You start your latest book with the toaster problem. What is that?
This was a project by a postgraduate design student in London called Thomas Thwaites. He decided that he was going to make an ordinary toaster from scratch. Now a toaster is not really a complicated piece of equipment. But when Thwaites took this thing apart he discovered that it had over 400 different components and it was made of all sorts of different materials, like copper to make the pins of the electric plug, the cord, and internal wires. Then it had iron to make the steel grilling apparatus, and the spring to pop up the toast, nickel to make the heating element and so on.
So what happened in trying to build it from scratch?
In trying to build the toaster by himself he realised that it was an impossible task. He went to a disused iron mine to get iron ore. He ended up destroying a microwave trying to smelt that iron ore. He tried to get British Petroleum to fly him to an oil rig with a jerry can so that he could fill crude oil with and maybe get some plastic out of it. But they refused. In the end he had to make many compromises and he finally managed to make this toaster. It looked like a birthday shaped cake rather than a real toaster, with its coating dripping and oozing like an icing job gone wrong. And it did not work.
So if a mere toaster is beyond a single man’s comprehension, how does any problem get solved?
Well, how it doesn’t get solved is through the use of experts. I don’t want to dismiss experts, their expertise is tremendously valuable. But it doesn’t go so
far in a complex world. If you
look at the toaster itself, it was a product of massive trial and error over decades. Success emerges from a process of trial and error. In the first toaster, the heating elements were exposed and went on the outside of the toaster. It was like having a little electric fire in the middle of the room. And it rusted. It would electrocute people and it would start fires, which is a very terrible design for a toaster. But it wasn’t just that somebody could sit down and think really hard about the best way to make a toaster.
Has any research been done to show why experts are ineffective?
Philip Tetlock, a young psychologist, in the mid 80s was asked to help try and understand how the Cold War was going to develop. He interviewed lots and lots of experts on the Cold War and what he found was these experts disagreed with each other. This shouldn’t come across as a huge surprise, we expect experts to disagree with each other all the time. But he said hang on, let me think about this for a moment. This is the most important question of this age: is there going to be a nuclear war? And there are all these different experts from different fields and they can’t agree. So what does that tell us? This inspired a project to try to evaluate expertise.
What conclusions were drawn from this project?
He interviewed hundreds of experts over nearly two decades and got thousands of forecasts from them, political forecasts, economic forecasts and so on. Forecast is a good way to figure out whether someone is really an expert. Anyone can seem like an expert, but you are really an expert if you make correct judgments of the state of the world. What he found was basically all the experts were pretty useless. It doesn’t matter what field they were in, what academic discipline, whether they were journalists or diplomats or academics, they were all very bad at forecasting. I would say the problem is not expertise, the problem is the world. It is too complex and that is why experts get things wrong all the time.
The tagline of your book is why success always starts with failure. Why is that?
It starts with a process of failure. There is the process of experimentation of trial and error. And whenever you see a success, political success or business success, I would always ask but where is the failure? Where are all the ideas that did not make it? Where are all the companies that didn’t make it? It is possible for a single business to be set up, have the right idea right from the start. Take Facebook. I wouldn’t particularly say that Mark Zuckerberg could only create Facebook because he had some failure first and learnt from it. The thesis I am making is for every Facebook there are a dozen or hundred attempts that don’t quite get it right. They don’t quite get the marketing right, they don’t quite get the technology right and they don’t quite get the timing right.
Can you give us an example?
Take the case of the IT industry. What did IT start with? It started with computers with vacuum tubes. When transistors replaced vacuum tubes as the basic elements of the computer, all the vacuum tube manufacturers went bust. And then you had transistors which were made by companies like Hughes, Transitron and PhilCo. You would have never heard about any of these companies. They were wiped out by integrated circuits, and the baton passed to Intel and Hitachi. These names are familiar. On the hardware side there was a complete wipe out of whole sectors if they weren’t able to keep up.
And this is not unusual?
Not at all! You can look at the early printing industry. Gutenberg who invented the moving type press went bankrupt. He printed the Gutenberg Bible, which is regarded as one of the most beautiful books in western civilization, and it bankrupted him.
The basic point you make it that to tackle failure, more innovation and more trial and error are required. But you also say innovation has become slower, harder and costlier?
It is a bit surprising when I say that because people say that we have these smart phones, computers, mobile phones, email etc. How can you say that there is no innovation? My answer is well, that’s true. But look at other parts of the economy. If I wanted to fly to India, I would probably fly on the Boeing 747. The 747 was a plane that was developed in the late 60s. The expectation of aviation experts is that the Boeing 747 will still be flying in 2030 and 2040 and that gives it a nearly 100 year life span for its design. That is pretty remarkable if you compare what was flying in 1930s, the propeller aeroplanes. In the 1920s they didn’t think that it was possible for planes to fly at over 200 miles an hour. There was this tremendous progress and then it seems to have slowed down. Look at medicine, look at drugs, antibiotics. Tremendous progress was made in antibiotics after 1945. But since 1980 it really slowed down. We haven’t had any major classes of antibiotics since then.
But that’s just two examples...
There is an economist called Benjamin Jones and what he has found is that patents today if you compare them with patents 20-30 years ago, have bigger teams and the teams are older. Also, there are more specialists. They have to focus more because they have to learn more to get to the frontier of knowledge and they have to get together in order to develop something new. That is an organisational problem. Previously if you just got some incentives, you could just invent stuff. Now that is not true, people don’t just invent stuff. They do that in certain fields, iPhone apps and in software, where it is easy to invent just all alone. But in most fields you are looking at a very big extensive process which is an organisational problem.
Which means days of garage innovation are over?
Modern innovation and modern scientific discoveries are big expensive team efforts. In the book I talk a lot about the Spitfire aeroplane, used extensively by the British air force in the Second World War during the Battle of Britain. Spitfire was basically a cheap, quick project. It took about seven years. Social development costs were about a million dollars or a bit more. Now if you want to develop a cutting edge fighter, you are talking about a 20 or 30 year multi-billion dollar project. Look at the computer games. Duke Nukem Forever, the computer game people thought would never come out; it is 11 years behind schedule. Computer games in the 1980s were equally popular, and one guy or two guys would knock up in a few weeks. The most popular computer game of 1984 was a game called Elite. It was so good that people would buy computers just to play this one game. It was designed by students during their summer vacation. It is unimaginable that you can get a modern computer game designed like that.