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 / Winter 2010 / Issue 61(originally published by Booz & Company)


Best Business Books 2010: Innovation

Johnson offers double-entry bookkeeping, a key tool in the practice of capitalism, as an example of an important innovation arising from liquid networks. Described by Goethe as one of the “finest inventions of the human mind,” double-entry bookkeeping was codified in the trade capitals of northern Italy during the Renaissance. Its development, says Johnson, stemmed from the spillover of ideas from one merchant to the next as markets morphed from the feudal system into early capitalism, and relationships between people became less hierarchical and more interconnected. Interestingly, despite the importance of the innovation, no one person ever claimed credit for it.

Examples like these have implications for the design of office space and business processes. The proverbial watercooler — the site of countless discussions ranging from the gossipy to the profound — can have an incredible generative effect. John Seely Brown, former director of Xerox PARC (Palo Alto Research Center), once told me how the center’s coffeemaker was connected to its computer network, sending a friendly notice when the coffee was brewed to lure researchers into impromptu social moments that helped feed their creative culture. Organizations as diverse as the highly successful Pixar Animation Studios Inc., owned by the Walt Disney Company, and CERN (the European Organization for Nuclear Research), the organization responsible for the Large Hadron Collider near Geneva, design cafés and social areas into the core of their buildings so that employees with varying job descriptions can serendipitously meet and form their own liquid networks. Executives who are overly focused on titles and reporting structures should take note: Networks can be much more powerful than hierarchies in stimulating the creation and sharing of ideas.

In addition to liquid networks, Johnson explores six other patterns that underlie especially fertile ecosystems for innovation: the adjacent possible, the slow hunch, serendipity, error, platforms, and exaptation (a term borrowed from biology for the functional shift of a trait during an evolutionary process). Each pattern is illustrated with delightfully fresh and often surprising examples from a wide array of sources — history, evolutionary biology, chemistry, the U.S. Department of Homeland Security, urban planning, digital culture, and neurology — which stretch the reader’s mind, cultivating new ideas in and of themselves. Although the book does not address the social impacts of creativity per se, its themes and examples clearly underscore the role that social phenomena play in the shaping and creation of ideas. For these reasons, I feel it is the best business book of the year on innovation.


Social interaction is a critical factor in the generation of ideas, but innovation is more than creativity. Innovation is the process of transforming new ideas into tangible societal impact. Society plays an essential role in this process, which starts when a concept has sparked but before the fire has spread.

An idea is not an innovation unless it is adopted and scaled, and the innovator’s ability to harness society in this quest can either make or break the idea. Addressing this challenge, The Power of Pull: How Small Moves, Smartly Made, Can Set Big Things in Motion, by John Hagel III, John Seely Brown, and Lang Davison, starts where Johnson’s book leaves off. (Disclosure: John Seely Brown is a friend of mine and a member of the board of councilors that advises me at the University of Southern California’s Stevens Institute for Innovation.)

The Power of Pull paints an optimistic view of the world based on a new paradigm, called “pull,” which is enabled by an unprecedented acceleration in technology and can be highly profitable if harnessed effectively. Under this paradigm, individuals and corporations must develop the ability to pull together the building blocks of successful innovation, to “draw out people and resources as needed to address opportunities and challenges,” according to the authors. This new world belongs to “global hunter-gatherers” who repeatedly put themselves into serendipitous situations. They skillfully attract and connect with one another to rapidly add value to their projects, and they add reciprocal value to the initiatives of others.

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