2 INNOVATION

Innovation is what makes progress and development possible, and in the recent past a number of societal and technological circumstances have dramatically increased the pace of change of our societies.

2.1 On the shoulders of giants

Scientific and technological progress always builds upon the foundations laid by earlier scientists, researchers, inventors and innovators. Isaac Newton acknowledged this when he wrote : “If I have seen further, it is only by standing on the shoulders of giants”.
In other words, every discovery lays the ground for even more impactful discoveries in the future, and progress goes a bit faster and a bit further every time. Several causes are combining to make this acceleration even more substantial in the current period.
One of the explanations for this acceleration rests on the fact that current technological progress relies largely on information technology which is driven by the computing power of microprocessors is the fundamental driver of capabilities. Microprocessors are the “intelligent” elements found at the heart of our computers, sensors in our home and our cities as well as in smart objects like smart watches or self-driving cars. Microprocessors are the element that actually process and analyze data; faster, more powerful microprocessors automatically result in the ability to perform more complex calculations in a shorter time.

Gordon Moore, one of the founders of Intel, which is one of the leading producers of microprocessors, identified one of the key trends fuelling modern technological progress. He noted that the computing power of processors doubles approximately every two years. This increase of computing power arises because technology allows cramming in the same surface an increasingly large number of computing units, called transistors.

The diagram on the right shows how computing power has been growing over 30 periods, and it displays the typical effect of an exponential curve that gives the impression of going off the chart at a given point. As mentioned earlier, the COVID pandemic made all of us familiar with exponential trends. In this case, it is a welcome effect, that bears the name of Moore’s law, even if it is not really a law, but just a phenomenological trend that was sustained for several decades. This is the second, but not the last, example of an exponential trend, after the GDP growth since the industrial revolution.

Today’s technological progress is not driven by computing power only, but also by the fact that computers, intelligent objects and people themselves are increasingly interconnected. Bob Metcalf is the founder of 3com, an historical producer of connectivity and communication tools eventually acquired by Hewlett Packard. Metcalfe was also the inventor of Ethernet which standardizes the software processes and hardware components that allow your computer to communicate with other computers through cables. He reflected on the value provided by a set of interconnected components and realized that this value doesn’t grow linearly with the number of elements but quadratically. In other words, if you have a communicating device, say, a fax machine, sitting all by itself, the network value is null: at best you can use it as a photocopier. If you add another fax machine to the system, you have just one link for sharing information. With three fax machines, you have three possible ways to establish a direct connection. With four elements, you have six possible links, and with five devices, you get eleven. And so on, the number of links increases much faster than the number of nodes. The number of connections in a network represents its capacity to generate value. It grows with the square of the number of nodes: another exponential behaviour!

Moreover, while the world population is limited in number, and therefore the number of individuals connected to the network has an upper limit, the number of “intelligent “nodes” interconnected worldwide is currently itself growing at an exponential rate.
It would be interesting and reassuring to be able to easily make sense of where this technological and social acceleration is going to take us. Unfortunately, as an old Danish saying puts it :

Indeed, innovation’s potential impact on our lives can be a surprise even to the best informed. Below are few quotes from individuals that were very well-positioned to grasp the potential of innovation and totally failed in their predictions

* Thomas Watson chairman of IBM in 1943 estimated the total world market for computers to 5

• Robert Metcalfe predicted that the internet would go spectacularly bad in 1996.
• XYZ the founder of digital equipment corporation, a major computer maker acquired by HP in XXXX, was convinced that no one would ever want a computer in their home

This difficulty of anticipating the societal impact of innovation, even for someone at the forefront of change, is not limited to IT. For example, Rutherford, after splitting the atom for the first time, stated that : “the energy produced by the breaking down of the atom is a very poor kind and anyone who expects a source of power from the transformation of these atoms is talking moonshine” [^6].

Opposite to sceptics of technological disruption, we have people like Ray Kurzweil, an American inventor and futurist. He is involved in fields such as optical character recognition (OCR), text-to-speech synthesis, speech recognition technology. Google has employed Kurzweil since 2012, who is now “director of engineering”. He stated:”The combined effect of accelerating technological innovation, in particular Artificial Intelligence, and ever-expanding networks will abruptly trigger runaway technological growth, resulting in unfathomable changes to human civilisation.” This is another way of saying that we may be at the inception pointof an exponential transformation of society : time will tell if humankind is reaching a singularity point in its evolution.
Indeed, so far the dreamers’ predictions have been outbidding those made by the sceptics. This chart shows the rate of diffusion of some major technological advances in the history of humanity, and it clearly shows the acceleration of innovation adoption through history.

