Failures in Foresight, Part II: The Failure of the Paradigm

I often imagine myself meeting James Clark Maxwell, one of the greatest physicists in the history of the Earth, and the one indirectly responsible for almost all the machinery we’re using today – from radio to television sets and even power plants. He was recognized as a genius in his own time, and became a professor at the age of 25 years old. His research resulted in Maxwell’s Equations, which describe the connection between electric and magnetic fields. Every electronic device in existence today, and practically all the power stations transmitting electricity to billions of souls worldwide – they all owe their existence to Maxwell’s genius.

And yet when I approach that towering intellectual of the 19th century in my imagination, and try to tell him about all that has transpired in the 20th century, I find that he does not believe me. That is quite unseemly of him, seeing as he is a figment of my imagination, but when I devote some more thought to the issue, I realize that he has no reason to accept any word that I say. Why should he?

At first I decide to go cautiously with the old boy, and tell him about the X-rays – whose discovery was made in 1895, just 26 years after Maxwell’s death. “Are you talking of light that can go through the human body and chart all the bones in the way?” he asks me incredulously. “That’s impossible!”

And indeed, there is no scientific school in 1879 – Maxwell’s death date – that can support the idea of X-rays.

I decide to jump ahead and skip the theory of relativity, and instead tell him about the atom bomb that demolished Nagasaki and Hiroshima. “Are you trying to tell me that just by banging together two pieces of that chemical which you call Uranium 235, I can release enough energy to level an entire town?” he scoffs. “How gullible do you think I am?”

And once again, I find that I cannot fault him for disbelieving my claims. According to all the scientific knowledge from the 19th century, energy cannot come from nowhere. Maxwell, for all his genius, does not believe me, and could not have forecast these advancements when he was alive. Indeed, no logical forecasters from the 19th century would have made these predictions about the future, since they suffered from the Failure of the Paradigm.

Scientific Paradigms

A paradigm, according to Wikipedia, is “a distinct set of concepts or thought patterns”. In this definition one could include theories and even research methods. More to the point, a paradigm describes what can and cannot happen. It sets the boundaries of belief for us, and any forecast that falls outside of these boundaries requires the forecaster to come up with extremely strong evidence to justify it.

Up to our modern times and the advent of science, paradigms changed in a snail-like pace. People in the medieval times largely figured that their children would live and die the same way as they themselves did, as would their grandchildren and grand-grandchildren, up to the day of rapture. But then Science came, with thousands of scientists researching the movement of the planets, the workings of the human body – and the connections between the two. And as they uncovered the mysteries of the universe and the laws that govern our bodies, our planets and our minds, paradigms began to change, and the impossible became possible and plausible.

The discovery of the X-rays is just one example of an unexpected shift in paradigms. Other such shifts include –

Using nuclear energy in reactors and in bombs

Lord Rutherford – the “father of nuclear physics” in the beginning of the 20th century, often denigrated the idea that the energy existing in matter would be utilized by mankind, and yet one year after his death, the fission of the uranium nucleus was discovered.

Electronics

According to the legend, the great experimental physicist Michael Faraday was paid a visit by governmental representatives back in the 19th century. Faraday showed the delegation his clunky and primitive electric motors – the first of their kind. The representatives were far from impressed, and one of them asked “what could possibly be the use for such toys?” Faraday’s answer (which is probably more urban myth than fact) was simple – “what use is a newborn baby?”

Today, our entire economy and life are based on electronics and on the power obtained from electric power plants – all of them based on Faraday’s innovations, and completely unexpected at his time.

Induced Pluripotent Stem Cells

This paradigm shift has happened just nine years ago. It was believed that biological cells, once they mature, can never ‘go back’ and become young again. Shinya Yamanaka other researchers have turned that belief on its head in 2006, by genetically engineering mature human cells back into youth, turning them into stem cells. That discovery has earned Yamanaka his 2012 Nobel prize.

Plugs everywhere. You can blame Maxwell for this one.
Plugs everywhere. You can blame Maxwell and Faraday for this one.

How Paradigms Advance

It is most illuminating to see how computers have advanced throughout the 20th century, and have constantly shifted from one paradigm to the other along the years. From 1900 to the 1930s, computers were electromechanical in nature: slow and cumbersome constructs with electric switches. As technology progressed and new scientific discoveries were made, computers progressed to using electric relay technology, and then to vacuum tubes.

