I recently spoke at a CEO summit with a group of IT executives from Silicon Valley and China. Naturally many were concerned about the slowdown of Silicon Valley innovation as well as the copycatting and IP protection issues in China. I challenged the group to think about innovation in the bigger context of human civilization. Is tech innovation really slowing down, and is copying really that bad?
Innovation is 99 percent imitation with 1 percent differentiation
Humans won the battle of the species race. But why? Is it because we use tools, communicate with language or have a bigger brain? Scientists have recently discovered through advanced DNA mapping that we humans are humble enough to be willing to copy and build off each other’s knowledge. It was our ability to acquire collective intelligence that separated us from the rest of the hominids pack approximately 40,000 years ago.
Humans are the only species with a neocortex, the outer and most advanced layer of the brain. The neocortex is really a learning machine –- we observe cause-effect patterns in life, store them in the brain and predict the effect when the same cause appears again. Humans institutionalize this process in our first 12 to 16 years of our life –- we go to school and learn these patterns experienced by our ancestors.
Innovation comes from solving the new challenges we face and combining it with our knowledge of existing state-of-art technologies and paradigms. “Standing on the shoulders of giants” is the only motto for successful innovation, but too many entrepreneurs make the common mistake of inventing in a vacuum.
Our economy has always been global
Human civilization is a “learning” history across time and geographic regions. But if we had only lived in the Roman Empire in 50 B.C., we’d have thought Romans had invented everything. Halfway around the world, the Chinese of the Han Dynasty had the same thought. But the reality is that these distinct civilizations were never developed independently. From Egypt to Euphrates to Greeks to Romans, village after village and generation after generation, people migrated, copied and propagated their skills, knowledge and culture. If you have been to the 5000-year old archaeological site Sanxingdui in central China, you would think that you were visiting ancient Egypt or Greece.
The world economy was actually global even back then; it just wasn’t obvious to the people who lived at the time, because they were limited by their own human life span.
If Marco Polo could have traveled at light speed
What does this mean to modern humans? The Internet has changed the scale of distance and time. Where it took Marco Polo 30 years to propagate the know-how of making noodles, it now takes a web whiz kid only three weeks to get a similar idea around the world twice.
Just look at the example of Groupon, which broke the code of viral growth to promote local services, using stay-at-home moms as the social nucleus while combining the power of Internet and telesales. In two years, Groupon is at a $2.2 billion revenue runway and turned down $6 billion from Google (s GOOG) and other high-profile offers.
The story doesn’t stop there. The rest of the world is copying the formula of this modern “spaghetti” and has started to make their versions of Groupon: European entrepreneurs have formed dozens of successful group buying sites. In China, there are over 1,000 clones — the no. 1 player being Lashou.com, which is breaking out in China, mirroring Groupon’s success in the US.
If you look closer at these local clones, their actual execution is quite different, much like spaghetti is not Chinese noodles. For example, Groupon credits its success to having a centralized call center for accessing small business owners in the top 100 US cities. But Bo Wu, the founder of Lashou.com, discovered that China is not “one country” after all. There are many regional dialects preventing Groupon-like telesales to work. There were also significant cultural differences that he needed to consider. For instance, while lamb chops are a best-selling food in Beijing, the Shanghainese view it as “barbarian” food. So Bo’s solution has been to deploy 100 local sales teams in the country’s top cities instead of a call center.
Action-driven collective intelligence
In the business world today, we still rely on collective intelligence to innovate albeit in more technology advanced ways — whether it be talking with an overseas partner on Skype or email, or learning what our customers are saying on Twitter. While you and I obviously can’t communicate directly to everyone on the web this way, what we can do is learn from their infinite collective implicit actions and experiences. The entire universe of humans makes billions — if not trillions — of silent “votes” each day as they navigate the web, but a very small percentage of these people are actually publishing their ideas. There’s a tremendous amount we can learn from their silent actions – not what they say on Twitter, but what they do when they see something they like. For example, if a GPS tracked device showed a restaurant was full, you wouldn’t need a Yelp review to guess the restaurant quality.
Another key difference of today’s web from ancient civilization is that we can connect contextually without being personal friends. If I am shopping for a 3-D LED TV, there are many people around the world who can help me on that decision.
This concept has huge implications for innovation. Imagine a world when these “contextual friends” start to invent things together!
Smart “copying” has been the core to the success of human civilization, and I predict that web-based collective intelligence will fuel the next frontier of innovation. By building on the successes of other entrepreneurs along with the implicit wisdom of all web users innovation is poised to reach new heights in the next decade.
Jack Jia is a founder and Chairman of Baynote, a leading software developer for recommendation engine. He is also a partner of GSR Ventures, a top China-focused technology VC. He is an angel investor, a board advisor for Santa Clara University, and the president of HYSTA, an organization that promotes entrepreneurship.
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