AN ILLUMINATING PERSPECTIVE ABOUT BUSINESS INNOVATION: THE PINBALL EFFECT

What follow are actually some raw but rich ideas from Dilip Mukerjea's work-in-progress, tentative titled 'Innovation Ecosystem Lifescape', which form an illuminating perspective about business innovation, as he sees it:

The process of business innovation should seek enlightenment from that of evolution, leading from simple consumptive forms towards more efficient and creative ones… and often back again… distilled into a series of ecological principles.

These principles follow a sort of Karmic Logic, and are all related to one another, in a sequence of cause-and-effects.

Think of them as pinballs, the ten pinballs of evolutionary innovation as applied to business, each pinging into the next and often in the process leading to the creation of net gain… that is, profit.

THE PINBALL EFFECT:

The first pinball is entropy, the imposition of a loss or cost.

According to the second law of thermodynamics, entropy means that every conversion of matter or energy leads to a net loss of potential energy. Every use of a resource creates a cost. Without new infusions of fuel, systems will quickly expend all their energy and run down.

It often takes a long time for the cost of an action to induce change in the system that created it.

The second pinball is feedback, the effect of the action.

Entropy triggers feedback, and the system begins to learn. Feedback imposes a forcing function that ultimately prevents past behaviours from recurring, either because a customer changes a buying habit, an employee changes a production decision, an executive is fired, or a company goes bankrupt. The more effectively soft-feedback signals work to cultivate change gradually, the less likely more extreme changes are compelled later.

So feedback closes the open loop, helping turn a chain into a web, imposing a forcing function that induces change. That knocks into the third pinball.

The third pinball is adaptation.

When resources are abundant, business pioneers have the competitive edge.

But when constraints kick in, the survival strategy is to adapt to fit specific niches more perfectly, and consume resources more frugally, than when at the pioneering stage. This expands the carrying capacity and enables more life to co-exist on fewer resources.

Thus, we arrive at the fourth pinball: specialization.

As organizations (organisms) adapt to the imposition of environmental changes, they grow more refined, different from the pioneers. They become specialists, able to excel in more narrowly defined niches, or places with particular attributes.

Over time, successive waves of limits and adaptations create an ever-greater array of specialists within the innovation ecosystem (marketspace), each matched to the niche opened up by the predecessor species.

Every appearance of a specialist triggers a succession of further changes in the ecosystem. Not just one part of the system adapts; they all do. Every action has not just one reaction, but myriad reactions.

Actions diffuse along every strand in the system’s web, changing not one thing but every thing, and changing them in different ways.

Now the fifth pinball gets activated: diversification.

Every time you trade information, you can get more in return. Similarly, each increase in diversification can lead to more diversity, as emerging corporate species create space for myriad smaller establishments to fit into the niches being created.

Since each specialized innovation entity (organism) is a specific information set, each represents a new tool… a choice. Since diversity means choice, this increase in diversity generally increases the resilience of the playing field.

Why are diverse systems often more resilient in the long-term? Simple ecosystems have limited information content and limited choices. In the short term, they might seem to offer greater stability, but that’s because they have no choice. They rebound only so long as the system is not stressed too severely.

When a fire or other crisis is mild, a simple system remains as is, rock solid, enabling individual species to rebound to previous population levels.

But when a crisis is severe, the simple ecosystem can’t flex, so it may in effect crack, break down, and collapse completely, often with catastrophic results for all its members... a la the financial collapse of September 15, 2008.

The system grows more complex, and with it the sixth pinball gets moving: complexity.

So long as change is regulated but not repressed, a complex organisation can adapt to it continuously. Small, frequent challenges can wind through the living alleyways of trade zones, feeding only on deadwood. They act as cleansing organisms and leave behind them a healthy, diverse terrain with a mix of young and mature players, in the fractal structure that renews itself on many levels simultaneously.

At the level of individual players, even individual categories of players, the change may be catastrophic. But for the system as a whole, small challenges clear the way for the development of a richer and more vibrant ecosystem. If we look at the whole, the number of different parts becomes greater; there is greater variety.

And with every thing affecting every other, the relationships among them become ever more complicated. Diagram them, and what you see might resemble a computer-generated fractal, where simple yes/no instructions lead to the gradual emergence of recurring patterns.

Since every niche is shaped and sculpted according to its relationship to every other, all the elements of the complex whole are dependent on one another, creating the seventh pinball: interdependence.

In a system of increasingly interdependent parts, every thing is related to every other, dependent on every other for its very definition. Lines of relationship are drawn from everywhere to everywhere. Chains become webs.

In a sense, each element of the whole becomes more unique, more individualized, as it grows more specialized and focused on its particular genius, its core competence. Yet through this individuation, it becomes more drawn into a larger whole. It is more individualized and yet less complete.

Specialised to one place and purpose, it loses its capacity to fit other niches and relies on others better suited. Like it or not, it falls into a condition of cooperation, the eighth pinball. Not by choice, not necessarily because it “desires” to or is drawn to by some sense of altruism, but by nature.

Ultimately, parts join as pieces of a larger whole and find that in serving the whole, they serve themselves best.

As this larger whole becomes defined, something astonishing often happens: New properties often emerge, not just in the marketspace but in all complex systems. Not by an individual alone but by individuals in the context of their times and their whole communities.

This is the ninth pinball… emergence.

Something new is created… a parachute is unbound from its pack (a caterpillar has metamorphosed into a butterfly?). This is a potential, a choice, a source of power, a bank account of new value.

Hence, synergy, the tenth pinball, the principle in nature that accounts for its extraordinary ability to end-run entropy.

In complex systems, more is created than was spent to get there… not just quantitatively, but qualitatively. The “more” may include greater efficiency… a continuous improvement in our capacity to carry out an existing function.

