America’s Great Advantage Creating Divergent Industries

The American economy is the growth engine of the industrial world and will continue to be so, as long a steady stream of innovative, divergent products is successfully created. The history of capitalism is replete with cycles of unique, needed product and technology advances that exponentially expand the economic base and evolve into completely new industry categories. No country comes close to America in dynamism, creativity and energy in pursuing cutting edge new growth opportunities.

Why is this so? Many other countries have a much longer historical pedigree with features of freedom and capitalism as significant foundations of their heritage. Old Europe has been trading, exploring and investing for centuries before Jamestown and Plymouth were settled. The Dutch, British, Venice, Swiss and Spanish have wondrous commercial histories. The Japanese and Chinese were commercial powerhouses before the Europeans. And yet, none has left a commercial footprint like the United States in just over two centuries of enterprise.

Why? The answer is the constant curiosity, drive and ingenuity inherent in America’s unique form of capitalism. This is most clearly reflected in the risk/reward benefits gleaned from an almost endless stream of product inventions. Hugely significant new industries are in existence solely because of the divergent nature of the product, technology or service created.

A divergent product or service is one that did not exist before its invention. The wheel was a divergent product. The radio was a divergent product, as was the airplane. Computers, lasers, McDonalds franchises and hearing aids are examples of products that were divergent and first to market movers.

Today we take the radio for granted. However, when invented it was an amazing device, truly divergent, revolutionary, a breakthrough. Many refinements, improvements, and new features have been added to the original radio apparatus. Radios have been enhanced with clocks, alarms, lights, FM, placed in cars, portable and satellite delivery. These new benefits and performance embellishments are dependent on the original ground breaking radio product platform and are convergent products. All add to the usability of the radio and generate income, but, without the original invention, they would be of little consequence. The radio was, and is, the home run divergent product.

The result of the continual creation of divergent products and technologies is to continually fertilize and grow these industry segments with ancillary convergent business opportunities. The computer begets the software. The software attracts bugs and security services are required. New retail categories are required to sell the computers, software, security and accessories. Service companies evolve. A whole new industry has been developed on the shoulders of the original divergent invention.

Critics of the American capitalist model rarely consider the huge benefits modern society enjoys from the creation of these divergent technologies. One elemental example: the light bulb. Light bulbs provide safety and the opportunity for people everywhere to more productively utilize evening hours. Light bulbs are manufactured in dozens of countries, providing jobs and sustenance. Bulbs are made for innumerable uses. They must be transported, warehoused, marketed and sold. The result is a complete supply chain benefiting every human utilizing this simple, but amazing divergent product. This is a fantastic benefit provided by capitalism and divergent technologies.

When Thomas Edison invented the light bulb he had no real knowledge of the potential universality of the product at that time. There was as yet no power grid system available to deliver the electricity required to light the bulb. He was seeking to solve a problem, answer a need and make a profit. He could have failed, and he did so many times. However, he kept trying and his effort was rewarded.

American capitalism rewards effort, drive and, of course, success. Uniquely, in America, failure is allowed. Failure is not regarded as finality. Americans are encouraged to try, and if they fall down, get up and try again. Almost every other society punishes failure with a different outcome, a very negative outcome. The result is a lack of creative risk taking, a lack of dynamism.

Virtually no net job growth has been created in Europe in the last 20 years. European states place huge barriers in the way of starting a business, commercializing a product or organizing capital. The successful Japanese model of the 1970’s and 1980’s has declined precipitously, and was largely based on manufacturing clones of convergent products created in America.

Korea, India and China are currently under political and media scrutiny for the imbalances they enjoy in trading with the United States. However, name a single divergent technology, product or service proprietary to any of these countries. There are none. They are formidable competitors for resources, but they are not inventors and will not, at least yet, be competitive in creativity. Low cost, low margin production, product duplication and industrial theft are not long term strategies the United States should fear.

Rigid socialist, centrally planned economies by their very nature can not be creative. The free flowing nature of American capitalism is a blessing for this country, and the few other countries (Hong Kong, Canada, Singapore) willing to let humans do what humans do best: enjoy freedom and seek personal opportunity. Much like the food chain, where the ox-pecker lives off the ox, we need divergent product advances to feed the desire of convergent enterprises for fresh growth opportunities. No country yet approaches America in industry pioneering, nurturing and growth.