Archive for the ‘Technology’ Category

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Got your creative destruction right here, and what a gale of it

May 31, 2012

Lynne Kiesling

The ever-interesting Alexis Madrigal notes that Motorola and RIM called; they want to go back to 2004 and try again. Do they ever! Remember the first RAZR flip phone (in pink, even!) and the power image associated with being tethered to your Crackberry? And the profits for Motorola and RIM that accompanied them?

What happened to these once-awesome outfits? There are a lot of things you could point to over the last eight years, but no single event had as big of an impact as the launch of the iPhone in 2007. …

Much as you can call attention to their strategic missteps, these companies ran into a world-historical movement in technology that Apple ushered in and then dominated. No matter how good you were in 2004, you needed to start over again during 2007. Not many companies are going to surf that kind of wave.
Even the guy who coined the term “disruptive innovation”, Harvard Business School’s Clayton Christensen, couldn’t recognize the iPhone as such.
Nor can even the best informed analysts recognize what will come next, which raises the important competition policy point — Apple’s disruptive innovation and the ensuing creative destruction has created substantial market share and profit for Apple while creating great consumer surplus. We don’t know what will come next, but that lure of the combination of creativity and profit will generate more disruptive innovation. Some may occur within Apple, but more is likely to occur elsewhere. You can say the same for Google.
I’d also like to give a plug for Alexis’ book Powering the Dream: The History and Promise of Green Technology. It’s on top of my to-read pile for June, and the browse I’ve had through it has really whetted my appetite. If you are interested in history, energy, and technology (and if you’re here I suspect that description fits you!), it’s worth checking out.
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Micro-hydropower potential in man-made waterways

April 19, 2012

Michael Giberson

Earth Techling reports on the release of the latest report in the U.S. Department of Interior’s efforts to identify opportunities to develop small-scale hydropower projects within the DOI’s current water delivery systems in the Western United States. The goal of DOI’s project was to inventory potentially valuable locations and then invite developers to consider investing in projects. The most recent report indicates an annual potential for as much as 1.5 million MWh of energy to be generated.

Details from the Earth Techling summary:

These are all micro hydro sites, ranging in potential capacity from 125 kW to about 26 MW installed capacity. Fish would not be endangered because they are largely municipal water conduits.

The total clean energy produced would be equivalent to replacing one 260 -300 MW coal power station.

Since the hydropower projects probably would generate less power than the waterway itself uses, it might be more economical to consume the power ‘behind the meter’ rather than producing power for sale elsewhere. Possibly, however, the locations where the waterway uses power and the locations with good hydropower potential are distant from each other, so then sale off system could be more economic.

The DOI’s webpage for the project has several reports.

(The Earth Techling post ends with an odd political slam at Republicans, seemingly wistful for the good ol’ days of grand projects like the Hoover Dam. Apparently the inability to ram project’s down a region’s throat from the halls of government can be a bit constraining to people with big dreams.)

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Smart meter cybersecurity and moral panics

April 19, 2012

Lynne Kiesling

In March I wrote about Adam Thierer’s paper on technopanics — “a moral panic centered on societal fears about a particular contemporary technology” — and I argued that we should bear the moral panic phenomenon in mind when evaluating objections to smart grid technologies. In the past two weeks we’ve seen news articles on this topic: according to the FBI, smart meter cybersecurity is loose enough that hackers have been able to hack into smart meters and steal electricity.

Chris King from eMeter has done some digging into this question, and writes at Earth2Tech suggesting that the problem is old-fashioned criminal human behavior, not any technology-specific security failure:

Upon a closer look, this situation is not so much about smart meters as it is about criminal human behavior. Former Washington Post reporter Brian Krebs explained that it was not actually the smart meters themselves which were “hacked.” The meters’ own security measures were not breached.

Instead, criminals accessed the smart meters by stealing meter passwords as well as some devices used to program the meters. This is more like stealing a key and opening a door, rather than breaking the lock on the door.

These criminals were former employees of the utility involved, and of the vendor who provided the smart meters. These people were paid (bribed) by customers to illegally reprogram the meters so that those meters would record less energy consumption than actually occurred. This is not fundamentally different from bribing human meter readers to under report consumption — which happens often in some developing countries.

