Technology Change and the Rise of New Industries explores why new industries emerge at specific moments in time and in certain countries. Part I shows that technologies which experience "exponential" improvements in cost and performance have a greater chance of becoming new industries. When "low-end" discontinuities incur exponential improvements, they often displace the dominant technologies and become "disruptive" innovations. Part II explores this phenomenon and instances in which discontinuities spawn new industries because they impact higher-level systems. Part III addresses a different set of questions—ones that consider the challenges of new industries for firms and governments. Part IV uses ideas from the previous chapters to analyze the present and future of selected technologies.
Based on analyses of many industries, including those with an electronic and clean energy focus, this book challenges the conventional wisdom that performance dramatically rises following the emergence of a new technology, that costs fall due to increases in cumulative production, and that low-end innovations automatically become disruptive ones.
Technology Change and the Rise of New Industries explores why new industries emerge at specific moments in time and in certain countries. Part I shows that technologies which experience "exponential" improvements in cost and performance have a greater chance of becoming new industries. When "low-end" discontinuities incur exponential improvements, they often displace the dominant technologies and become "disruptive" innovations. Part II explores this phenomenon and instances in which discontinuities spawn new industries because they impact higher-level systems. Part III addresses a different set of questions—ones that consider the challenges of new industries for firms and governments. Part IV uses ideas from the previous chapters to analyze the present and future of selected technologies.
Based on analyses of many industries, including those with an electronic and clean energy focus, this book challenges the conventional wisdom that performance dramatically rises following the emergence of a new technology, that costs fall due to increases in cumulative production, and that low-end innovations automatically become disruptive ones.
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Overview
Technology Change and the Rise of New Industries explores why new industries emerge at specific moments in time and in certain countries. Part I shows that technologies which experience "exponential" improvements in cost and performance have a greater chance of becoming new industries. When "low-end" discontinuities incur exponential improvements, they often displace the dominant technologies and become "disruptive" innovations. Part II explores this phenomenon and instances in which discontinuities spawn new industries because they impact higher-level systems. Part III addresses a different set of questions—ones that consider the challenges of new industries for firms and governments. Part IV uses ideas from the previous chapters to analyze the present and future of selected technologies.
Based on analyses of many industries, including those with an electronic and clean energy focus, this book challenges the conventional wisdom that performance dramatically rises following the emergence of a new technology, that costs fall due to increases in cumulative production, and that low-end innovations automatically become disruptive ones.
Product Details
| ISBN-13: | 9780804784924 |
|---|---|
| Publisher: | Stanford Business Books |
| Publication date: | 01/09/2013 |
| Series: | Innovation and Technology in the World Economy |
| Sold by: | Barnes & Noble |
| Format: | eBook |
| Pages: | 264 |
| File size: | 4 MB |
About the Author
Read an Excerpt
Technology Change and the Rise of New Industries
By JEFFREY L. FUNK
Stanford University Press
Copyright © 2013 Board of Trustees of the Leland Stanford Junior UniversityAll right reserved.
ISBN: 978-0-8047-8385-9
Chapter One
What Determines the Potential for New Technologies and Thus New Industries?
Understanding the potential for new technologies is highly problematic. Consider, for example, nuclear power. On September 16, 1954, Lewis Strauss, then chairman of the U.S. Atomic Energy Commission, in a speech to the National Association of Science Writers, said, "Our children will enjoy in their homes electrical energy too cheap to meter." Although there is some disagreement about whether he was referring to nuclear fission or nuclear fusion, children born in the 1950s still do not have access to energy that is too cheap to meter, and it is highly unlikely that those born in the 21st century will have it. In fact, the opposite may be true.
Similar examples can be found in a book written in 1967 by Herman Kahn, considered one of the greatest visionaries of his time, and Anthony Weiner. Kahn and Wiener described technologies they believed would be widely used by the year 2000. In 2002, Richard Albright created a panel of experts to assess these forecasts. It was concluded that fewer than 50 percent of the forecasted innovations had occurred before the end of the 20th century. By sector, a larger percentage were correct in computers and communication (80 percent) than in aerospace (20 percent) and infrastructure and transportation (30 percent). Consistent with this book's analysis, Albright concluded that the greater accuracy in forecasts for computers and communication was the result of greater improvements in the underlying technologies for them, such as integrated circuits (ICs), magnetic storage, and optical fiber. On the other hand, the lower forecasting accuracy for aerospace was the result of exaggerated hype generated by the Apollo program. Exaggerated hype may now be occurring with electric vehicles and other clean energies.
Part I describes the concepts of technology paradigms and geometrical scaling and how they can be used to better assess the potential of new technologies. Chapter 2 provides an overview of technology paradigms, while Chapter 3 focuses on a key aspect, geometrical scaling. Although any method is prone to exaggeration and hype such as occurred in some of Kahn and Wiener's examples, using a technology paradigm requires gathering performance and cost /price data and considering both the components that make up a technological system and the concepts that form the basis of the technology whose potential is being assessed.
For example, if Lewis Strauss had analyzed the technology paradigm for nuclear power in 1954, he would have noted several key things: (1) that boilers, turbines, and generators are needed for nuclear fission just as they are for fossil-fired power; (2) that the benefits from increasing the scale of boilers, turbines, and generator technologies had almost been attained by the 1950s; (3) that, although nuclear fuel has higher energy densities than do other fuels, its costs of extraction, shipping, and processing on a weight or volume basis are also higher, for safety reasons; and (4) that the costs of plant construction are higher for nuclear fuel, also for safety reasons. These facts should have alerted him to the nuclear energy's potential limitations.