Computing power increases exponentially as paradigms change. Source: Ray Kurzweil's The Singularity is Near
Computing power increases exponentially as paradigms change. Source: Ray Kurzweil’s The Singularity is Near

One of the first and best known computers based on vacuum tubes technology is the ENIAC (Electronic Numerical Integrator and Computer), which weighed 30 tons and used 200 kilowatts of electricity. It could perform 5,000 calculations a second – a task which every smartphone today exceeds without breaking a sweat… since the smartphones are based on new paradigms of transistors and integrated circuits.

At each point in time, if you were to ask most computer scientists whether computers could progress much beyond their current state of the art, the answer would’ve been negative. If the scientists and engineers working on the ENIAC were told about a smartphone, they would’ve been completely baffled. “How can you put so many vacuum tubes into one device?” they would’ve asked. “and where’s the energy to operate them all going to come from? This ‘smartphone’ idea is utter nonsense!”

And indeed, one cannot build a smartphone with vacuum tubes. The entire computing paradigm needed to change in order for this new technology to appear on the world’s stage.

The Implications

What does the Failure of the Paradigm mean? Essentially what it means is that we cannot reliably forecast a future that is distant enough for a paradigm shift to occur. Once the paradigm changes, all previous limitations and boundaries are absolved, and what happens next is up to grabs.

This insight may sound gloomy, since it makes clear that reliable forecasts are impossible to make a decade or two into the future. And yet, now that we understand our limitations we can consider ways to circumvent them. The solutions I’ll propose for the Failure of the Paradigm are not as comforting as the mythical idea that we can know the future, but if you want to be better prepared for the next paradigm, you should consider employing them.

And now - for the solutions!
And now – for the solutions!

Solutions for the Failure of the Paradigm

First Solution: Invent the New Paradigm Yourself

The first solution is quite simple: invent the new paradigm yourself, and thus be the one standing on top when the new paradigm takes hold. The only problem is, nobody is quite certain what the next paradigm is going to be. This is the reason why we see the industry giants of today – Google, Facebook, and others – buying companies left-and-right. They’re purchasing drone companies, robotics companies, A.I. companies, and any other idea that looks as if it has a chance to grow into a new and successful paradigm a decade from now. They’re spreading and diversifying their investments, since if even one of these investments leads into the new paradigm, they will be the Big Winners.

Of course, this solution can only work for you if you’re an industry giant, with enough money to spare on many futile directions. If you’re a smaller company, you might consider the second solution instead.

Second Solution: Utilize New Paradigms Quickly

The famous entrepreneur Peter Diamandis often encourages executives to invite small teams of millennials into their factories and companies, and asking them to actively come up with ideas to disrupt the current workings of the company. The millennials – people between 20 to 30 years old – are less bound by ancient paradigms than the people currently working in most companies. Instead, they are living the new paradigms of social media, internet everywhere, constant surveillance and loss of privacy, etc. They can utilize and deploy the new paradigms rapidly, in a way that makes the old paradigms seem antique and useless.

This solution, then, helps executives circumvent the Failure of the Paradigm by adapting to new paradigms as quickly as possible.

Third Solution: Forecast Often, and Read Widely

One of the rules for effective Forecasting, as noted futurist Paul Saffo wrote in Harvard Business Review in 2007, is to forecast often. The proficient forecaster needs to be constantly on the alert for new discoveries and breakthroughs in science and technology – and be prepared to suggest new forecasts accordingly.

The reason behind this rule is that new paradigms rarely (if ever) appear out of the blue. There are always telltale signs, which are called Weak Signals in foresight slang. Such weak signals can be uncovered by searching for new patents, reading Scientific American, Science and Nature to find out about new discoveries, and generally browsing through the New York Times every morning. By so doing, one can be certain to have better hunch about the oncoming of a new paradigm.

Fourth Solution: Read Science Fiction

You knew that one was coming, didn’t you? And for a good reason, too. Many science fiction novels are based on some kind of a paradigm shift occurring, that forces the world to adapt to it. Sometimes it’s the creation of the World Wide Web (which William Gibson speculated about in his science fiction works), or rockets being sent to the moon (As was the case in Jules Verne’s book – “From the Earth to the Moon”), or even dealing with cloning, genetic engineering and bringing back extinct species, as in Michael Crichton’s Jurassic Park.

