We all understand the importance of inventions like light bulbs, automobiles, the internet, computers, airplanes, mobile phones, word processors, and information technology (ICT). Every year, they generate trillions of dollars’ worth of Wealth. They have also created and destroyed millions of jobs. They are at the core of our prosperity and high-quality living standards. Unfortunately, in the beginning, these inventions did not create wealth and transform society. Irrespective of the greatness, invariably, all inventions get birth in embryonic form. They support primitive innovations—far inferior to incumbent alternatives. Hence, they begin the journey at a loss. Their latent potential keeps unfolding due to evolution. Technology evolution not only keeps making innovations better and cheaper, but it also transforms jobs, firms, and industries. Furthermore, Innovation epicenters migrate across the boundaries of firms and nations due to technology evolution—making success transitory.
Technology Evolution Examples
Automobiles Evolving from Primitive Three-Wheeler
In 1886, Carl Benz received the automobile invention patent. Instead of a horse, a minor two-stroke internal combustion engine (ICE) mounted beneath the seat propelled this three-wheeler. He and a few German firms started manufacturing and selling within a few years. However, this ICE-powered tricycle was initially less powerful and comfortable than horse wagons.
Furthermore, its frequent failure and refueling were also a concern. As additional economic benefit from this alternative to horse wagon was very little, its diffusion started slowly. By 1899, German automakers succeeded in selling only 900 cars. Indeed, this number was negligible to Germany’s 3.4 million automobiles rolled out in 2022. What is the underlying reason for such a remarkable success?
Like all other great inventions, automobiles also gave birth in embryonic form. Nevertheless, it was amenable to evolve. Hence, a race folded out among European and American automobile makers to systematically keep advancing ICE performance, reliability, safety, efficiency, and cabin improvement. In this regard, well-organized R&D activities started creating a Flow of Ideas. Those ideas were improving the quality and reducing the cost, consequentially, increasing value for money. Hence, along with the evolution of automobiles, economic attractiveness increased due to a flow of ideas, resulting in deeper diffusion.
As the emission of a growing number of automobiles has become an issue, and electric vehicle technology is showing potential as a better alternative to ICE, cars are on the path of getting reinvented. Electric vehicles are anticipated to be a better alternative to ICE automobiles, resulting in further diffusion. However, through this process, many jobs were lost and created. The rise of electric vehicles will also create and destroy more jobs. For example, 50% of India’s 36 million labor-centric automobile workers will like lose jobs. However, EVs have already created high-paying employment in China and Japan.
Semiconductor Evolution Underpins Third Industrial Revolution
Although semiconductor has been the technology core unfolding the 3rd industrial revolution, it was also invented in 1947 as a primitive and expensive device. Its strength to work as an amplifier was so low that significant electronics companies avoided using it to replace the vacuum tubes. In 1956, Fairchild’s first batch of transistors was priced at $150 apiece. However, this technology core was amenable to progression.
Notably, the invention of the integrated circuit in 1961 opened a highly scalable path of producing a flow of ideas in making transistors smaller, better, and cheaper—resulting in 16 billion transistors in Apple’s A16 at $110. Such progression of this technology has been the driver of reinventions and progression of an array of products, creating and destroying jobs and firms. Consequentially, along with creating new wealth out of a flow of ideas, the innovation epicenter of several products has migrated, notably from the USA to Japan. Creating wealth by advancing and leveraging semiconductor invention has been the reason for the rise of natural resource-poor Japan, South Korea, and Taiwan’s to high-income status.
Computer Evolving from Mechanical Machine
In 1834, Charles Babbage conceived a mechanical analytical engine to calculate mathematical formulas. He envisioned this computing machine by adapting the technology of the Jacquard loom, a weaving machine developed in 1804-05. Subsequently, electro-mechanical computers, using relays to operate as binary devices, were developed in the early 20th century. This evolution led to ENIAC in 1945, the first programmable, electronic, general-purpose digital computer. Subsequently, this machine was reinvented by changing the vacuum tube technology core by semiconductor devices.
Due to the progression of the semiconductor technology core, computers started getting better and cheaper. Thus, with growing computational capability, the race to profit from increasingly complex software applications unfolded. Due to the zero cost of copying software, the evolution of computers also started unleashing market power accumulation. Consequentially, along with the transformation of jobs, firms, and industries, computer evolution has been unfolding highly rich monopolies.
