Michael Hart's comments on the Disruptive Engine - Innovation and the
Capitalistic Dream:

http://www.narcissistic-abuse.com/pp155.html

More about Michael Hart:

http://samvak.tripod.com/busiweb29.html

http://samvak.tripod.com/busiweb39.html

Sam

MICHAEL HART's COMMENTS

re: The Disruptive Engine Innovation and the Capitalistic Dream


"Whenever we move forward, the power flows from the few to the many."
Ralph Nader [on Charlie Rose, August ~12, 2005]


Have you read Atlas Shrugged, The Fountainhead, or Anthem?

Each of these addresses "disruptive innovation" very interestingly.



"Yet, the truth is that no one knows why people innovate. The process
of innovation has never been studied thoroughly - nor are the effects
of innovation fully understood."

_I_ know why people innovate!

"Capitalism makes sure that innovators are rewarded for their time and
skills. Property rights are enshrined in enforceable contracts. In
non-capitalist societies, people are busy inventing ways to survive or
circumvent the system, create monopolies, or engage in crime."

Most non-capitalists are idealists.


"Perhaps because oligopolies are more common in the US than they are
elsewhere. Baumol suggests that oligopolies use their excess rent -
i.e., profits which exceed perfect competition takings - to innovate
and thus to differentiate their products. Still, oligopolistic
behavior does not sit well with another of Baumol's observations: that
innovators tend to maximize their returns by sharing their technology
and licensing it to more efficient and profitable manufacturers. Nor
can one square this propensity to share with the ever more stringent
and expansive intellectual property laws that afflict many rich
countries nowadays."

I presume you are aware that there are TWO points on the supply/demand
curve that provide equal profits, but ONE of the points keeps products
in very limited distribution with very high rarity scores, whereas the
OTHER point provides huge mass distribution potential in which all the
people can have the product. Britannica and Oxford each faced this in
recent times, with the advent of eBooks, and I eventually bought CDROM
verions of the Britannica for ~$15 each at Best Buy, while the OED was
kept artificially limited by price tags of ~$1,000.

"The Landed Gentry of the Information vs. The Computer Commoner."

"The Tragedy of the Commons."

Etc.


"Very few inventions have forced "established companies from their
dominant market positions" as the "The Economist" put it recently.
Moreover, most novelties are spawned by established companies. The
single, tortured, and misunderstood inventor working on a shoestring
budget in his garage - is a mythical relic of 18th century
Romanticism."

We wouldn't even have had PC's if it weren't for Woz and Jobs in their
garage in Cupertino, which literally CREATED Silicon Valley.

Not to mention that we wouldn't have had Project Gutenberg, if not for
some wild basement inventor in the middle of the Midwest cornfields.

Not to mention the Gutenberg Press, relativity, music, synthesizers or
many, many other things, such as the new blue LEDs.



"High-performing companies - those that generate annual total
shareholder returns in excess of 37 percent and have seen consistent
revenue growth over the last five years - average 61 percent of their
turnover from new products and services. For low performers, only 26
percent of turnover comes from new products and services."

Sounds as if this were written during the "Dot Com Boom."


"Tom Kelly, brother of founder David Kelly, studies, in "The Art of
Innovation", the history of some of the greater inventions to have
been incubated in IDEO, a prominent California-based design firm
dubbed "Innovation U." by Fortune Magazine. These include the computer
mouse, the instant camera, and the PDA. The secret of success seems to
consist of keenly observing what people miss most when they work and
play."

Of course, the mouse inventor also has been said to have "invented the
eBook". . .but quite obviously it was like inventing nylon, tossed out
with the rest of the non-useful results.


"This methodology is a hybrid between the lone-inventor and the
faceless corporate R&D team. An entirely different process of
innovation characterizes the financial markets. Jacob Goldenberg and
David Mazursky postulated the existence of Creativity Templates. Once
systematically applied to existing products, these lead to innovation."

I once figured out a "creativity template" for music, but don't know
any musicians or composers who liked the idea.


"Three types of factors drive financial innovation: demand, supply,
and taxes and regulation. Demand driven innovation occurs in response
to the desire of companies to protect themselves from market risks ...
Supply side factors ... include improvements in technology and
heightened competition among financial service firms. Other financial
innovation occurs as a rational response to taxes and regulation, as
firms seek to minimize the cost that these impose."

None of these factors drove my innovations:

I just wake up every morning and don't get out of bed until I figure
out some way to make the world a better place.. . .

After all, THAT is the real purpose of innovation.


1. "In the first stage ... there is a proliferation of standardised
securities such as futures. These securities make possible the
creation of custom-designed financial products ...
2. In the second stage, volume in the new market expands as financial
intermediaries trade to hedge their market exposures.
3. The increased trading volume in turn reduces financial transaction
costs and thereby makes further implementation of new products and
trading strategies possible, which leads to still more volume.
4. The success of these trading markets then encourages investments
in creating additional markets, and the financial system spirals
towards the theoretical limit of zero transaction costs and
dynamically complete markets."


All that is being talked about HERE is the Zero Sum Game of trading.




"It would seem that both management gurus and ivory tower academics
agree that innovation - technological and financial - is an
inseparable part of competition. Tom Peters put it succinctly in "The
Circle of Innovation" when he wrote: "Innovate or die". James Morse, a
management consultant, rendered, in the same tome, the same lesson
more verbosely: "The only sustainable competitive advantage comes from
out-innovating the competition." "

What a horrible concept of innovation. . .innovation as slavery!



"The study analyzed the entire OECD area. It concluded, unsurprisingly,
that easing regulatory restrictions enhances productivity and that
policies that favor competition spur innovation. They do so by making
it easier to adjust the factors of production and by facilitating the
entrance of new firms - mainly in rapidly evolving industries."

They also make it easier to screw your competition.



"Many cited the S-curve to illuminate the current respite. Innovation
is followed by selection, improvement of the surviving models,
shake-out among competing suppliers, and convergence on a single
solution. Information technology has matured - but new S-curves are
nascent: nanotechnology, quantum computing, proteomics,
neuro-silicates, and machine intelligence."


Just think how many people, even those I personally know, who shoulda/
woulda/coulda kept their billion dollar bubbles afloat if they perhaps
had just been bright enough to see the "S" curve of Internet coverage
had reached 50% and thus could never double again, much less in a year!




"Recent innovations have spawned two crucial ethical debates, though
with accentuated pragmatic aspects. The first is "open source-free
access" versus proprietary technology and the second revolves around
the role of technological progress in re-defining relationships
between stakeholders."


Obviously, this is something I/we could write about for years!!!


"Both issues are related to the inadvertent re-engineering of the
corporation. Modern technology helped streamline firms by removing
layers of paper-shuffling management. It placed great power in the
hands of the end-user, be it an executive, a household, or an
individual. It reversed the trends of centralization and hierarchical
stratification wrought by the Industrial Revolution. From
microprocessor to micropower - an enormous centrifugal shift is
underway. Power percolates back to the people."

Ah, then you understood what I quoted from Nader in my opening gambit!



;=-)