Which brings us back to Adam’s original point: why are we so willing to accept the technopanic argument? Why are so many people so suspicious of new technology, and so willing to give up both the consequentialist potential benefits and the moral defense of individual liberty and impose controls and limits on technology?

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The Internet of things and computational energy efficiency

April 9, 2012

Lynne Kiesling

Today in Technology Review, Jonathan Koomey has an interesting analysis of computational energy efficiency. We’re all familiar with Moore’s Law — Gordon Moore’s prediction that the number of transistors on a chip will double approximately every two years — but I did not realize that Moore’s Law is also borne out in improvements in the electrical efficiency of computation. Not only do we have more and more computational capacity per unit of area, each of those increased computations is performed with less electricity per computation. Koomey’s graphic showing this result over time is striking:

If this trend continues, Koomey claims, “ the power needed to perform a task requiring a fixed number of computations will continue to fall by half every 1.5 years (or a factor of 100 every decade). As a result, even smaller and less power-intensive computing devices will proliferate, paving the way for new mobile computing and communications applications that vastly increase our ability to collect and use data in real time.”

The ability to do more work with less effort is one of the most meaningful consequences of technological change, whether we’re talking about horse harnesses, water wheels, diesel engines, or digital sensors. One of the fascinating aspects of this improvement in computational electrical efficiency is that it opens up the feasibility of lots of distributed low-power sensors that get enough electricity to operate by harvesting “background energy flows”; Koomey’s example is small weather sensors that harvest stray energy from television and radio signals to send weather condition updates every five seconds. Imagine how a distributed network of such sensors could improve severe weather preparation, for example.

In the rest of this very interesting article, Koomey discusses the research and design efforts going into achieving such energy efficiency in data transmission and taking a system-level perspective on the electricity use of an entire network of devices. He also claims, and I think he’s right, that without such energy efficiency the “Internet of things” cannot become a reality.

The “Internet of things” framing of the Internet envisions interconnected networks of devices able to communicate their states, generate more granular information, and/or trigger tasks autonomously, without human intervention. For example, right now the water filter in my refrigerator needs to be replaced, which means I go down to the basement to see if I have one (which I do), and if using it reduces my filter inventory to one, I get online and order three more. It would economize on the most scarce resource in this supply chain — my time — if the filters had RFIDs and the refrigerator had an algorithm that would implement the inventory query and ordering process for me. I still have to install the new filter, but if that installation triggered an automated query and order, I’d come home from work in a few days to find a box of three water filters, with little effort on my part. That’s an example of the potential of the Internet of things; I’m sure you can come up with more examples that you would find valuable in your own work or personal lives, and I know you can see where this IoT framework intersects with consumer-focused smart grid networks.

Of course, details matter, such as getting the interoperability rules and security right so that only refrigerators can query the filter inventory in the house (no infiltrators, including the government), and so that the refrigerator’s connection to order replacements is secure. The same applies to electricity devices in the home and the digital meter, which is why one of the important phases in the process of smart grid development is laws protecting consumer privacy and property rights in data. Innovation in both computational power and computational energy efficiency have created this potential to create more value while economizing on the scarce resources of human time and attention.

UPDATE: And check this out: carbon nanotubes that can dump heat separately from current into a separate device, which should contribute to continued gains in computational energy efficiency.

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Getting a little LED off my chest

March 23, 2012

You know what? I’d happily spend the $27.98 for the 6 LED chandelier bulbs at Costco IF THEY WERE DIMMABLE. Yes, I know I’m shouting, but crikey, if you want people to use less energy, MAKE IT EASIER FOR THEM. Seriously, electronics engineers, what’s the problem? Who on earth thinks that people want to sit under a brightly-lit chandelier without being able to change the lighting level?

Until you have good quality dimmable LED bulbs on the market, you’ll pry my incandescent chandelier (and can light) bulbs at your peril from my cold, dead hands.

