A few decades ago, big companies like GE and IBM controlled product pipelines, meaning that they would likely bring groundbreaking inventions to life. Now, a college junior can have a good idea and build an entire business around it using only a crowdfunding website, open source technology, and a 3D printer.
What effect does this power shift from corporations to individuals have on our larger society? We brought the question to a panel of experts at our recent live event, which included author Nicco Mele and Harvard Business School professor Karim Lakhani.
[This interview has been edited and condensed. For the full conversation, visit innovationhub.org.]
Kara Miller: What is causing innovators to turn their backs on big companies?
Nicco Mele: Technology has, over the last 35 years, pushed power to individuals. In 1820, the vast majority of Americans were self-employed as shopkeepers and subsistence farmers. By 1920, the vast majority of Americans were employed by a corporation. Over the last 20 years, that pendulum has swung back in a significant way to people being self-employed. And, you know, it sure beats having a boss.
KM: Instagram had only 13 employees when it was taken over for a billion dollars. Barnes and Noble is worth approximately the same amount, and it has 33,000 full-time employees. How is this possible?
Karim Lakhani: There’s been a shift in the cost of computation. When I was graduating from MIT, to do a startup you’d need 10 million bucks, 30 engineers, and all this software to get going. Today, if you get half a million bucks, you might be OK. You can get computation from the cloud, open source tools, and scale in ways that weren’t possible before. Instagram was running on Amazon’s Web servers, which made it possible for them to do what they were able to do. Technology is becoming democratized, and access to the technology is becoming widespread.
NM: It begs the question, what are the advantages to scale?
KL: If you’re going to make a 787 airplane, you need scale. Some really important problems require scale, time, coordination, and diversity of expertise. So the question becomes, what’s the organizational form that can sustain this? Is it always going to be the GEs, IBMs, and AT&Ts of the world, or can we have more fluid, distributive forms take place?
KM: When you think about where the creative people are going these days, what happens to everyone else, particularly in regards to the consolidation of money?
NM: I think the world is full of opportunity if you’re a student at an elite university. But the Department of Labor did a study that says between 16 to 19 percent of parking attendants in the U.S. have a four-year college degree, and the debt that comes with it. Broadly speaking, a lot of our institutions are not addressing the challenges we’re facing.
KL: Right now, we’re in a stage where we’re seeing tremendous inequality in the economy. But at the same time, people are inherently problem-solvers. You go, oh my goodness, are we back at the start of the industrial revolution? Maybe, to some degree. But I also believe that adjustments will be made, and we will go after the big problems that we want to be solving in health, energy, food, and so forth.
Mikaela Lefrak contributed to this report.