Tim Harford on the real relationship between technology, disruption and innovation

Ridley Scott’s 1982 film Blade Runner presents a startling vision of an imagined 2019. Artificial Intelligence and genetics have reached a point where synthetic humans known as replicants are indistinguishable from the real thing. They walk, talk, think and feel as we do… so much so that the film’s protagonist, played by Harrison Ford falls in love with a replicant, who is herself so lifelike that she believes she’s human.

So, in this version of an AI-shaped future, what does Ford do when he wants to ask Rachael, his replicant love interest, on a date? He goes to a phone hanging on the wall of a bar, slots in a credit card, and calls her. There are no mobile phones and no email, despite the fact that early versions of these technologies already existed at the time the film was made.

Innovation doesn’t come about through technology alone

For Tim Harford OBE, behavioural scientist, BBC presenter, Financial Times columnist and author of The Undercover Economist, the interesting thing about how we imagine the future isn’t the spectacular, thought-provoking innovations that we anticipate. It’s the more familiar, less eye-catching tech that we miss the significance of. He argues that this distorts our view of innovation, causing us to miss out on the benefits of technologies for decades, or even centuries. This matters in 2021, because there’s never been a better moment to think differently about how we apply tech. This is a huge moment of opportunity for innovation – but to take advantage, we have to understand what innovation really looks like.

Tim was the guest speaker at last month’s gathering of LinkedIn’s Big Minds Collective, the initiative that brings agency leaders together to discuss the most pressing issues for business and marketing. His theme was the question of how innovation happens, how technology drives new ways of doing things – and also, how it doesn’t. As Tim sees it, if we sit waiting for the next mind-blowing invention to transform our lives, we’re likely to miss the huge potential of the technologies already around us. Innovation doesn’t happen through technology alone. It’s not a question of plugging in something new and watching the world transform.

The real lesson of the Gutenberg printing press

The story that Tim tells to illustrate this point is one that most marketers and people passionate about innovation think they know. It’s a story about the Gutenberg printing press – but it’s probably not the story you’ve heard before.

On the face of it, the Gutenberg press was a world-transforming technology. It’s repeatedly described as one of the most important inventions in history; one that transformed humanity’s relationship to knowledge and has been credited with making possible the renaissance, the age of enlightenment and everything that followed from them. However, as Tim points out, the press itself couldn’t have done anything of the sort without another, arguably more significant and more influential innovation that had only arrived in that part of Germany a few decades earlier. The name of this innovation? Paper.

Had the Gutenberg press printed its letters onto the parchment or animal skin in use before the widespread adoption of paper, it would have taken entire continents of sheep and goats to provide the raw material for the dissemination of knowledge. Gutenberg’s press could not have had the impact that it did without a cheap, widely available writing surface to work with. For centuries, that writing surface had been hard to come by in Mainz, where Johanes Gutenberg worked. Despite being in use across China and the Islamic world, paper was slow to catch on in northern Europe. It was only a commercial revolution and the sudden demands of bookkeeping that led to parchment being pushed to one side, and paper mills being set up in Germany – just in time to create the first wave of mass knowledge-sharing.

Hearing Tim tell this alternative version of the Gutenberg story, I couldn’t help thinking about the other underappreciated technologies that could turn out to be the paper of today. An obvious example is QR codes. Believe it or not, these have now been around for over a quarter of a century, with the first Quick Response code deployed in Japan in 1994. However, for most of that time businesses in Europe and the US have struggled to find a compelling use case for them. Why would you need a way to access information digitally when you’re already in a shop or an office where the QR code is displayed? The pandemic has changed this at a stroke. The value of being able to deliver experiences and content in a touchless way is suddenly obvious. Brands like EE are now using QR codes to deliver in-store experiences that would once have required dressing hundreds of locations. It’s not only safer – it’s also a lot more efficient and scalable.

Missing the potential of the seemingly incremental

It’s often comparatively simple inventions that have the most profound impact on our lives – mobile phones rather than replicants, and paper as much as printing presses. However, that impact often depends on society reorganising itself in ways that take advantage of those inventions’ potential. For this reason, the next world-changing innovation is often already with us, hiding in plain sight until we light upon a different way to use it. It’s not the moment at which something is invented that changes the world. It’s the moment when society has a reason to reorganise itself around that technology.