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How fear affects policy: Adam Thierer on technopanics

March 14, 2012

Lynne Kiesling

Fear is a strong motivating factor, having evolved over millennia as we have protected ourselves against predators. Fear supports self-preservation by making us risk-averse and cautious. But such a deep, visceral, evolved emotion does not always serve our long-term objectives of thriving; it leads to maximin outcomes, and it is often mismatched to the actual threats to our self-preservation. As our environments change around us, we can fear things we shouldn’t and may not fear things that we should; we overthink everything and tend toward a “precautionary principle” approach, making us risk-averse and cautious.

I think such fear is a component in the persistence of regulation when it’s maladaptive to technological change, so I was happy to read Adam Thierer’s new Mercatus working paper, Technopanics, Threat Inflation, and the Danger of an Information Technology Precautionary Principle. Adam lays out a framework for analyzing fear-based attitudes toward technology and technological change that’s informed by economics, sociology, psychology, and rhetoric. He tackles the question of why, and how, participants in public policy debates use appeals to fear to sway opinion toward anticipatory regulation and forms of censorship:

While cyberspace has its fair share of troubles and troublemakers, there is no evidence that the Internet is leading to greater problems for society than previous technologies did. That has not stopped some from suggesting there are reasons to be particularly fearful of the Internet and new digital technologies. There are various individual and institutional factors at work that perpetuate fear-based reasoning and tactics.

He analyzes the use of “appeal to fear” and “appeal to force” logic in the construction of arguments in favor of regulation and censorship, focusing on case studies of online child safety and violent media and online privacy and cybersecurity. In deconstructing these arguments he identifies four ways that fear can be a myth: it may be empirically unfounded and lacking evidence, other variables may be more important in affecting behavior than the feared variable, not all individuals have the same reaction to the feared variable, and other approaches than regulation exist that can mitigate the consequences of the feared variable (pp. 5-6).

Adam introduces the phenomenon of the “technopanic”, which is “… a moral panic centered on societal fears about a particular contemporary technology” (p. 7). Because culture often evolves more slowly than technology, as we are adapting culturally to the new technology we can see these panic phenomena, which can result in demonizing the technology and can lead to calls to “do something”, typically some form of control-based anticipatory regulation or censorship. A crucial part of manipulating individual attitudes to tap into fear and create advocacy for and acceptance of such regulation is what Adam calls “threat inflation”:

Thus, fear appeals are facilitated by the use of threat inflation. Specifically, threat inflation involves the use of fear-inducing rhetoric to inflate artificially the potential harm a new development or technology poses to certain classes of the population, especially children, or to society or the economy at large. These rhetorical flourishes are empirically false or at least greatly blown out of proportion relative to the risk in question. (p. 9)

Allowing threat inflation and technopanics to drive policy outcomes is socially corrosive and wasteful; it diverts resources from their higher-valued uses in dealing with actual risks rather than inflated ones, and it creates an environment of suspicion and social control, particularly censorship and information control. After analyzing six factors that create conditions favorable for the development of threat inflation and technopanics regarding Internet technology (nostalgia, special interests, etc., well worth reading in detail), he proposes two categories of policy response that we should pursue instead of prohibition and anticipatory regulation: resiliency and adaptation. We build resiliency to threats through education, transparency, labeling, etc., and we adapt to living with risk through experimentation, trial-and-error, experience, and social norms. These two are complementary; information-sharing about best practices can shape social norms and get people to change their behavior without regulation. For example, I don’t sign my credit cards, but instead write “CHECK ID” in the signature line and present a photo ID when using them. Having store clerks and other shoppers witness my behavior to protect my identity may lead to their replication of it, and has led over time to a change in behavior (remember back in the 1990s when they used to write your phone number on the receipt? Yikes! But that behavior’s gone extinct.).

We cannot eliminate risk through resilience and adaptation, but we can’t eliminate it through regulation either. Better to have strong, flexible, adaptable institutions and practices that enable us to continue thriving in unknown and changing conditions, while we enjoy the substantial benefits of technological creativity. While I heartily recommend Adam’s paper to you all as a good and thought-provoking read, he also summarizes it in this recent Forbes column.

