Embracing Innovation, Disrupting the Status Quo, and Attacking Unemployment
I figured the picture would spice things up a bit. I wanted to jot down a few thoughts that have been rolling around in my head.
I just finished the book The Lean Startup and have been thinking about how the ideas in the book can be used to change our society. Recently, I have been thinking about social structure and the status quo mostly because I see it how it can be opposed to innovation. This will come as no surprise to any one who reads my blog, but I have been thinking about this because the utility companies in Spain are the biggest challenge to the growth in residential PV in Spain. They wield so much political power, and from the people I talk with, there doesn't seem to be any good way for prying this power away from them. It is the status quo perpetuating itself and it really frustrates me.
It has demonstrated to me the importance of social flexibility and social mobility in a society. The more malleable a society is to change and innovation, the easier it will be to take advantage of the benefits technological and social change bring. I also believe that given the share human traits, the obstructionism from the status quo is present in all countries. The power entrenched interests exert and their ability to maintain that power varies between countries, but I believe that despite the social advancements afforded by democracy, all countries are still by and large controlled by the few.
Change in any form is scary to people in power because it requires them to exert effort to adapt, or lose power. The fear of losing power combined with a lack of desire to change is what leads to obstructing innovation. An example is a large company acquiring a smaller rival to thwart the development of the rival's competing technology. Granted, not all acquisition are so destructive. I would argue that given the counterproductive nature of being an obstructionist to innovation, those companies that eliminating new technology instead of using it are at a disadvantage to companies that do harness new innovation, and therefore are more likely to die out. There is a sort of natural selection.
Despite the private sector's ability to incorporate innovation, everything can be improved. I began thinking about ways to make our social structure more agile in accepting change. I think this is a fairly serious issue today and will become more serious as the speed of technological innovation continues to increase. Given that the lean startup has its roots in lean manufacturing, we can use a manufacturing line as an example. If the rate at which the innovation engine produces innovation (in manufacturing lingo - the cycle time) is faster than the rate at which society can incorporate that innovation, then we will have a build up of innovations waiting to be incorporated into society. Now, I understand there are institutions like the FDA that need to thoroughly screen drugs before they enter the market. However, as is true in manufacturing, we never sacrifice quality or safety for speed. There is a triangle where each corner is safety, speed, and quality and each improvement to a manufacturing process can never sacrifice one corner for any others. I believe we can find better processes to evaluate the safety of drugs with higher quality in less time.
Speeding up the cycle time of our society's ability to incorporate innovation is a huge undertaking. One of the reason is that the social infrastructure that governs the process of incorporating innovation is controlled by the government. It goes without saying that currently the central process of the US government, the legislature, is not working. However, even when it is working its ability to adapt to changes is relatively slow. I believe there are clear benefits to this, as it should not be easy to rewrite large chunks of our constitution, but I do think that other parts of our government could incorporate innovation more rapidly. I saw one example of this from the German government in the law governing the FIT.
Initially, the FIT was reduced once a year, but the price of solar panels was dropping so rapidly that the FIT would only be set at an adequate level at the beginning of the year. As the price of PV dropped, the FIT would be over subsidizing the market. The German government changed the FIT adjustment to biannual, but eventually it created a system where the FIT would decrease every month based on the total installed capacity over the last 12 months. I would argue that this is a wonderful example of improving legislating, which resulted in a very adaptive and sophisticated law. The FIT is supposed to promote the installation of PV and so it makes perfect sense to have the FIT reduction be linked to the amount of PV being installed. It is adjusts quickly enough to keep pace with the rate of innovation. For example, if PV installations are below a certain threshold, the FIT will actually increase to promote more installations. This framework won't work for most laws, but it illustrates the essence of sophisticated and adaptive legislation. Equally important to having legislation that incorporates innovation is having government agencies that effectively incorporates innovation. I have heard many horror stories about how many government departments still run like it is the 1980's.
The reason why many government departments still run like it's 1980 is because the people who work in those departments were hired in 1980 and haven't had the competitive pressure to become more efficient. I am not at this point advocating a liberalization of the job market for public workers (but it is an idea), but rather trying to unpackage why the rate of innovation adoption is so slow within the government.
