All the news seems to be about swine flu the last few days. And while this appears to be a serious version of the flu, and the flu does in fact kill a pretty large number of people every year, it seems to me that we’re overreacting a bit. As of this morning, there were 21 confirmed swine flu fatalities in Mexico since the first case was reported over two weeks ago. If this has been an average fortnight on the roads there, roughly 700 people will have died in traffic-related accidents over that same period. But no one cancels a trip to Mexico because of the drivers.

The simple fact of the matter is that while swine flu is bad, and I sure don’t want to catch it, we’d all be much more likely to live longer if we avoided roads as much as possible and if we weren’t overweight. Behavioural economists have consistently found that we overreact to news of unusual events, and that seems to be what we’re seeing here. I think it’s just a matter of time before we see morbidly obese people driving recklessly while smoking who are also wearing masks to avoid getting swine flu. Actually, the mask might inhibit the smoking, so maybe we won’t, but you get the picture. Highly publicised negative events often evoke extreme reactions while day-to-day events that actually pose a far greater threat are taken for granted.

The same thing happens with innovation. In last night’s class we were discussing an initiative reported in yesterday’s news which aims to consolidate and streamline the various programs in Australia designed to stimulate innovation. Apparently there are about 221 such programs, providing $3.7 billion in funding. I asked the class why consolidating might be seen as a good goal. One of my brighter students said that consolidating could eliminate waste. I asked her what she meant by waste, and she responded that wasteful government spending would be on innovations that weren’t successful.

I still find this attitude a bit distressing. Innovation is an evolutionary process, which requires variation, selection and replication. Variety + selection = some innovations won’t work. As I’ll say to anyone that will listen – if every idea that you try works, then you’re clearly not trying enough ideas. This is as true at the national level as it is for individuals.

So while there may well be a case for consolidating Australia’s innovation promotion programs, I don’t think that efficiency is the best reason to do so. Trying to eliminate all unsuccessful projects as a reaction to one or two initiatives being unsuccessful is equivalent to getting really concerned about swine flu while ignoring all the other life-shortening activities we regularly undertake. All innovative processes have to allow for failure. We obviously want to lower the cost of failure, but we have to have it. We can’t overreact to whatever negative innovation stories happen to catch our attention.

One last point – the spread of swine flu is clearly a network story. And I suspect that there is a good network story buried inside all those innovation initiatives in Australia. It would be very interesting to see how many firms are connected to multiple schemes, and how densely interconnected the overall innovative network within the country is. I might have to get a proposal together and then find one of those 221 schemes with some extra money available…

Edit: Now today they say similar things on the Worldchanging blog…