Posts Tagged ‘innovation’
“There are only two ways to establish competitive advantage: do things better than others or do them differently”*…
… so why is it that there’s so much emulation, so much sameness in the marketplace? Byrne Hobart explains Hotelling’s Law…
The economist Harold Hotelling has already inspired one Diff piece, on the optimal extraction rate for finite resources ($), but Hotelling has another rule that explains political non-polarization, fast-followers in tech, and the ubiquity of fried chicken sandwiches. Companies, parties, subcultures tend to converge over time, and a simple model can illustrate how.
Consider a stretch of beach 100 feet long, running east to west. Beachgoers are positioned randomly on the beach. There are two hot dog vendors who are both selling to beachgoers. Where should they position their hot dog stands?
One option is for one vendor to be a quarter of the way from one side, and the other to be a quarter of the way from the other side. This means that everyone is, at most, 25 feet away from a snack. That’s socially optimal. But let’s suppose the vendor on the eastern side moves a bit to the west. Everyone east of them will still patronize them, because they’re still closer, if not the closest. But some customers in the middle will switch! So the other hot dog seller responds by moving east, and the same result ensues. Eventually, you end up with two vendors in the middle of the beach, and now the median distance customers travel, 25 feet, is the former maximum distance anyone used to travel.
You can substitute any other cost or one-dimensional positioning feature for this. If there are two snack food manufacturers, the socially-optimal setup might be for one of them to sell something sweet and the other to offer something salty, but the same convergent force will eventually lead both of them to sell a salty-sweet combo; customers with specific preferences will be worse-off, but they’ll still have a favorite, while any convergence captures some of the customers who were close to indifferent before.
Making the model more reflective of the real world illustrates some of the assumptions it depends on. For example, we were always assuming exactly two competitors, but now let’s add in new entrants and departures. The model gets simpler if one of the initial two hot dog vendors quits—ironically, in this case the monopolist’s profit-maximizing position is also the social welfare-maximizing position (though they’ll probably respond to their new monopoly power with higher prices). In snack foods, if the formerly diverse market is now just a choice between salty-sweet and sweet-and-salty, a new entrant might introduce some product for the flavor purists and capture the market that way.
The model does describe cases where there are limits to new entrants. For example:
- In a voting system that tends to disproportionately reward winners, you’ll expect some convergence between parties. They want enough differentiation for voters to feel like they’re making a choice, but beyond that it makes sense for both sides to compete on similarity rather than difference.1
- Businesses that are dependent on continuously delivering products with low value density will tend to have a few national brands and lots of regional ones, as with Coke and Pepsi. Both beverages are pretty similar, and retain just enough differentiation for customers to feel like they’re making a choice. The amount is small, but nonzero: in the 1980s, when Coke was losing to the sweeter Pepsi in blind taste tests, they introduced a new, sweeter formula, a decision they reversed after a consumer backlash.
- Software products with high switching costs tend to get more complex over time, as standalone products get subsumed as features of a larger suite. As long as the pace of increased complexity is controlled, this doesn’t hurt user experience too much. It does eventually lead to a sprawling mess, but by then a new kind of switching cost kicks in—the sunk cost of learning to use the system is so high that it feels wasteful to switch.
- This model also describes regulated industries that lack extraordinary returns on capital. It’s hard for a bank to become a monopoly because it takes so much capital to grow, and while even the largest banks have some regional skew to their branch networks, they tend to settle on a similar model. They also diversify in similar ways: issuing credit cards, getting into investment banking, having a capital markets business of some sort, etc…
Hotelling’s simplified model describes an iron law: under the right set of assumptions, sellers end up homogenizing their products, and niche interests end up under-served. In the real world, there are countervailing forces, and in practice the dimensions on which companies compete are messy enough that “adjacent” doesn’t really work. But Hotelling’s Law also illustrates why there’s relentless pressure for homogeneity: if some people like product A and some people prefer product B, something halfway between the two will capture part of that audience. And the producer of A or B is probably in a better position to make this new compromise product C…
One can observe that this dynamic often leads, beyond sameness, to steadily declining value/quality as well. So, one might wonder why, if all it takes is an innovative new entrant to stir up a market, that’s not going on all the time. The answer is, of course, complicated (and varies from sector to sector). But if there is a root cause, your correspondent would suggest, it’s the concentration of power and control in a market that yields oligopolies that can effectively preempt new competitors. (See, e.g., here, here, and here.)
