Myth-Buster or Meme Maker? Reflections Upon Reading How Innovation Works (and Why it Flourishes in Freedom)

By Bruce Berman
July 21, 2020

“Ridley may be right about the absence of an ‘ah-ha!’ moment for most inventions. However, he leaves readers (this one, at least) uneasy and confused when he suggests that discovery is inevitable, and inventing should be left to history to sort out.”

How Innovation Works: And Why it Flourishes in FreedomSome people believe that breakthrough products like the light bulb, steam engine and mobile phone were not so much invented as stumbled upon.

Fostering innovation and the circumstances in which it thrives today has never been more relevant or mysterious. COVID-19 has provided a compelling reason to revisit how innovation occurs and who are the responsible parties. Understanding the inventive process is not much clearer today than it was when the framers drafted the United States Constitution more than two centuries ago.

A new and provocative book by a National Academy of Sciences award-winning writer, entrepreneur and member of the House of Lords, Matt Ridley, suggests that innovation is an iterative process of trial-and-error that should be attributed to groups of inventors, not individuals, and that patents impede. Ridley believes that policy and investment can do little to influence innovation and that “Innovators need to be freed from the shackles that hold them back.”

How Innovation Works, subtitled, ‘Why it Flourishes in Freedom,’ explores the people and conditions under which a range of iconic innovations were born. Among the book’s main premises is the distinction between specific inventions and marketable innovations, which are typically comprised of many inventions. In every case, argues Ridley, it was not the individual or the government which provided the impact, but the march of history. His book examines under what circumstances, historical, economic, and technological, innovation takes place. It is informed by a suspicion of individual achievement, government interference and “rent-seeking” intellectual property rights and holders.

What How Innovation Works does best is provide a context for dozens of iconic developments, from the steam engine to CRISPR gene editing. It endeavors to convey an understanding of the unique conditions that impact innovation. Among the many figures considered in the book are Watt Newton, Edison, Bell, Whitney, Wright, Jobs and Bezos.

No Great Men

While Ridley respects most of these people, he believes that the “great man” theory of invention is a myth that must be dispelled. If progress requires creative destruction in the manner suggested by Austrian economist Joseph Schumpeter, governments and the rights they bestow upon creators need to get out of the way. Often, says the author, several inventors are thinking simultaneously about a similar solution, and it is a mistake to attribute credit to one or two because of their good timing, funding or ability to win patent office approvals.

Ridley reminds readers that the automobile was not invented by a single individual but was innovated by a range of contributors over time. A short list of significant participants includes Daimler, Maybach, Benz, Levassor, Lenoir, Peugeot, Rudolf Diesel and Henry Ford.

The electric light bulb? The smartphone? Many inventors are responsible, often too numerous to mention, and for some dubious businesses, too costly to pay. If it is not the entrepreneurial visionaries (e.g. Jobs, Gates) who are the true inventors, as Ridley argues, then who should receive the spoils if not the credit? Surely the individuals and businesses along the way deserve some recognition? Is it the failure of the patent system or marketplace not to identify them, or, as Ridley suggests, are these inventors simply receiving too much credit for products they played a relatively modest role in advancing and would have come to fruition without them?

‘Inescapably Inevitable’

“The truth is,” writes Ridley, “that the story of the light bulb, far from illustrating the importance of the heroic inventor, turns out to tell the opposite story: of innovation as a gradual, incremental, collective yet inescapably inevitable process. The light bulb emerged inexorably from the combined technologies of the day. It was bound to appear when it did, given the progress of other technologies.” (p.28)

Ridley rails against technology and pharmaceutical company giants for their efforts to maintain bloated, conservative monopolies, bent on maintaining their status and share price. Still, he would deny fundamental rights like patents that help to achieve a leveler playing field for small business and individuals. The most innovation occurs, he argues, where the sharing is most abundant, like in the software industry. It is also is where the most dominant monopolies exist and the most significant IP and data abuses.

“Patents have hurt and retarded human flourishing more than they ever assisted it,” writes Joakim Book about How Innovation Works for the American Institute for Economic Research. Book calls Ridley’s work a “masterpiece.” IP rights, Book continues, “are not a necessary boon to innovation that modern economists and legal scholars would have you believe: there is simply no sign of a ‘market failure’ in innovation waiting to be rectified by intellectual property, while there is ample evidence that patents and copyrights are actively hindering innovation.”

