Human Ingenuity And New Business Models

Lynne Kiesling

Micha Ghertner had a post commenting on the programmer who outsourced his own job to India. This is a great example of the value creation of mutually beneficial arrangements.

It’s so great, in fact, that it reminds me of one of the canonical examples of such ingeneuity, from Adam Smith:

But in consequence of the division of labour, the whole of every man’s attention comes naturally to be directed towards some one very simple object. It is naturally to be expected, therefore, that some one or other of those who are employed in each particular branch of labour should soon find out easier and readier methods of performing their own particular work, wherever the nature of it admits of such improvement. A great part of the machines made use of in those manufactures in which labour is most subdivided, were originally the inventions of common workmen, who, being each of them employed in some very simple operation, naturally turned their thoughts towards finding out easier and readier methods of performing it. In the first fire-engines, a boy was constantly employed to open and shut alternately the communication between the boiler and the cylinder, according as the piston either ascended or descended. One of those boys, who loved to play with his companions, observed that, by tying a string from the handle of the valve which opened this communication, to another part of the machine, the valve would open and shut without his assistance, and leave him at liberty to divert himself with his play-fellows. One of the greatest improvements that has been made upon this machine, since it was first invented, was in this manner the discovery of a boy who wanted to save his own labour.

From An Inquiry Into the Nature and Causes of the Wealth of Nations, Volume I, Book I, Chapter 1, “Of the Division of Labor”.