Innovation and its Disappointments

When I say that I have reservations (or even criticism) about the idea of innovation, people react with surprise. First, how could there be even the slightest flaw in innovation? After all, it is our provider, our protector, the salvation of our budgets and the bringer of all good things, the alpha and omega. But there are also those who are surprised at my loss of faith: after all, in the past, during the heady days of the internet bubble, when I wrote a regular column for Captain Internet – I carried the torch of innovation with pride. And what wonderful innovations there were then! Yahoo (which has since been sidelined, and whose shares are no longer traded with a price-earnings ratio of 40), Skype (which is slower than ever, after having been sold for the third time, profitably – this time to Microsoft, a symbol of innovation), ICQ (sold in 2010 by AOL for half of the enormous price for which it was once purchased from its Israeli entrepreneurs), Myspace (sold in 2011 by News Corp. at a loss of half a billion dollars) – in short, only veterans in the field remember today what marvelous innovations were taking place barely fifteen years ago, and which we believed would last for a millennium. Looking back, it seems like a game of musical chairs that can only end in disappointment.

Part of the problem was the fact that many of the amazing inventions of the 1990s were invented by engineers. Don’t get me wrong – some of my best friends are engineers. Specifically because of their fascinating personalities and intriguing ideas, it took many years till I realized the extent of the disaster that threatens companies led by engineers.

I have recently heard of a series of lectures on the topic of how to set up a start-up without knowing how to program. I am in favor, having seen what can happen when the boss is a programmer living in an extremely rational world. Want to move forward? Of course! So, say the lecturers – what is really important is that you have a good idea. That, more or less, is the thesis behind Innovation 2.0. But I would say – let’s keep on with that line of thought. You don’t even need a good, innovative idea. In fact, even an old idea will work. What is necessary always? An understanding that there is a need, and the ability to meet it.

The problem with my idea is that it does not depend on originality. I am suggesting a kind of strategic simplicity, the kind that can be obtained not only from anarchistic entrepreneurs but also from royalist heirs-apparent. It is appropriate not only for Steve Jobs but also for Confucius. And you don’t have to be born with a pragmatic strategy – you can learn it, and any group of party apparatchiks or royal courtiers can learn it.

What made me rethink this issue is a speech made some weeks ago by Finance Minister Yair Lapid. Lapid asked: “And what is the one Israeli product that everyone wants to buy? Innovation. What is the product that does not depend on the political situation, that is injured least in economic downturns, and that does not rely on natural resources? Innovation. What can evolve almost endlessly if given the right conditions? Innovation.”

But the Internet 1.0 bubble did suffer during a period of a world financial downturn, and has never recovered. Natural resources? The value of many innovations derives specifically from their ability to save on the costs of resources, which in recent decades have multiplied many times over. And what is there that can develop endlessly? The answer to that riddle should probably be left to metaphysics. In the physical world, everything has an end.

And a beginning.

In 2006, I took part in an exclusive, invitation-only, gathering of internet people. The assumption at that meeting – as was the norm in the innovation school – was that such things as spreadsheets (an example of a development by what was then a very innovative company) had already been invented, and so they were boring. What was needed was to search for other inventions to achieve. To invent an improved spreadsheet seemed to be a job for dull, uninspired people, and the market for such a development had no potential. In an attempt to challenge this thinking, I moderated a collective analysis of the most boring application that I could think of – e-mail. I’ll be happy to leak to you (somewhat after the fact) the results of the discourse among the industry leaders there – in my next post.