In a section entitled “When the Law Stifles Innovation: The Case of Intellectual Property” (p.342) Ridley makes the case that IP merely supports incumbents. Researchers will explore and inventors experiment without patents or other incentives. There are many investors who would disagree with this premise, including some Silicon Valley venture capitalists. Patents are among the few assets that enable entrepreneurs to raise capital and secure licensing deals with companies that dwarf them in size and capital. Patents work, even if their effectiveness has been muted over the past decade by corrosive lobbying, unnecessary legislation and misguided courts.

“Just how much Watt’s litigiousness delayed the expansion of steam as a source of power in factories is a hotly contested issue,” muses Ridley, “but the ending of the main patent in 1800 certainly coincided with a rapid expansion of experiments and applications of steam… My point is simple: Watt, brilliant inventor though he undoubtedly was, gets too much credit, and the collaborative efforts of many different people too little.” (p.25)

Ridley tips his cap to Edison for his dedication to experimentation but makes it clear that he did not invent much, and nor did Bezos, Jobs and many others. The history of invention is replete with hero-worship, “misleading procreators of vanity.” Ridley believes that the visionary inventor existed only in the eye of the media, the antithesis of Men of Progress, a masterful 19th century group portrait which hangs in the National Portrait Gallery in Washington, DC, which was built in 1837 as the United States Patent and Trademark Office. The book suggests that, because it is difficult to attribute credit precisely, there should be no credit at all. This must be music to the ears of technology and pharmaceutical giants.

Dubious Sources

Ridley’s background is worth perusing for clues to his perspective.  A Ph.D. zoologist and researcher by training and a libertarian, for him innovation is governed by shared information communities and fortuitous accidents. In addition to serving as a member of the house of Lords, stints as an editor of The Economist in the U.S. and UK, Ridley has served as Visiting Professor at Cold Spring Harbor. How Innovation Works is his ninth book and first in five years. His The Rational Optimist was a bestseller.

Friends of the Earth has connected Ridley’s opposition to climate science to his ties to the coal industry. He is the owner of land in the northeast of England on which the Shotton Surface coal mine operates and receives payments for the mine. In 2016 he was accused of lobbying for the coal industry, an allegation that was dismissed by the Parliamentary Commissioner for Standards. Ridley was one of the earliest commentators to spot the economic significance of shale gas. He is a proponent of fracking. Ridley was also director of the Northern Rock, the first major UK bank failure of the 2007-2008 financial crisis and was reprimanded by a parliamentary committee for not bringing the financial weakness forward sooner. Ridley’s father was Chairman of Northern Rock from 1987-1992.

Further undermining Ridley’s conclusions about intellectual property are his sources. For support he turns to three of the most questionable and debunked pre-America Invents Act anti-patent sources: James Bessen and Michael Meurer’s now infamous and deeply flawed study of NPEs, The Direct Cost of NPE Disputes, which attributes “$29 billion in direct costs in 2011” to patent assertions. Even patents’ most ardent critics are embarrassed to cite this article of suspicious nature and intent.

Also questionable are Adam Jaffee and Josh Lerner’s Innovation and Its Discontents – How Our Broken Patent System is Endangering Innovation and Progress, and What to Do About It, which makes an ill-informed case for denying many patents because there are too many of them and they are poorly examined. Finally, Michael Heller’s heinous Gridlock Economy – How Too Much Ownership Wrecks Markets, Stops Innovation and Costs Lives is offered as evidence of IP’s epic failure.

Heller’s 2009 book blames patent filers and licensors for undermining progress and refuses to recognize the value of IP rights because, unlike real property, they are infinite and inexhaustible. Heller suggests something akin to eminent domain is needed to save society from patents. (I reviewed the Jaffee/Lerner and Heller books for Nature Biotechnology.)

Ridley may be right about the absence of an “ah-ha!” moment for most inventions. However, he leaves readers (this one, at least) uneasy and confused when he suggests that discovery is inevitable, and inventing should be left to history to sort out. He would have us believe that innovation simply needs a wider berth to succeed—give it “freedom” (alluded to in the subtitle) from licensors and the vanity of credit-takers and innovation will be fine.

Myth-Buster or Meme Creator?

