thenextwave

Anticipating the next wave of technology

Posted in innovation, technology by thenextwavefutures on 24 May, 2014

PerezMainPhotoRegular readers of the next wave will know that I am a fan of the work of the economic and technology historian Carlota Perez, who developed a model that explains the processes by which new technology platforms first emerge, then become dominant, and then become superseded. There have been five of these “technology surges” since 1771; the present ICT surge is the fifth.

Her model is a historical one. This isn’t a complaint: she is a historian, and she did the analysis of the historical data to propose the pattern she describes in her book. But when I was asked to contribute to an Association of Professional Futurists workshop that used the Three Horizons method to explore candidates for the Sixth surge, I wondered if it was possible to identify future-facing characteristics in her model.

Dominant technology platforms

It’s worth saying a few things about the idea of a dominant technology platform, because it sometimes is misunderstood, for example by Brian Arthur in his book The Nature of Technology.

The first is that they are large – large enough to be an engine of growth over a period of 60-70 years; they have enough weight and economic power to carry through an economic and social transformation. In turn, that means that they have to connect technologies together to create that presence. And that means that they change the cultural reference points of society. Our speech used to dominated by car metaphors (changing gear, putting our feet down). Now they are dominated by computing metaphors.

Perez’ model

Perez’ model, briefly, is that there is an installation phase, in which new infrastructure is put in place, funded by investment or finance capital, but demand picks up too slowly to meet financial expectations, and there is a financial crash (as in Britain in 1847 when the boom in railway stocks and shares vanished in a week). The pieces are picked up by production capital, which has commercial relationships with customers. This is the deployment phase. In the first three waves, these were largely B2B, in the two most recent, B2C. Profits boom as the market becomes saturated – effectively demand catches up to the level enabled by the pre-crash infrastructure investment; and then diminishing returns mean these production-oriented businesses stop being engines of growth and turn into utilities.

Finally, dating the start of a surge is problematic. Typically, it’s around an innovation which reconstitutes existing ideas about technology and production methods, whether Watts’ steam engine, Ford’s Model-T, or Intel’s microprocessor. But we can only know with hindsight what starts the installation phase of a new surge.

The pre-installation phase

Close analysis of Perez’ work suggests that technologies that become part of a surge have a number of characteristics, and that these can be identified before the surge formally begins. In fact, as I suggest in the paper, there is a pre-installation phase,

1. The technologies exist already, in business niches (steam and pumping engines, for example), early
adopters (motor vehicles) or in a form that is less efficient than the later transformative processes. In the 1960s, the transistor was deployed in radios and calculators before it was deployed in computers. New technologies are always prefigured in some way.

2. The new platform emerges first in the lead industrial economy of the time. The first two surges (canals and cotton, then rail and steam) occurred in the UK. The next one (steel and chemicals) was split between the UK and Germany. And the fourth and fifth surges—autos/oil, then ICT—were both led by the United States. So it is at least possible that the next surge will be led from Asia.

3. It is capable of huge declines in cost —with the caveat that this is true to some extent of all developing technologies as production volumes increase and they benefit from economies of scale, scope, and learning. So a better way to think about this is that the technology, or combination of technologies, are able to generate a new form of abundance, as Bill Sharpe observes. Think of the amount of power generated by either the steam age of the second ‘surge,’ the cheap and ubiquitous oil of the fourth ‘surge,’ or the vast volume of information processing unleashed by the fifth.

4. The lead technologies can connect to related technologies to create a new production platform. Oil and the car became complementary technologies; the plastics that were derived from oil were ideally suited to the mass production methods that evolved with auto production. Indeed, by way of an ‘alternative history’ thought experiment, it is worth considering how the technological history of the 20th century might have been different had the early electric car designs of the first decade of the 20th century succeeded.

5. Elements of the emerging technology platform that will construct new types of network. If we look back at each of the five surges so far, each constructed at least one new form of network: canals, rail, and road in the first, second, and fourth; electricity and internet in the third and fifth. These networks led to a spatial and social reorganisation of society. In some surges, different networks emerged in parallel; the telegraph developed in the second surge, and its growth was accelerated because the wires could be run economically along rail tracks.

6. It can tell a new story about its transformational potential—initially its economic potential, but also its social potential. Effectively this means that we are considering technologies that have the scope to evolve from niche to mass. In other words, can the technology platform change the entire production base of the economy, such that existing organisations and businesses have to reinvent their business models to remain competitive?

97943317. At a cultural level we are starting to see either utopian or dystopian projections about the technology in cultural discourse. There may also be signs of a shift in worldview around the hope and expectations of emerging or early stage technologies. For example the short story that was used as the basis for Minority Report, in which Philip K. Dick invented the idea of the “pre-crime” constructed by the authorities from the analysis of ubiquitous data, was published in 1956.

Eliminating candidates

Of course, the purpose of these design criteria is not to try to predict the future. The systems of a new surge are too complex for that. They are to help to get the scale right, to understand better the mechanisms of socio-technical change. Its purpose, instead, is to eliminate some of the candidates that sometimes get mentioned.

Looking ahead, there are some technologies that simply don’t have enough mass to foster and support a whole new technology platform. Or, if they do, they will need to change their game. So, what would need to happen to the social and institutional and production environments surrounding nanotech, or biotech, if they are (as is sometimes suggested) going to be the next technology revolution? In that world they won’t just be about manufacturing.

The image of Carlota Perez is from [her site]http://www.carlotaperez.org/), and is used with thanks. The article this post is based on was written for the APF’s newsletter Compass. It can be downloaded below.

Curry-Compass-Jan2014-Final

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