But its most compelling form is breakthrough innovation, the creation of a new resource containing a new capacity not present in its parts. Thus we see the creation of net gain…a profit. So can all businesses.

We use this profit to create greater distance between ourselves and our limits, our ground zero. And in using it, we find that we have knocked into our first pinball again and begun a new process of creation that can lead to the creation of profit in a whole new form.

As the pinballs are set in motion, change is inevitable, but the path they take is not predetermined. These pinballs collide and ping off in unexpected directions.

The future is created by actions we take in the present; and every action taken, no matter how small and inconsequential it seems, can change wholly the shape that emerges.

Say Keng's personal comments:

Dilip's foregoing illumination on innovation somehow brings back memory of the work of English historian James Burke [through his book, 'The Pinball Effect' (1996), which takes the reader on many different journeys through the web of knowledge ~ more precisely, history's most dramatic innovations] from where I got my first understanding & appreciation about the interconnectedness & the serendipitous interactions of all things around us.

Likewise, as a corollary to Dilip's key point, & drawing on James Burke's work, "Knowledge has many unforeseen & surprising effects. Like a pinball, a simple discovery in one area can - through necessity, intuition, or serendipity - connect with, bounce off, & redirect the course of another seemingly unrelated discovery made elsewhere in the world or at a distant time."

The larger picture I got out from here is that the fundamental mechanism of innovation, or change for that matter, is the same: the way all things come together & connect.

da vincian PRINCIPLES: PERSONAL PERSPECTIVES III

[continue from the Last Post.]

"Everything is connected to everything else."

To be frank, the first time I had encountered this profound statement from Leonardo da vinci, that was way back into the late seventies or maybe the early eighties, I sort of knew it only intellectually, but did not truly understand it.

That's to say, to paraphrase personal transformation guru Harry Palmer, I had acquired only the "word experience", but not yet the "world experience".

It was probably only towards the end of the eighties that I had a good grasp of its true meaning, especially after I had embarked on a journey to explore learning & creativity as lifelong pursuits, followed by my small entrepreneurial ventures during the early nineties (bookstore, newsletter publishing, & consulting).

Around that time, I had acquired the fascinating book, 'Connections' [followed later by 'The Pinball Effect'] as well as the related wonderful video productions, by scholar & documentary producer James Burke.

He had brilliantly traced the course of many technological innovations from ancient times to the present. In fact, he looked in particular at 8 of them, which maybe most influential in structuring our futures:

- the computer;
- the production line;
- telecommunications;
- the airplane;
- the atomic bomb,
- plastics;
- the guided rocket;
- television;

According to him, each of the 8 was part of a family of similar devices, & was the result of a sequence of closely related events extending from the ancient world until the present day.

In a nut shell, about 12,000 years of history had shown that every person, circumstance, event or invention related in some way to every other.

With my own personal exploration of the field of creativity & innovation, first as a student, then researcher, & finally as a strategy consultant, working with real-world clients, my understanding & knowledge of the foregoing statement went up a couple of notches.

I like to use the following apt quotes to exemplify:

"The crux of creativity resides in the ability to manufacture variations on a theme. If you look at the history of science, for instance, you will see that every idea is built upon a thousand related ideas. Careful analysis leads one to see that what we choose to call a new theme is itself always some sort of variation, on a deeper level, of previous themes."

~ Douglas Hofstadter, quoted in 'Essence of Creativity' by Steven Kim;

"The essence of creation - in all endeavours - is chance connections between ideas & facts that were previously segregated. Entrepreneurship is the direct by-product of chance, of convoluted connections among ideas, needs & people."

~ Tom Peters, 'Liberation Management';

Around the same time, as part of my strategy consulting, in conjunction with my small bookstore, aptly called 'The Brain Resource', I had also indulged in training development & coaching both professionals, managers & entrepreneurs as well as school going kids & teens.

In building up my reference & coaching resources, especially for the kids, I had stumbled upon a wonderful picture book, among many others, by Dr Seuss under his pseudonym, Rosetta Stone: 'Because a Little Bug Went Ka-Choo!'.

In a nut shell: A little bug sneezed & each consequence led to a bigger one, creating in the end total chaos in town, & all because a little bug went ka-choo!

It was certainly a fun way to introduce to the kids the idea that even our smallest actions could have important consequences.

Nonetheless, for me, it was also a brilliant encapsulation of Chaos Theory, which beautifully illustrated the fact that a small event could trigger larger unforeseen events.

Wow! Basically everything is somehow connected to everything else!

Interestingly, I had also meanwhile stumbled upon the Dymaxion Map, or better known as the Fuller Projection, from R Buckminister Fuller, or Bucky as he was affectionately known. He was the man who had created the Geodesic Dome.

Imagine my real shock of realising what I had learned earlier in school, especially with the most widely used Mercator Map, was wrong.

In the Mercator Map, Greenland was shown 3 times its normal size; Antarctica was splayed across the full length of the bottom of the map as a huge long piece of land.

That's to say, the map was badly distorted.

In the case of the Fuller Projection, patented in 1946, the map arrangement puts the North Pole as the centre, thus showing a contiguous land mass & retaining most of the relative proportional integrity of the global map.

That's to say, the map has no or minimal distortion.

In reality, Bucky saw all people on planet earth eventually becoming a one-town world or one-world island in a one-world ocean.

I then knew exactly why Bucky had designated our planet earth as Spaceship Earth. We are all in it together as crew members.

In other words, we are all connected.

Come to think of it, at a deeper level, whenever we find or learn something new in our environment for the first time in our life, doesn't our brain goes into a quick search mode at lightning speed to zip through our entire lifetime inventory of memory traces in order to create a match, so to speak, as if everything in life we have gone through is connected or resonated in some way?