Category Archives: Innovation

Ideas that might not matter: Inefficient technological path dependence

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Part one of a intermittent series on interesting ideas that might not be useful.

Today I’m talking about path dependence that leaves us with second rate technology.

The hypothesis is very simple, but very interesting. A society has a problem, and a number of technologies become possible solutions. One of these technologies makes a little more progress than the others – it could be because this technology makes the first step a little easier or just through complete randomness – but this progress meas that it becomes the focus of attention. Funding, the efforts of innovators and entrepreneurs and other resources start flowing towards it because it looks like the best bet. This leads to even more progress which attracts even more. The competitors are neglected and forgotten.

But unbeknown to all, one of these technologies had a brighter future or another has come along too late. If only there had been a little bit of early success it would have been developed into a much better technology than its more favoured rival. By the time this is realised, its far too late to swap over because we’re already locked into the other. The individual incentives to change are far weaker than the collective benefit would be. Because of an effectively random event in the past, we end up in a poorer future.

A very interesting idea and very intuitive (path dependence in general is clearly true) and with large ramifications. But is it useful?

The overwhelming problem is that counterfactuals are  hard to find. We can’t (yet) look at alternate universes to see whether the technologies we pursued are inferior to those we didn’t. That makes it hard to confirm the hypothesis on the vast majority of candidates. This also makes it hard to avoid making similar mistakes. There may be innumerable better paths we could have taken, but without some way to recognise what they were, the idea is fairly pointless.

What do we do with the hypothesis then?

There have been efforts to identify cases based on real analysis. Unfortunately most treatments of the idea are content to stop at just two, both of which are far from convincing.

Continue reading →

The GLAM Sector bytes a hand that tried to feed it: Or how really terrific organisations can do really silly things

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Tim O’Reilly proposed the slogan “Government as a platform” for his Government 2.0 activities which he’s heavily scaled back in favour of more lucrative opportunities. But there was always a problem. That problem was that it wasn’t so much that no-one had ever had the idea that government might be an enabling resource – a platform in the lingo of Web 2.0. The real problem is that government has no culture of this. Departments are proprietorial and secretive and that’s a tenacious culture which is prevented from evaporating by lots of expectations and structures.

But there is one part of government that has cultivated the culture of ‘Government as a platform’ since its inception around a century and a half or so ago:  The GLAM sector – that’s galleries, libraries, archives and museums. I couldn’t help noticing when doing the Government 2.0 Taskforce that the GLAM sector were up and at it long before anyone else. The National Library had its newspaper digitisation program and Seb Chan from the Sydney Powerhouse Museum was on our Taskforce and instrumental in getting us to run a mashup competition – and likely instrumental in getting the Powerhouse to become the first museum anywhere in the world to post its historic photos on Flikr and licence them Creative Commons. Seb’s unit built the mashup of baby names in NSW which is fascinating to play with.

I also learned about all the problems the national and state libraries were having getting rights to archive web content that were analogous to their rights as libraries of record to receive a copy of all publications in their jurisdiction from publishers. If they had such rights all they would need would be a robot to go and collect the material and Bob’s your uncle. In fact without this, much of their efforts involve sending people letters to ask their permission to archive their sites. I discussed with various people in libraries of record having such rights which certainly made sense to me.

Anyway, they still don’t have such rights.

Meanwhile . . . they are certainly keen on their rights to printed material as you will observe from this letter I received from the Victorian State Library this week (I might add that The Victorian State Library is a terrific organisation, which I am very fond of, but even terrific organisations do really silly things):

The State Library of Victoria tries to collect a copy of all books, videos, CD’s, CD-ROMs, pamphlets, periodicals, newspapers and any other items published in Victoria for permanent preservation in the Library.

To help us in this endeavour, legislation was passed in 1869 requiring publishers to deposit free of charge with the library a copy of every item published in Victoria. Current legislation is contained in section 49 of the Libraries Act 1988 (see enclosed leaflet).

Recently the following publication came to our notice.

The economic value of Australia’s investment in health and medical research: reinforcing the evidence for exceptional returns. 

We look forward to receiving a copy of this publications (sic), as well as any other publications you might not have previously sent us for legal deposit. Please follow the enclosed legal deposit instructions when forwarding publications. Continue reading →

Gizmodo loses it: Google has not turned evil (at least not yet . . .)

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What a load of old sensationalist nonsense. I’m seriously starting to worry about Giz. If I want to search anonymously there is a thing called an anonymous tab. And I don’t log into my Google account outside work because why would I? – My phone is logged in.

That’s how the first commenter responded to this piece in Gizmodo accusing Google of being evil because it – wait for it – shares identity information between functions. That’s right, Gmail can now share information with Google search with Google + and on it goes.

This is supposed to be some attack on our privacy. Well there are very nasty things Google can do to harm my privacy. Those things would be telling other people things it knows about me that it could reasonably expect that I might not want them to tell them.

