How decentralisation enhances our innovation capacity

A few months ago, I started to take a deeper look into resource flows and how their patterns evolved over time. What the emerging flow patterns for information, energy, and material all have in common is the strong trend towards the decentralisation of distribution networks, which over time led to a genuine democratisation of access. As a result, today everybody can easily find an entry gate to information, energy, and material flow to contribute to and benefit from.

By reducing the barrier to entry and facilitating the access to resources, we effectively enhance our innovation capacity in two important ways. On one hand, being embedded in the information flow is essential for receiving, sharing and generating ideas; that’s promoting the novelty of thought. On the other hand, easy access to energy and material flows facilitates and accelerates the testing and validation of those ideas; that’s promoting the novelty of deed.

That’s empowering innovation on all fronts, as decentralisation promotes an inclusive, participatory approach that is poised to replace the old idea “that innovation is only for trained specialists“: just consider emerging forms of organising large-scale projects like crowd-sourcing, or novel ways for providing and aggregating capital like crowd-funding, which both reach unprecedented numbers of potential contributors to engage them in innovation.

The evolving roles of the innovation protagonists

With more contributors being more involved, society’s innovation endeavour becomes more elastic, fluid, agile. In the course of that development, the roles of the innovation protagonists will evolve further, and so will their interactions. Once again, I’ll dare a little projection for entrepreneurs, organisations, and institutions.

Let’s start with the entrepreneurs. Of the three protagonists, they are the most agile, fastest moving, but also the smallest, with limited reach. Through decentralisation, they gain substantial benefits, as they can now obtain easier and quicker access to the resources required to pull their idea through. And with that ease of access, I’d see two important effects emerging: more individuals will follow an entrepreneurial vocation; and those that do will be able to mature their ideas faster, as trial and error becomes less costly. As a result, we’ll see more disruptive innovation, which remains to be the focus of entrepreneurial activity.

Organisations traditionally need time to establish, and they work at a lower speed. But they reach a lot further than entrepreneurs do. And organisations hold control over the majority of resources. Hence their position and role are challenged by decentralisation.

• Research laboratories are faced with a new actor in the field of science, research, and technology development: citizen science. From today’s venture point, I’d expect some initial struggle between the two; but that will be mainly related to figuring out the strengths (e.g., agility, new methods) and weaknesses (e.g., credibility, publication) of citizen science. Once those are understood, I see little reason for competition and many opportunities for enriching collaboration. And that has promising potential for scientific disruptions and for sustaining innovation as well.
• Corporations will face considerable challenges that results from decentralisation. They will come under pressure mainly from the entrepreneurs, and to a lesser extent from citizen science as well. Loosing their tight grip on resources, corporations will have to surrender (some of) their control over the market. As a result, business models will be shorter-lived, efficiency innovation will pay off less easily, and amortisation cycles will be shorter. The disruptions caused by the other protagonists will make for a more dynamic, less predictable business environment.

Finally, institutions. Designed to instil and sustain stability in society, they usually evolve over longer periods of time (except for revolutions), ultimately reaching out to cover almost every aspect of society. And that is exactly where the existing institutions are stressed by decentralisation: how much of the emerging innovation capacity is covered by the available set of rules? Agile and flexible approaches like crowd-sourcing generate questions regarding ownership of results, responsibilities and even liabilities. More importantly, this previously unknown dynamism challenges the speed of institutional adaptation: Can the evolution of the agreed set of rules actually keep up with the pace of innovation? Or do we need to accept that novel domains like for example the internet are – at least temporarily – unregulated, partially beyond the control of the established legal framework? These are questions that we’ll need to find innovative answers for.

Where do we go?

The decentralisation of resource flows changes the way we do innovation. Former certainties vanish as new coalitions emerge. At the same time, it’s getting easier for David to overcome Goliath, sheer size is not the winning argument anymore. While the decentralised access to resources has welcome aspects of liberation, of course it presents its own risks. Where previously resources were essentially controlled by a small number of quasi-monopolists, in the future we might fall into the opposite extreme, facing the risk of fragmentation of resources.  An unconstrained crowd-everything approach could render it prohibitively complicated to plan and pursue concerted action to address, e.g., global-scale challenges.

Hence we have to make up our minds: can we simply, do we just want to rely solely on the wisdom of the crowd? Or do we need to express some additional rules to ensure the right level of centralisation? That’s a topic for a serious policy discussion on how we want to shape the appropriate institutions.

Happy to learn your views …