Adam Cowart is one of our Emerging Fellows, and this is his sixth article written for the program. In it, he explores the potential of sub-optimized ecosystems. The views expressed are not necessarily those of the APF or its members.
What role can – or will – innovation play in the future of the real economy? To begin, let’s start with the simplest definition of innovation. Innovation is “creating results by doing new things.” The “doing new things” part is fairly self-explanatory on the surface. It is the process of doing something in a way in which it was not previously done. Although, often, we may have done something, then stopped doing it, then started doing it again either aware or unaware of having done it in the past. But the “creating results” piece of the definition is less clear. What, precisely, is a result? A positive outcome? And, if so, a positive outcome for whom? We can say that, today, an innovative result is one in which we either save money, make money, or provide some sort of social or environmental good. But are those the results we should be aiming for? Do we care, or even understand, how these results impact and influence other components of the global system? And, for our purposes here, how will our definition of “results” evolve in the future? The point here is not to focus on types of results reporting, such as triple bottom line or happiness index-type measurements. The purpose here is on the deeper structural challenges to “real” innovation.
There is no question that what we might call “innovation-offset” occurs across a system or multiple subsystems. How often does an innovation in one area generate an offsetting process inefficiency or product redundancy in another? Put another way, if you innovate in one area, to the detriment of another area, are you really innovating at all? And how would you even know?
Two common terms used to describe this phenomenon are sub-optimization and shifting the burden. Sub-optimization commonly refers to silo-type thinking within an organization. This leads to non-value added activities, redundancy, or diminished returns. Shifting the burden, on the other hand, is a term generally meant to describe a tendency to focus on resolving surface-level, symptomatic issues, pushing costs and negative externalities onto others.
What we might call “sub-optimization ecosystems” are now a vital part of the real economy, not only the maintenance of them, but the perpetual attempts to circumnavigate them. By focusing on the self-interest of the firm at the expense of the larger system, we are inherently sub-optimizing. We ostensibly innovate within a department, across a division, across a firm, across an industry, across multiple industries, then across whole economies. There is no escape.
Our attention has been focused on what we can call the migratory patterns of money. How its shapes and structures tend to manifest. And here, we see a profitable innovation ecosystem, where activity and expenditure is its own reward. But wait, isn’t innovation inherently messy? An iterative process of trial and error. “Fail fast to succeed sooner”?
Consider what percentage of global GDP is dedicated to activities that solve problems by creating new problems elsewhere. Cycles of pointless zero-sum innovation. At a time of complexity, instead of adopting the tools of social innovation and systems change, we have doubled down on the mercurial dark arts of sub-optimization, masked as real innovation.
© Adam Cowart 2018