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(originally published by Booz & Company)


When Failure Isn’t Free

What these missing-in-action innovations have in common is that they are large and very expensive to develop. They call for an apparently impossible combination of massive resources with an array of wildly experimental innovative gambles. It is easy to talk about ‘skunk works’, or creating safe havens for fledgling technologies, but when tens of billions of dollars are required, highly speculative concepts look less appealing. We have not thought seriously enough about how to combine the funding of costly, complex projects with the pluralism that has served us so well with the simpler, cheaper start-ups of Silicon Valley.

When innovation requires vast funding and years or decades of effort, we can’t wait for universities and government research laboratories to be overtaken by dorm-room innovators, because it may never happen.

If the underlying innovative process was somehow becoming cheaper and simpler and faster, all this might not matter. But the student-startup successes of Google and Facebook are the exceptions, not the rule. Benjamin F. Jones, an economist at the Kellogg School of Management, has looked beyond the eye-catching denizens of Silicon Valley, painstakingly interrogating a database of 3 million patents and 20 million academic papers.

What he discovered makes him deeply concerned about what he calls ‘the burden of knowledge.’ The size of teams listed in patent citations has been increasing steadily since Jones’s records began in 1975. The age at which inventors first produce a patent has also been rising. Specialisation seems sharper, since lone inventors are now less likely to produce multiple patents in different technical fields. This need to specialise may be unavoidable, but it is worrying, because past breakthroughs have often depended on the inventor’s sheer breadth of interest, which allowed concepts from different fields to bump together in one creative mind. Now such cross-fertilisation requires a whole team of people — a more expensive and complex organisational problem. ‘Deeper’ fields of knowledge, whose patents cite many other patents, need bigger teams. Compare a typical modern patent with one from the 1970s and you’ll find a larger team filled with older and more specialised researchers. The whole process has become harder, and more expensive to support in parallel, on separate islands of innovation.

In academia, too, Jones found that teams are starting to dominate across the board. Solo researchers used to produce the most highly cited research, but now that distinction, too, belongs to teams of researchers. And researchers spend longer acquiring their doctorates, the basic building blocks of knowledge they need to start generating new research. Jones argues that scientific careers are getting squashed both horizontally and vertically by the sheer volume of knowledge that must be mastered. Scientists must narrow their field of expertise, and even then must cope with an ever shorter productive life between the moment they’ve learned enough to get started, and the time their energy and creativity starts to fade.

This is already becoming true even in some areas of that hotbed of dorm-room innovation, software. Consider the computer game. In 1984, when gamers were still enjoying Pac-Man and Space Invaders, the greatest computer game in history was published. Elite offered space combat depicted in three dimensions, realistic trade, and a gigantic universe to explore, despite taking up no more memory than a small Microsoft Word document. Like so many later successes of the dot-com era, this revolutionary game was created by two students during their summer vacation.

Twenty-five years later, the game industry was awaiting another gaming blockbuster, Duke Nukem Forever. The sequel to a runaway hit, Duke Nukem Forever was a game on an entirely different scale. At one stage, thirty-five developers were working on the project, which took twelve years and cost $20 million. In May 2009, the project was shut down, incomplete. (As this book was going to press, there were rumours of yet another revival.)

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This Reviewer

  1. Chris Trimble is the coauthor, with Vijay Govindarajan, of Reverse Innovation: Create Far from Home, Win Everywhere (Harvard Business Review Press, 2012), The Other Side of Innovation: Solving the Execution Challenge (Harvard Business School Publishing, 2010), and Ten Rules for Strategic Innovators: From Idea to Execution (Harvard Business School Press, 2005), which strategy+business recognized as the best strategy book of the year. He is a consultant, a speaker, and an adjunct associate professor at the Tuck School of Business at Dartmouth College.

This Excerpt

  1. Adapt: Why Success Always Starts with Failure (Farrar, Straus and Giroux, 2011), by Tim Harford.
  2. Tim Harford is an economist, a senior columnist for the Financial Times, and host of the BBC radio series “More or Less.” His previous books include The Undercover Economist: Exposing Why the Rich Are Rich, the Poor Are Poor—and Why You Can Never Buy a Decent Used Car! (Oxford University Press, 2006), which has sold a million copies worldwide in almost 30 languages, and The Logic of Life: The Rational Economics of an Irrational World (Random House, 2008).


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