Innovation Makes the World a Better Place

There is a quote by Milton Friedman, “it’s impossible to do good with other people’s money,” that I’ve always found both compelling and monstrously misleading—at once perceptive and cynically defeatist. On one hand, charity does often fail to live up to its potential because it gets the incentives wrong. On the other, incentives are exactly the wrong way to think about charity, because charity is about something more important than efficiency and markets.

Toyota embraced this tension between effectiveness and goodwill recently when it decided not to donate money to a New York food bank. Instead, the New York Times reports that it donated kaizen, the Japanese idea of continuous improvement that has been a crucial part of the Toyota management philosophy. The Times article mentions that a number of improvements Toyota engineers made to the food provision process appeared to be genuinely helpful.

While this is obviously good PR for Toyota, it also does a good job of illustrating the importance of innovation. Improving the charity’s distribution systems can have lasting efficiency benefits that help them for years to come, helping them do more with less. It also helps ensure that volunteers are used effectively and therefore feel more inclined to help.

Of course, donating engineers would be useless if there were not already sufficient donations and volunteers to organize, in the same way that donating millions of dollars to an ineffective charity would be a waste of money. But when you combine innovation with real commitment and resources, it doesn't matter whose money it is: doing good is definitely possible.