Emergent intelligence requires feedback loops. The fluffy squishy “Johnny, you did a great job and came up with some great ideas, but you need to improve your communications skills and your proof-reading” is not the kind of feed-back loop I’m talking about.

Emergent intelligence works when independent agents interact with each other according to a simple set of rules, and where the independent agents adjust their behavior according to direct feedback from other agents.

For example, consumers buying in a free-market give entrepreneurs direct feedback on the pricing and quality of their products. If an entrepreneur starts losing business to a lower priced rival, the entrepreneur needs to take action. The direct feedback comes in the form of lower sales, or price/quality complaints from customers.

Free-markets work because consumers are free to give feedback (they have the freedom to take their business elsewhere) and entrepreneurs are forced to listen for fear of going out of business.

Just as a free market would fail to produce optimal resource allocations if consumers could not provide direct feedback (or at least, vote with their wallets), innovation creators cannot succeed in developing true improvements unless the environment fosters direct feedback.

In most large organizations, people are not able to give direct and honest feed back. Institutional inertia, over reliance upon hierarchies, overly structured processes, the politics of empire building, and the ugly side of human egos, all play a role.

If you work in a large organization, ask yourself when was the last time you saw a major new initiative based on an idea from one of the junior people in the company. If you are a senior executive, ask yourself when you last accepted a critique from one those junior people.

Now, compare this to an academic environment, which encourages direct feedback. Here are two examples:

Discovery of E=MC2

Albert Einstein was a lowly “technical assistant examiner” at the Swiss Patent Office in 1905 when he published the four Annus Mirabilis Papers, including a paper on the photoelectric effect, which won him a Nobel prize in 1922, and a paper on special relativity, which was the pre-cursor to his theory of general relativity, which gave us E=MC2. Einstein was stuck in the patent office because his professors didn’t like him. He was too brash. He still managed to get his papers published.

Curing stomach ulcers

Until 1994, ulcers were thought to be caused by stress or spicy food. Until 1994, in the US at any rate, there was no real cure. The story began 12 earlier in 1982, when, in the face of this dogma, two Australians named Robin Warren and Barry Marshall set out to prove to the world that most stomach ulcers were actually caused by the H. pylori bacteria, and most importantly, that the bacterial infection could be cured with antibiotics. Despite the dogma, Warren and Marshall were able to get their original paper published. The medical community was slow to react. Eventually, Marshall drank a test tube of H. pylori, developed gastritis, and treated himself with antibiotics. This test, combined with the results of a few other tests eventually convinced the medical community. In 1994, the National Institutes of Health published an opinion stating that most recurrent gastric ulcers are caused by H. pylori, and recommending that antibiotics be used for treatment. In October, 2005, Warren and Marshall were awarded the Nobel prize for medicine.

In both cases, academia and the medical community had protected themselves against all the structural and human ego things that normally prevent innovation. Academia and the medical community used a combination of the scientific method and anonymous peer reviewed journals. Despite the fact his professors didn’t like him personally, Einstein still got published. Despite the egos of literally millions of doctors who had simply assumed that no bacteria could survive in the powerful acids in the stomach, Warren and Marshall were able to get published and finally change the recommended treatment.

Does your company do anything to make sure that innovation can happen in the face of internal opposition?

Obviously, any executive wishing to create an environment that fosters innovation must first create an infrastructure for facilitating constructive feedback loops within their organization.

Academia and free market economics offer three other lessons about feedback:

1. In order for innovation creators to thrive, they must have a clear and simple way of challenging the status quo. That means that the guy from the shipping department with a good marketing idea must be able to provide it to the marketing department in a way that garners praise and the likelihood of advancement, not a fast track to the exit.
2. The feedback must be multi-directional. Not everyone is going to come up with the right solution the first time round. But with dialog and the opportunity to iterate, good ideas can be cut and polished, like diamonds found in the rough, into something truly valuable.
3. Feedback is only useful when everyone is fully informed. In a free market economy, a company can be deluded into thinking it has a superior product simply because the market has not yet learnt about the competition. Eventually, the information will disseminate. This is an echo of the first and second points made above: “Innovation creators need to know who is who”, and “Innovation creators need to know what is going on”.

In summary, in order for an organization to be truly innovative and exhibit emergent intelligence, it must have a system that facilitates feedback. To be successful, the tools used to facilitate feedback must enable underlings to challenge superiors, must allow for multi-directional feedback to enable people to iterate on good ideas, and must help to ensure that everyone stays well informed.

In order to achieve all of these lofty goals, the feedback tools must be an easily understood part of organization’s DNA. Every academic knows what a journal is, knows how to get published and knows how the review system works. Entrepreneurs know that, in a free market economy, their customers can go to the competition. Thus, mechanism for feedback has to be ingrained in the organization’s daily workflow and its function and purpose must be well understood.