Building Blocks and Innovation

Most innovation comes from combining well-known, well-established, building blocks in new ways.

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John Holland, a professor of two vastly different fields—psychology and engineering—at the University of Michigan, lectures frequently on innovative thinking.

According to Holland there are two steps to innovation. The first step is to try and find the right building blocks—the basic knowledge. Second, is the use of metaphors to relate understanding.

Holland is focused on innovation, but many readers of Farnam Street will recognize the first step—acquiring the building blocks—as the process for acquiring worldly wisdom.

Like us, Holland wants to connect well-known and well-established ideas from multiple disciplines in new ways to solve problems.

In our case, the basic building blocks are the big ideas in each major discipline. While this seems daunting, luckily, according to Charlie Munger “80 or 90 important models will carry about 90% of the freight in making you a worldly wise person.”

Domain Dependence and Linking
It’s important that you can link these models together and recognize them outside of the domain they are presented. Many people, for instance, don’t link the supply and demand from economics and equilibrium from physics. Yet in many ways they are the same thing. If you can’t recognize the forces at play outside of the system in which you learned about them, you are domain dependent.

In Antifragile, Nassim Taleb writes:

We are all, in a way, similarly handicapped, unable to recognize the same idea when it is presented in a different context. It is as if we are doomed to be deceived by the most superficial part of things, the packaging, the gift wrapping.

If you don’t have a basic understanding of each of the major models you won’t be able to link them together. And if you can’t link them together, you’re going to go through life like a one-legged man in an ass-kicking contest.

Construction of a Model
According to Holland, “the construction of a mental model … closely resembles the construction of a metaphor:”

  1. There is a source system with an established aura of facts, interpretation and practice.
  2. There is a target system with a collection of observed phenomena that are difficult to interpret or explain.
  3. There is a translation from source to target that suggests a means of transferring inferences for the source into inferences for the target.

Seeing new connections requires models and metaphors. Holland continues:

For most who are heavily engaged in creative activities, be it in literature or the sciences, metaphor and model lie at the center of their activities. In the sciences, both the source and the target are best characterized as systems rather than isolated objects. … In the sciences, decisions about which properties of the source system are central for understanding the target, and which are incidental, are resolved by careful testing against the world. As a result of testing and deduction, a well-established model in the sciences accumulates a complicated aura of technique, interpretation, and consequences, much of it unwritten. One physicist will say to another “this is a conservation of mass problem” and immediately both will have in mind a whole array of knowledge associated with problems modeled in this way.

“The essence of metaphor,” write Mark Johnson and George Lakoff in their book Metaphors We Live By, “is understanding and experiencing one kind of thing in terms of another.”

Holland posits that metaphors help us translate ideas into models, which form the building blocks of innovative thinking.

“In the same way that a metaphor helps communicate one concept by comparing it to another concept that is widely understood,” Robert Hagstrom writes in Investing: The Last Liberal Art, “using a simple model to describe one idea can help us grasp the complexities of a similar idea. In both cases we are using one concept (the source) to better understand another (the target). Used this way, metaphors not only express existing ideas, they stimulate new ones.”

Metaphor and Innovation
From the Credit Suisse Thought Leader Forum:

To understand the problems in any discipline, it is necessary to have deep knowledge in that discipline. To resolve those problems, it is often necessary to look at the problem through the filters of a different and often distant discipline. The simplest analogy to the phenomenon is simply perspective. It is very difficult to understand, say, the traffic patterns of a city if you are stuck in your car at rush hour. With the distance provided by a traffic helicopter, however, it is much easier to see the major thoroughfares, the bottlenecks and the overall dynamics of the traffic system. The shift in vantage point offers better understanding and new insights for your strategy. For more abstract challenges, the use of metaphor serves the same purpose as distance in the traffic example. If we are stuck on the challenge of distribution in a global manufacturing company, for example, it may be useful to apply models from other disciplines as metaphors. The model that we have developed and used for our distribution system has been quite effective over the years, but we just cannot seem to resolve some particular challenge. Perhaps we can learn something from other kinds of distribution systems. How does an ant colony collect and distribute its resources? How does the human body manage its circulation and processing of nutrients and wastes?

Three Keys to effectively applying metaphors

There are three keys to effectively applying metaphors to achieve insight and innovation. First, you must develop a deep understanding of the metaphorical system. You will gain no new insights if you look at the human circulatory system and say, “Aha! The brain tells the rest of the body where to send things!” If you draw conclusions too quickly, then more than likely you have only recreated your existing model of distribution systems – you are seeing the human body’s circulation system as if it were the distribution system of a global manufacturing firm. If you invest the time and effort to understand this complex new system on its own merits, then you might discover something interesting about your own discipline. For instance, the human circulatory system is one of several overlapping hierarchical systems that allow the human body to grow, heal, change and yet maintain homeostatic balance. How do those systems overlap? How are the priorities of those different systems balanced? What overlapping systems exist in our global manufacturing firm, and how do they interact? An in-depth study of a new complex system should force you to ask new questions about your own, seemingly familiar system.

The second key to applying metaphors is to recognize the value of the cognitive leap. As you map the models from one system onto another, the fit will never be perfect. Our global manufacturing firm is not a human body. Therefore the solution to our challenge will not lie in our suddenly believing this to be true. Instead, the solution will lie one or two steps away. As we look at the human circulatory system, we will encounter questions and tangential thoughts. “What performs the function of ‘hormones’ in our organization?” We will not, of course, implement a system of complex chemical exchanges in our organization, but this might lead us to think about our communication systems or decision-making metrics in a new way.

The final key is often the most frustrating for managers — only a very few of the ideas that this process produces will be highly valuable. Some of the ideas will be useless. Many of the ideas will be interesting but impractical or irrelevant. Other ideas will serve as useful, incremental improvements to your system. But only a rare few of these ideas will be truly revolutionary. The secret is the same in any game of statistics – you have to try large numbers of these metaphors for the big ideas to hit. These ideas are the outliers, not the norm, and while metaphor can push your thinking towards the innovative, no process can guarantee that your new ideas will be both different and effective. Many managers are willing to try this approach once or twice, and give up when it does not immediately return impressive results. … In order to discover great innovations, you must engage regularly in the search and recognize that most of your discoveries will have either marginal or moderate value. Creative combination is a process that increases your odds of discovering breakthrough innovations, but it cannot guarantee success. This is a tool, not a silver bullet.

While the audio quality leaves much to be desired, Holland gives an interesting TEDx talk introducing a lot of these ideas: