Innovation Files has moved! For ITIF's quick takes, quips, and commentary on the latest in tech policy, go to

The Healing Power of Greed?

In an earlier post on “software factories”, I touched on the question of why America’s software engineers were not, by and large, working on projects that would enhance American software competitiveness:

…the finest software minds of the current generation are not interested in solving the American productivity problem, but are interested in profiting from what I elsewhere call flash-fads, huge blockbuster moneymakers that last for the comparative blink of an eye but, like the Pet Rocks of my youth, make lots of money.

This is probably rational behavior on the part of these software engineers.  Sacrificing current income to make the income of the nation greater over time is a bit like voluntarily helping to pay down the national debt by giving extra money to the Treasury: patriotic, maybe, but certainly not a mass choice.  (One of my partners told me this morning that some $81M had been contributed to the Treasury in this fashion, versus a national debt service obligation several orders of magnitude greater.)

But how does the rational behavior of individual software engineers feed the public good?  Our market orientation in the U.S. gives us a touching faith in what we might call “the healing power of greed”, an exaggeration of Adam Smith’s point of about the “invisible hand” into the notion that individuals can do whatever we darn well please and somehow benefit the polity.  In this raw form, it probably ain’t so.

Yes, over time the drive for hundreds of flash fads has in fact made software development more productive.  It is probably an order of magnitude cheaper and quicker to bring an application to market today than 30 years ago, when I got started in the tech business.  But these benefits accrue to everyone, and don’t provide specific advantage for our country.  Which is what we need to remain competitive.

It seems we can’t escape from a policy that targets innovations which are game-changing and then invests in them directly from the public purse or incents the private sector to factor innovation projects in among the Pet Rocks.

Your thoughts?

Print Friendly

About the author

an Gordon is Research Director for Valhalla Partners, a Northern Virginia venture capital firm. Dan has twenty-eight years experience working with technology, as a computer scientist, software developer, manager, analyst, and entrepreneur. Prior to joining Valhalla Partners, Dan was a Director and senior staff member at the PricewaterhouseCoopers Global Technology Centre, analyzing technology trends and consulting on technology-oriented strategies in the software, e-business, wireless, optical, networking, semiconductor IP, and life sciences arenas. He worked with clients from North America, Europe, the Middle East, and Australia. Dan was a Contributing Writer and Contributing Editor to the Technology Centre’s annual Technology Forecast, and a frequent speaker at industry and general business meetings. Before joining PwC, Dan spent 20 years in Silicon Valley as a software technologist, manager, director, and entrepreneur, including senior technical roles at well-known Silicon Valley firms like Symantec, Intuit, and Oracle. Dan has also been involved in startup companies in the applied Artificial Intelligence and Web applications fields. Dan has a B.A. (cum laude) from Harvard University and an M.S. from New York University in Computer Science. He is a Professional Member of the IEEE and ACM. Dan lives in Washington, D.C. with his wife and two children.
  • amar

    It is hard to say whether these “flash-mob” companies are just selling pet rocks, or whether the business life cycle has just dramatically shortened due to increased competitiveness, increased innovation, and dramatic shifts in technology and consumer behavior. I recall a stat that discusses that even Fortune 500’s are now lucky to stay a Fortune 500 for over 25 years. I think the discussion on fads need take into account the shortened life cycle that is being seen in American business today. In fact, maybe investments in horizons in American technology companies, where cloud computing platforms offer quick scale, need to be rethought to be shorter?