Evolution of ICT
The evolution of computers led to software-centric innovations in information management, storage and communication, forming a new technology core. This is known as information and communication technology. Among notable applications are e-mail, imaging, document preparation, and business function-specific software applications. Due to the rapid diffusion of Personal Computers, ICT kept unleashing transformative implications on products, jobs, and firms. For example, the typewriter, fax machine, and telegram industries were destroyed. The software has been replacing manual office work. However, all those applications started in primitive and expensive forms. For example, in the 1970s, primitive word processors used to cost $12,000.
Similarly, e-mail in the 1980s could not support the attachment of files. And access to these applications was limited. However, the growth of PC kept driving the evolution of ICT, making it a powerful transformative force.
The Internet was born as a packet-switching-based link between Interface Message Processors—ARPANET. It began on 21 November 1969 by establishing the link between the IMP at UCLA and the IMP at the Stanford Research Institute. By 5 December 1969, it evolved as a four-node network. Since then, the Internet has been evolving, connecting an increasing number of nodes and improving the underlying technology core. As a result, a profit-making race started unfolding a growing number of applications. Notable ones are e-mail, the World Wide Web, and websites. Some of the remarkable profit-making success stories are Amazon, Google and Facebook. In modern times, the Internet has evolved as the backbone of the global information and communication system.
Mobile Phones Evolution
The first mobile phone patent was issued in 1908 in the USA. Its visible usages unfolded as a backpack mobile communication device on the battlefield during WWII. In 1956, 40kg user unit of an automated mobile phone system for vehicles was launched in Sweden. However, the evolution of the semiconductor technology core kept making the device smaller and less costly. Consequentially, in 1984, Motorola unveiled Dynatec in 1984, a 3lb handset costing $3995. Since then, the profit-making race has been gaining momentum due to the advancement of the technology core and unfolding knowledge about consumer preferences. Along the way, the evolution of mobile phones and handsets has been transforming products, jobs, and firms. Along with lowering the importance of land phone, mobile handset has destroyed various products like PDAs, camera, torchlight, portable music player, and many more.
Incremental Advancement and Reinvention
Technologies have a typical S-curve-like life cycle. Upon birth, they keep growing incrementally. However, they do not keep growing naturally. Their growth demands a flow of ideas stemming from STEM. Sometimes, their growth suffers from premature saturation, requiring significant scientific advancement to cross the chasm. Besides, along with the evolution of technologies, innovations around them also keep evolving.
However, the race of incremental progression reaches saturation, slowing innovation diffusion. To overcome it, inventors succeed in developing alternative technology cores. For example, the keyboard technology core reached saturation, limiting the progression of smartphone innovations. To overcome it, Apple came up with multitouch technology. Similarly, liquid crystal (LCD) technology was invented to overcome the saturation of the cathode ray tube (CRT) display. However, LCD also reached saturation, demanding the emergence of OLED (organic light emitting diode). Hence, technologies have been evolving in episodic form, with incremental advancement followed by reinvention. Those reinvention waves grow and unleash Creative waves of destruction, transforming industries and migrating innovation epicenter. Such a reality demands an understanding of the dynamics and leveraging it instead of suffering from a loss.
Role of Human Urge, STEM, and Market in Driving Invention and Evolution of Technology
The underlying force of this evolution has been human beings’ relentless urge to get jobs done better at less cost. It happens that ideas stemming from STEM can potentially improve the quality and reduce the cost simultaneously. There have been examples from semiconductors, lithium-ion batteries, and word processor software. On the other hand, the Market Economy offers the freedom to profit from creating an idea flow from STEM and integrating them into products and processes to improve quality and reduce cost. Hence, there has been a race to advance STEM and generate ideas from it to make a profit by offering higher quality products at lower prices to a growing number of customers. Hence, the fusion of these three forces has been the underlying force for the invention and evolution of technologies, expanding wealth creation from a flow of ideas from STEM.
As explained, along with the advancing innovations deeper in society, the episodic evolution of technology has been transforming products, jobs, and industries. Most importantly, it has been migrating the epicenters of innovations—along with prosperity. Such a reality of technology evolution has made the prosperity of firms and nations transitory. Hence, it demands understanding the dynamics to profit and prevent loss from the evolution of technology.
In retrospect, the rise of a few natural resource-poor countries to high-income status due to their success in creating wealth from a flow of ideas distilling from STEM in driving technology evolution. On the other hand, despite growing STEM competence, most less-developed countries fail to drive prosperity due to their inability to fuel tech evolution.
This article is part of a book, Engineering Economics and Management–Modern Day Perspective.