Sunday, June 13, 2010

Not all innovation is good innovation

A frequent frustration has been the lie perpetuated by con artists (or politicians) that all change is good. For these fraudsters, “change” (or “reform”) becomes a mantra or a cloak to hide any close examination as to whether the proposed change is a good thing or a bad thing.

Clearly, not all change is good. Hitler, Stalin and various ayatollahs come to mind. Different factions like different forms of change: in the US, leftists fight deregulation or tax reduction while rightists fight various forms of social change.

Similarly, in his talk Friday at the Tilburg Conference on Innovation, Prof. Andrew van de Ven of the University of Minnesota noted that “innovation” is also both a good thing and a bad thing. He called on scholars to refuse to be drawn into any definition of “innovation” that it as synonymous with “good thing”.

Alas, such intellectual honesty is in scarce supply among politicians and bureaucrats — as well as some industry trade associations. “Innovation” becomes a mantra of those seeking to wrap themselves in the halo of scientific progress — as with the current White House and its “Strategy for Innovation.”

Van de Ven pointed to a paper 20 years ago by William Baumol entitled “Entrepreneurship: Productive, Unproductive, and Destructive,” which made a similar point about entrepreneurs and the new ventures they create:

[T]here are a variety of roles among which the entrepreneur's efforts can be reallocated, and some of those roles do not follow the constructive and innovative script that is conventionally attributed to that person. Indeed, at times the entrepreneur may even lead a parasitical existence that is actually damaging to the economy. How the entrepreneur acts at a given time and place depends heavily on the rules of the game-the reward structure in the economy-that happen to prevail.
Baumol argues that if the incentives are right, entrepreneurs grow new profit-making enterprises that provide employment, wealth and other societal benefits. In corrupt, non-transparent, or other hostile environments, entrepreneurs join the gray or black market, or create criminal enterprises.

So perhaps if we’re lucky, a reminder to academics about the accuracy of our constructs will eventually filter into the media and the political caste. But I’m not optimistic.

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