This hits on a more general phenomenon: when the rate of innovation is faster than the rate of reproduction of humans. Let's consider if the average lifetime of humans was 30 years, keeping all else constant (it's a thought experiment - ok?). The would mean that the oldest people in charge of our society would have grown up with computers, which makes it likely that all of them know how to use computers and naturally adopt this innovation. This is an example where the rate of innovation is more on pace with the rate of human reproduction. However, the people that are currently the leaders of our society, the baby boomers, did not necessarily grow up with computers which means it is more likely that these people see computers as threatening. Of course, almost all baby boomers know how to use computers, but some may not feel completely comfortable use computers, or making their offices completely digit.
So the obvious conclusion is that we set a mandatory extermination age at say 45 to try to match our rate of innovation with our rate of human births. As the rate of innovation continues to increase, we slowly bring the extermination age down. NOT QUITE.
I started with using the turnover of generations, but really this is just a proxy for what really matters - education. There are many baby boomers that probably know how to use computers and all the other cool gizmos much better than I do, but the reason for that is because they exert the effort to reeducate themselves. Most people going through the existing education system stop their formal education between 18 - 22. In industries where there is less necessity to maintain your skills, like the public sector, people are less likely to exert the effort to learn how to use the new tools being produced by the innovation engine to increase their efficiency. Luckily, that means that we don't need to mandate an extermination age, but rather we need to create a system that is convenient, inexpensive, and fun for people to reeducate themselves. I said a system (singular), but this education system could easily be many subsystems in different parts of our societies. If people learn how to use the new tools produced by the innovation engine, they hopefully will see the benefits of them and will either accept their adoption in their workplace or actively push their workplace to adopt them.
Conveniently, this actually ties nicely into something else I was thinking about and wrote a post about before - what to do with the unemployed, especially if unemployment is structural. In my previous post, I used pictures from a strike to illustrate the dangers that structural unemployment pose to our society. Tonight I thought about it differently. For most of human history, we have been trying to reduce the amount of effort and time to sustain ourselves. When humans developed tools to assist with their work, they had time and energy, which allowed them to do other things, like take care of their children better, relax, and develop new tools. Perhaps, structural unemployment is our society taking this general process to the extreme. We have become so good at making tools to do our work for us, that some people no longer "need" to work at all. I know this is a bit of a stretch, but we can apply the same approach as older humans took when they had more time - do something useful you couldn't do before. Essentially, unemployment doesn't have to be a ticking social time bomb - it can be a huge resource of human capital, if we have the systems to reeducate people so they can continue to add value in our society. Unemployment is not an inevitable end of scientific development, it is a correctable failure of our education system to adapt to the changing needs of our society. Education shouldn't stop at 22, or 25, or 30. It should be a lifelong endeavor and I believe everyone can see the value in it. I don't believe that humans are fundamentally lazy beings. I believe everyone wants to feel like they are doing something meaningful, so if you give someone who is unemployed the opportunity to reeducate themselves and allow them to continue to contribute to society, they will take that opportunity.
The question that then needs to be answer is: do we have systems in place to reeducate the unemployed? If so, why are they failing? If not, how can we get them? I just heard today that there is a shortage of nurses (granted this was from a podcast in 2007, but is probably still true today) and the government was trying to relax immigration rules for foreign nurses instead of trying to improve our domestic nurse education system. I believe there are jobs out there. We just need education systems that can retool the unemployed's skill set to meet the changing needs of our society.
I started with two separate ideas (the mismatch between the innovation engine and society's rate of adoption and the potential opportunity in the unemployed) and somehow found a way to connect them. Man, that is sweet. It's the little things in life....
I would love to end the post on that final sentence, because I think it sounds cool, but I will not because there is one avenue I didn't pursue when discussing the mismatch between the innovation engine and the society's rate of adoption. The first avenue I pursued addressed a "systematic" reason for the mismatch - that our society's process of adopting technology can't speed up fast enough because of the lack of reeducation. There is a second avenue for the mismatch, which I alluded to above that I could call a "deliberate" reason. It is not that our society is incapable of adopting new technology, but rather is the result of existing interests actively opposing the adoption of technology because it threatens their power. Most often that power is monetary. My example above is utility companies. All across the world, utility companies are, or will, oppose the adoption of decentralized generation like solar PV because it is a direct threat to their business. As I mentioned in a previous post, an Arizona Public Service spokesman said, “We are in a political battle. We didn’t ask for it. But we are not going to lie down and get our heads kicked in. We are just not. We are obligated to fight. It is irresponsible to our customers not to fight back.” I would argue that the word customer should be replaced with shareholder. Solar PV threatens to take away revenue from the utility company and thus threatens their power. Therefore, utility companies will do literally whatever they can to obstruct the adoption of solar PV from funding anti-solar campaigns as APS did, or getting the government to pass anti-solar laws as is happening in Spain.
