Two types of innovation

Hierarchical vs. tinkering innovation and what it means for our regulatory system

Here is the text of a short talk I gave for the our technology zones event focusing on innovation. As charter cities have taken off, we've put our domestic program on indefinite hiatus, but we're glad other folks are interested in revitalizing American innovation.

Hello, thank you for coming. I’m Mark Lutter, the Founder and Executive Director for the Center for Innovative Governance Research, recently renamed the Charter Cities Institute.

I’d like to start this discussion with a story I recently read in the Atlantic. It’s about a diabetic, Doug Boss. He had not had a good night’s sleep in a decade, because his glucose monitor would go off and he would have to eat something to adjust his blood sugar.

In response to this challenge, he did what a growing number of people are doing, he created an artificial pancreas. He bought an outdated insulin pump with a security flaw, which allowed him to attach the insulin pump to an insulin monitor to automatically calculate insulin doses.

He is not the only one to do this. The article in which he is mentioned is in the Atlantic. The New York Times has also written about DIY insulin pumps. This is not an isolated phenomenon, and for understandable reasons, it greatly reduces the burdens faced by diabetics.

The FDA did approve an artificial pancreas in 2016, the Minimed 670G from Medtronic. However, many of the DIYers are still sticking with their system. It allows them greater flexibility with choosing glucose monitors and setting their blood sugar than sticking with Medtronic produced devices.

I like this anecdote because it illustrates an important dimension of innovation that is typically forgotten. Today, innovation is typically thought of as coming from large, hierarchical, bureaucratic organizations. A decision is made at the top of an existing, powerful institution, a government, university, or company. Then resources are expended according to a carefully devised plan to develop the innovation. The epitome of hierarchical innovation is the Manhattan project.

The DIY pancreas is an example of what I call, tinkering innovation. It’s the result of individuals, typically working with a flat, non-hierarchical network. For Doug Boss, the network is called OpenAPS, or Open Artificial Pancreas System.

There’s also the biohacking community, referred to as Grinders, that try to ‘hack’ their bodies with technology. A common hack is implanting magnets in fingers to ‘feel’ electromagnetic fields, sometimes combined with an ultrasonic distance sensor to allow you to have ‘sonar’.

An even better-known example is DIY drones.

The structure of innovation is important because regulatory systems are built for specific structures of innovation. A regulatory system built for tinkerers might not be optimal for hierarchical innovation and vice versa. The three previous examples of DIY pancreas, biohacking, and drones all operate in a regulatory grey area.

The primary claim I would like to make is that we are moving away from an era dominated by hierarchical innovation to an era where tinkering innovation plays an important role and it is important to update our regulatory system accordingly. In the 19th century innovation was dominated by tinkerers, the latter half of the 20th century saw hierarchical innovation take over, but the nature of innovation is changing again.  

Our current regulatory system was created as the industrial age emerged and matured. Innovation was largely confined to large enterprises and as such, large bureaucracies were built to regulate them. However, the regulatory bureaucracies are having trouble adapting to the emerging world. They are neither quick nor adept enough to nurture the types of technologies being developed by tinkerers. The result is that tinkerers not only create artificial pancreas before large companies, they continue to prefer their artificial pancreas to the mass-produced ones.

Put simply, we need to retool our regulatory regime. This is where technology zones come in. A technology zone is a specific zone, be it a city, county, or other region, that has a regulatory regime that is less restrictive than the federal regime. Technology zones allow for the experimentation with new regulatory approaches that can help foster innovation.

Technology zones are not just an idea, the FAA has already implemented 10 zones to allow for experimentation with drones We believe a similar framework can be adopted for a wider variety of regulatory reforms. Reinventing the American regulatory system can help jumpstart innovation, and create a world where opportunity is the future.

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