Round-off Error? Hardly!

As pop economists go, Tim Harford is pretty good. His The Undercover Economist is a decent read. His Dear Economist column in the Weekend Financial Times can be quite clever--except when it's not.

The source of irritation? The cloying glibness of Harford's response to a simple but important question about voluntary contributions to the Internet. So he dismissively writes:

J. K. Rowling's books attract thousands of reviews on Amazon.com. Yet the overwhelming majority of her readers--more than 999 in every thousand--don't bother to post a review. Frankly, if 0.1 per cent of people make unrewarded contributions to the internet, that's just a rounding error away from nobody at all. Economists love efficiency, and it is not very efficient to produce an explanation of behaviour that hardly anyone engages in.

As Glenn Reynolds likes to say, you should read the whole thing. However, what we have here is bad analysis and worse math--the sort of bad analysis and quantitative peabrainedness that annihilates rather than promotes economic awareness and understanding. Let's start with the math: treating .1 percent of people as a "rounding error" may make economic sense if they don't do anything of substance or significance. But if they actually create and add value to your network and/or your business, you might be wiser to treat that magnificent tenth of a percent as an "outlier" to be nurtured rather than a statistical aberration to be ignored. Indeed, as Mr. Harford well knows, 10 percent of a thousand is larger than 90 percent of a hundred. If we have--and we do!--Net enterprises with tens of millions of users, then that measly-looking .1 percent can be misleadingly robust. One-tenth of a percent of a million is a thousand, and, of course, .1 percent of 10 million = 10,000. That's quite a workforce. But why grant Tim his self-serving assumptions? I cheerfully argue that as a "culture of contribution" and creative volunteerism facilitates a vibrant innovation marketplace, that tenth of a percent might really be closer to seven-tenths of a percent or even 1 percent. Again, it's not the volume of contributors that matters; it's the value of their contributions. Isn't that what economics is supposed to be about? Hence my dismay with and dismissal of our Undercover Economist's "analysis." The simple truth is that we can look at any industry--automobiles, semiconductors, telecoms--and find only a tiny fraction of "entrepreneurs" who are making real contributions. Now, I'm not for a moment suggesting that folks who volunteer their videos on Youtube or comments on Amazon or story preferences on Digg are entrepreneurs in the Schumpertarian or Hayekian sense. The (obvious) profit motive is absent. However, the community/audience/marketplace clearly sees some value in these contributions--as do the undeniably entrepreneurial hosts. The spirit--and seduction--of "increasing returns" suggests that literally tens of thousands of people will be making value-added contributions to these arenas and that, yes, noncontributing consumers will also extract some value from them. In other words, Harford's "rounding error" assertion is a bit like saying, "You know those tiny little things that huge trees have called seeds? Well, they're so small and lightweight, they don't really matter. I mean, they're not even one-tenth of one percent the size or weight of the tree...." Just as bad botanical understanding can wipe out forests and biodiversity, poor economic analysis can wipe out value and its creation. The truth is that we're just beginning to grasp the underlying behavioral economics of "open source" and "cooperative" innovation economies. Dismissing what we don't understand as "round-off error" makes poor punditry and worse economics.

Poor Design(ers)

Pardon the interruption. Between technical, logistical, and temporal conflicts, I've been remiss. For example, I had to finish up this piece for the Financial Times, which was kind of fun because it's not often that something I write provokes critical comment from the President of the Royal Society. What can I say? His response affirmed my essential point: scientists are every bit as vested in their expertise as lawyers and lobbyists. Remember that delightfully cynical George Bernard Shaw line? All professions are conspiracies against the laity ...

Which is a natural transition for yet another piece I wrote for someone else, except this essay-lette was cavalierly canceled at the last moment. It was originally for Business Week (notice the absence of a link) and describes my brief tenure as a judge for the Industrial Design Society of America's global design competition.

I confess that I had a hoot of a time and learned a lot--both about design and about myself. More important, I gained a very keen insight into the way that great design does--and does not--align with great innovation. You're fully welcome to disagree (this was originally written in July), just as did Lord Rees. But if you do disagree, please make a better argument.

