Chester Carlson must’ve seemed like a hopeless dreamer. Working in the patent department at Bell Labs, he wrote down hundreds of ideas, the vast majority of which never amounted to anything. He was eventually fired from his job and went through a few more after that. Chester wasn’t the type of man satisfied with the mundane, everyday.
There was one idea, however, that would keep his interest. He worked on it for years, even while holding down a day job and going to law school at night. When his wife got tired of the explosions he made mixing chemicals in the kitchen, he moved his experiments to a second floor room in a house his mother-in-law owned.
Eventually he conjured up a working prototype and his invention truly would change the world. Yet that wasn’t the end of the story. It would still take decade to transform Carlson’s invention into a viable business and many twists and turns to the story after that. The one constant was that when a challenge arose, what saved the day was off the beaten path.
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Over the past several decades, innovation has become largely synonymous with digital technology. When the topic of innovation comes up, somebody points to a company like Apple, Google or Facebook rather than, say, a car company, a hotel or a restaurant. Management gurus wax poetically about the “Silicon Valley way.”
Of course, that doesn’t mean that other industries haven’t been innovative. In fact, there are no shortage of excellent examples of innovation in cars, hotels, restaurants and many other things. Still, the fact remains that for most of recent memory digital technology has moved further and faster than anything else.
This has been largely due to Moore’s Law, our ability to consistently double the number of transistors we’re able to cram onto a silicon wafer. Now, however, Moore’s Law is ending and we’re entering a new era of innovation. Our future will not be written in ones and zeros, but will be determined by our ability to use information to shape the physical world.
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There’s an old adage that says we should never let a crisis go to waste. The point is that during a crisis there is a visceral sense of urgency and resistance often falls by the wayside. We’ve certainly seen that during the Covid pandemic. Digital technologies such as video conferencing, online grocery and telehealth have gone from fringe to mainstream in record time.
Seasoned leaders learn how to make good use of a crisis. Consider Bill Gates and his Internet Tidal Wave memo, which leveraged what could have been a mortal threat to Microsoft into a springboard to even greater dominance. Or how Steve Jobs used Apple’s near-death experience to reshape the ailing company into a powerhouse.
But what if we could prepare for a trigger before it happens? The truth is that indications of trouble are often clear long before the crisis arrives. Clearly, there were a number of warning signs that a pandemic was possible, if not likely. As every good leader knows, there’s never a shortage of looming threats. If we learn to plan ahead, we can make a crisis work for us.
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When politicians and pundits talk about the economy, they usually do so in terms of numbers. Unemployment is too high or GDP is too low. Inflation should be at this level or at that. You get the feeling that somebody somewhere is turning knobs and flicking levers in order to get the machine humming at just the right speed.
Yet the economy is really about our well being. It is, at its core, our capacity to produce goods and services that we want and need, such as the food that sustains us, the homes that shelter us and the medicines that cure us, not to mention all of the little niceties and guilty pleasures that we love to enjoy.
Our capacity to generate these things is determined by our productive capacity. Despite all the hype about digital technology creating a “new economy,” productivity growth for the past 50 years has been tremendously sluggish. If we are going to revive it and improve our lives we need to renew our commitment to scientific capital, human capital and free markets.
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Marshal McLuhan, one of the most influential thinkers of the 20th century, described media as “extensions of man” and predicted that electronic media would eventually lead to a global village. Communities, he predicted, would no longer be tied to a single, isolated physical space but connect and interact with others on a world stage.
What often goes untold is that McLuhan did not see the global village as a peaceful place. In fact, he predicted it would lead to a new form of tribalism and result in a “release of human power and aggressive violence” greater than ever in human history, as long separated —and emotionally charged— cultural norms would now constantly intermingle, clash and explode.
Today, the world looks a whole lot like the dystopia McLuhan described. Fringe groups, nation states and profit-seeking corporations have essentially weaponized information and we are all caught in the crossfire. While the situation is increasingly dire it is by no means hopeless. What we need isn’t more fact checking, but to renew institutions and rebuild trust.