• the paper took about two centuries to be adopted worldwide
• the mechanical loom one century
• the production chain 40 years the
• World Wide Web just 20 years and
• Even more recently, and this is just an example among a myriad of innovations, up to 600 million people have adopted digital wallets within five years

Technological changes are indeed impacting us at an increasing speed, and the chart shows the beginning of the “off the chart” exponential effect we are beginning to be familiar with .
In the coming sections, we will use the four dimensions of digital transition, complexity, organizational consciousness and agility to make some sense of how this will impact organizations in the future.

2.2 Diffusion of innovation

When speaking of innovation, one may think of revolutionary inventions that change the world : the aeroplanes, the telephone or nuclear power. While technological progress readily comes to mind, innovation can take many forms that may be technology-based or not. Sometimes it arises from adopting a new, simple, practice that works much better than the previous one and, for some reason, no one thought about it before, like in xxxxx.
Innovation typically starts from a briliant idea, but good idea are not sufficient. To have a substantial impact on society or more modestly on a specific market, innovation has to be widely adopted. Consider, for example, the layout of the keyboard that you use to type on your computer: the initial design was made when typewriters would easily jam when typing too fast. The main objective of the layout was not to speed up typing but to minimize jamming at the cost of slowing down typing speed. More efficient keyboard layouts exist since decades, specifically designed to make typing faster and easier. Tests show that these layouts are more effective as long as one makes the required small adaptation effort, but we are so used to our keyboard and so reluctant to adapt, that manufacturers gave that innovation up a long time ago, probably because there was no major financial interest in promoting it.
Innovation can also be incremental, by providing only a small change to the previous situation, without revolutionizing the way a service is delivered, or an item produced. While imposing only a marginal difference, it may still offer sufficient advantages to make its adoption worthwhile. Air winglets, the tilted tip of air wings that is now common in most commercial aeroplanes is a typical example of incremental innovation. It doesnt change the industry, the way to fly aircraft, or to sell tickets or board or passengers. It just reduces fuel consumption, and can also be easily fitted to existing aeroplanes.
At the opposite extreme some innovation can dramatically disrupt established industries. Electric bulbs, for example, are definitely not improved candles. Once introduced, they changed the industry of illumination radically, from sourcing material to production and distribution . The innovation introduced by Edison brought benefits but also remarkable social changes. It was adopted not just because of its superior advantages, but also through a deliberate political lobbying of Edison and his partners (Akrich et al. 2013, page 111; Hughes ).Actually the invention ofthe high resistance light bulb was not at the origin of the deployment of the electric lighting system. It was the economic and social constraints of the power grid that put Edison in the deliberate development of a high resistance light bulb (Hughes 1979).

Often, faced with innovation, incumbent players are slow to recognize the potential of disruption in their market. Eventually, to their surprise and often to their loss, the competitive environment in their industry is revolutionized. Management textbooks are filled with examples of major players in their field who have disappeared for failing to embrace the new technology. A classical example is offered by the transition from steam to diesel powered locomotives in the railroad industry in the first half of the 20th century. A change that one may consider of secondary importance, eventually resulted in the disappearance of the major steam locomotive producers from the US and world markets (Churella 1996).

