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What is the Proximate Cause of Innovation? March 23, 2010

Posted by Peter Varhol in Strategy.
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I’m prompted to ponder that unanswerable question because of the news over the last couple of weeks concerning Google abandoning google.cn as its Chinese search engine, due to the censorship requirements imposed by its government.  Instead, the company plans on redirecting google.cn searches to its Hong Kong search site (while Hong Kong is a part of China, it has some separate laws and regulations until 2047).

Censorship was a mantle Google wore uncomfortably for several years; it prefaced abridged search results with a statement saying that they had been censored.  However, the issue came to a head when Google discovered network break-ins that had originated from China.  Presumably the implication was that these break-ins had come at the instigation of the government.

I have no inside knowledge of who may have compromised Google’s network and gmail.  The question that I ponder is the censorship one and its long term effects on society.  There is a relatively light layer of censorship in the US, mostly revolving around the maintenance of what is considered broadly acceptable behavior by the mainstream.  While that is undoubtedly a motivation for Chinese censorship, there seems little question that it also does so in order to hide information and direct the thought patterns of its citizens.  Chinese officials freely acknowledge this and claim that its culture prefers that goal, and censors a far wider variety of information than many other developed countries.

And therein lies the crux of the issue.  As I’m a biased observer, I can’t reasonably comment on which is the “better” approach in the abstract.  Rather, I’d like to speculate which promotes innovation.  Is it the less censored system where people can more easily get access to contradictory information?  Or the system that provides a more consistent and ordered view of reality?

China would have us believe it is the latter, and offers a few years of high economic growth, and a relatively painless path through the worldwide financial mess of the last couple of years, as evidence.  The US, by contrast, has a longer track record of success, but the recent economic failure has led reasonable people to speculate that perhaps its best years are behind it.

I personally prefer more information with which to make my own decisions, but I am a product of my own system, so that hardly counts.  However, it may be likely that more information is better than less, because there are people who can use contrary information to their advantage in determining the Next Big Thing.

This may or may not be the case in general, but is almost certainly true in technology.  While there is some herd behavior in new startups (remember the dot-com bubble), those that have the best chance of success do so through new ideas.  And contrary information is the engine that drives new ideas.

The story of the economic decline of the US has been written before.  It will almost certainly happen some day, but it’s not at all clear that today will be that day.  I am old enough to remember the late 1980s and early 1990s, when everyone was certain that Japan had eclipsed the US in both technology and business in general.  It didn’t happen, and it’s problematic that China is doing so today.  Give it a few decades of today’s performance, and perhaps we can accept that strict control over information access is a competitive advantage.  Until then, I think I’ll bet on me and my colleagues.

Update:  Time.com’s Michael Schuman uses Korea as an example to offer a better analysis of the relationship between freedom and innovation.

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