Technology Shift

Technology Shift

There are several types of technology changes: innovative technology, subversive technology and disruptive technology. Any technology shift is a varying mix of these three types.

Sustaining innovation

Innovative technology is a gradual improvement on an existing technology of process. It may be an improved manufacturing method or industrial process. Computer processors became faster because improved industrial were discovered that allow components to be placed closer together to reduce the distance for the electricity to travel within the circuits. As we have reached this theoretical limit, new more efficient circuits and human ingenuity has so far been able to keep up with the same growth curve.

Disruptive

Disruptive technology is a revolutionary shift that causes huge upheaval within an industry. The new form of technology is a sudden quantum leap or drastically lowers costs. Hydraulic excavators rendered cable excavators extinct due to their cheaper costs, easier operation and faster mobility.

Disruptive technology may exist for many years before coming to the fore. When this happens industries built around old methods are unable to adapt fast enough until the time is too late. This is because it is not always apparent that the newer technology is better than the existing technology. When digital cameras first appeared they were not better than film photography. Digital camera shutters needed to be open for several seconds, image quality was poor and grainy, and had a large energy usage requiring constant battery replacement.

These technologies target the lower end segment of the market which is willing to accept a drop in quality for a drastic drop in price. The product is designed for a different set of consumers than are being targeted, usually the long tail.

As the technology grows and improves, it reaches the same quality (or better) and displaces the earlier technology. With digital cameras, this reduction in price was the cost associated with processing camera film- the cost of time, money and energy. For a reduction in quality, people were willing to use a device which has a negligible cost for taking photographs. As digital photography became more widely adopted, the technology and knowledge around producing digital cameras brought them to the level of competing and then eventually displacing film photography altogether.

Subversive

Subversive technology is technology that fundamentally affects the social fabric of society with deep changes within people’s behaviors. The industrial age is a testament to subversive technologies. Subversive technology is adopted because it is empowering. Subversive technology is a technological paradigm shift.

Subversive technologies:

  • When the first wheel rolled
  • When gunpowder exploded
  • Rocket fired
  • Hargreaves invented the spinning jenny
  • Gutenberg invented the printing press
  • Watt saw a kettle-lid rise
  • Marconi tapped out the first message
  • Rutherford split the atom

There is ample evidence of generation Y technology replacing generation X technology where the new technology is able to compete on a level of empowerment (subversion), targeting a new market segment (disruption) or building on an existing model (innovation).

Better ≠ adoption

There is evidence in the opposite direction. History is rife with examples of superior technologies that were not adopted. James Burke said that “technology is not adopted based on its technological merit but based on its social acceptability”. Burke is referring here to the network effect. The users of the technology are the main driving force behind its effectiveness (telephones, the web, social networks).

The internet has big problems and is hugely inefficient due to its beginnings as a largely experimental project. The early designers of the internet created it as a prototype and did not expect it to become a production system. IP addresses, the address of a computer within cyberspace, are too small for serving the entire planet and are practically exhausted. A number of hacks and workarounds for reusing IP addresses that compromise the fundamentals of the internet are used.

Internet 2 solves these problems. It has been designed for serving the entire planet from ground-up with the lessons learnt from internet 1 while not compromising the fundamentals of internetworking. However it has not been adopted in any large scale because the internet is where everyone is at. This means that alternate bitcoin chains, alternate social networks or alternate domain registrars are unlikely to be successful competing directly in the same market as a larger alternative.

Knowledge accumulation is another inertia causation in technology adoption. Nuclear reactors around the world employ active safety. Active safety requires human intervention during an emergency. Passive safety is the opposite. During an emergency, passive safety nuclear reactors rely on the predictable nature of physical laws to slow rather than accelerate nuclear reactions, rather than requiring direct human intervention.

From an engineering perspective, passive safety is far better than active safety. Yet passive safety remains a theoretical exercise with a handful of prototype reactors worldwide. New nuclear reactors are always active safety.

Since the 1960s, there has been a continuous build up of knowledge in building and maintaining active safety reactors. To switch to passive safety reactors would need a huge initial investment. Active safety is good enough. The cost is not worth the gain.

Bitcoin

Bitcoin is both disruptive and subversive. Viewed in the framework above, for Bitcoin to be successful, it must focus on new markets and be empowering. Trying to compete against established markets like online shopping is a mistake. Bitcoin is a market enabler. The low fees and fast transfers will create new markets that could not emerge otherwise, and rely on bitcoin’s continued existence.

Bitcoin is one tool among many new emerging technologies in cyberspace that will redesign how interactions between humans works. New ways of codifying wealth exchange will arise. Imagine being able to have computer assistance over Skype from a technician for a few dollars rather than visiting a physical building and paying hundreds of dollars. This is where bitcoin will shine.

And then it will grow and displace established markets like online shopping. Trying to displace those markets now is naive and hugely optimistic. Bitcoin is too immature.

 

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Favorite Quote: "Bitcoin is a remarkable cryptographic achievement and the ability to create something that is not duplicable in the digital world has enormous value" - Eric Schmidt, CEO of Google

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