The economics of every burger chain launching a chicken sandwich: “Hotelling’s Law,” from @ByrneHobart.
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As we noodle on normalization, we might spare a thought for a man who innovated, then (for a time) enjoyed the benefits of an oligopolist, Thomas Crapper; he died on this date in 1910. Crapper popularized the one-piece pedestal flushing toilet that still bears his name in many parts of the English-speaking world.
The flushing toilet was invented by John Harrington in 1596; Joseph Bramah patented the first practical water closet in England in 1778; then in 1852, George Jennings received a patent for the flush-out toilet. Crapper’s contribution was promotional (though he did develop some important related inventions, such as the ballcock): in a time when bathroom fixtures were barely mentionable, Crapper, who was trained as a plumber, set himself up as a “sanitary engineer”; he heavily promoted “sanitary” plumbing and pioneered the concept of the bathroom fittings showroom. His efforts were hugely successful; he scored a series of Royal Warrants (providing lavatories for Prince, then King Edward, and for George V) and enjoyed huge commercial success. To this day, manhole covers with Crapper’s company’s name on them in Westminster Abbey are among London’s minor tourist attractions.
“Foul cankering rust the hidden treasure frets, but gold that’s put to use more gold begets.”*…
The scientific literature is vast. No individual human can fully know all the published research findings, even within a single field of science. As Ulkar Aghayeva explains, regardless of how much time a scientist spends reading the literature, there’ll always be what the information scientist Don Swanson called ‘undiscovered public knowledge’: knowledge that exists and is published somewhere, but still remains largely unknown.
Some scientific papers receive very little attention after their publication – some, indeed, receive no attention whatsoever. Others, though, can languish with few citations for years or decades, but are eventually rediscovered and become highly cited. These are the so-called ‘sleeping beauties’ of science.
The reasons for their hibernation vary. Sometimes it is because contemporaneous scientists lack the tools or practical technology to test the idea. Other times, the scientific community does not understand or appreciate what has been discovered, perhaps because of a lack of theory. Yet other times it’s a more sublunary reason: the paper is simply published somewhere obscure and it never makes its way to the right readers.
What can sleeping beauties tell us about how science works? How do we rediscover information the scientific body of knowledge already contains but that is not widely known? Is it possible that, if we could understand sleeping beauties in a more systematic way, we might be able to accelerate scientific progress?
Sleeping beauties are more common than you might expect.
The term sleeping beauties was coined by Anthony van Raan, a researcher in quantitative studies of science, in 2004. In his study, he identified sleeping beauties between 1980 and 2000 based on three criteria: first, the length of their ‘sleep’ during which they received few if any citations. Second, the depth of that sleep – the average number of citations during the sleeping period. And third, the intensity of their awakening – the number of citations that came in the four years after the sleeping period ended. Equipped with (somewhat arbitrarily chosen) thresholds for these criteria, van Raan identified sleeping beauties at a rate of about 0.01 percent of all published papers in a given year.
Later studies hinted that sleeping beauties are even more common than that. A systematic study in 2015, using data from 384,649 papers published in American Physical Society journals, along with 22,379,244 papers from the search engine Web of Science, found a wide, continuous range of delayed recognition of papers in all scientific fields. This increases the estimate of the percentage of sleeping beauties at least 100-fold compared to van Raan’s.
