I’ve been thinking a lot about talent clustering and particularly how it helps and hinders startups’ ability to compete with well funded incumbents. I was therefore interested to come across this paper
from last year. It looks at whether “inventiveness” is primarily a characteristic of firms
(i.e. certain organisations have embedded innovation capabilities that make their employees more inventive) or of individuals
(i.e. certain individuals are particularly inventive, irrespective of where they work)
The authors use a large patent dataset and a clever statistical strategy to disaggregate these two effects and come down firmly in favour of the latter explanation: inventor quality explains more than five times the variance in output between firms than differences in organisational capability does*. Moreover, the authors are able to use the same dataset to ask what predicts the movement of high quality inventors between firms. They find that the biggest determinant is the quality of the other inventors there, rather than firm-level capabilities.
This is good news for research-heavy startups. It suggests that if a new company can attract a critical mass of star researchers, its relative lack of organisational capital is no barrier to success. This seems particularly applicable in AI research. It’s one reason why new entrants like Anthropic (see TiB 167
) have a good shot, despite the apparently formidable leads of DeepMind and OpenAI. Talent wins.
*There’s the obvious caveat that patenting might not capture all of what we care about when thinking about innovation, but this is still striking