Science fiction writers consider the possible paradigm shifts and analyze their consequences and implications for the world. Gibson and other science fiction writers understood that if the World Wide Web will be created, then we’ll have to deal with cyber-hackers, with cloud computing, and with mass-democratization of information. In short, they forecast the implications of the new paradigm shift.

Science fiction does not provide us with a solid forecast for the future, then, but it helps us open our minds and escape the Failure of the Paradigm by considering many potential new paradigms at the same time. While there is no research to support this claim, I truly believe that avid science fiction readers are better prepared for new paradigms than everyone else, as they’ve already lived those new paradigms in their minds.

Fifth Solution: Become a Believer

When trying to look far into the future, don’t focus on the obstacles of the present paradigm. Rather if you constantly see that similar obstacles have been overcome in the past (as happened with computers), there is a good reason to assume that the current obstacles will be defeated as well, and a new paradigm will shine through. Therefore, you have to believe that mankind will keep on finding solutions and developing new paradigms. The forecaster is forced, in short, to become a believer.

Obviously, this is one of the toughest solutions to implement for us as rational human beings. It also requires us to look carefully at each technological field in order to understand the nature of the obstacles, and how long will it take (according to the trends from the past) to come up with a new paradigm to overcome them. Once the forecaster identifies these parameters, he can be more secure in his belief that new paradigms will be discovered and established.

Sixth Solution: Beware of Experts

This is more of an admonishment than an actual solution, but is true all the same. Beware of experts! Experts are people whose knowledge was developed during the previous paradigm, or at best during the current one. They often have a hard time translating their knowledge into useful insights about the next paradigm. While they can highlight all the difficulties existing in the current paradigm, it is up to you to consider how in touch those experts are with the next potential paradigms, and whether or not to listen to their advice. That’s what Arthur C. Clarke’s first law is all about –

“When a distinguished but elderly scientist states that something is possible, he is almost certainly right. When he states that something is impossible, he is very probably wrong.”

Conclusion

The Failure of the Paradigm is a daunting one, since it means we can never forecast the future as reliably as we would like to. Nonetheless, business people today can employ the above solutions to be better prepared for the next paradigm, whatever it turns out to be.

Of all the proposed solutions to the Failure of the Paradigm, I like the fourth one the best: read science fiction. It’s a cheap solution that also brings much enjoyment to one’s life. In fact, when I consult for industrial firms, I often hire science fiction writers to write stories about the possible future of the company in light of a few potential paradigms. The resulting stories are read avidly by many of the employees in the company, and in many cases show the executives just how unprepared they are for these new paradigms.

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Failures in Foresight: The Failure of Nerve

Picture from Wikipedia, uploaded by the user Yerevanci

Today I would like to talk (write?) about the first of several different failures in foresight. This first failure – called the Failure of Nerve – had been identified in 1962 by noted futurist and science fiction titan Sir Arthur C. Clarke. While Clarke has mostly pinpointed this failure as a preface for his book about the future, I’ve identified several forces leading to the Failure of Nerve, and discuss ways to circumvent it, in the hope that the astute reader will avoid making similar failures when thinking about the future.

Failure of Nerve

The Failure of Nerve is one of the most frequent of failures when talking or writing about the future, at least in my personal experience. When experts or even laypeople are expressing an opinion about the future, you expect them to be knowledgeable enough to be aware of the facts and the data from the present. And yet, all too often, this expectation is smashed on the hard-rock of mankind’s arrogance. The Failure of Nerve occurs when people are too fearful of looking for answers in the data that surrounds them, and instead focus on repeating their preconceived notions – which might’ve been true in the past, but are no longer relevant in the present.

Examples for Failures of Nerve are sadly abundant. Many quote Simon Newcomb, the famous American astronomer, who declared that flying machines are essentially impossible, a mere two years before the first flight of the Wright brothers –

“The demonstration that no possible combination of known substances, known forms of machinery and known forms of force, can be united in a practical machine by which man shall fly long distances through the air, seems to the writer as complete as it is possible for the demonstration of any physical fact to be.”