Citing the work of the economic historian, Paul David, Tim explains how the first factories were organised around steam engines. One engine, located outside the factory provided the power for all of its processes – and this power was transferred to workstations via a driveshaft that ran the length of the building. The guiding principle in factory organisation was that everything had to be clustered around this central axis. The driveshaft ruled.

The invention of the electric dynamo should have changed this. Electric motors can be distributed throughout a factory, wherever they’re needed. They don’t rely on one common, giant source of external steam power. However, when dynamos were first introduced to factories, none of this happened. Factory owners simply replaced their steam engines with big electric dynamos – and everything ran as before. They had a transformational technology on their hands – but they treated it as simply an incremental improvement on what had gone before. The driveshaft had a different source of power – but it still ruled how people thought about factory design.

How disruption changes the innovation game

It wasn’t the electric dynamo that revolutionised factories and brought about a productivity revolution. It was the First World War. Faced with a sudden labour shortage and spiralling wage bills, factory owners in the US were forced to go looking for efficiencies. When they did, they realised the potential of putting electric motors on every bench and distributing power through wires. This enabled them to organise people around the logic of the production line rather than the logic of the driveshaft. They could give them greater autonomy and pay and incentivise them in different ways. Being forced to find uses of a technology whose potential they’d never explored transformed productivity in US factories. Most industries are happy with a productivity gain of 0.75%. During this period, factory productivity grew by 10x more – at 7% a year.

It’s impossible to hear Tim tell the story of the dynamo and its delayed impact without thinking of the situation over the last 18 months. We’ve been experiencing a global shock arguably greater than any other since the last World War; one in which we haven’t been able to fall back on established habits and working routines. And like those factory owners, we’ve been forced to reappraise the value of technologies we already had – and invest in new ways of doing things.

The dynamos among us

It’s not just QR codes that are suddenly being understood as the solution to problems we didn’t know we had. Once treated with suspicion, contactless and mobile payments are now seen as essential. Video calls have gone from a strange technology that lives in big conference rooms to the mainstay of business interaction for most professionals. And on those video calls, you’ll have noticed steadily increasing quality of pictures, lighting and sound as people invest in the technical equipment that makes working from home a far more satisfying option in the future.

What comes next should be really exciting. We’ve been forced to question assumptions and look at a range of technologies in a different light. When organisations and societies start to reorganise themselves around these new uses, it quickly lowers the barriers to innovation of all sorts. Some of the innovations that emerge will involve long shots and big bets that happened to succeed at just the moment they were needed – such as speedily developed mRNA vaccines. Others will involve changes that feel like incremental improvements but are actually the essential foundation for the world to change. A more effective way of producing phials to hold vaccines would be almost as impactful as a new vaccine itself.

During our session we discussed several ideas for the form such innovations could take. Tim explained how the producers of his radio programmes have come up with wholly new uses of Google Docs, typing into documents simultaneously as a way of communicating with one another during a recording. Havas Media Group’s Strategy Director Dom Whitehurst talked about the opportunity to move away from always organising meetings in 30-minute increments, making time for snippets of conversation instead. Every agency and every sales and marketing team has been forced to find new ways of organising themselves and resolving problems they already thought they’d solved. And when that happens at scale, innovation can happen in many different directions. For an idea of how many, I’ll leave you with one final story from Tim Harford.

Where will the tube strike take you?

In 2012 there was a tube strike in London. Half the stations on the underground were closed for 48 hours – and it rained for a lot of that time. Nothing unusual there, you might say, but this tube strike was different in one significant way. A group of economists persuaded Transport for London not to delete immediately all of the data from the digital oyster cards that Londoners use on their journeys. Instead they anonymised it, analysed it – and found something very interesting.

Huge numbers of commuters were forced to change their route to work during the strike, visiting new underground stations and trying different combinations of trains and buses. Tens of thousands of these people never went back. They’d figured out routes that were either faster, or more scenic, cheaper or more pleasant in some other way. Disrupting the standard solution, even for just 48 hours, had helped them innovate something better.

Those routes were always available to them, of course. They’d just been overlooked. Their full potential had never been realised – until disruption provided the opportunity. In the same way, innovation very rarely happens by a new technology arriving, being plugged in and changing life and society overnight. More often than not, it’s society and organisations that have to change first.

The silver lining for innovative-minded marketers is that this is exactly what’s just been happening.