This resistance to change doesn't have anything to do with our society's ability to adopt the innovation. We have the ability to install PV on almost everyone's roof (although not at an affordable price everywhere - yet). It isn't the system that is hitting it's maximum potential, but rather the people who have power are standing in the way. Resolving this problem is much more challenging. Ironically, this once again has to do with the government, as utilities in the US and APS are trying to influence legislation. Perhaps this sort of obstructionism is less likely to occur in the private sector because the existing centers of power are able to die (go bankrupt) without social upheaval.
I still believe that those companies and organizations that stand in the way of innovation will eventually be overcome by it, but it is really frustrating for me to feel powerless against the utility companies in Spain. I strongly believe there is opportunity in all challenges, and some solution to every problem, but I just don't see a clear way to attack this problem.
In the US, it has been successful to organize against the utilities, but the ability to organize the population in Spain is much more difficult. Sigh... I am running out of steam, so will stop here.
As I was afraid would happen, I don't have any peppy ending to conclude this post. I will simply say that I am gradually realizing the power in an entrepreneurial mindset. I have always been a little hesitant to identify with the word because "entrepreneurship" is in vogue, but as I have learned more about it, I do think there is a lot of power in the general approach. It is about approaching problems differently. As we see from evolution, diversity is necessary for optimal adaptation. Much of my exposure has come from the Stanford Entrepreneurial Podcasts. They are really neat way to learn about many different industries and people's experience with starting companies.
Kudos for all who made it this far. Internet high five. If you have any thoughts, comments, criticism, I am very happy to hear them. Email me - dzubke@gmail.com - or post on FB or G+
I just finished the book The Lean Startup and have been thinking about how the ideas in the book can be used to change our society. Recently, I have been thinking about social structure and the status quo mostly because I see it how it can be opposed to innovation. This will come as no surprise to any one who reads my blog, but I have been thinking about this because the utility companies in Spain are the biggest challenge to the growth in residential PV in Spain. They wield so much political power, and from the people I talk with, there doesn't seem to be any good way for prying this power away from them. It is the status quo perpetuating itself and it really frustrates me.
It has demonstrated to me the importance of social flexibility and social mobility in a society. The more malleable a society is to change and innovation, the easier it will be to take advantage of the benefits technological and social change bring. I also believe that given the share human traits, the obstructionism from the status quo is present in all countries. The power entrenched interests exert and their ability to maintain that power varies between countries, but I believe that despite the social advancements afforded by democracy, all countries are still by and large controlled by the few.
Change in any form is scary to people in power because it requires them to exert effort to adapt, or lose power. The fear of losing power combined with a lack of desire to change is what leads to obstructing innovation. An example is a large company acquiring a smaller rival to thwart the development of the rival's competing technology. Granted, not all acquisition are so destructive. I would argue that given the counterproductive nature of being an obstructionist to innovation, those companies that eliminating new technology instead of using it are at a disadvantage to companies that do harness new innovation, and therefore are more likely to die out. There is a sort of natural selection.
Despite the private sector's ability to incorporate innovation, everything can be improved. I began thinking about ways to make our social structure more agile in accepting change. I think this is a fairly serious issue today and will become more serious as the speed of technological innovation continues to increase. Given that the lean startup has its roots in lean manufacturing, we can use a manufacturing line as an example. If the rate at which the innovation engine produces innovation (in manufacturing lingo - the cycle time) is faster than the rate at which society can incorporate that innovation, then we will have a build up of innovations waiting to be incorporated into society. Now, I understand there are institutions like the FDA that need to thoroughly screen drugs before they enter the market. However, as is true in manufacturing, we never sacrifice quality or safety for speed. There is a triangle where each corner is safety, speed, and quality and each improvement to a manufacturing process can never sacrifice one corner for any others. I believe we can find better processes to evaluate the safety of drugs with higher quality in less time.
