The Sphere of Knowledge

Why long-term thinking is a key driver for innovation

Business leaders and politicians regularly emphasize the importance of innovation for progress and economic growth. Everybody wants innovation, and everybody wants get as much of it as fast as possible.

Nevertheless, with all this pressure to innovate, we often forget what is required to enable innovation in the first place: patience and long-term thinking. But the connection between long-term thinking and innovation is not immediately obvious, and therefore sometimes difficult to communicate.

Recently, I remembered an old metaphor from my time in academia which back then I found incredibly useful to illustrate the necessity for long-term thinking for innovation. The metaphor is called ‘the sphere of knowledge’ and describes the relationship between innovation, knowledge and learning. In the hope you might find it useful in conversations about innovation, I decided to describe it and apply it to recent developments in the sciences and corporate innovation.

The metaphor of the sphere of knowledge

The sphere of knowledge encompasses the total knowledge accumulated and discovered by humanity so far, e.g. how to build solar cells or sequence the genome. The centre of the sphere contains our most basic knowledge, whilst the most specialised and state of the art knowledge is found near the outer layers of the sphere. The outer surface of the sphere represents the frontier of humanities’ total knowledge. Beyond this frontier (outside of the sphere) lies all yet undiscovered knowledge, i.e. how to enable large scale nuclear fusion.

Your personal knowledge corresponds to the volume of the sphere which you have ‘conquered’, i.e. the part of the total human knowledge you have learned and internalised. If you knew absolutely nothing about anything, this volume would be zero, and your position would be in a single point in the centre of the sphere. Of course, each of us knows something and has therefore conquered a certain volume of humanities’ total knowledge. As we learn more, we expand this volume.

The deeper we develop our knowledge in a particular subject, the more we progress towards the surface of the sphere. Once we reach the surface of the sphere, we reach the limit of human knowledge. Now we can’t learn from others anymore. To progress further and to innovate, we must first discover new knowledge.

If we are successful and discover new knowledge, we create a dent in the sphere of knowledge. This dent expands the sphere of knowledge — creates innovation. Some dents are small, resulting in incremental innovation, some are bigger, resulting in more disruptive innovation. Millions of individuals and teams creating millions of dents are the reason the sphere of knowledge constantly expands. They are the innovators and the reason for progress.

Using the metaphor of the sphere of knowledge, it is now quite easy to illustrate the necessity of patience and long term thinking for innovation.

Digging and denting takes time and is risky

We typically cannot innovate without first ‘digging’ through the inner layers of the sphere to reach the frontier of knowledge. And all this digging takes a lot of time. It takes even more time because of the millions of other people digging and constantly denting and expanding the sphere of knowledge. For this reason, we have to constantly keep digging even if we have already reached the frontier of knowledge just to stay there.

But not only the digging takes a lot of time, the denting does too. Sometimes it is easier to innovate, for example when we add a tiny bit of understanding to create a small dent (incremental innovation). Sometimes it is harder, for example when it requires us to access different parts of the sphere to combine knowledge in two separate fields to create novelty (combinatory innovation) or when we aim to discover a completely new method to create a big dent (disruptive innovation).

In addition to taking a lot of time, the digging and denting is also risky. Because even if we eventually reach the surface of the sphere, we sometimes still might not be able to expand it significantly. Some forms of innovation are more predictable (incremental innovation), some are less predictable and therefore riskier (disruptive innovation).

During my time as a PhD student, I used the metaphor of the sphere of knowledge to remind myself that I have to be patient if I want to create novelty, that I will have to commit significant time to understand and learn, that I have to take the long-term view. Recently, I have been thinking again about this tool, and found that it can also be used to illustrate two interesting contemporary trends and developments.

Short term thinking creates noise

We live in a world where time is scarce, competition is fierce and short term thinking dominates many of our decisions. These factors result in a situation where we are often forced to stop our digging well before we are able to reach the frontier of knowledge and generate novelty. Instead, we remain in the layer of half knowledge. This is a problem because we are incentivised to nevertheless broadcast our results generated from this layer.

Take academia for example. The publish or perish attitude and a somewhat broken peer-review process incentivise scientists to squeeze as many publications into a year as they can, or otherwise risk their careers. Because of this pressure, many are forced to avoid the time consuming digging towards the surface of the sphere of knowledge. Instead, they are more and more pressured to publish low quality content and low risk — low reward results which in many cases have been generated elsewhere already.