Lights bulbs illustrate also the peculiarity of network based innovation. While it is possible to use light bulbs with one own electric generator, they show their true potential when hooked to an electric grid that conveniently delivers the necessary power. In that sense, we can say that they both require and promote the development of the electric grid. On the other hand, once installed, the grid facilitated the development of all sorts of electric appliances. This type of network-based innovation becomes even more powerful when it is about information exchange. The existence of a telephone network was a prerequisite for the introduction of the fax machine. However, while a single light bulb can still serve its purpose of illuminating a room, independently of the other users, a single fax machine is quite useless unless other fax machines are reachable on the same network. And as Metcalfe pointed out, with more interconnected equipment the benefit of accessing the network grows exponentially
This network acceleration effect is a fundamental point to consider when trying to understand why we have the impression of living in a period of unprecedented change. In our daily life are used to processes that show a linear behaviour.
The interconnected world does not work with simple linear trends or reasonable deviation from linearity: there are plenty of nonlinear effects, with results that accelerate suddenly. The variations can be surprising, in Taleb’s word, its extremistan The difficulty we experience in grasping the implications of exponential trends has been dramatically illustrated by the slow response of governments worldwide to the explosion of the COVID-19 pandemics.
We are witnessing the introduction of innovation like blockchain or artificial intelligence that promise to change the world in a very short period of time. With such tools, we will not do business anymore the way we do it now will have different ways of working and different ways of interacting with each other. The annoying aspect is that the change may come seemingly unannounced. Small signals of change will creep up, but if one waits for confirmation and unequivocal evidence, it may be too late. Like when most governments finally decided that some serious action was needed to counter the spread of COVID-19. They waited for unequivocal evidence that it was not going to disappear by itself, and it was just something concerning the Chinese or some other poorly organized countries. When they took action, it was already too late to stop the deadly wave of contamination.
Working in a complex, fast-changing knowledge-based society requires an ever-higher level of education and humanity is actively upgrading its own “operating system”: the number of highly educated people around the world has never been so high. Not only those persons are capable of having a better understanding of society and technology around them, they are increasingly interconnected, and they can communicate and exchange ideas and discoveries and contribute to the ever-increasing pace of change. This fuels the explosion of “social “innovation”, that also tends to accelerate. Its at the hearth of the emergence of collective intelligence. Rapid adoption of new climate consciousness is probably the only chance to curb the GHG emissions in the coming years, in order at least to gain time while new technological energy processes bring their contribution.
Can we learn something from this? What are the most reasonable actions to prepare for change, when you do not know what shape this change will take? Responding to every weak signal may be too dispersive. On the other hand, wait and see what other players, your competitors, will do may not leave enough time for an appropriate reaction.
Purely technological innovation is not the only element responsible for the surrounding changes. People live, think and work in different ways than in the past. Economic and business models change, sometimes driven by technological changes, sometimes by social changes. Sometimes social changes are driven by technology; sometimes technology evolves to satisfy social and individual expectations. It’s one of those chicken and egg situations that are difficult to untangle, which is not the objective of this document. What will appear clear of converging trends that reinforce one another and will eventually impact the way companies are organized and managed.
The strategy I advocate relies on the 4 petals of the organizational revolution, which present serious challenges of change and innovation themselves :

• Explore the options that digital transition offers you to redesign your business, but also to be more informed and more attentive at what happens around you
• Connect with the emerging consciousness trends that and find new way to relate with all the stakeholders impacted by your organization
• Search for the deep purpose of your company and build an agile organization that is driven by a strong shared culture
• Rely on the whole collective intelligence of the organization to be close with the reality of your business environment

Each of those points represents a journey towards innovation, not exclusively technological, that you may want your organization to take. How far you want to go on each or all of those paths will depend on several circumstances, including your current environment, your corporate culture and your aspirations and preferences.
To find orientation in these uncharted areas, we need to find some tool that will help us understand how the diffusion of those innovations might take place, and measure where we are and assess how far we wish to go.
Looking back at the internet, we can use it as an example of networked innovation that has displayed a phenomenal impact on our lives over the last few decades. I will adopt a tool by.. based on d two main parameters one is the complexity anyone has the novelty of the applications and solutions that wear incrementally developed over the internet infrastructure
The pace of adoption of innovation can be linked to two dimensions : Novelty and Complexity (Iansiti and Lakhani 2017). Even technologies that have an immense potential for transforming our lives, will see their adoption slowed down by complexity and novelty. Iansiti and Lakhani summarize the adoption of TCP/IP based applications by placing them a four quadrant “Novelty vs Complexity” scheme. They showed that the key step of worldwide adoption of TCP/IP, introduced in 1972, were

1. Single use : for a long time email was the main application built on TCP/IP, and basically the only one kpwn to a large public
2. Localization : corporations adopted internal email systems based on the own local area networks
3. Substitution : with the advent of the World Wide Web in the 80’s, and the subsequent development of an extended ecosystem of networks, servers and public adoption, substantial activities were moved online, substituting virtual players to “brick and mortar” ones, like Amazon introducing online book sales.
4. Transformative : the final step was the development of

We will see that most technology is being adopted at the single use level, but potential is growing for Substitution and localization. Transformation will take time, but that is where the biggest impact will be made.

In the following sections, we will dive in the 4 petals, and explore their origin and how they may impact us. Sometime provocatively, I try to link each aspect, even the most technological ones, to deep and ancestral trends in human history. I want to emphasize the continuity and coherence of our evolution even facing the accelerating pace of change that we are experiencing today