What If Innovation Doesn’t Grow the Economy?


Joey Gannon | Flickr

We live in an era of stunning innovation yet stagnant growth. In Vox, Timothy Lee explores various ways to explain this “productivity paradox” (not to be confused with the other productivity paradox, the one that wondered why infotech wasn’t making the U.S. more productive). The conventional argument is that we’re measuring badly and failing to capture the positive impact of all those innovative ideas. Either that, or we’re over counting the amount of innovation that’s actually taking place and thereby expecting more growth than we’ve really earned.

But what if it’s an accurate picture, and somehow our innovations are actually holding growth down? The more productivity we eke out of traditional manufacturing jobs, the more people end up taking service jobs, which aren’t as optimizable. We end up in a society where “a small minority of people will produce the world’s material goods and automated services, while the rest of us are focused on providing personalized services to each other.”

And maybe that’s not so bad. The service sector isn’t just flipping burgers; it’s doctors and nurses, lawyers and realtors, professors and financial advisers. “A wealthy society has a basically unlimited demand for workers to provide personal services,” Lee says. Factory jobs were once low-paid and miserable; if the service sector is the future of employment, then we should probably make sure its jobs evolve in the same high-wage, high-skill direction that manufacturing did.

Wikipedia Bridges the Political Chasm

When you despair of the possibility of communication across the red-blue partisan divide, take a deep breath and think of Wikipedia. The venerable collectively-written encyclopedia has plenty of faults, but it deserves kudos for modeling and scaling a mode of discourse that’s fact-based and structured to help find common ground.

One new study even finds that, over time, contributors to Wikipedia actually become less biased — or at least use less deliberately inflammatory language (The Washington Post). There are lessons here not only for political interaction but for any businesses that aim to create public digital spaces that don’t degenerate into anarchy, flamewars, or abuse. Chief among them: Post rules and make sure users have a stake in them.

Ikea’s Catalog is Alive — and It Evolves

Ikea is its own economic universe: The company says it uses one percent of the world’s lumber. The history of iconic Ikea furniture items, like the bent-wood Poang chair, provides a fascinating case-study in pricing (FiveThirtyEight). Most of the most popular Ikea products have come down in price drastically over the years — thanks to efficiency and scale.

Do the products that go the distance end up becoming cheaper to produce over time, or is it that those products that are cost-effective end up outlasting those that aren’t? How does survival of the Ikea fittest really work? Here’s a research paper if you want to explore. Also note Ikea’s different strategies for raising and lowering prices: Price increases happen in small slow increments; cuts are fast and all-at-once.

Heal is Uber For Doctors

Doctors making house-calls in 2016? There is now an app for that, and the company behind it, Heal, just raised $27 million to expand its service (TechCrunch). Right now Heal is available throughout California; next up are other states that are short of primary-care physicians, such as Texas.

You might think healthcare is the least likely industry to be Uber-ized, but Heal is only one player in this expanding market. Some companies are pushing telemedicine, which has obvious time and cost savings built in. Heal’s team argues that on-site visits can give doctors valuable insight into patients’ lives, and patients get the benefit of an in-person examination without the waiting-room delay. The target market isn’t just phone-addicted Millennials; next month, Heal will start accepting Medicare.

Five Ways BigCos Can Partner With Scrappy Startups

Big business incumbents don’t have to view entrepreneurial startups as a threat, writes NewCo cofounder Brian Monahan (NewCo Shift). There’s a whole catalog of ways for them to work together instead, from the more traditional investment and acquisition to more unorthodox ideas like co-development (where large companies form project-focused partnerships with entrepreneurs).

When a big company uses a startup as a vendor, that’s a kind of partnership, too. And some of the most interesting relationships are those where an established company and a new one find common ground based on a shared mission. That idea has roots in the non-profit realm, but is spreading more widely today in the for-profit zone, too.

We’re ramping up the NewCo presence on LinkedIn. Follow us to help us reach 1,000 followers!

Leave a Reply