Instead of furthering science, the resulting flooding of the academic journals with low quality content actually impedes scientific progress. Low quality content just results in an increasing difficulty to identify truly novel ideas– the signal — amongst this growing amount of noise. This in turn makes the digging through the layers of the sphere of knowledge even more difficult.

Risk aversion is the enemy of innovation

Whilst low quality content is a nuisance that can be addressed with adequate rating and filtering mechanisms, disincentives to innovation are harder to address. Unfortunately, risk aversion and short term thinking in many fields do exactly that: they favour incremental innovation (small dents) over disruptive innovation (big dents).

Let’s take corporate innovation and R&D expenditure for example. Everybody knows that disruptive innovations benefit business and can result in significant competitive advantages. The world is full of examples where a completely new technology or business model enabled a company to dominate a market, such Apple’s touch screen that initiated the era of the smart phone.

At the same time, however, the current way businesses operate often does not encourage disruptive innovation. Due to the power that shareholders and financial departments have in the corporate decision making process, R&D that delivers incremental innovation will often be favoured over R&D that could potentially deliver disruptive innovation. This is because disruptive innovation takes more time and resources and is riskier than incremental innovation.

The reason for this preference is that corporate finance departments evaluate competing business strategies using business cases and efficiency ratios and only consider comparably short timelines of 2–7 years. Investing in disruptive innovation would result in a very bad internal rate of return for the time horizon typical business decisions are made in and is therefore avoided. This lack of investment in disruptive innovation and short time thinking are partly to blame for the lack of growth in our global economy and for us taking ever longer to recover from economic downturns.

A similar development is happening in certain fields in academia too. Governments are tight on money, and therefore reduce their funding for research, for example in engineering science. The missing funding is often replaced by funding from the industry. Unfortunately, whilst the total amount of funding might remain stable, industrial partners of universities have completely different attitudes towards risk and require much faster return on investment than governments. As a result, industry funded scientists tend to have less time to embark on fundamental research and dig through the layers of the sphere of knowledge to discover truly novel scientific insights.

In short: without taking the risk and spending the time to reach the frontier of knowledge, our efforts seldom generate the output we desire. This holds true for all areas where innovation is the ultimate goal, for example the startup world, as argued by Paul Graham in in famous essay “How to get startup ideas”.

We need to take a longer term view on innovation

Long-term thinking is the key to innovation. In order to improve the way we conduct scientific research and get corporations to innovate boldly again, we need to accept that the digging through the sphere of knowledge and the denting of its surface takes time, is risky, but ultimately pays off. Otherwise, we make it harder to innovate, as in the case of science, or limit economic growth, as in the case of business.

Some of the challenges described early are harder to address, some easier. In academia, an improvement could potentially be achieved by reforming the KPIs based on which academics are evaluated. For example, instead of counting the number of publications of a researcher during an evaluation process, the average (non-self) citations to all his articles could be considered. At the same time, the peer review process needs to be reformed to prevent sub-standard research from being published and highlight high impact research instead.

Another way to enable scientists to focus again more on high-risk-high-reward problems and potential disruptive innovations would be to increase the ratio of research funding from the government versus industrial funding. As raising taxes seems an unlikely option, an alternative could be to enable governments to directly participate in the economic benefits from fundamental research they funded 25 years earlier. After all, at the moment, the government is taking all the risks and reaps none of the rewards when funding fundamental research that later finds application in industry.

For companies I am more optimistic, as the market is a powerful corrective and typically punishes companies that are not investing in long-term innovation. Nevertheless, we need different metrics to evaluate corporate innovation strategies, especially metrics that incentivise taking the long-term view. How can we achieve that? Well, would it not be ironic if the solution would be related to environmental sustainability, another example where short term thinking is a major hurdle? After all, corporations taking the long-term view by taking environmental sustainability seriously are more innovative than their peers and are even outperforming them on the stock market.

Playing with the sphere of knowledge

Whether or not we can realise any of these ideas I do not know of course. In any case I believe that the metaphor of the sphere of knowledge can be a useful image to illustrate some common issues related to knowledge discovery and innovation, and I certainly found it very useful to illustrate the importance of long-term thinking. If you feel the same, feel free to use this metaphor yourself to argue the case for long-term thinking, for example when communicating with corporate controllers or university administrators.