Many of those papers became highly influential many decades after their publication – far longer than the typical time windows for measuring citation impact. For example, Herbert Freundlich’s paper ‘Concerning Adsorption in Solutions’ (though its original title is in German) was published in 1907, but began being regularly cited in the early 2000s due to its relevance to new water purification technologies. William Hummers and Richard Offeman’s ‘Preparation of Graphitic Oxide’, published in 1958, also didn’t ‘awaken’ until the 2000s: in this case because it was very relevant to the creation of the soon-to-be Nobel Prize–winning material graphene…
Indeed, one of the most famous physics papers, Albert Einstein, Boris Podolsky, and Nathan Rosen (EPR)’s ‘Can Quantum-Mechanical Description of Physical Reality Be Considered Complete?’ (1935) is a classic example of a sleeping beauty…
More examples, and explanation of why they slumber, and thoughts on how to awaken them sooner: “Waking up science’s sleeping beauties,” from @ulkar_aghayeva in @WorksInProgMag.
[Image above: source]
* Shakespeare, “Venus and Adonis”
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As we dwell on discovery, we might send healing birthday greetings to a woman whose scientific work thankfully rarely napped, Gertrude Elion; she was born on this date in 1918. A pharmacologist, she shared the 1988 Nobel Prize in Physiology or Medicine with George H. Hitchings and Sir James Black for their use of innovative methods of rational drug design (focused on understanding the target of the drug rather than simply using trial-and-error) in the development of new drugs. Her work led to the creation of the anti-retroviral drug AZT, which was the first drug widely used against AIDS. Her well-known and widely deployed creations also include the first immunosuppressive drug, azathioprine, used to fight rejection in organ transplants, the first successful antiviral drug, acyclovir (ACV), used in the treatment of herpes infection, and a number of drugs used in cancer treatment.
“The materials of city planning are: sky, space, trees, steel, and cement; in that order and that hierarchy”*…
… problematically, the last of those is among the biggest sources of CO2 emissions on earth– between 7 and 8% of the total. Now, Casey Crownheart reports, there may be a way to produce that essential building material in a low- or no-carbon way…
Cement hides in plain sight—it’s used to build everything from roads and buildings to dams and basement floors. But there’s a climate threat lurking in those ubiquitous gray slabs. Cement production accounts for more than 7% of global carbon dioxide emissions—more than sectors like aviation, shipping, or landfills.
Humans have been making cement, in one form or another, for thousands of years. Ancient Romans used volcanic ash, crushed lime, and seawater to build the aqueducts and iconic structures like the Pantheon. The modern version of hydraulic cement—the sort that hardens when mixed with water and allowed to dry—dates back to the early 19th century. Derived from widely available materials, it’s cheap and easy to make. Today, cement is one of the most-used materials on the planet, with about 4 billion metric tons produced annually.
Industrial-scale cement is a multifaceted climate conundrum. Making it is energy intensive: the inside of a traditional cement kiln is hotter than lava in an erupting volcano. Reaching those temperatures typically requires burning fossil fuels like coal. There’s also a specific set of chemical reactions needed to turn crushed-up minerals into cement—and those reactions release carbon dioxide, the most common greenhouse gas in the atmosphere.
One solution to this climate catastrophe might be coursing through the pipes at Sublime Systems. Founded by two MIT battery scientists, the startup is developing an entirely new way to make cement. Instead of heating crushed-up rocks in lava-hot kilns, Sublime’s technology zaps them in water with electricity, kicking off chemical reactions that form the main ingredients in its cement.
Over the course of the past several years, the startup has gone from making batches of cement that could fit in the palm of your hand to starting up a pilot facility that can produce around 100 tons each year. While it’s still tiny compared with traditional cement plants, which can churn out a million tons or more annually, the pilot line represents the first crucial step to proving that electrochemistry can stand up to the challenge of producing one of the world’s most important building materials.
By the end of the decade, Sublime plans to have a full-scale manufacturing facility up and running that’s capable of producing a million tons of material each year. But traditional large-scale cement plants can cost over a billion dollars to build and outfit. Competing with established industry players will require Sublime to scale fast while raising the additional funding it will need to support that growth. The end of 0% interest rates makes such a task increasingly difficult for any business, but especially for one producing a commodity like cement. And in a high-stakes, low-margin industry like construction, Sublime will need to persuade builders to use its material in the first place…
A start-up is working to drive down the carbon footprint of cement production: “How electricity could help tackle a surprising climate villain,” from @casey_crownhart in @techreview.
See also: “We are closing in on zero-carbon cement.”
