I have the good fortune to be back at the Aspen Institute this week, this time for the 21st annual Information Technology Roundtable. It’s a small gathering of people brought together by the Institute and Charlie Firestone to talk about the digital world’s big topics. The title for this year is “navigating the emerging economy;” we’re spending three days talking about how the economy is changing, technology’s role(s) in this shift, and what interventions, if any, are warranted.
We operate under the Chatham House rule so I can’t say who said what, but I want to relate one of my biggest ‘a-ha’ moments so far.
Yesterday afternoon one of us was documenting the great recent successes of the American mobile industry. The Apple iCosystem is the most obvious example, but not the only one. The large majority of the world’s smartphones now run on an operating system originating from an American company, and I bet that most of the most popular apps in the world are of American origin (especially if we exclude the very large walled garden behind the Great Firewall of China).
Think how improbable this would have seemed only five years ago. At the start of 2007 RIM and Nokia were ascendant (as the below clipping from the New York Times indicates), and mobile network speeds and technologies in the US lagged behind those in Korea, Japan, and much of Europe.
Our domestic market, while large, was split among large, slow, incumbent vendors backing incompatible standards, and it seemed like any move significant enough to change things would require regulatory review and permission. Finally, many smart observers were maintaining that the proliferation of software patents in the mobile industry was retarding innovation because players were using them primarily to sue each other (or threaten to do so).
In short, it seemed a dire situation, and I remember reading the familiar parade of articles and reports outlining how far behind we were in this critical industry and proposing various grand plans for addressing the situation.
And then the American version of capitalism did what it does when it’s at its best, which is to innovate, to create and seize large markets, to create high-stakes competition that benefits customers, and to create new things that people value a great deal.
And the American high-tech industry does what it’s recently learned to do so well, which is to create platforms (iOS, Android, Twitter, Facebook, etc.) that balance openness and control, develop and curate large ecosystems of innovation, and generate massive value for platform owners and members alike.
I bring this example up not to wrap myself in my flag and cheerlead for America (I do enough of that these days while watching the Olympics), but to make two points.
First, when capitalism is working well markets, even large ones, are dynamic places, and the speed and scale of creative destruction can be breathtaking. To paraphrase an old line about Boston weather, if you don’t like the state of a high-tech industry, wait a minute. And while you’re waiting, stop predicting doom and calling for heavy-handed interventions. Markets generally work, and we should generally let them.
Second, it is a serious mistake to underestimate the ability of American companies to respond and compete effectively. I’m not nearly smart enough to understand precisely what makes the American version of capitalism work so well, but we can grow small companies into big ones, come up with new stuff, and adopt to changing circumstances better than anyone. And lest that sound like jingoism coming from me, here’s a quote from Nicholas Bloom, Rebecca Homkes, Raffaella Sadun, and John Van Reenen:
After a decade of painstaking research, we have concluded that American firms are on average the best managed in the world. This is not what we — a group of European researchers — expected to find. But while Americans are bad at football (or soccer, as it’s known as locally), they are the Brazilians of Management.
My surest prediction about technology is that Moore’s Law, in all its variants, is going to continue for some time to come, and that the resulting digital cornucopia of more, better, and cheaper will continue. My second surest prediction is that much if not most of this cornucopia will come from America.
Anyone think differently?