But it doesn’t do that. It is just using all the data it has to further improve improve the adds and other services it provides me. WTNTLAT? *

My point is, as I said here, privacy law, and privacy activism should be focused wherever practicable on stopping conduct that actually threatens privacy – ie where that information is provided to agents other than the one that has the information in the first place. It always pissses me off when I have to wait to be read some stupid thing which tells me my voice is going to be recorded “for quality purposes”. If it’s for training purposes they can protect my privacy by making sure the recordings don’t get leaked and by destroying them after the couple of weeks it was necessary to hold them to use them for the entirely benign purposes of quality control.

And remember, although Google is probably mostly thinking of optimising advertising here . . .

  1. making advertising relevant is a source of considerable value to the world and
  2. there are lots of other ways that the data might be able to be used to simply provide improved services to people – such as search, prompting connections with others, or with information of relevance to users, task management and all the other things that I can’t think of.

So broadly speaking, and with the caveat that I’ve not researched all this in great depth, I submit these views to you O Troppodores and Troppodillians.

* “Define: WTNTLAT” doesn’t generate any answers in Google, so we’re on the ground floor here Troppodores. This could be Troppo’s big break – our own little footnote in the English language, our own corner of the universe.

Steve Jobs, Friedrich Hayek and Design: the column

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Herewith my  column for the SMH and Age in Ross Gittins’ spot while he’s on vacation. It’s the column of the essay which is here.

As he was wheeled around on the emergency ward trolleys, Kristian filmed the whole experience with the video camera he had concealed under his clothing. Who is Kristian and what (on earth) was he doing? He’s a designer from the top global design consultancy Ideo. And the video camera? It goes pretty much everywhere Kristian goes on assignment.

Welcome to the new world of service design. If you haven’t heard, design is on the crest of a wave. Apple teeters on being the most valuable company in history because of its mastery over design – not technology, at which it is unremarkable. And the world’s largest business services firm, Deloitte, wants ”design thinking” at the centre of its operations – from consulting to audit.

So what is design and why is it important? We economists tend to think that once ”incentives” are sorted, for instance once competition forces producers to compete for customers, that everything will be hunky dory. But in a complex world what if the seller doesn’t understand what the buyer wants?

Before the Apple Macintosh was designed, no one understood how important user friendliness was to computer users – certainly not IBM and Microsoft. Some people think of design as an aesthetic overlay on products. But as Steve Jobs insisted, good design isn’t about how something looks, but rather how it works.

The driving force of design is looking at things from every angle. And usually the producer’s angle is already dominant. That’s where Kristian’s ”patient’s eye” video cam came in. Continue reading →

Productivity growth: what proportion is driven by firms’ internal smarts (or luck) and what proportion by entry and exit?

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Restructuring and productivity growth in uk manufacturing

We analyse productivity growth in UK manufacturing 1980-92 using the newly available ARD panel of establishments drawn from the Census of Production. We examine the contribution to productivity growth of ‘internal’ restructuring (such as new technology and organisational change among survivors) and ‘external’ restructuring (exit, entry and market share change). We find that (a) ‘external restructuring’ accounts for 50% of establishment labour productivity growth and 80-90% of establishment “TFP” growth; (b) much of the external restructuring effect comes from multi-establishment firms closing down poorly-performing plants and opening high-performing new ones, and (c) external competition is an important determinant of internal restructuring.

Read the whole paper here (pdf) if you want. HT Chris Dillow.

Government 2.0: my first column of the Gittins Summer break

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Ross Gittins asked me if I’d fill in for him during his summer break, which gives me a chance to get a few things off my chest. So here’s the first of four weekly columns.

In 2009, I chaired the federal government’s Government 2.0 Taskforce. We sketched out how government might be transformed by the open zeitgeist and tools of Web 2.0 – like Wikipedia, Facebook, Twitter and Google.

Web 2.0 massively scales up our capacity to communicate – with possibilities both trivial and earth-shaking. And it scales up simple improvisation. Whether you’re organising a party or a working bee, just hop on to Facebook or Twitter and Bob’s your uncle.

Two hours after the Christchurch earthquake, work commenced on a map on the net on which could be plotted emerging developments on the ground. The information, such as the address of pharmacies that still had insulin, was parsed from 300,000 tweets bearing hashtags like #eqnz.

If you think this was a job for official emergency services on the ground, think again. Tim McNamara wasn’t with the government, but spearheaded the initiative from the North Island capital Wellington. The people who parsed the tweets were further away still, a band of humanitarian ”Crisis Commons” volunteers spanning every continent. Continue reading →

Innovation and Prizes

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Looks like they work . . .

Inducement Prizes and Innovation.
Date: 2011-12-15
By: Brunt, Liam (Dept. of Economics, Norwegian School of Economics and Business Administration)
Lerner, Josh (Harvard Business School)
Nicholas, Tom (Harvard Business School)

http://d.repec.org/n?u=RePEc:hhs:nhheco:2011_025&r=ino

We examine the effect of prizes on innovation using data on awards for technological development offered by the Royal Agricultural Society of England at annual competitions between 1839 and 1939. We find large effects of the prizes on competitive entry and we also detect an impact of the prizes on the quality of contemporaneous patents, especially when prize categories were set by a strict rotation scheme, thereby mitigating the potentially confounding effect that they targeted only “hot” technology sectors. Prizes encouraged competition and medals were more important than monetary awards. The boost to innovation we observe cannot be explained by the re-direction of existing inventive activity.