Invention: Learning by Doing
Most inventions are incremental and have limited technological value. Only a few inventions are truly radical, i.e. they constitute the basis for future innovation. Is an inventor learning from past experience when he produces new inventions? In other words, what's the role of learning by doing in radical innovation?
Our article (Learning to be Edison? The Effect of Individual Inventive Experience on the Likelihood of Breakthrough Inventions) shows that the amount of experience of an inventor (i.e. the number of inventions he made in the past) has a two-sided effect. On the one hand, it diminishes the probability for a given invention to be radical; on the other hand, it makes inventors more productive. The reason for this is that more experienced inventors tend to replicate what they have done in the past; for them it will be easier to make new inventions, but these will tend to be incremental, since they resemble past innovations. However, since radical breakthroughs are hard to predict, making many inventions is the safest method to achieve one. As a consequence, inventors who have acquired more experience are more likely to generate radical inventions, thanks to their higher productivity. In order to quantify the impact of past experience, it is possible to state that a 1% increase in the stock of inventive experience determines an almost proportional increase (around 1%) in the likelihood of an investor generating a breakthrough invention. Relevant managerial implications are not hard to see. Many firms invest major resources to generate radical inventions. The distribution of the economic value of invention is very skewed: there are many incremental innovations of little value or none, and very few radical inventions that have very significant value. For small firms and start-ups, to be able to make a radical invention means creating competitive advantage and potentially subtracting market share from major firms. But for the big corporation making a radical invention means maintaining competitive advantage and giving new impulse to its activities, as well entering new market segments.
How do you then increase your chances of generating radical innovation? Our article suggests that in the case of a company having to choose among more than one invention, as happens in technology markets, it's better to bet on the ideas of inexperienced inventors, which are more likely to be radical. However the advice is turned onto its head in the case of a company having to decide which inventor to hire, or which inventor to favor in the allocation of internal resources. In this case, the company would do better to invest in more experienced inventors. In fact, although each of their inventions has a lesser probability to be radical, expert investors are more likely to generate radical inventions, just because they are more productive.