However, this is not a Failure of Nerve, since in Newcomb’s time, the data from the scientific labs themselves was incorrect. As the Wright brothers wrote about their experiments –

“Having set out with absolute faith in the existing scientific data, we were driven to doubt one thing after another, till finally, after two years of experiment, we cast it all aside, and decided to rely entirely upon our own investigations.”

Newcomb’s Failure of Nerve appeared later on, when he was confronted with reports about the Wright brothers’ success. Instead of withholding judgement and checking the data again, Newcomb only conceded that flying machines may have a slight chance of existing, but they could certainly not carry any other human beings other than the pilot.

The first flight of the wright brothers - against the better judgement of the scientific experts of the time. Source: Wikipedia
The first flight of the wright brothers – against the better judgement of the scientific experts of the time.
Source: Wikipedia

A similar Failure of Nerve can be found in the words of Napoleon Bonaparte from the year 1800, uttered in reply to news regarding Robert Fulton’s steamboat –

“What, sir, would you make a ship sail against the wind and currents by lighting a bonfire under her deck? I pray you, excuse me, I have not the time to listen to such nonsense.”

Had the uprising emperor bothered to take a better look at the current state of steamboats, he would’ve learned that boats with “bonfires under their decks” were already carrying passengers in the United States, even though the venture was not a commercial success. Fulton went on to construct a steamboat (nicknamed “Fulton’s Folly”) that rose to fame, and in 1816 France finally recovered its senses and purchased a steamboat from Great Britain. Knowing of Napoleon’s genius in warfare, it is an interesting thought exercise to consider how history might have changed had the emperor realized the potential in steamboats when the technology was still emergent.

Is it possible that steamboats like this one would've changed the course of history, had Napoleon not been affected by the Failure of Nerve? Source: Wikipedia
Is it possible that steamboats like this one would’ve changed the course of history, had Napoleon not been affected by the Failure of Nerve?
Source: Wikipedia

How do we deal with a Failure of Nerve? To find the answer to that question, we need to understand the forces that make this failure so common.

Behind the Curtains of the Nerve

There are at least three different forces that can contribute to a Failure of Nerve. These are: selective exposure to information, confirmation bias, and last but definitely not least – the conservation of reputation.

The Force of Selective Exposure

Selective exposure to information is something we all suffer from. In this day and age, we have an abundance of information. In the past, news would’ve had taken weeks and months to get to us, and we only had the village elder’s opinion to interpret them for us. Today we’re flooded by information from multiple media sources, each of which with its own not-so-secret agenda. We’re also exposed to columns by social critics and other luminaries, and we can usually tell in advance how they look at things. If you read Tom Friedman’s column, you can be sure he’ll give you the leftist approach. If you open the TV at The Glenn Beck Program, on the other hand, you’ll get the right-winged view.

An abundance of information is all good and well, until you realize that human beings today suffer from a scarcity in attention. They can only focus on one article at a time, and as a result they must choose how to divide their time between competing pieces of information. The easiest choice? Obviously, to go with the news that support your current view on life. And that is indeed the way that many people choose – and understandably results in a Failure of Nerve. How can you be aware of any new information that stands in contradiction to your core beliefs, if you only listen to the people who repeat those same core beliefs?

Philip E. Tetlock, in his new book Superforcasting, tells about Doug Lorch, one of the top forecasters discovered in recent years, who has found a way to circumvent selective exposure, albeit at an effort. In the words of Tetlock (p. 126) –

“Doug knows that when people read for pleasure they naturally gravitate to the like-minded. So he created a database containing hundreds of information sources – from the New York Times to obscure blogs – that are tagged by their ideological orientation, subject matter, and geographical origin, then wrote a program that selects what he should read next using criteria that emphasize diversity. … Doug is not merely open-minded. He is actively open-minded.”

Of course, reading opposite views to the one you adhere to can be annoying and vexing, to say the least. And yet, there is no other way to form a more nuanced and solid view of the future.

Superforecasting: The Art and Science of Prediction. By Philip E. Tetlock and Dan Gardner
Superforecasting: The Art and Science of Prediction. By Philip E. Tetlock and Dan Gardner

The Force of Confirmation Bias

Sadly, even when a person chooses to actively open his or her mind to different views, it does not mean that they will be able to assimilate the lessons into their outlook. As human beings, one is wired to –

“…search for, interpret, prefer, and recall information in a way that confirms one’s beliefs or hypotheses while giving disproportionately less attention to information that contradicts it.” – Wikipedia

The confirmation bias is well-known to any expecting future-parent. You walk around in the city, and you find that the street is choke-full of parents with strollers and babies. They are everywhere. You can’t avoid them in the streets, on the bus, and even at work you find that your co-worker had decided to bring her children to the workplace today. So what happened? Has the world’s birth rate doubled itself all of a sudden?

