Need, Speed, and Greed: How the New Rules of Innovation Can Transform Businesses, Propel Nations to Greatness, and Tame the World’s Most Wicked Problems
Vijay V. Vaitheeswaran
Harper Business/An Imprint of HarperCollins (2012)
A brilliant examination of “the new paradigm for sustainable economic development in the twenty-first century”
How innovation happens is rapidly changing. The result is the emergence of what Vijay Vaitheeswaran characterizes as a global “Ideas Economy.” For example, after winning a contest Trevor Rose learned about when visiting the website of InnoCentive (a spin-off from the pharmaceutical giant Eli Lilly), Rose articulates the essence of the Ideas Economy: “I like the idea of being an InnoCentive solver because for me it’s like a little billboard that will say to those who doubted me in life that [having finally overcome a ‘lifetime’ of frustrated attempts at innovation’] maybe they are wrong and I am a lot cleverer than I look.” There is also the motivation to make a difference: “I do like the possibility that something I thought of might help someone in a country where the economy is very tough already, and perhaps make their lives easier in some way…I hope so.”
To me, Rose demonstrates the power of what Vaitheeswaran characterizes as “fresh thinking that creates something valuable, whether for individuals, firms, or society at large.” Almost anyone anywhere, whatever the given circumstances (especially resources) can take full advantage of the more democratic models of innovation that stress inclusion, collaboration, transparency, and social benefit. As Clayton Christensen has so eloquently explained in several books (notably in The Innovator’s Dilemma), “sustaining technologies” produce incremental, evolutionary improvement where as “disruptive technologies that challenge traditional thinking and the models that thinking produces.
The title of this book suggests that the new rules of innovation are based on three cornerstones: Need (to extend, deepen, and enrich the benefits of the global Ideas Economy), Speed (to accelerate the democratization of innovation), and Greed (good but only if “a more muscular [U.S.] government plays its proper role so that the playing field of capitalism is no longer rigged in favor of dirty industries, inefficient markets, and shirt-term payouts”). In Wall Street, Gordon Gecko (played by Michael Douglas) insists that greed is good. In the sequel, after Gecko is released from a federal prison, he announces that greed is not only good, “now it’s legal” or at least condoned. However, the “greed” that Vaitheeswaran endorses is one that enriches the best interests of huumanity rather than the net worth of individuals such as Gecko.
I agree with Vaitheeswaran that, for whatever reasons, there is an emerging trend in corporate boardrooms to move away from short-termism and dishonest accounting and toward the aforementioned level playing field. “That is the foundation stone of the Ideas Economy and the path to inclusive growth, the new paradigm for sustainable economic development in the twenty-first century.”
Vijay Vaitheeswaran concludes his brilliant book with The Disruptive Dozen: The New Rules of Global Innovation. Listed and briefly discussed on Pages 260-262, these new rules combine insights, admonitions, and guidelines for executives who are determined to lead their organizations through a process of collaborative reinvention and transformation. To be sure, that process is perilous. However, the democratization of innovation, “once the preserve of technocratic elites in ivory towers, offers hope that the grand challenges of this new century can indeed be tackled.”
Here is an excerpt from an article written by Jonathan Schlefer for the Harvard Business Review blog. To read the complete article, check out the wealth of free resources, and sign up for a subscription to HBR email alerts, please click here.
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One of the best-kept secrets in economics is that there is no case for the invisible hand. After more than a century trying to prove the opposite, economic theorists investigating the matter finally concluded in the 1970s that there is no reason to believe markets are led, as if by an invisible hand, to an optimal equilibrium — or any equilibrium at all. But the message never got through to their supposedly practical colleagues who so eagerly push advice about almost anything. Most never even heard what the theorists said, or else resolutely ignored it.
Of course, the dynamic but turbulent history of capitalism belies any invisible hand. The financial crisis that erupted in 2008 and the debt crises threatening Europe are just the latest evidence. Having lived in Mexico in the wake of its 1994 crisis and studied its politics, I just saw the absence of any invisible hand as a practical fact. What shocked me, when I later delved into economic theory, was to discover that, at least on this matter, theory supports practical evidence.
Adam Smith suggested the invisible hand in an otherwise obscure passage in his Inquiry Into the Nature and Causes of the Wealth of Nations in 1776. He mentioned it only once in the book, while he repeatedly noted situations where “natural liberty” does not work. Let banks charge much more than 5% interest, and they will lend to “prodigals and projectors,” precipitating bubbles and crashes. Let “people of the same trade” meet, and their conversation turns to “some contrivance to raise prices.” Let market competition continue to drive the division of labor, and it produces workers as “stupid and ignorant as it is possible for a human creature to become.”
In the 1870s, academic economists began seriously trying to build “general equilibrium” models to prove the existence of the invisible hand. They hoped to show that market trading among individuals, pursuing self-interest, and firms, maximizing profit, would lead an economy to a stable and optimal equilibrium.
Leon Walras, of the University of Lausanne in Switzerland, thought he had succeeded in 1874 with his Elements of Pure Economics, but economists concluded that he had fallen far short. Finally, in 1954, Kenneth Arrow, at Stanford, and Gerard Debreu, at the Cowles Commission at Yale, developed the canonical “general-equilibrium” model, for which they later won the Nobel Prize. Making assumptions to characterize competitive markets, they proved that there exists some set of prices that would balance supply and demand for all goods. However, no one ever showed that some invisible hand would actually move markets toward that level. It is just a situation that might balance supply and demand if by happenstance it occurred.
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To read the complete post, please click here.
Jonathan Schlefer is author of The Assumptions Economists Make (Belknap/Harvard, 2012). The former editor of Technology Review, he holds a Ph.D. in political science from MIT and is currently a research associate at Harvard Business School.
To read more more blog posts by Jonathan Schlefer, please click here.