It is concerning that How Innovation Works will be seen and read by people susceptible to the anti-IP narrative. Ridley’s strategy is reminiscent of climate deniers who instill just enough doubt about who or what is the source for global warming, and whether anything can be done to address it. Similarly, this book questions the originality, source and relevance of particular inventions, and their role, as to make attribution difficult and licensing unnecessary. Is Ridley merely a suave propagandist for businesses wary of competition or an historian looking to set the record straight? In Ridley’s world every patent holder seeking a license is a “troll” and all litigation is an unnecessary waste of time and money.

How Innovation Works makes it easy for some audiences – especially researchers in the scientific and technology communities ­who are susceptible to anti-business biases and wary of legal entanglements – to dismiss the positive role patents play in shaping innovation and encouraging participation. There are many compelling reasons to read and discuss How Innovation Works (sample here). Separating history from agenda is one of them.

 

The Author

Bruce Berman

Bruce Berman is CEO of Brody Berman Associates, a management consulting and strategic communications firm he founded in 1988. He has supported 200+ IP-focused businesses, portfolios and executives, as well as law firms and their clients. Bruce is responsible for five books, including From Ideas to Assets (Wiley) and, since 2003, approximately 100 columns for IAM magazine. He also has written on IP for publications such as Nature Biotechnology and Forbes. His weekly observations about trends can be seen on IP CloseUp. In 2016, Bruce founded the the Center for Intellectual Property Understanding, an independent non-profit that raises awareness and provides outreach to improve IP literacy, promote freedom of ideas and deter theft.

Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author as of the time of publication and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com. Read more.

Discuss this

There are currently 15 Comments comments.

  1. Anon July 21, 2020 6:36 pm

    Good to know.

  2. James Conley July 21, 2020 10:22 pm

    Bruce Berman shines a light on a common activist tactic where shallow evidence is put forward in an attempt to undermine established history. The evidence is usually full of selection bias, a pervasive conceit of those more interested in activism than historical fact. While the methods lead to questionable conclusions, the bigger problem is that this approach to “history” reflects badly on scholarship in economic history.

  3. Stephen Potter July 22, 2020 6:46 am

    Thanks, Bruce: a nice summary of a somewhat thoughtful book…

    Iprova – the pioneer of data-driven inventions believes, in line with Ridley, that all inventions are inevitable and will be made – but the key, as far as believers in formal IP is concerned, is to be the first to create them and try to ensure ownership and mastery of them before the competition through patent applications.

    The information explosion and rapid technological convergence is demanding new methods to identify invention triggers in real time: BIC has now launched a new data-driven invention laboratory using Iprova’s methods – https://www.bicworld.com/en/bic-and-iprova-launch-invention-lab and the hope is that other major globals will start to add these data-driven methods, from Iprova or other sources, to their normal, somewhat serendipitous invention processes…

  4. Scott E July 22, 2020 7:16 am

    Sounds like socialism or communism as applied to innovation. It all sounds good in theory but never seems to work that well in practice.

  5. MaxDrei July 22, 2020 8:30 am

    Can somebody tell me more about patents and the search for new and effective drugs and vaccines? For me, Ridley’s rails against:

    “…..pharmaceutical company giants for their efforts to maintain bloated, conservative monopolies, bent on maintaining their status and share price.”

    are not dispositive or convincing. We need these drugs and vaccines. Is it truly “inevitable” that they would be brought to market, even after the patent system is abolished? I think not.

  6. jacek July 22, 2020 10:01 am

    “Patents have hurt and retarded human flourishing” ??
    Let’s not waste time on this.

    The arguments smell of Gulag, Kulak, and other similar inventions of a collective society practiced in the Soviet Union and now by Tech lobby influencing the U.S. Congress in their selfish interest.
    This “Book” is just a sample of how far-reaching is trying to be their propaganda- nothing short from Goebbel’s.

  7. MaxDrei July 22, 2020 1:35 pm

    Communism? Surely not. Ridley is the 5th Viscount Ridley, English Aristocracy personified. And a proud libertarian. His viewpoint is that Government is the problem, not the solution:

    https://en.wikipedia.org/wiki/Matt_Ridley

  8. Pro Say July 22, 2020 4:08 pm

    Karl Marx was right.

    It takes a village.

    A thousand points of light.

  9. jacek July 23, 2020 3:57 pm

    Max
    I think the symptoms are most important, even if it comes to brain disease. Left or Right – extreme produces same results. Soviet Gulag or Nazi’s Treblinka there is no difference in the experience and outcome. The opposite side is not Left or Right. It is the Human side.