The obvious answer is that we are constantly influenced by confirmation bias. If our mind is constantly thinking about babies, then we’ll pay more attention to any dripping toddler crossing the road, and the memory will be etched much more firmly into our minds.

The confirmation bias does not influence only young parents. It has some real importance in the way we view our world. A study from 2009 demonstrated that when people were asked to read certain articles spend 36 percent more time, on average, reading articles that they agreed with. Another study from 2009 demonstrated that when conservatives are watching The Colbert Report – in which Stephen Colbert satirizes the part of a right-winged news reporter – they read extra-meaning into his words. They claimed that Colbert only pretends to be joking, and actually means what he says on the show.

How does confirmation bias relate to the Failure of Nerve? In a way, it serves to negate some of the bad reputation that the Failure of Nerve has garnered from Clarke. The confirmation bias basically means that unless we make a truly tremendous and conscious attempt to analyze the world around us, our mind will fool us. We’ll pay less attention to evidence that refutes our current outlook, and consider it of lesser importance than other pieces of evidence. Or as the pioneer of the scientific method, Francis Bacon, put it (I found this great quote in a highly recommended blog: You Are Not So Smart) –

“The human understanding when it has once adopted an opinion (either as being the received opinion or as being agreeable to itself) draws all things else to support and agree with it.”

Can we fight off the influence of the confirmation bias over our thinking process? We can do that partially, but never completely and it will never be easy. Warren Buffett (third on the list of Forbes’ richest people in the world, and one of the most successful investors in the world) uses two means to tackle the confirmation bias: he specifically looks for dissenters and invites them to speak up, and (assumedly) he’s writing down promptly any piece of evidence that stands in contradiction to his current ideas. In the words of Buffet himself (quoted in TheDataPoint) –

“Charles Darwin used to say that whenever he ran into something that contradicted a conclusion he cherished, he was obliged to write the new finding down within 30 minutes. Otherwise his mind would work to reject the discordant information, much as the body rejects transplants.”

In short, in order to minimize the impact of confirmation bias, you need to remain constantly vigilant against the tendency to be certain of yourself. You must chase after those who disagree with you and seek their opinions actively, and perhaps most importantly: you should write it all down in order to distance yourself from your original perspective, and allow yourself to judge your thinking as though it were someone else’.

The Conservation of Reputation

One of the best known laws in the physical world is the Conservation of Mass. Only slightly less well-known is the law of Conservation of Reputation, which states that the average expert always takes the best of care not to lose face or reputation in his or her dealings with the media. Upton Sinclair had summed up the this law nicely when he wrote –

“It is difficult to get a man to understand something, when his salary depends on his not understanding it.”

Sadly enough, most experts believe that revisions of past forecasts, or indeed any change of opinion at all, will diminish and tarnish their reputation. And so, we can meet experts who will deny reality even when they meet it face-to-face. Some of them are probably blinded by their own big ideas and egos. Others probably choose to conserve what’s left of their reputation and dignity at any cost, even as they see their forecasts shrivel and wither in the light of the present.

The story of Larry Kudlow is particularly prominent in this regard. Kudlow forecast that President George W. Bush’s substantial tax cuts will result in an economic boom. The forecast fell flat, and the economy did not progress as well as it did during President Clinton’s reign. Kudlow did not seem to notice, and declared that the “Bush Rush” is here already. In fact, in 2008 he proclaimed that the current progress of American economy “may be the greatest story never told”. Five months later, Lehman Brothers filed for bankruptcy, and the entire global financial system collapsed along with that of the U.S.

I am going to assume that Kudlow was truly sincere in his proclamations, but obviously many other experts will not feel the need to be as honest, and will adhere to their past proclamations and declarations come hell or high water. And if we’re totally honest, then it must be said that the public encourages such behavior. In January 2009, The Kudlow Report (starring none other than Kudlow himself) began airing on CNBS. Indeed, sticking to your guns even in the face of reality seems to be one of the most important lessons for experts who wish to come up with the upper hand in the present – and assume correctly that few if any would force them to come to terms with their forecasts from the past.

