Next time you get in a car to drive somewhere, take a minute to think about how many parts of the economy are connected to your trip. There are a whole lot. There all of the people and firms involved in building your car. They have taken ideas and designs that have evolved for over a hundred years, added some new ideas, and come up with the design for your car. And if you drive a Toyota, it’s not just people in Toyota that have done that – there are hundreds of other firms that have designed particular parts – brakes, stereos, and windshield wipers.
Then another bunch of people and firms built the actual car. For the vast majority of cars, this didn’t happen in the city or town that you live in – so yet another bunch of people and firms were involved in getting the car to your particular location so that you could buy it or lease it. This includes shipping companies, trucking firms, and dealerships.
So that’s a lot of people involved with just getting the car to you in the first place. Now you turn it on – petrol ignites (if you’re driving a hybrid it takes a while longer to get to this point, but it still happens). How did that get to your car? Another chain of research, design, production and distribution. Thousands more people and firms.
Then you start driving. On what? Roads. How did they get there? Same story, although in this case a government almost certainly had something to do with it.
Every single thing in the economy is embedded deeply into these economic networks. Design, production, distribution – no matter what we’re talking about, nothing stands alone.
When you come up with a great new idea, you need to think about this economic network in two ways. The first is: how can I connect to all of the complementary parts of the economy that are needed to get my idea to work? The second is: if I’m going to get my idea to spread, which of these existing connections need to be broken?
We’ve talked before about the importance of making new connections to get your idea embedded within the economy. But breaking connections is also important.
Ford wants to get me to break my connection with Toyota and forge a new one with them. If they are successful, the overall economic network impact is relatively small. Many of the same firms are involved in making parts for both Ford and Toyota. Many of the same shipping and trucking firms move vehicles for both. I’ll drive my new Ford on the same roads, and I’ll probably buy petrol from the same stations. So the impact of that change is small.
But what if I want to buy a Honda FCX? Then things get a bit more complicated. The FCX is a hydrogen-powered car, and it’s pretty cool. But if I want one, I have to break my connection with Australia, and rebuild the one with California, because that’s the only place they’re being sold. And because they’re only sold through fleet sales, I’d have to get a job that is affiliated with the right car fleet program. So on a personal level, the connections that I would have to break to buy an FCX are much more substantial than the ones that have to be broken if I just switch to a generic Ford. And it’s extremely disruptive.
The changes required by the FCX are pretty disruptive within the economy as a whole as well. We’ve got roads already, so that at least is covered. And some of the parts manufacturers will be the same as those involved with making regular cars – tires, seats and body parts will all be essentially the same. But a lot of new suppliers need to be added to the supply chain for hydrogen-powered cars. There are hydrogen fuel cells, which replace the petrol tank. Hydrogen requires a different ignition method, so the engines have to be completely different. In connecting to manufacturers in these new areas, Honda is breaking connections with suppliers that have gone back many years.
Many connections need to be broken outside of Honda as well. Where do we get hydrogen for our hydrogen-powered cars? Currently there’s no infrastructure for this. We need new plants to make fuel-quality hydrogen, new methods of transporting this hydrogen once it’s produced, and new places to get the hydrogen. These will actually replace oil refineries, oil pipelines and petrol stations. That is a lot of disconnecting.
Everything is embedded within the economic network. So when we have a great new idea, we need to get people to connect to it to get it to spread. As Umair Haque says, we do this by making it awesome. However, we also have to be aware of the connections that need to be broken to get our ideas to spread. This can get pretty complicated. It’s not just Toyota and Ford that don’t want me to connect up with a Honda FCX. It’s Shell and BP, and all the companies that make petrol-driven engines, and all the petrol station owners, and many more. A lot of these firms will actively fight to prevent having the connections broken.
This is why having a great idea, and even executing it really well, aren’t necessarily enough. The critical third part is to get your idea to spread. This isn’t meant to be discouraging. I’m simply saying that for our innovations to be successful, we need to think about where they fit within the economic network. A lot of these connections are relatively in obvious in the case of cars, but even if you’re introducing a simple new way of doing things, you have to get people to disconnect from the old ways too. By thinking of the economy as a network, we’ll get better at getting our ideas to spread. But to get people to connect with our new ideas, we have to getting them to disconnect first. Yesterday I said that making connections is the fundamental creative act in innovation. This is definitely true when we are generating great ideas. When we are getting them to spread, connecting our ideas to people is important, but so is getting them disconnected from other ideas. That’s the key challenge in innovation diffusion.