Speeding up the cycle time of our society's ability to incorporate innovation is a huge undertaking. One of the reason is that the social infrastructure that governs the process of incorporating innovation is controlled by the government. It goes without saying that currently the central process of the US government, the legislature, is not working. However, even when it is working its ability to adapt to changes is relatively slow. I believe there are clear benefits to this, as it should not be easy to rewrite large chunks of our constitution, but I do think that other parts of our government could incorporate innovation more rapidly. I saw one example of this from the German government in the law governing the FIT.
Initially, the FIT was reduced once a year, but the price of solar panels was dropping so rapidly that the FIT would only be set at an adequate level at the beginning of the year. As the price of PV dropped, the FIT would be over subsidizing the market. The German government changed the FIT adjustment to biannual, but eventually it created a system where the FIT would decrease every month based on the total installed capacity over the last 12 months. I would argue that this is a wonderful example of improving legislating, which resulted in a very adaptive and sophisticated law. The FIT is supposed to promote the installation of PV and so it makes perfect sense to have the FIT reduction be linked to the amount of PV being installed. It is adjusts quickly enough to keep pace with the rate of innovation. For example, if PV installations are below a certain threshold, the FIT will actually increase to promote more installations. This framework won't work for most laws, but it illustrates the essence of sophisticated and adaptive legislation. Equally important to having legislation that incorporates innovation is having government agencies that effectively incorporates innovation. I have heard many horror stories about how many government departments still run like it is the 1980's.
The reason why many government departments still run like it's 1980 is because the people who work in those departments were hired in 1980 and haven't had the competitive pressure to become more efficient. I am not at this point advocating a liberalization of the job market for public workers (but it is an idea), but rather trying to unpackage why the rate of innovation adoption is so slow within the government.
This hits on a more general phenomenon: when the rate of innovation is faster than the rate of reproduction of humans. Let's consider if the average lifetime of humans was 30 years, keeping all else constant (it's a thought experiment - ok?). The would mean that the oldest people in charge of our society would have grown up with computers, which makes it likely that all of them know how to use computers and naturally adopt this innovation. This is an example where the rate of innovation is more on pace with the rate of human reproduction. However, the people that are currently the leaders of our society, the baby boomers, did not necessarily grow up with computers which means it is more likely that these people see computers as threatening. Of course, almost all baby boomers know how to use computers, but some may not feel completely comfortable use computers, or making their offices completely digit.
So the obvious conclusion is that we set a mandatory extermination age at say 45 to try to match our rate of innovation with our rate of human births. As the rate of innovation continues to increase, we slowly bring the extermination age down. NOT QUITE.
I started with using the turnover of generations, but really this is just a proxy for what really matters - education. There are many baby boomers that probably know how to use computers and all the other cool gizmos much better than I do, but the reason for that is because they exert the effort to reeducate themselves. Most people going through the existing education system stop their formal education between 18 - 22. In industries where there is less necessity to maintain your skills, like the public sector, people are less likely to exert the effort to learn how to use the new tools being produced by the innovation engine to increase their efficiency. Luckily, that means that we don't need to mandate an extermination age, but rather we need to create a system that is convenient, inexpensive, and fun for people to reeducate themselves. I said a system (singular), but this education system could easily be many subsystems in different parts of our societies. If people learn how to use the new tools produced by the innovation engine, they hopefully will see the benefits of them and will either accept their adoption in their workplace or actively push their workplace to adopt them.
