Making sense of innovation
What often passes as innovation is just gimmickry and gloss
A word that seems to be perennial in the lexicon of political and economic consultants is “innovation”. Consultancy gurus tell business and political leaders that unless they innovate, they will die. Innovation has been transformed into an unambiguous virtue, and the quest for it has almost become a religious cult.
Recently, HSBC chief executive Georges Elhedery appealed to staff not to fight AI, saying it would destroy jobs while creating new ones.
Innovation has, of course, brought substantial changes in our lives. In medical science, we now have the technology to diagnose disease much earlier than before. The pharmaceutical industry is continually coming up with new drugs to combat diseases that previously resisted any treatment.
In the financial services field, we have seen the introduction of automatic teller machines over the last century, which has made handling cash much easier. We also have internet banking, and today, one hardly ever needs to go to a physical branch to conduct business. But many other innovations have not served us well at all.
The deregulation mania that afflicted the banking community in the last few decades of the 20th century saw banks offloading the dud mortgages they had oversold to their gullible customers by inventing securitisation.
They packaged these risk loans in what was then perceived as an innovative service known as securitisation.
We all know that this innovation was the spark that ignited the financial crisis in the US. It seems that rating agencies and banking supervisors were just as gullible as they were in failing to see the inherent risks in this innovative service.
In politics, we see young political leaders convincing the electorate that they have the right painless solutions to stimulate vibrant economic growth. They believe they have broken the boom-and-bust cycles that are constant in economic life.
Part of their innovation strategy is to dump traditional politicians with decades of experience. These new kids on the political block share the fallacious belief of tech investor Vinod Khosla that “people over 45 basically die in terms of new ideas”. If by “new ideas” they mean an abandonment of integrity and social values, then I wonder how productive their innovative strategies will ever be.
Many innovators want to create a wow factor that often lasts only a very short time, like the colourful fireworks display we see at our festas
What often passes as innovation is just gimmickry and gloss. In the world of politics and business communication, we are better off using earplugs to preserve our sanity. Social media has brought enormous benefits, but it also has a dark side that is still not properly managed. The propagation of hate by individuals and empty political rhetoric by morally bankrupt politicians seems to be unstoppable now that they can broadcast their views from the comfort of their homes and at little expense.
The most worrying aspect of innovation that we have to endure is its promotion of consumerism. When expensive home appliances break down, we no longer have a viable repair option. We are told that it is more economical to scrap them and buy new ones.
One kind of innovation I would most certainly welcome is businesses offering repair services for goods with minor defects that can be fixed at a reasonable cost.
Perhaps the most dangerous innovation we should worry about is in education. Our educational system has been underperforming for decades. While many go through the system successfully, mainly because their parents provide safety nets when the system fails them, many others fall through the cracks.
The educational authorities are continually developing innovative ideas for preparing young people for the real world of work. The poor results speak to the shallowness of these innovative strategies.
One innovation that seems to be eluding business and political leaders is the rediscovery of the wisdom of enforcing basic standards, whether in education or customer service. The “cult of maintenance” may be an unglamorous notion, but we would surely be better off if we had more sticklers for the fundamentals. To achieve this, we need a new generation of business and political leaders who can reinvent themselves by embracing the merits of maintenance alongside innovation.
Many innovators try to hide their incompetence by promoting a cult of innovation that is built on a disregard for fundamentals. They want to create a wow factor that often lasts only a very short time, like the colourful fireworks display we see at our festas.
Scepticism about the new is not necessarily a question of age. It is often a characteristic of pragmatic thinkers.