Conclusion

In this text, the first of several, I’ve covered the Failure of Nerve in foresight and forecasting. The Failure of Nerve was originally identified by Arthur C. Clarke, but I’ve tried to make use of our current understanding of behavioral psychology to add more depth and to identify ways for people to overcome this all-too-common failure. Another book which has been very helpful in this endeavor was the recently published Superforecasting by Philip E. Tetlock and Dan Gardner, which you should definitely read if you’re interested in the art and science of forecasting.

There are obviously several other failures in foresight, which I will cover in future articles on the subject.

Why crowdfunding scams are good for society

Yesterday I suggested a scenario about the Skarp laser razor campaign, in which the new device disrupts the current shaving industry giants. Well, that was yesterday. Less than 24 hours after I published the piece in this blog, Kickstarter suspended (a polite word for “dumped”) the project. The people behind Skarp jumped ship immediately to Indiegogo, and seem to be doing quite well in there – gathering approximately $10,000 every hour, for the past ten hours.

There have been several accusations by so-called experts and professional experts in the field of lasers and physics, regarding the feasibility of the laser razor. And yet, the suspension by Kickstarter was formally because of a very different reason: it turns out the Skarp team did not have a working prototype. Or maybe they did, but it was working so haphazardly that it could not be used for actual shaving.

So what’s going on here? Don’t the folks at Kickstarter consult experts before they agree to take up projects that may be physically impossible?

I believe they do not, and that’s generally a good thing.

In order to understand why I say so, let’s first try to see what purpose Kickstarter and crowdfunding platforms as a whole serve in society.

The Three Steps of Innovation

We often hear of the entrepreneur who had an amazing idea. A truly breathtaking invention formed in his mind, and he immediately proceeded to make it a reality, earning himself a few billion dollars and a vacation in the Bahamas on the way.

That, at least, is the myth.

In reality, innovation is based on three distinct steps:

  • Recombination of existing concepts into many new ideas;
  • Finding out which ideas are good, and which aren’t;
  • Rapidly iterating a good idea until it becomes an excellent one.

The Polymerase Chain Reaction (PCR) is an example for a unique recombination of existing concepts that changed the world. The PCR device is used in nearly every biological lab as part of the work needed to sequence DNA, to create new DNA strands, and genetically engineer bacteria, plants and even human cells. The technique was invented by Kary Mullis, who won the 1993 Nobel Prize in Chemistry for it, ‘simply’ by recombining existing techniques and automating them to a degree.

Many other winning inventions are in fact a recombination of existing ideas. Facebook, for example, relies on the recombination of a social network, the World Wide Web, smartphones, image and video storing, hashtags, and many others. Similarly, autonomous (driverless) cars are a recombination of computers, sensors, image processing, GPS, etc.

Since we’re constantly innovating, dozens (and sometimes hundreds and thousands) of new ideas are being added to the mix every year, and entrepreneurs are trying to recombine them in different and exciting ways to create new inventions. This is the first step of innovation: the frantic recombination of existing ideas by inventors from around the world.

The only problem is, most of these new inventions are, well, rubbish.

In his book “How to Fly a Horse”, Kevin Ashton (the inventor who gave the Internet of Things its name) details what happens to newly patented inventions in at least one firm – Davison Design. For the past 23 years, Davison mainly took money from customers to register their patents. Overall, its revenues equaled $45 million a year, with an average of 11,000 people signing with the company. How many people actually made any money from their patents and inventions? Altogether, only 27 people have seen any money out of their patents. The statistics, in short, are grim for any inventor. You may think the market is eager to use your new idea, but you can never tell for certain until the product is actually on the market. In fact, Shinkhar Ghosh from Harvard Business School has discovered that, “About three-quarters of venture-backed firms in the U.S. don’t return investors’ capital”. So nobody knows which idea is going to be any good: not even the big venture capitalists who invest millions of dollars in those ideas.

This is where the second part of innovation comes in: we have to winnow the good ideas from the bad ones. In the past, this function was only performed by government grants and investors. Distinguished committees would go over hundreds and thousands of idea submissions, and select the ones that seemed to have the best chance for success. Unfortunately, such committees are hard-pressed to support all the applicants, and as a result, 98-99% of ideas are refused funding.

