is also wrongheaded in some instances.

Your thoughts?

Institutions, Instruments, and the Innovator’s Dilemma

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I have written several posts that use Carroll Quigley’s “institutional imperative” as a lens for understanding contemporary events. [1] Mr. Quigley suggests that all human organizations fit into one of two types: instruments and institutions. Instruments are those organizations whose role is limited to the function they were designed to perform. (Think NASA in the 1960s, defined by its mission to put a man on the moon, or the NAACP during the same timeframe, instrumental to the civil rights movement.) Institutions, in contrast, are organizations that exist for their own state; their prime function is their own survival.

Most institutions start out as instruments, but as with NASA after the end of the Cold War or the NAACP after the victories of the civil rights movement, their instrumental uses are eventually eclipsed. They are then left adrift, in search of a mission that will give new direction to their efforts, or as happens more often, these organizations begin to shift their purpose away from what they do and towards what they are. Organizations often betray their nature when called to defend themselves from outside scrutiny: ‘instruments’ tend to emphasize what their employees or volunteers aim to accomplish; ‘institutions’ tend to emphasize the importance of the heritage they embody or even the number of employees they have.

Mr. Quigley’s institutional imperative has profound implications for any democratic society – especially a society host to so many publicly funded organizations as ours. Jonathan Rauch’s essay, “Demosclerosis” is the best introduction to the unsettling consequences that come when public organizations transform from instruments into institutions. [2] While Mr. Rauch does not use the terminology of the Institutional Imperative, his conclusions mesh neatly with it. Describing the history and growth of America’s bureaucratic class, Mr. Rauch suggests its greatest failing: a bureaucracy, once created, is hard to get rid of. To accomplish whatever mission it was originally tasked with a bureaucracy must hire people. It must have friends in high places. The number of people who have a professional or economic stake in the organization’s survival grows. No matter what else it may do, it inevitably becomes a publicly sponsored interest group. Any attempt to reduce its influence, power, or budget will be fought against with ferocity by the multitude of interests who now depend on it. Even when it becomes clear that this institution is no longer an instrument, the political capital needed to dismantle it is just too high to make the attempt worth a politician’s time or effort. So the size and scope of bureaucracies grow, encumbering the country with an increasing number of regulations it cannot change, employees it does not need, and organizations that it cannot get rid of.

I used to think that the naked self-interest described by Mr. Rauch was the driving force behind the Institutional Imperative. It undoubtedly plays a large role (particularly when public funds are involved), but there are other factors at play. One of the most important of these is what business strategists call Marginal Thinking.

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