Serving on a criminal jury exposes one to unpleasant realities about the legal system and human nature. Serving on a design jury, on the other hand, merely exposes you to unpleasant truths about corporate innovation and creative talent.

Much to my surprise, being a design juror gave me a far more useful and revealing glimpse into pop culture than a criminal trial. The experience radically altered my perceptions--and preconceptions--of how designers design and what "good design" really means. I literally do not look at "designed" objects or services the same way anymore. Neither would you.

I am not a designer. Nevertheless, I was asked to serve as a juror on the Industrial Design Society of America's prestigious International Design Excellence Awards. Apparently, my research on innovative prototyping, along with my work with design-oriented innovators, made my participation appealing. My fellow jurors were a global mix of world-class designers from industry and academe. They were uniformly smart, talented, articulate, and passionate about great design. Here was their chance--here was our chance--to examine hundreds of submissions from around the world and select the very best examples of great design. What a fantastic opportunity.

I thought I'd have a terrific time kicking back, listening and learning how designers drew distinctions between the mediocre and the magnificent. Instead, what I discovered were profound--and angry--disagreements over the very essence of design value. For example, a hardcore group of jurors took a hard-line approach that great design was what resonated with their design sensibilities. They took an unabashedly, unashamedly elitist view that their training, experience, and professionalism gave them special insights into greatness. They were ardent and articulate champions of their choices.

On the other side, an equally adamant faction emphasized that excellence was better measured by how well customers and users were integrated into the design process. Great designs were designs that real people felt great about using and experiencing. The "design populists" argued that the elegance so valued by the elitists shouldn't trump the importance of users in defining value. Yes, voices were raised; designers are passionate people.

Provocative arguments swirled around the importance of design interfaces, accessibility, and ease of use. A majority of the jurors agreed that usability was an integral part of great design but merely one of many factors to judge. A vociferous minority insisted that ease of use and accessibility are what truly drives great design in this postindustrial Google era. You couldn't predict where the populists or elitists would fall on this issue.

Unsurprisingly, world-class designers believe that design is a medium and method with which to change the world for the better. So several heated conversations revolved around what kind of "message" a jury ward might send about a) the environment, b) sustainability, c) children's education, d) safety, etc. Corporate designers who were exquisitely sensitive to the issue of brand as an organizing business-design principle had friendly quarrels with the independent designers who saw design as a medium to redefine or revolutionize brand perceptions.

By far the most striking revelation for me was the collective designer obsession with detail. You've no doubt heard the phrase "God is in the details" or "The devil is in the details"? This design jury had heaven and earth covered. You can talk "brand" or "vision" or "concept" or "insight" or "elegance" until you're blue in the face, but world-class designers care about how those ideals are expressed in the details. Something that I would dismiss as a niggling detail the designers would say revealed the essential point they were trying to make. Great design is about the ordering and intention of details that you can--or aren't supposed to--see and feel.

Yes, the Big Idea matters enormously. But world-class designers insist that the matrices and arrays of little details reflect and respect the Big Idea. By the fifth or sixth hour of deliberations, I realized that I could never be a designer. For me, precision of detail is a means to an end. For a designer, the precision is both a means and the end. That's what "design integrity" means to a design professional. That's why the arguments over usability vs. elegance vs. accessibility were so intense. These were battles over integrity.

Integrity is a terrific value to fight about. That helps explain why so many entrepreneurs and executives find designers naive idealists who refuse to understand the trade-offs that business demands. However, it also explains the sustainable successes of Steve Jobs and design-centric companies like Bang & Olufsen. Design integrity may not be essential to innovation success, but it holds the undeniable power to be transformational.

My verdict: it's easier for a criminal jury to reach consensus around guilt or innocence than for a design jury to find a majority around great design. For some reason, I find that exhilarating.

Indianovation

I'm here in Delhi for a gig with Indian CIOs--an impressive array of intelligence and intensity. India's economy is growing; it's globalizing in a fashion rather different from China's, and yes, I'm biased, in that the Indian command of the English language--on average--is superior to the Chinese.