I would extend Adam’s argument to apply to two case studies. The first is smart grid technology. Fear-based arguments abound in electricity, usually grounded (pun intended!) in the physical reality that electricity is dangerous. But after a century of economic regulation to serve particular social policy objectives, fear-based arguments also show up in arguments against moving away from the status quo both technologically and more economically in general; in my experience these fear-based arguments are used most to advocate for the status quo on behalf of low-income consumers and the elderly, and for that reason I find the use of fear-based arguments heart-wrenching, because when they succeed they deprive vulnerable populations of the benefits of innovation. Another current example is the arguments that digital meters, which transmit data using radio frequency wireless networks and thus emit low-level electromagnetic fields, are making people sick. Despite the absence of any scientific evidence consistent with this hypothesis, California and Maine are using these fear-based claims as a basis for allowing customers to opt out of having a digital meter installed (I have other analyses of this phenomenon, but that’s for another time …).

The second case is threat inflation and the exaggeration of fear to extend the security state. Each of Adam’s six factors contributing to threat inflation is applicable to the growth of the security state — nostalgia, pessimistic bias, “bad news sells”, the political power of the military-security-industrial complex, and so on. The persistence of threat inflation enables these special interests to use fear-based arguments to perpetuate the false belief that we are under constant, persistent threat beyond the actual threat level; this false belief creates the incentives in politicians to “do something” so that they don’t appear “soft on terror” and therefore risk not getting reelected; that political incentive enables security and defense companies to lobby politicians to buy their cutting-edge technologies at very great taxpayer expense to demonstrate to voters that they are “doing something” (even though the technologies have high false positive rates, can be fooled easily, and are more for symbolic security theater than for addressing the most relevant risks that we actually do face).

In both cases, a resiliency-oriented public policy approach would be a substantial improvement on the control-oriented regulation that is not focused on the most meaningful or relevant threats, be they health threats, economic threats, or security threats, from technological dynamism.

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The federal government’s natural gas R&D breakthrough

February 23, 2012

Michael Giberson

In the recent edition of The American magazine, the on-line journal of the American Enterprise Institute, Michael Shellenberger and Ted Nordhaus write in defense of the President’s State of the Union address claim of federal government credit for the shale gas revolution. (For those of you not keeping score at home, (1) I commented on a related Shellenberger and Nordhaus op-ed in two posts back in December 2011, here and here, and then (2) followed with a comment in response to the State of the Union remark in late January 2012, here.)

Shellenberger and Nordhaus begin this recent article:

In his State of the Union address, President Obama invoked the 30-year history of federal support for new shale gas drilling technologies to defend his present day investments in green energy. Obama stressed the value of shale gas—which will create thousands of jobs and billions in profits—as part of his “all of the above” approach to energy, and defended the critical role government investment has always played in developing new energy technologies, from nuclear to solar panels to wind turbines.

The president’s remarks unsurprisingly sparked a strong response from some conservatives (hereherehere, and here), who have downplayed and even attempted to deny the important role that federal investments in hydrofracking, geologic mapping, and horizontal drilling played in the shale gas revolution.

This is an over-reaction. In acknowledging the critical role government funding played in shale gas, conservatives need not write a blank check for all government energy subsidies. Indeed, a closer look at the shale gas story challenges liberal policy preferences as much as it challenges those of conservatives, and points to much-needed reforms for today’s mash of state and federal clean energy subsidies and mandates.

Note that the first of their “here” links is to the first of my two December 2011 blog posts in response to their op-ed, as it appeared at The Energy Collective site (where some of our KP energy-related posts get a second life). As it happens, after the President’s address, the Master Resource blog republished the post as a commentary in response to the President’s natural gas research claim, appending to my title “(December 20 post becomes part of a national debate).”

I want to object to a couple of pretty minor points below, but before I object let me emphasize my agreement with part of what they say about much-needed reforms to today’s state and federal clean energy policies. As they point out late in their article, they’d like to see a reduction or even an end to most current renewable energy production subsidies and direct some of that funding to energy research and innovation. I would completely support such a move, even though I wouldn’t defend the change on the same grounds that they do.

And now two petty objections, both in response to the sentence “The president’s remarks unsurprisingly sparked a strong response from some conservatives (here, ….”

