In the physical universe, chemical reactions are limited by the molecules that are close to one another and the ease with which they can meet up. You can run an electrical current through a chemical bath and synthesize the basic amino acids that form the building-blocks of human life. You cannot synthesize a llama.
So in the field of human knowledge. New ideas are limited by the supply of existing ideas and by the speed with which those ideas can combine to form new ones. The ancients could build accurate astronomical models but could not generate a theory of gravity; they needed better telescopes, better measurements and a theory of calculus. "If I see farther than other men," said Isaac Newton, "it is because I stood on the shoulders of giants."
This idea, the importance of proximity, is one of the first concepts that Steven Johnson introduces in "Where Good Ideas Come From." In many ways, it is the heart of the book, defining not just what innovations are possible at a given time, but also how innovation gets done within the current frontiers of human knowledge. In Mr. Johnson's telling, innovation is most likely to occur when ideas from different people, and even different fields, are rapidly banging against one another; every so often the ideas will spawn some radical new combination. The most innovative institutions will create settings where ideas are free to move, and connect, in unexpected ways.
Anyone who has written about business or science knows how often stories about inventions start with some chance encounter: "I was sitting next to this guy on an airplane, and he said . . ." The pacemaker was invented by an electronics technician who happened to have lunch with two heart surgeons; McDonald's became a national chain after Ray Kroc stopped by the original hamburger shack to sell milkshake machines and realized that he had stumbled onto a good thing.
Mr. Johnson thinks that the adjacent possible explains why cities foster much more innovation than small towns: Cities abound with serendipitous connections. Industries, he says, may tend to cluster for the same reason. A lone company in the middle of nowhere has only the mental resources of its employees to fall back on. When there are hundreds of companies around, with workers more likely to change jobs, ideas can cross-fertilize.
The author outlines other factors that make innovation work: the tolerance of failure, as in Thomas Edison's inexorable process-of-elimination approach to finding a workable light-bulb filament; the way that ideas from one field can be transformed in another; and the power of information platforms to connect disparate data and research. "Where Good Ideas Come From" is filled with fascinating, if sometimes tangential, anecdotes from the history of entrepreneurship and scientific discovery. The result is that the book often seems less a grand theory of innovation than a collection of stories and theories about creativity that Steven Johnson happens to find interesting.
It turns out that Mr. Johnson himself has a big idea, but it's not a particularly incisive one: He proposes that competition and market forces are less important to innovation than openness and inspiration. The book includes a list of history's most important innovations and divides them along two axes: whether the inventor was working alone or in a network; and whether he was working for a market reward or for some other reason. Market-led innovations, it turns out, are in the minority.
Certainly it is true that great discoveries happen in government projects or academic labs; it would be foolish to declare that only market incentives can produce transformative ideas. But Mr. Johnson's list ultimately proves less about the market's shortcomings than about the shortcomings of the great-discovery model of innovation on which he dwells. Markets may be less effective at delivering radical new ideas, but they excel at converting those ideas into useful tools.
Reverence for the great-discovery model of innovation is what prompts critics of the pharmaceutical industry to declare that all the "real work" of drug discovery is done in university labs, often with taxpayer funding. Drug companies, we are often told, simply steal the ideas and monetize them. And yet what "Big Pharma" does no less crucial to drug discovery than the basic research that takes place in academia. It is not enough to learn that a certain disease process can be thwarted by a given molecule. You also have to figure out how to cheaply mass-produce that chemical, in a form that can be easily taken by ordinary patients (no IV drugs for acid reflux, please). And before the drug can be approved, it must be run through the expensive human trials required by the Food and Drug Administration.
The endless creativity of the human animal is one of the differences between us and a chimpanzee poking sticks into an anthill in search of a juicy meal. But another one is our capacity for the endless elaboration and refinement of ideas—particularly in a modern economy. Toyota's prowess at this sort of incremental improvement is legendary, even radical. Wal-Mart, it is said, was responsible for 25% of U.S. productivity growth in the 1990s. That's not because Sam Walton emerged from his lab one night waving blueprints for a magic productivity machine. The company made continual, often tiny, improvements in the management of its supply chain, opening thousands of stores along the way and putting the benefits within reach of virtually every American.
We are all of us, every day, discovering many things that don't work very well and a few things that do. Reducing the history of innovation to a few "big ideas" misses the full power of human ingenuity.