LOGIC & MAGIC The double nature of innovation
BERTIL HÖK
© Bertil Hök 2017 Graphic Design: Linda Andersson Illustrations: Erik Noréus and Martin Svedén Publishing: BoD – Books on Demand, Stockholm, Sweden Printing: BoD – Books on Demand, Norderstedt, Tyskland ISBN: 978-91-7699-581-5
This book explores the pattern of logic and magic evolving from studies of truly exceptional innovations. The logic always looks simple in retrospect, but innovators start out in the dark with an intimidating series of obstacles ahead. The magic is to enter unknown territory, to expand the horizons, and to create new value from something that looks impossible to most people. Great innovators take advantage of this double nature. Paradoxically, the chance of success may increase with the magnitude of the challenge. The impact of great innovations like the World Wide Web and the smart phones is beyond comprehension and grossly underestimated by most people, including decision makers. The world needs innovation more than ever. The low hanging fruit has already been picked, and now is the time to reach higher. Our existence depends on it. The logic and the magic are sources of hope and inspiration to innovators. Bertil Hรถk
CONTENTS CONTENTS
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PROLOGUE
9
HOW THIS BOOK WORKS
13
1 AN IDEA IS A GOOD START
21
1.1 The utopian sieve 1.2 Step by step 1.3 The eureka myth 1.4 Creativity, serendipity and intuition 1.5 The human factor
2 THE PROBLEMATIC VIEW
2.1 Doubt - the precursor of problem definition 2.2 Imagine 2.3 Out of the loop 2.4 Gaps, traps, catches and clashes 2.5 Perfect is not good enough 2.6 Believe me, I’m a liar
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29 31 34 36 40
42
44 47 49 53 55 57
2.7 On the watch 2.8 Marginal notes becoming significant 2.9 A long and winding road
60 61 63
3 NOT INVENTED HERE
67
3.1 The inventor’s paradox 3.2 The innovator’s thinking tools 3.3 Association and selection 3.4 Transformation 3.5 Balance 3.6 Validation 3.7 All together now
4 ‘IT HAS NOT ESCAPED OUR NOTICE …’
4.1 Survival of the fittest 4.2 Emergent phenomena 4.3 Knowns and unknowns
5 NOTHING BUT THE TRUTH
5.1 Expecting the unexpected 5.2 Laws of nature 5.3 The luckiest thought 5.4 The logic of science 5.5 Estimations and probabilities 5.6 A simple rule goes berserk 5.7 The investor’s headache 5.8 Business as unusual
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74 76 79 82 85 87 89
91
97 99 103
105
106 108 112 118 121 126 129 132
6 VALUES AT STAKE
135
6.1 The boxer 6.2 The prisoner 6.3 The peace-maker 6.4 On purpose 6.5 Human nature 6.6 The value-chain
136 138 140 142 145 148
7 IN CHARGE
151
7.1 A piece of soap 7.2 Conclusions from the case studies 7.3 The logic and the magic
151 158 162
EPILOGUE
169
NOTES
172
ACKNOWLEDGEMENTS
184
APPENDIX A: RAMANUJAN’S SOLUTION
186
APPENDIX B: BAYESIAN CALCULATIONS
188
APPENDIX C: CASE STUDY TIMINGS
190
BIBLIOGRAPHY
192
INDEX
201
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PROLOGUE To master innovation, we need to understand its nature. This is what this book is about. What is innovation? To me, innovations are simply new solutions, demanded by a significant and growing number of users. This definition may sound harmless and plain, but it deserves some further elaboration. The innocent-looking word ‘new’ has important consequences. The novelty requirement means that unknown territory needs to be entered. ‘Business as usual’ is no longer valid. The word ‘solution’ suggests that a problem has been solved. It may be argued that some innovations do not solve problems. They are simply the result of a great idea being materialised. But if the effect is a growing and significant number of users, these users obviously find the new solution beneficial and advantageous compared to the alternatives. Could it be that the innovators identified a problem and solved it before most users had even noticed there was a problem? That the problem was implicit, unarticulated and only became obvious when there was a better solution?
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Logic & Magic – The double nature of innovation
What did the innovators see that others did not? These are examples of follow-up questions from the seemingly harmless definition. There is a logical link between problems and solutions. They are each other’s opposite but they co-exist. The link is causal, and the solution is the result of a defined cause, the problem. Does this mean that innovation is always a logical consequence of improvements, a result of rational thinking? Is it predictable? Somewhat surprisingly, these questions seem to divide leading analysts into two camps and their arguments need to be examined. The logic of innovation has another dimension. New and improved solutions will generally replace old and inferior ones, at least in open economies. As a corollary, the driving force and the cash flow of an innovation process will switch at a critical juncture, from investors to consumers. The underlying mechanisms need to be understood both to explain the past and to learn for future challenges. Innovation is sometimes described as an irreversible race towards a super-human existence. This description is at least partly based on the exponential growth of digital computational capacity going on for several decades, and resulting in machine intelligence being comparable to, and in some respects, even exceeding human intelligence. The inevitable question arises: is innovation serving mankind, or is it the other way around? Are there aspects beyond intelligence that need to be considered? How can scientific methods be used? Innovation needs to be anchored in scientific methodology and research. If the connection to reality is lost, the effort is doomed to fail.
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Prologue
Its relation to common knowledge within the disciplines of mathematics, natural sciences, technology, business, economy, human behaviour etc., needs to be clarified. The logic of innovation deserves to be viewed from many different perspectives. And it must be faced: logic alone does not provide a full picture. How on earth ‌? This question is an expression of amazement, a sign of magic. The object of excitement could be new technology, inventions, discoveries, tools, toys ‌ Yes, innovation has a touch of magic. The question also expresses curiosity and an urge to understand the underlying principles. How can innovation be both logical and magical? Superficially, these attributes may seem contradictory, but after a closer look, a consistent pattern will emerge. The kind of magic referred to in this book occurs at the intersection between the known and the unknown, but is still firmly anchored in reality by always testing against it. This kind of magic does not lend itself to supernatural speculations. The magic of innovation is a token of human creativity, willpower, and decisiveness. Without them, innovation would not exist. Although well-known, these abilities are still mysterious. We do not understand how they emerge or how they are maintained. The magic of innovation becomes a reality whenever it expands our horizons, when bits of the unknown are incorporated with our previous knowledge. OK, innovation is double-natured. So what? What difference does it make? Well, let’s be patient and put the facts, opinions, and controversies on the table before answering. In this book, we examine some of the most important discoveries, inventions and accomplishments of our time, not
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Logic & Magic – The double nature of innovation
only in a search for explanations, but also for white spots in our present understanding. These are our case studies, a test bench for the logic and the magic of innovation. The history of innovation extends as far back as mankind itself. Creativity is an innate human ability, and our ancestors must have used it – just as we do - to make life easier. That includes communicating with one another: ‘I’ll show you how …’ Their knowledge distribution channels may have been less efficient than ours, and many innovations must have fallen into oblivion. Others evolved at separate locations in somewhat different forms, like the spoken and written languages.
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