Can We Come Up With A Better Way To Measure Innovation?
from the the-market? dept
But, that leads to a separate issue. If you aren't using patents as a proxy, then how do you measure innovation? Tim O'Reilly is asking for suggestions on a measure innovation metric:
How might we construct a metric that would reflect the transformative power of the web (no patents), Google (nowhere near as many as their innovations), Facebook (ditto), Amazon (ditto, despite the 1-click flap), Craigslist, Wikipedia, not to mention free software such as Linux, Apache, MySQL and friends, as well the upwelling of innovation in media, maker culture, robotics... you name it: all the areas where small companies create new value and don't have time, money or inclination to divert effort from innovation to patents?The problem is that I'm not sure there is any single metric that really works here -- especially when it comes to disruptive innovations. You could go with revenue, but one of the features of truly disruptive innovations is that they sometimes shrink direct markets (while greatly increasing the size of indirect markets). So that might not be very useful either. You could go with user adoption -- but that may be fleeting or possibly gamable.
Even with older successful technologies, I'm not sure these kinds of metrics would most accurately highlight how much their innovation meant. Telcos made lots of money, but much of the real innovative value of the telephone was what other businesses they eventually enabled. How do you calculate that?
The only real metric I can think of -- though I'm not sure how one would measure this accurately -- is how much you would have to pay customers to get them to stop using a certain innovation. If you went around and surveyed people, and figured out how much it would cost to get them to, say, stop using search engines or email or mobile phones or automobiles, you might be able to get a sense of the "value" of certain innovations. From there, as a baseline, you could potentially monitor the delta over time. Thus, as the iPod grows in "value," the value of a portable CD player would decrease. As mobile phone cameras got better, the value of portable cameras would decrease, etc. It would be a lot of work, but could give you a much better general sense of innovation and how it changes over time than any patents.