* Le Corbusier
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As we prioritize progress, we might note that it was on this date in 1942 that Henry Ford patented the Soybean car. Per Wikipedia:
… a concept car built with agricultural plastic. The New York Times in 1941 states the car body and fenders were made from a strong material derived from soy beans, wheat and corn. One article claims that they were made from a chemical formula that, among many other ingredients, included soy beans, wheat, hemp, flax and ramie; while the man who was instrumental in creating the car, Lowell E. Overly, claims it was “…soybean fiber in a phenolic resin with formaldehyde used in the impregnation” (Davis, 51). The body was lighter and therefore more fuel efficient than a normal metal body. It was made in Dearborn, Michigan and was introduced to public view on August 13, 1941. It was made, in part, as a hedge against the rationing of steel during World War II. It was designed to run on hemp fuel.
“Books make great gifts because they have whole worlds inside of them. And it’s much cheaper to buy somebody a book than it is to buy them the whole world!”*…
With this post (and all best wishes for the season), your correspondent begins his annual Holiday hiatus. Regular service should resume on or around the New Year… In the hope that it’s helpful to those still searching for last-minute gifts, this, from the marvelous Tom Gauld…
And as a bonus, this appreciation of Jean Shepherd, the man whose work inspired (and fueled) that yuletide staple, A Christmas Story— and so much more: “The Old Man at Christmas“…
… Most of Shepherd’s career, particularly his first three decades on the radio, relied on riffing and improvisation, which makes for a vast but fairly evanescent archive. People often rewatch classic movies, and sometimes rewatch beloved old TV shows, but they very rarely replay old radio shows. The real marker of twentieth-century success always lay in syndication, and it’s there, a little late in the game, and in a medium that had otherwise eluded him, that Shepherd secured his legacy. In the petty grievances and joys of Seinfeld and Curb Your Enthusiasm, in NPR-style storytelling, in everything that straddles the line between countercultural and popular representative of the monoculture, from Calvin and Hobbes to Steely Dan, echoes of his work can be found, so abundant and diffuse they can be easy to miss—but they’re everywhere you care to look…
Daniel M. Lavery in The New York Review of Books
* Neil Gaiman
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As we read, we might recall that it was on this date in 1882 that an associate of Thomas Edison, Edward Hibberd Johnson (President of the Edison Electric Light Company, a predecessor of Con Edison) lit and displayed the first known electrically illuminated Christmas tree at his home in New York City.
He had Christmas tree bulbs especially made for him–80 red, white, and blue electric light bulbs the size of walnuts, hand-wired around the tree. From that point on, electrically-illuminated Christmas trees, indoors and outdoors, grew in popularity in the United States and elsewhere. In 1895, President Grover Cleveland sponsored the first electrically lit Christmas tree in the White House. And in 1901, the Edison General Electric Company advertised the first commercially-produced Christmas tree lamps (manufactured in strings of nine sockets).
“Today everything exists to end in a photograph”*…
Or so it seems. Indeed, as the ability- and the impulse– to take pictures becomes ubiquitous, we risk losing a sense of how rarefied, how special photos once were. By way of a reminder, from Her Moments, a collection of 35 photographic firsts…
If not for the invention of the camera, many of the greatest moments in human history would have been lost forever. What would the world be like without images of unforgettable moments like the flag being raised over Iwo Jima or the man facing down a tank in Tiananmen Square? Throughout the history of photography, there have been plenty of incredible milestones. These rare photographic firsts may be some of the most impactful pictures ever taken…
Many more at “35 Photography Firsts That Paint A Fascinating Portrait Of Human History.”
For an overlapping but different collection of photographic firsts, see “First images from atoms to the universe.”
And for more on three of the photos in the first collection, covered in earlier (R) D posts, see “First Takes” and “Time and tide wait for no man.”
* Susan Sontag
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As we point and click, we might recall that it was on this date in 1982 that Def Leppard and their producer Mutt Lange completed production on “Photograph,” the lead single from their next album, Pyromania; the album and the single were released the following month. ”Photograph” reached No. 1 on the Billboard Top Tracks chart, where it stayed for six weeks.
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