Beware Unintended Innovation Killers from Laws, Regulations, and Corporate Policies

In the game of chess, experienced players know that a move that looks tempting can often open up fatal weaknesses that deliver swift defeat later in the game. With experience, discipline, and solid strategic skills, good players can look several moves ahead and be aware of broad patterns and principles that can give one an improved position with options for success in endgames too far away to calculate in advance. Novices look for easy fixes to threats and quick attacks based on looking just a few moves ahead. Many times they are surprised at how their moves to solve a problem or gain an advantage make them easy prey. Their style of playing is fraught with moves that bring unintended consequences later in the game.

One of the great tragedies of human decision making is the pernicious inability to consider far-reaching implications of an action. To avoid harmful unintended consequences of a decision, there are two possible solutions: 1) get assistance from experts providing guidance from many difference perspectives and do the best to consider new areas and issues that were previously overlooked, and 2) follow proven principles and strategies that increase the odds of success in spite of the impossibility of calculating everything. Both of these principles can be and probably should be used.

Innovation, for all the voices hyping it, is one of the least considered factors when policy makers start shaking things up. Whether it’s a new law, a tax policy, a regulation, or corporate policies, decision makers easily overlook innovation–real innovation, not just money spent in the name of innovation–because they tend to overlook the individuals who are the source of innovation. Real innovation begins in the minds of individuals with a vision and must be nurtured to succeed. The voice of innovators, including the voice of entrepreneurs, inventors, university professors post-docs, corporate R&D staff, etc., is rarely heard. The voices of CEOs or other top leaders from big companies may be heard. The voices of direct reports to a CEO may be heard. The voices of celebrities and activists may be heard, but who actually seeks out and listens to the real innovators or prospective innovators in our economy? Who considers what impact a law or policy will have on those individuals and their incentives to innovate or their ability to succeed? They are among the voices that should be carefully considered when making policies to avoid unintended consequences that might crush innovation and economic growth.

There are several general principles that should also be considered by policy makers. Innovation at the personal level, which is one of the themes of Conquering Innovation Fatigue, requires personal liberty. It requires a system in which individuals and companies are motivated to take on the high risks of innovation because there are incentives to succeed. These incentives for many require a form of government in which intellectual property rights are respected as well as property rights in general. When property can be seized capriciously, or when the fruits of one’s innovative labors can be taken on a whim or taxed to death, why bother innovating?

Every law, every policy, every act of government should be constrained by general principles, such as those espoused in the US Constitution, and done with care to avoid harming the economy with unintended consequences that trample on the delicate flower of innovation.

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