  • First, I am not a conservative. I am pro-dynamism, pro-market, pro-experimentation in many matters both economic and social, and pro-freedom. I don’t want to belabor the point, they probably didn’t mean to offend me, but I am libertarian not conservative.
  • Second, my December 20, 2011 response was not directed at President Obama’s State of the Union address in January 2012, but rather at the mid-December 2011 op-ed by Shellenberger and Nordhaus. (For what it’s worth, I find their arguments more thoughtful and more worthy of a thoughtful response than the President’s  remarks on the topic. So even though my first response to their piece started in somewhat flippant tone, I did try to engage with what they were saying.)

My less minor objections to this new article by Shellenberger and Nordhaus will require a bit more explanation, so I’ll defer them for now. In brief, I still object to how they characterize the significance of the federal role in drilling technology and especially to some of the policy inferences they want to make. In addition, I will want to explain how and why I would support the kind of renewable energy policy reforms they propose even though I disagree with the reasons they give for the reforms.

I should add that their article goes far beyond the first three paragraphs quoted above. You should read the whole thing.

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Alex Tabarrok on innovation, barriers to it, and the warfare-welfare state

February 13, 2012

Lynne Kiesling

I was glad Mike mentioned Alex Tabarrok’s recent Launching the Innovation Renaissance in his recent post on the Honeywell-Next patent lawsuit, because reading Alex’s new TED book was on my to-do list for this past weekend. Alex’s focus in this book is U.S. innovation policy and ways that we could improve the institutional environment to better enable innovation to create opportunities for people to thrive, and consequently to create growth. He analyzes the patent system, education, and how the federal warfare-welfare state has a high opportunity cost in terms of resources that could be dedicated to R&D (through both public and private funding) but aren’t because of the heavy burden of defense and entitlement spending.

An important variable on which Alex focuses is the ratio of development costs to imitation costs, and he argues that laws such as patents are more likely to be positive-sum and pro-growth in industries with high development costs and low imitation costs. He discusses pharmaceuticals as the canonical industry in this category, where the absence of patents would be likely to reduce the amount of new drug development. But patents in other industries with lower development costs and lower imitation costs can hinder innovation, because they discourage the use of ideas in novel, unexpected ways by people other than the patent-holder. Moreover, notice the dynamic incentives that the current patent system presents to engage mostly in defensive patenting, which is wasteful and reduces the extent to which patents are positive-sum. The high-profile activities of patent trolls in technology-related industries in the past decade indicates just how wasteful this perverse incentive is.

One of Alex’s recommendations to reform the patent systems is variable patent duration in accordance with these differences in development costs and imitation costs. For example, from the book, one-click shopping and a pharmaceutical that cost millions of dollars to develop both receive 20-year patents. Uniform patent length means that the patent system ignores the importance of both development costs and imitation costs in determining whether the monopoly granted by the patent will be positive-sum or not. Granting different monopoly lengths depending on the interplay of development costs and imitation costs in that industry when the invention is created would enable developers to recoup costs while reducing the lost beneficial applications of imitation. Note in particular that a lot of these beneficial applications are not direct imitation, but are rather creative uses of the idea as an input into some other idea. Patents that are either too long or too broad (or both) deter such beneficial activity.

For brevity I’ll skip over his thought-provoking discussion of education (but I do recommend it to your attention), and connect the patent discussion to the implications of federal warfare-welfare spending for whether or not we have an institutional environment that is conducive to unleashing innovation. Alex presents some sobering data on federal government spending on research, entitlements, and defense, data that he elaborates on in a post at Marginal Revolution today in which he puts a NY Times article on the welfare state in the context of his argument.

And that doesn’t even take into account the important, but trickier to estimate, effect of government spending on private R&D funding (the crowding out question). Crowding out can take two forms — government spending on R&D reducing private R&D spending, or government spending on other goods and services reducing the resources available for private R&D spending.

Alex boldly makes what I think is the crucial material point:

The point is not simply that the U.S. should spend more money but that a state with these kinds of budget priorities does not have innovation at the center of its vision. If innovation is not central to the vision, then it is inevitably given short shrift.

Given the incontrovertible evidence that low barriers to innovation are the biggest ultimate institutional cause of the unprecedented growth in well-being and living standards over the past 250 years, the absence of this innovation vision is backward-looking and short-sighted.

