Jim Surowiecki, writing his regular column in The New Yorker, “The Financial Page,” wrote last week about innovation and why it seems to take hold in the US before it does elsewhere. Jim is a good read almost any week, but this is a column demanding attention. Here’s the hook:
In September, 2008, a company named Dropbox opened for business, marketing a simple innovation: it allowed you to upload your files, via an intuitive drag-and-drop method, to remote servers, and to then synch those files with other computers. Dropbox grew quickly; a year after starting, it already had two million users, and today it has more than twenty-five million. A typical account of Dropbox’s success might focus on the usefulness of its service or the entrepreneurial drive of its founder. But, to understand why the U.S. regularly produces companies like Dropbox, you also have to look at who is interested in buying and using new products. It turns out that the U.S. has a particularly large number of people who are willing to do something like hand over their precious data to a brand-new startup–the kind of people the economist Amar Bhidé calls “venturesome consumers.”
Applaud as I do the US’ “venturesome consumers,” you have to ask if they’re behaving entirely rationally. After all, isn’t it always safer to sit on the sidelines and wait?
Yes, but mostly no.
Consider how Surowiecki describes the penchant of Americans to be early adopters:
Given the risks of early adoption, it’s rational for consumers to just wait and see what happens. But Bhidé, in his book “The Venturesome Economy,” shows that American consumers, businesses and individuals alike, are inordinately willing to take a gamble on new products. American farmers, for good or ill, have been the world’s most ardent adopters of genetically modified crops, and American businesses have consistently been avid adopters of new technology.
They were among the first to use electric power to run their factories. They made air-conditioning ubiquitous in the corporate world. In the nineteen-fifties and sixties, they purchased tens of thousands of mainframe computers, even though I.B.M. had initially thought it might be able to sell only twenty-five. And when the minicomputer and then the P.C. were introduced, businesses invested heavily in them as well.
This embrace of technology has not diminished: a 2005 study of businesses in the U.K. showed that those owned by American multinationals invested far more heavily in information technology than those with non-U.S. ownership, and were more productive as a result.
The American public, meanwhile, has thrown caution aside in its desire for novelty. Automobiles were dangerous, polluting, and, even after Henry Ford pioneered the assembly line, pricey. But by 1920 Americans were buying more than two million of them annually, and the American market accounted for ninety per cent of the world’s cars. Appliances like electric irons and vacuum cleaners were commonplace in American households in the nineteen-twenties, when they were still rarities in most European countries.
Early jet travel was both perilous and expensive, yet by the mid-fifties American airlines were carrying fifty-five million passengers a year, and by 1960 they were handling nearly sixty per cent of global air travel. Television, the personal computer, the DVD player, the iPod: all became very popular here very quickly.
Now: Care to nominate an industry as titleholder for most resistant to change?
I’m waiting….
Well, if you’re among my readership, you’re most likely in that industry: Welcome to Law Land.
The standing joke about introducing something new is that a lawyer’s reaction is “Who else is doing that?” while a business person’s reaction is, “I hope no one else is doing that.”
Who can doubt the fundamental truth about being “venturesome,” namely that it produces concrete advantages?
The first businesses to visit their customers in person via air travel established a closer connection and the first businesses to adopt BlackBerrys did the same.
Yes, you’re saying, but these advantages are fleeting: As soon as a few firms adopt them, all follow and the advantage disappears.
Yes, and no.
First, there’s a competitive glow associated with being innovative: Some firms in our industry even aspire to it, and can lay claim to it. (You know who they are.) This glow attracts a different sort of lawyer and different sorts of clients. I believe it’s an unalloyed good.
Second, even a year or two’s advantage in adopting an innovation can have lasting benefits. European automakers have a tradition of consistently adopting things like antilock brakes, all-time four wheel drive, electronic stability control, and upscale features such as dual climate control a few years ahead of American car makers. Are these technologies patented or mysterious? No, they’re universally known and thoroughly understood throughout the industry. But because American car makers have adopted them a couple of years late, they’ve consistently remained behind the curve. None of those car features are static technologies; they’ve gotten better and better over the years.
And you cannot copy the fine-grained refinements that make all the difference. You can only learn these as you work through them with your lawyers and clients.
The point is that an innovation is not a single, “once and done” event: It’s an evolution. The sooner you get on the train, the farther to the front you’ll be.
Are you ready?
Or are you going to do the “prudent” thing, sit by the sidelines and see how it all works out?
We saw how that worked for Detroit. Your choice.