  10. Matteo Sabattini July 24, 2020 9:09 am

    Bruce:

    Thank you for your informative post. The role of a patent, and the quid pro quo associated with the disclosure of the invention, allows others to innovate on top of that invention (Ridley is right at least about this bit). This is the beauty of the patent system. Innovation flourishes when ideas are exchanged through trade and knowledge sharing. The patent system has accelerated and enhanced that process. Each inventor stands on the shoulder of other geniuses. Without incentives for innovators to disclose their inventions, some may decide to keep it a trade secret. And the next great idea might not come to light.

    On the “inevitability” of the invention, I disagree. An invention exists because the inventor exists. Patents and inventions are about the people who work hard to develop the ideas and technologies behind them. Without the inventor, maybe someone else would have come up with the same invention, maybe years later, maybe not at all. I had a conversation along these lines with one brilliant engineer and prolific inventor at Ericsson. She was describing, with the humbleness that only great engineers exhibit, her work on the development of 4G/LTE. And she described her contributions as a small part in a large, complex system. When I asked if 4G/LTE would have worked the way we know and rely on if she hadn’t come up with those ideas, the answer was ‘No’. And with that came the realization of how important her work is.

  11. Stephen Potter July 27, 2020 6:35 am

    Matteo – thanks for your comment but, as I had said in my earlier comment I would still argue for the inevitability of inventions…

    Don’t get me wrong: inventors are crucial but invention is, to some extent, the result of a transfer function of the kind of data / information that is available.

    The key point of the inventor – as far as the IP system is concerned – is to be the first person to realise the significance of pieces of new information and then create inventions around them and getting them on file.

    Evidence for this is the fact that, in so many cases, inventions are made essentially at the same time by several inventors – the normal example we use in Iprova is that of Computerised Tomography: Sir Geoffrey Hounsfield – a former colleague – and a US inventor came up with essentially the same invention and algorithms at the same time and shared the Nobel Prize but Sir Geoffrey and EMI, his company, were able to get their application first and they shared the hundred of millions of dollars in royalty from this fundamental patent family while the US inventor received nothing…

  12. Anon July 27, 2020 6:49 am

    Mr. Potter,

    You focus not on the race, but on ‘inevitability.’

    This is a logical fallacy, in that you miss that the race invites (multiple) racers. If you only look at ‘gee, there are multiple, so it would have happened eventually anyway,’ you miss the point that the patent system promoted the action that happened to affect those multiples.

    Your view – if taken to its logical limits – would necessitate a patent system that somehow magically reaches out and ‘promotes’ only one single person per invention.

    Think about that for a moment.

  13. Josh Malone July 28, 2020 1:37 pm

    Like most inventors, I have worked in both environments. There is no question that innovation in a corporate setting is stifled. You have to work on the projects your boss approves, with the budget given, using the tools of the company. There is a certain sort of innovation that occurs there – incremental, predictable, and inefficient.

    However, independent inventors are necessary for disruptive breakthroughs. We are often frustrated by the limitations of the corporate environment, and jump ship to launch our own ventures. Pretty much every famous inventor and innovative company started out this way. It seems nonsensical to suggest that the pace of innovation does not rely on independent inventors capitalized by the exclusive rights to their future discoveries.

    According to this post, Ridley seems to suffer from hindsight bias and lack of vision. Every invention appears obvious in retrospect. Surprisingly, simultaneously filled, self-sealing water balloons were not inevitable and none of the established toy companies figured it out from 1950 to 2014. Are cures for cancer inevitable? Speed of sound commuting? Space tourism? Affordable and sustainable housing? Friction-less risk-free financial transactions?

    Will the endless technical challenges we face more likely to be solved by incumbent corporations and philanthropists, or by undeterred creative pioneers backed by risk-taking investors?

    Certainly the world would be better off with inventors and reliable patent rights.

  14. Night Writer July 30, 2020 5:26 am

    This is just hindsight absurdity. It sounds like what Posner said about inventions. Posner said that he had a roommate that was an engineer and that they just naturally invented and all you needed to do was provide them with a pizza and they would work.

    Stevens said that you just write what you want on a piece of paper and give it to a clerk and he/she will program it on the computer.

    Breyer uses examples from ancient Egypt as inspiration for modern day inventions.

    The lot of them have absolutely no idea how science and invention work.

  15. Dale August 4, 2020 12:06 am

    Thank for the update