The English-language press here is reminiscent of America's print media of the '60s--diverse, competitive, in-your-face, exuberant, and forward-looking. While mobile bandwidth continues to explode, the reality is that the populist Internet culture of, say, America, Korea, Estonia, the Nordic countries, or the U.K.--or vast swaths of urban China--simply doesn't exist.

I'm struck by the notion that despite its Wipros, Tatas, Infosyses, and, of course, IIT, India doesn't appear to have anything that rivals China's culture of netadventurism. Where are India's hackers? Are they all conformists looking for R&D jobs @ Intel or entrepreneurial opportunities overseas?

Indigenous innovation cultures are always different from global innovation cultures in ways both subtle and profound. With all due respect to Bollywood, India's digital culture doesn't seem nearly as playful or as experimental as others'. Analytical rigor and economic growth seem more "culturally appropriate" than weirdo Facebook/Orkut type technologies, Worlds of Warcraft, or Second Life.

Yes, the poverty here is grinding and heartbreaking. There's not a shred of doubt in my mind that the C. K. Prahalad Fortune at the Bottom of the Pyramid market philosophy will dramatically influence innovation investment here. There is a belief that entrepreneurial innovation--as opposed to state-sanctioned socialism--may be India's best bet for dramatically improving the lives of its poorest.

As fascinating as I find China, I think India will be the more intriguing emerging innovation superpower story over the next five years. The global reach of its diaspora entrepreneurs (Lakshmi Mittal, for example), its calibrated linkages with America and China, and a population that is bound to grow more innovative and playful as the burdens of the Bureaucratic Raj ebb should all combine to make the Subcontinent even more influential than many might expect. I'm not uncomfortable making the case that India's biggest value-added export is its human capital.

Yes, the infrastructure here is not world-class, and that will become even more of an issue gating India's future economic growth and success. But between the wealth of its human capital and a global marketplace that appears uneasy with China's grasp of both rule of law and "quality circles," India may attract more than its fair share of entrepreneurial expats and direct foreign investment.

Innovation Pandemics

In my very last column for the dead-tree Technology Review, I wrote, "I now believe that the dominant global issue of our time is the accelerating diffusion of innovation. Period. Full stop. The diffusion of innovation--not the 'spread of ideas' or the 'clash of civilizations' or even 'globalization'--is the dynamic driving today's world and tomorrow's."

I still stand by that. That's why the innovation cliché "The best way to predict the future is to invent it" is rubbish. The future isn't "invented" by superbly educated cognitive elites; it's interactively shaped by the individuals, institutions, and communities that actually adopt and use the innovations--in their own time and in their own way. Users--not inventors--determine value in the innovation marketplace. Diffusion defines innovation success.

Bob Metcalf's bon mot that "Invention is a flower; innovation is a weed" remains bon. But as with "viral" marketing, the bio-metaphor doesn't go far enough. I prefer evolutionary biologist Richard Dawkins's insights about the "extended phenotype": the notion that our tools, technologies, and artifacts may enhance our evolutionary fitness. Much as bird's nests--rather a clever bit of vernacular technology--may enhance avian reproductive fitness by better sheltering fragile eggs, might not clever technologies like Lasik surgery, hybrid automobiles, implants and--yes--even Google enhance our own by making us more attractive, effective, and desirable?

The question is rhetorical; its implications are not. Innovations that make us more attractive, more effective, and more desirable are more likely to diffuse than those that don't. Just as significant, innovations we think will make us more attractive, more effective, and more desirable are likely to be disproportionately diffusive.

Want to predict the future of innovation? Simply predict the future of attractiveness, effectiveness, and desirability. Then act accordingly.

Actions always speak louder than words. Thinking about a particular innovation isn't innovating any more than thinking about a particular diet or bariatric surgery means losing weight. Immunity or resistance to a virus--or a viral innovation--shapes the future health and wealth of people as surely as susceptibility. Both literally and figuratively, innovation is a global public-health issue that more than rivals AIDS, malaria, avian flu, or climate change.

Media and mechanisms like the Internet and desktop fabrication virtually guarantee futures filled with potential innovation pandemics. I'm less interested in how they'll start than in how they'll spread. It's not a global innovation unless it's catching.