Americans always love to do something new and different. It seems innovation is deeply embedded in their culture. So when you hear people saying US people are lack of creativity, you pay extra attention.

Coincidentally, Michael Mandel, Paul Kedrosky and Peter Thiel all recently talked about insufficient innovation may be a cause of our current crisis. Peter pointed out that the dot-com boom of the late 90s is a fraud and most innovation we have received is only marketing hype. Since technology had not made much progress to improve our productivity, people tried to achieve high returns through high leverage. He said we shouldn’t count on established technology companies like Cisco, Microsoft and Intel to give us innovation because their technological progress is extremely slow.

There is no better way to illustrate this situation than talking about what I have seen in the last company I worked for. For some reasons, that company always likes to change their product’s names from time to time but the content is still the same. May be they want to do something new and different but those products are the same old ones that they have provided to customers in the past decade. They may change the pricing a little bit but is that an innovation? Of course not! The company changed the names just for the sake of change. Unfortunately, we can always see these practices in the market nowadays.

As Paul Kedrosky mentioned, “new products took much longer coming than anyone expected“. People sometimes underestimate the difficulty of commercializing technologies because companies like Apple and Google make it look so easy. However, how often have revolutionary products/technologies, like the Internet, radio, TV, got invented in the past? We need to understand that only breakthrough products can produce sustainable strong growth to the whole economy.

Discipline not Innovation

While these conclusions sound reasonable, the management guru, Jim Collins, has a different view. He thinks that the economic turmoil happened because companies lost discipline. Because people tried to do things differently all the time. He argues that our economy was not lack of innovation. Just think about those hedge funds, derivatives and creative financial engineering. Companies only tried to make things more complicated and forgot about their core values. We sometimes tend to rely too much on innovation to produce high growth.

At this moment, it’s hard to say which side is correct as Jim Collins won’t talk about this topic until his new book comes out and he still hasn’t started writing yet . But in my opinion, insufficient innovation may have correlation to the economic problems but it shouldn’t be a cause. Taking on debt that you can’t repaid, buying a house that you can’t afford, and investing in derivatives that you don’t understand. I call them greedy or insufficient satisfaction

Photo source: Jason Nicholls@Flickr

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