Consider, on the other hand, Kickstarter and other crowdfunding platforms. In Kickstarter alone, 43% of campaigns reach their goals and obtain the money they needed to make their vision a reality. In a way, crowdfunding allows inventors to test their ideas: does the public want this new invention? Is it any good? Are people willing to pay for it… even before the factories have received the million dollar contract to manufacture all the parts?

In that way, crowdfunding platforms enable innovation by streamlining the second step: distinguishing the good ideas from the bad ones. And once a good idea has been found and supported – whether it’s an ice chest with a USB charger, or a pillow that covers the user’s head completely – the inventor keeps upgrading and changing the product so that it becomes better with each iteration. This is the reason that iPhone 6S is so much better than the original iPhone.

Innovation is the steppingstone on which our modern day society is built. Innovation leads to increased productivity, and as Paul Krugman says – “Productivity isn’t everything, but in the long run it is almost everything.” Innovative new companies are responsible for the majority of new jobs in the United States, and innovative ‘crazy’ ideas – the kind only few dared to support when they were originally proposed, like Airbnb or Google – have led to wholesale changes in the way society behaves.

Today’s new Google or Airbnb would not have had to look for elite investors: they could’ve went to the crowdfunding platforms to ask for assistance, and their chances would’ve been much higher to receive funding, at least in principle.

That is why Kickstarter is so important for innovation and for modern society: it allows the public to support many more innovators than ever before. And while quite a few of them are going to fail (probably most of them), the ones who make the big breakthroughs are going to change society. At the very least, even the fluked campaigns show the rest of us the value of some ideas. Overall, crowdfunding platforms move society forward.

The Bad Apples

“That is all just swell,” you might say now, “but how can we be sure that the projects on Kickstarter are not a scam? How can we know for sure that the Skarp laser razor isn’t a scam? The experts were all against it!”

Well, here’s a newsflash: when it comes to innovation, you can’t always rely on the experts.

There are plenty of examples that support this statement. Both Lord Kelvin (noted British Physicist) and the great astronomer Simon Newcomb dismissed any attempt to build a heavier-than-air flying machine, a mere two years before the Wright brothers demonstrated the first successful airplane. The British Royal Astronomer Richard van der Reit Wooley has declared confidently that “Space travel is utter bilge” – one year before Sputnik orbited the Earth. In fact, experts are wrong so often about the limits of possibility, that Arthur C. Clarke has issued his First Law about them –

Arthur C. Clarke's First Law. Originally from IZQuotes
Arthur C. Clarke’s First Law. Originally from IZQuotes

In short, experts can be wrong, too, even in matters as rigid as the laws of nature and the ways we can manipulate them. And it is so much easier to get social developments and innovations wrong, since there is no perfect model of the human mind or of society. And thus, no expert would’ve forecast with certainty that people will upload their photos so that millions can see them (Facebook, Flickr, Instagram), or share their houses (Airbnb) and cars (Uber) with total strangers. And yet, these innovative start-ups made it into existence, and changed the world.

That does not mean, of course, that the public should support every wily promise on Kickstarter. In fact, I think Kickstarter did a good thing when they removed the Skarp project because the inventors had no fully working prototype. In the end, crowdfunding platforms need to balance between the desire to protect their users from scams, and the fact that it’s very difficult to distinguish between scams and some extremely innovative ideas. At least in this case, it seems Kickstarter decided to err on the side of caution.

Conclusion

While many are asking whether the Skarp laser razor is a scam, it’s the wrong question. The real question is what purpose Kickstarter and other crowdfunding platforms should have in our modern society, and the honest answer is probably that the users of these platforms have a better chance of seeing their money dissipating into thin air – but altogether that’s a good thing, since more innovators overall get supported – and the few who succeed, change the world.

So go ahead: support Skarp on Indiegogo, or any other crazy idea on Kickstarter, Tilt and the other crowdfunding platforms out there. Buy that new (barely functioning) 3D-printer, the shiniest (and fragile) aerial drone, or that dream-reader that doesn’t really work. Go ahead – now you have the justification for it: you’re promoting innovation in society. Or in other words – bring on the scams!