🗒 Innovation and Market Efficiency

It will not be unheard of to associate “innovation” with “efficiency”. Central in a lot of our minds lies this question: can more funding/programs/nation-wide support help create an ecosystem of innovative companies? Singapore has been the muse of my thoughts on this for the last week.

Framing the problem around Taleb’s idea of antifragility, I am starting to arrive at a conclusion that efficiency and innovation are two-ends of a push-pull relationship.

Most companies started within a technological boom can be put within 3 categories: market-creators, market-enhancers, and market-extractors. When they come together, it makes sense: you need inefficiency to build market-creators, a 50/50 mix to build market-enhancers, and when a market matures and all that is left to do is to diffuse a new paradigm into peripheral markets, that is when people roll out their Xeroxes and efficiently “innovate” to extract the last out of a boom of a given paradigm.

State-funded programs are great for stimulating greater market efficienices, but they do not permit serendiptious bottom-up innovation. In fact, this homogenisation creates interdepence, not indepedence.