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October 11, 2001
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*Chapter 11 Info*

The Law of Recombinant Growth

Issue Date: Mar 06 2000

Like Eli Whitney, Thomas Edison and the Wright Brothers, today's inventors have learned that the sum is greater than its parts.

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Many entrepreneurs have benefited from the Web's stunning growth, but few understand its present-day impacts and future consequences. Some clues to the puzzle might lie in the concept of "recombinant growth," a theory that arose from the works of Stuart Kaufman, a biologist at the Santa Fe Institute, and Martin Weitzman, a Harvard economist.

Here's how it works: Every so often innovations come along that can be broken down into separate parts and recombined to create a host of new inventions. Integrated circuits are a good example. The ability to stamp out millions of chips at pennies apiece eventually led to the invention of the circuit board. In turn, these boards became the building blocks of more sophisticated devices.

The Web's components - URLs, CGI scripts, HTTP protocols and the HTML language - hold the seeds of similar innovation. In the fertile grounds of research labs and startups, people are taking apart and recombining these basic elements to forge new products, services, processes and business models.

To better understand this current period of online innovation, it's worth considering a few historical examples:

  • In 1798, Eli Whitney dazzled government officials when he broke apart a dozen muskets, scrambled the parts and then reassembled the weapons in working order. Prior to this, muskets were each hand-tooled, and parts could not be interchanged. Whitney's new manufacturing process, known as the "uniformity system," made it possible to create mechanical components that could be recombined to produce new machines, setting the stage for the American Industrial Revolution.
  • In 1876, Thomas Edison moved to Menlo Park, N.J., where he created his most influential invention: the research laboratory. In Menlo Park (and later in West Orange, N.J.), Edison fused a variety of known materials in novel combinations. His tireless explorations led to the invention of the electric light, the phonograph, the generator and hundreds of other creations.
  • From 1899 to 1905, the Wright Brothers built upon their knowledge of printing, bicycles, kites and the new gasoline engine, to create a recombinant species: the airplane. The brothers systematically examined 100 to 200 wing designs in their wind tunnel and conducted thousands of flights with various combinations of the basic parts.

A willingness to pull things apart and reconstitute them in a new form underlies the genius of these inventors. This time around, though, the basic components are pure electronic information, which explains why the current period of innovation speeds along at a mind-boggling pace.

At little cost, the raw materials of the Web have spread rampantly around the globe, allowing countless engineers and developers to recombine these common parts simultaneously. Once one inventor proves something can be done, hundreds of others attempt to improve upon the invention. Biology uses such parallel evolution to great effect, and so does capitalism, when it has the opportunity.

As with biological mutations, most new dot-coms won't survive the current round of hypercompetition. But the parts - and the skills in combining them - will proliferate. To be sure, they will be reassembled in yet another configuration for the next round of recombinant growth.

Hal R. Varian is dean of the School of Information Management and Systems at the University of California at Berkeley and coauthor of Information Rules (Harvard Business School Press).

*Read the Instructions
Jun 04, 2001
*The Divide Divide
Jun 04, 2001
*The Net Effect
May 28, 2001

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