Elon Musk discusses the crucial role of the rate of innovation, emphasizing that innovation per unit time, rather than just innovation in isolation, is what truly matters. He explains the significant difference between making a 100% improvement over a hundred years versus one year. Moreover, Musk highlights a tendency for larger companies to become less innovative, both per person and in absolute terms, likely due to misaligned incentive structures rather than a simple lack of encouragement.
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00:00Speed of innovation is what matters, that innovation per unit time, not innovation absolute time,
00:05because if you wanted to make, say, 100% improvement in something and that took 100 years
00:09or one year, that's radically different. It's like, what is your rate of innovation
00:13that matters? And is the rate of innovation, is that accelerating or decelerating?
00:17The weird thing happens when companies get big is that most companies or organizations,
00:20the bigger they get, they tend to get less innovative, not just less innovative on a
00:25per person basis, but less innovative in the absolute. And I think this is probably
00:28because the incentive structure is not there for innovation. It's not enough to
00:33use words to encourage innovation. The incentive structure must be aligned with that.