© Matthew Gilson Mort Kamien, the Joseph and Carol Levy Distinguished Professor of Entrepreneurship

Faculty Forum

Revolutionary Innovation
What will it be and when will it get here?

Essay by Mort Kamien, the Joseph and Carole Levy Distinguished Professor of Entrepreneurship

In 1798, Thomas Malthus’ “Essay on the Principles of Population” hypothesized that because population grows at a geometric rate while the food supply grows only at an arithmetic rate, it is inevitable that food demand will eventually outstrip food supply, reducing humanity to the edge of subsistence. Malthus’ prediction proved spectacularly wrong. However, we may not be out of the woods yet. Martin Rees, Britain’s Astronomer Royal, tells us that humanity only has a 50 percent chance of surviving to the end of this century, for reasons that include the World Wildlife Fund’s estimate that it will take the resources of three earths to support the 8 billion people who are expected to inhabit the planet by 2050 [1].

The reason Malthus got it so wrong was he underestimated the role of technological advances despite having witnessed the Industrial Revolution. He didn’t foresee the continual innovations over the next 200 years. We, on the other hand, have become so accustomed to the new, new thing that we take for granted that whatever the challenge, innovation and invention will meet it even if it’s the need for the resources of three earths.

After all, in 1925 the eminent philosopher Alfred North Whitehead proclaimed, “The great invention of the nineteenth century was the invention of the method of invention.” [2] To which in 1952 the economist John Kenneth Galbraith added, “Because development is costly, it follows that it can be carried out only by a firm that has the resources associated with considerable size.” [3] Think Bell Laboratories.

Apparently Steve Jobs and Steve Wozniak hadn’t read Galbraith. They kicked off the information technology revolution by assembling desktop computers in a garage. But IT, according to the Harvard Business Review [4], has run its course by being absorbed into the business infrastructure much as earlier information technologies had, leaving us with the big question “What’s next?” Where is the next revolution that will generate jobs, instant millionaires and budget surpluses going to come from — and when will it get here? Many gurus are eager to tell us, but there is a Catch-22: “Those who know, don’t speak; those who speak, don’t know.” Think plastics.

Regardless of where the innovation comes from and when, for it to be revolutionary it will have to be embodied in a piece of equipment that provides businesses that possess it a competitive advantage. Production to meet widespread demand for it will generate new jobs and the other goodies.

There is a story of an airliner whose navigation system failed. Its captain announced to the passengers that he had good news and bad news. The bad news was that he didn’t know where they were heading, but the good news was that they were making great time. And so it is with innovation. Current low interest rates force investors looking for higher returns to assume more risk, while job scarcity reduces the opportunity cost of striking out on one’s own. With so many fresh entrepreneurs eager to succeed, we may not know exactly where innovations are heading, but we are confident that they are making great time.

1 Martin Rees, Our Final Hour, New York: Basic Books, 2003 back

2 Alfred North Whitehead, Science and the Modern World, New York: Macmillan, 1925 back

3 John Kenneth Galbraith, American Capitalism, Boston: Houghton Mifflin, 1952 back

4 Nicholas G. Carr, "IT Doesn't Matter," Harvard Business Review, May 2003, 41-9. back