Conveniently, this actually ties nicely into something else I was thinking about and wrote a post about before - what to do with the unemployed, especially if unemployment is structural. In my previous post, I used pictures from a strike to illustrate the dangers that structural unemployment pose to our society. Tonight I thought about it differently. For most of human history, we have been trying to reduce the amount of effort and time to sustain ourselves. When humans developed tools to assist with their work, they had time and energy, which allowed them to do other things, like take care of their children better, relax, and develop new tools. Perhaps, structural unemployment is our society taking this general process to the extreme. We have become so good at making tools to do our work for us, that some people no longer "need" to work at all. I know this is a bit of a stretch, but we can apply the same approach as older humans took when they had more time - do something useful you couldn't do before. Essentially, unemployment doesn't have to be a ticking social time bomb - it can be a huge resource of human capital, if we have the systems to reeducate people so they can continue to add value in our society. Unemployment is not an inevitable end of scientific development, it is a correctable failure of our education system to adapt to the changing needs of our society. Education shouldn't stop at 22, or 25, or 30. It should be a lifelong endeavor and I believe everyone can see the value in it. I don't believe that humans are fundamentally lazy beings. I believe everyone wants to feel like they are doing something meaningful, so if you give someone who is unemployed the opportunity to reeducate themselves and allow them to continue to contribute to society, they will take that opportunity.
The question that then needs to be answer is: do we have systems in place to reeducate the unemployed? If so, why are they failing? If not, how can we get them? I just heard today that there is a shortage of nurses (granted this was from a podcast in 2007, but is probably still true today) and the government was trying to relax immigration rules for foreign nurses instead of trying to improve our domestic nurse education system. I believe there are jobs out there. We just need education systems that can retool the unemployed's skill set to meet the changing needs of our society.
I started with two separate ideas (the mismatch between the innovation engine and society's rate of adoption and the potential opportunity in the unemployed) and somehow found a way to connect them. Man, that is sweet. It's the little things in life....
I would love to end the post on that final sentence, because I think it sounds cool, but I will not because there is one avenue I didn't pursue when discussing the mismatch between the innovation engine and the society's rate of adoption. The first avenue I pursued addressed a "systematic" reason for the mismatch - that our society's process of adopting technology can't speed up fast enough because of the lack of reeducation. There is a second avenue for the mismatch, which I alluded to above that I could call a "deliberate" reason. It is not that our society is incapable of adopting new technology, but rather is the result of existing interests actively opposing the adoption of technology because it threatens their power. Most often that power is monetary. My example above is utility companies. All across the world, utility companies are, or will, oppose the adoption of decentralized generation like solar PV because it is a direct threat to their business. As I mentioned in a previous post, an Arizona Public Service spokesman said, “We are in a political battle. We didn’t ask for it. But we are not going to lie down and get our heads kicked in. We are just not. We are obligated to fight. It is irresponsible to our customers not to fight back.” I would argue that the word customer should be replaced with shareholder. Solar PV threatens to take away revenue from the utility company and thus threatens their power. Therefore, utility companies will do literally whatever they can to obstruct the adoption of solar PV from funding anti-solar campaigns as APS did, or getting the government to pass anti-solar laws as is happening in Spain.
This resistance to change doesn't have anything to do with our society's ability to adopt the innovation. We have the ability to install PV on almost everyone's roof (although not at an affordable price everywhere - yet). It isn't the system that is hitting it's maximum potential, but rather the people who have power are standing in the way. Resolving this problem is much more challenging. Ironically, this once again has to do with the government, as utilities in the US and APS are trying to influence legislation. Perhaps this sort of obstructionism is less likely to occur in the private sector because the existing centers of power are able to die (go bankrupt) without social upheaval.
I still believe that those companies and organizations that stand in the way of innovation will eventually be overcome by it, but it is really frustrating for me to feel powerless against the utility companies in Spain. I strongly believe there is opportunity in all challenges, and some solution to every problem, but I just don't see a clear way to attack this problem.
In the US, it has been successful to organize against the utilities, but the ability to organize the population in Spain is much more difficult. Sigh... I am running out of steam, so will stop here.
As I was afraid would happen, I don't have any peppy ending to conclude this post. I will simply say that I am gradually realizing the power in an entrepreneurial mindset. I have always been a little hesitant to identify with the word because "entrepreneurship" is in vogue, but as I have learned more about it, I do think there is a lot of power in the general approach. It is about approaching problems differently. As we see from evolution, diversity is necessary for optimal adaptation. Much of my exposure has come from the Stanford Entrepreneurial Podcasts. They are really neat way to learn about many different industries and people's experience with starting companies.
Kudos for all who made it this far. Internet high five. If you have any thoughts, comments, criticism, I am very happy to hear them. Email me - dzubke@gmail.com - or post on FB or G+
