Adam Smith writes, ‘As it is the power of exchanging that gives occasion to the division of labour, so the extent of this division must always be limited by the extent of the power, or, in other words, by the extent of the market’. He believed, therefore, that innovation naturally created markets, yet history doesn’t back this up!
DEFINING IDEA…
An important scientific innovation rarely makes its way by gradually winning over and converting its opponents. What does happen is that its opponents gradually die out, and that the growing generation is familiarized with the ideas from the beginning.
~ MAX PLANCK, FOUNDER OF QUANTUM THEORY
For a start, the innovation that occurs is often limited to a system already created. Take the automotive industry, for example - industry-wide emulation ensures that despite over 100 years of assembly-line production and billions spent in research and development, the car hasn’t actually changed that much.
In 1977 President Jimmy Carter prophetically warned the US that, ‘we simply must balance our need for energy with our rapidly shrinking resources’. But no one listened, they didn’t want to: America was the Land of Plenty and Carter’s encouragement toward a less materialistic society lost him the presidency.
What’s interesting, though, is that at least a partial solution to his concerns already existed. Fourteen years earlier, in 1963, the German car company Daimler Benz invented an electric car capable of fifty-three miles per day, which even now would probably be enough for 80% of car users. In the early 70s Japan’s Honda invented a solution for a hybrid car, while French company Renault produced a solution for an electric car in the 80s. So, why were these innovations not brought to market? Because markets can be manipulated!
Perhaps if people had listened to Jimmy Carter in the 70s and had been presented with the facts and repercussions, Vice President Al Gore wouldn’t have had to create An Inconvenient Truth in 2006. Had the governments even then got behind the existing science and helped people to really understand the impact of their actions, perhaps the market would have been created. Instead, and especially in the US, government was consistently populated by those with vested interests in oil and the status quo.
Beyond any Oliver Stone-style conspiracies, however, human nature must be considered. It is very difficult to change something from the inside - our compulsion to keep doing what we’ve always done is very strong. Social psychologist Robert Cialdini refers to this as, ‘commitment and consistency’, and believes that we are driven to remain consistent with our past decisions and actions, even when they are obviously wrong. Another influencing factor is ‘social proof’, which refers to safety in numbers and how we are influenced by what others do. If everyone in the automotive, or indeed any other industry, has been doing something a certain way for a long time then there is huge resistance toward change. Being collectively wrong is better and safer than being individually wrong!
HERE’S AN IDEA FOR YOU…
If you are in business, encourage people to question everything. Take the time to consciously assess your policies and procedures—‘Because it’s always been done that way’ isn’t a good enough reason to maintain the status quo. Encourage creativity and innovation across the board.