Alex also highlights the extent to which regulatory thickets generate wasteful spending, particularly in health care and energy. Money we could spend on medical research and basic energy research gets spent instead on regulation-induced bureaucracy and wasteful projects like Solyndra and others that have failed. Reducing these regulatory thickets and focusing more vision on innovation and basic research than on bureaucratically-weighted and centrally planned projects would be an important incremental move in the right direction. To the extent we’re going to have a state, we should move from a warfare-welfare state to an innovation state.

Sadly, I think Alex is right about the political economy of innovation when he notes that “… few people lobby for innovation because almost by definition, innovation creates present losers and future winners and the present losers are by far the more politically powerful. Innovation has few champions.”

The book closes with seven institutional/policy recommendations touching on patent reform, education, regulation, and open trade in goods, services, and ideas. These recommendations also have implications for issues like immigration and health care.

One of the most valuable features of this book is how well written it is. While being a short, easy, compelling read, it’s a book dense with good and thought-provoking ideas presented clearly for non-specialists (and backed up by extensive references at the end for further analysis). I don’t remember where I saw it, but I think someone commented that we should send a copy of Alex’s book to every member of Congress and their staffers. That would be a valuable education process.

See also a short essay drawn from the book, and listen to Alex’s EconTalk podcast with Russ Roberts discussing the book.

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Honeywell vs. Nest, continued

February 10, 2012

Michael Giberson

Slate‘s technology columnist Farhad Manjoo examines Honeywell vs. Nest from a tech consumer’s point of view.

The Honeywell v. Nest lawsuit is being justifiably criticized as another black mark on our broken patent system. If Honeywell invented all these cool features, why didn’t it make something of them? …

Honeywell seems to have patented a bunch of great ideas in order to just sit on them. The sad thing is that if it tried, Honeywell seems capable of building a thermostat that’s every bit as wonderful as the Nest. From my testing, I found that Honeywell really does make great home heating and cooling equipment. If it competed in the marketplace rather than in the courts, I suspect it could really turn up the heat on Nest. (Sorry, couldn’t resist.)

When I compared the Nest and the Prestige, I found that feature for feature, Honeywell’s thermostat is more capable. …

On the other hand, you don’t need a one-page dossier, two installers, and an hour-and-a-half briefing to describe and install the Nest. That’s Honeywell’s greatest problem….

Manjoo concludes Honeywell has the technology, but not the consumer design nor the business model to get consumers clamoring for their product.

But Nest isn’t unstoppable. Honeywell has been in the thermostat business forever, and it’s got a lot of engineering and distribution advantages. It also, clearly, has a lot of innovative ideas. From what I’ve seen of its gear, Honeywell seems quite capable of creating a consumer-friendly version of the Prestige, one that works as easily and stylishly as the Nest. Now that Nest has paved the way, Honeywell would likely earn a lot of press coverage, too.

If I can summarize that last paragraph, he’s suggesting that rather than suing Nest for copying Honeywell technology, Honeywell ought to be copying some of Nest’s consumer-oriented design and marketing attitudes. (Fortunately for Honeywell, you can’t patent attitudes.)

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A secret to Chipotle’s good-food-fast innovations

February 10, 2012

Michael Giberson

At Slate, Matthew Yglesias tells the story of a business that is booming: Chipotle’s Mexican Grill, “a company that shows there’s clearly room for growth and innovation in even the most basic sectors of the economy.”

The chain has been expanding rapidly, Chipotle’s stock has risen 500 percent over 5 years, and yet:

… the food service industry can’t seem to get any respect. Politicians don’t name-drop burrito innovators as examples of the kind of entrepreneurs they want to encourage, and despite food’s ubiquity in our lives, culinary progress is slighted as a source of human progress.

Chipotle’s growth since its 2006 IPO should be seen as a great American success story. There’s nothing new about fast food, of course. But it’s not as if Steve Jobs invented the cellphone.

Yglesias follows with, “In many ways, the Chipotle burrito is very similar to the iPhone.” Maybe that analogy is a little strained, but it doesn’t matter, we get a peak at some of Chipotle’s key innovations. The article usefully reminds us that not all innovations are high tech or high science.

(The article gives a brief shout out to burger chain Five Guys, also a family favorite.)

MORE: Another story of entrepreneurial insight in action: Risk and stealth paid off in Eagle Ford shale.

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