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A leader’s primary responsibility is to make tough decisions. If the issues are unimportant and the choices are clear, someone lower down in the organization usually deals with it. The stuff that comes to you is mostly what others are unable, or unwilling, to decide themselves. That leaves you with the close calls.
All too often, we buy into the Hollywood version of leadership in which everything boils down to a single moment when the chips are down. That’s when the hero of the story has a moment of epiphany, makes a decision and sets things going in a completely new direction. Everyone is dazzled by the sudden stroke of genius.
In real life, it’s rare that things boil down to a single moment. It’s more of a continuum. In fact, the most consequential decisions you make often don’t seem that important at the time and ones that seemed pivotal can turn out to be trivial. What is true, however, is that the decisions you make will define you as a leader. You need to learn to make them wisely.
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In Mapping Innovation, I wrote that innovation is never a single event, but a process of discovery, engineering and transformation and that those three things hardly ever happen at the same time or in the same place. Clearly, the Covid-19 pandemic marked an inflection point which demarcated several important shifts in those phases.
Digital technology showed itself to be transformative, as we descended into quarantine and found an entire world of video conferencing and other technologies that we scarcely knew existed. At the same time it was revealed that the engineering of synthetic biology—and mRNA technology in particular—was more advanced than we had thought.
This is just the beginning. I titled the last chapter of my book, “A New Era of Innovation,” because it had become clear that we had begun to cross a new rubicon in which digital technology becomes so ordinary and mundane that it’s hard to remember what life was like without it, while new possibilities alter existence to such an extent we will scarcely believe it.
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In 1997, when Clayton Christensen first published The Innovator’s Dilemma and introduced the term “disruptive innovation,” it was a clarion call. Business leaders were put on notice: It is no longer enough to simply get better at what you already do, you need to watch out for a change in the basis of competition that will open the door for a disruptive competitor.
Today, it’s become fashionable for business pundits to say that we live in a VUCA era, one that is volatile, uncertain, complex and ambiguous, but the evidence says otherwise. Increasingly researchers are finding that businesses are enjoying a period that is less disruptive, less competitive and less dynamic.
The truth is that we don’t really disrupt businesses anymore, we disrupt people and that’s truly becoming a problem. As businesses are increasingly protected from competition, they are becoming less innovative and less productive. Americans, meanwhile, are earning less and paying more. It’s time we stop doubling down on failed ideas and begin to right the ship.
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I started Digital Tonto in 2009, at the height of the financial crisis. I was living in Kyiv and it felt like the world was ending. As the country descended into chaos, it would elect the hopelessly corrupt Viktor Yanukovych as President, who would shatter whatever norms of decency were left and leave the country in tatters.
The past year, with a global pandemic, a sharp economic downturn and political turmoil not seen since the 1850s, has had a similar feel. Yet that earlier experience gave me a sense of calm and hope. In the end, Ukraine made it through and is, in many ways, better off for the experience. We seem to be pulling through as well.
You never really know what’s around the next bend. Just like few saw the financial crisis coming in 2009, or the pandemic coming in 2020, I had no idea about the community that would coalesce around Digital Tonto or where it would take me. All I know is that I’m grateful and looking forward to the year ahead. Here are some of my favorite posts from the last year.
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Every era contains a prism of multitudes. World War I gave way to the “Roaring 20s” and a 50-year boom in productivity. The Treaty of Versailles sowed the seeds to the second World War, which gave way to the peace and prosperity post-war era. Vietnam and the rise of the Baby Boomers unlocked a cultural revolution that created new freedoms for women and people of color.
Our current era began with the 80s, the rise of Ronald Reagan and a new confidence in the power of markets. Genuine achievements of the Chicago School of economics led by Milton Friedman, along with the weakness Soviet system, led to an enthusiasm for market fundamentalism that dominated policy circles.
So it it shouldn’t be that surprising that veteran Republican strategist Stuart Stevens wrote a book denouncing that orthodoxy as a lie. The truth is he has a point. But politicians can only convince us of things we already want to believe. The truth is that we were fundamentally mistaken in our understanding of how the world works. It’s time that we own up to it.
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