Innovating Innovation: Old Metrics Failing to Capture New Curves?

Time Mag Picked up a great blog post on A VC, Fred Wilson (highly regarded VC and principal of Union Square Ventures) about Steven Johnson's Time Magazine cover story on How Twitter Will Change the Way We Live.  Fred's exuberance for the article stems from the article's final few paragraphs.  In his words:

It's the finish of Steven's piece where he talks about "end user innovation" that is so brilliant. He makes this "larger point about modern innovation":

When we talk about innovation and global competitiveness, we tend to fall back on the easy metric of patents and Ph.D.s. It turns out the U.S. share of both has been in steady decline since peaking in the early '70s. (In 1970, more than 50% of the world's graduate degrees in science and engineering were issued by U.S. universities.) Since the mid-'80s, a long progression of doomsayers have warned that our declining market share in the patents-and-Ph.D.s business augurs dark times for American innovation. The specific threats have changed. It was the Japanese who would destroy us in the '80s; now it's China and India.

But what actually happened to American innovation during that period? We came up with America Online, Netscape, Amazon, Google, Blogger, Wikipedia, Craigslist, TiVo, Netflix, eBay, the iPod and iPhone, Xbox, Facebook and Twitter itself. Sure, we didn't build the Prius or the Wii, but if you measure global innovation in terms of actual lifestyle-changing hit products and not just grad students, the U.S. has been lapping the field for the past 20 years.

That's the thing that gets me so excited to get up and get going every day. Technology has reached a point where anyone can get involved with innovation. Patents and degrees matter a lot less. Imagining something and then coding it up is what its all about these days.

We are engaged in what Eric von Hippel calls "end user innovation" and it is a fundamental shift in the way society innovates. The Twitter founders are a perfect example. They built a simple tool to share short messages and it has become something entirely different.

The tools we are creating are allowing a much greater population to participate in the innovation process.  Opensource.  Crowdsource.  All new terms that describe an interconnectedness and an intellectual leverage unprecedented in history.  This should make for much more rapid, powerful, and unpredictable sources of new growth.  Google came alive about 10 years ago, captured a space, and quickly rose to become a goliath.  But just as quickly as Google rose to predominance, another rival could come and beat them at their own game, invent a new model, change the rules of the game, or the playing field altogether. 

I very much agree with the point that those decrying the U.S.' falling stature as the center of world innovation, are pointing towards metrics that described previous generations' sources of and success in innovation.  PhD's and patents are no doubt important, but perhaps new metrics describing the interconnectedness of a society, or the mass, quality, and rate of information transferred between members of a society at any given point, will better describe innovation power.  Of course, because this new curve has only just begun, we're far from being able to fully understand it and thus, measure appropriately.