Chapter Two
Technology Paradigm
This chapter summarizes and contrasts the paradigms for six basic technologies and more than 35 "subtechnologies" (see the Appendix for methodology). Building from Giovanni Dosi's characterization of a technology paradigm, it does this in terms of (1) a technology's basic concepts or principles and the trade-offs that are defined by them; (2) the directions of advance within these trade-offs, which are defined by one or more technological trajectories; (3) the potential limits to these trajectories and their paradigms; and (4) the roles of components and scientific knowledge in these limits. The concepts or principles that form the basis of a technology define the trade-offs between cost and various dimensions of performance, and their characterization and implementation are supported by advances in science. This book distinguishes between a physical phenomenon, which exists independently of humans, and the use of a concept or principle to exploit it for a specific purpose. Advances in our understanding of a physical phenomenon form a base of knowledge that helps us find new concepts or principles, and these in turn help us find better product and process designs.
This chapter primarily focuses on the second and third items listed above and shows that there are four main methods of achieving advances along a technological trajectory: (1) improving the efficiency with which basic concepts and their underlying physical phenomena are exploited; (2) radical new processes; (3) geometrical scaling; and (4) improvements in "key" components. Since Chapter 3 focuses on scaling and radical process improvements as part of scaling in production equipment, this chapter focuses on the other two methods, the first of which includes finding materials that better exploit basic concepts and their underlying physical phenomena. Finding better materials (and radical new processes, which are not discussed in this chapter) is particularly important for the low levels in a nested hierarchy of electronic subsystems, while improvements in "key" components are more important for the higher levels.
A major goal of this and other chapters is to help managers, engineers, professors, and students better analyze the potential of a new technology. Understanding the extent to which improvements have occurred in old and new technologies can help us determine the extent to which they might occur in the future and thus when a new technology might provide a superior "value proposition" to an increasing number of users. In particular, since this chapter shows how improvements in performance and cost /price in a technological trajectory generally occur in a rather smooth and incremental manner over multiple generations of discontinuities, and shows that dramatic improvements do not occur following the emergence of a technological discontinuity, an understanding of these incremental improvements enables one to roughly understand the near-term trends in performance and cost /price for both a system and its components.
ENGINES AND TRANSPORTATION TECHNOLOGIES
Table 2.1 summarizes the technology paradigms for three types of engine. In a steam engine, steam does work by pushing out a piston while a vacuum (from the condensing steam) pulls the piston back in. Often defined as the key technology in the industrial revolution, the first steam engines had efficiencies as low as 0.5 percent (see Figure 2.1), and, even with the addition of a separate condenser by James Watt in 1765, efficiencies were still just a few percent. They increased only as better components, tighter tolerances, and better controls emerged and as the perceived usefulness of steam engines stimulated research on thermodynamics, combustion, fluid flow, and heat transfer. Furthermore, as described in Chapter 3, increases in scale led to higher efficiencies through a positive interaction between larger scale, higher pressures, and higher temperatures.
Steam engines revolutionized mining, factories, and later transportation. Steam-powered pumps allowed deeper mines to be dug and larger factories to be built, the latter enabling some of the increases in equipment and factory scale that are described in the next chapter. Because of more than 100 years of improvements in both their efficiencies and scale, locomotives and steamships became possible in the 19th century (see Table 2.2). Without high efficiencies, a low ratio of power to weight made it difficult to move an engine, much less cargo or passengers. For land transportation, heavy weight meant that engines were first used on heavy rails and not roads. For water transportation, initially poor efficiencies (and small scale) caused them to be used on rivers long before they were used on oceans.
Road and air transportation required a much lighter and smaller engine and thus one with a new form of technology paradigm. The internal combustion engine (ICE) uses a spark to ignite a small explosion and the subsequent expansion of gaseous fuel to push a piston. The explosion enables the ICE to generate much more power per weight or volume than a steam engine can. However, it required a "spark," which could not be achieved until electric batteries (see the next section) existed. Other necessities included a better understanding of combustion, which partly came about through Antoine Lavoisier's separation of oxygen from other gases; a plentiful supply of highly volatile fuel such as gasoline; and improvements in materials and equipment for forming and cutting metal. The latter improvements had only emerged by the second half of the 19th century.
Like the steam engine, the ICE also benefited from improvements in efficiency and increases in scale, and these improvements, along with a better understanding of the aerodynamics of lift, made human flight possible. According to Bernoulli's principle, first described in his book Hydrodynamica in 1738 and applied to flight by his successors, when air moves faster over the top than under the bottom of a wing, there is lower pressure above than below and thus the wing experiences "lift." The challenge was to propel an engine and a human at a high enough speed for them to experience lift.
The necessary improvements in the efficiency and weight of ICEs in the late 1800s were driven partly by the market for automobiles and partly by improvements in a wide variety of manufacturing processes in diverse industries. These improvements in weight and efficiency continued throughout the 20th century and resulted in a 300-fold reduction in the mass-to-power ratio of ICEs. Nevertheless, there are limits to the ICE paradigm. Pistons can only move so fast, and the efficiency of propellers declines as the speed of sound is approached or as altitude is increased.
Jet engines involve a different technology paradigm that permits aircraft to fly at high altitudes where air density and thus friction are low. Like the rockets first used in the 15th century, they depend on Newton's Law of Action and Reaction: the exhaust from the combustion of high-temperature, high-pressure fuel propels an airplane forward. Realizing this technology paradigm and advancing it required compressors, turbines to drive the compressors, and materials that could withstand high temperatures. Most of these "components" did not become available until the mid-20th century, when some of them were borrowed from the electric power industry (e.g., turbines). These improvements, along with increases in the scale of engines and aircraft (addressed in the next chapter), led to increases in temperature and pressure and thus increases in engine efficiency of about 30 percent between 1960 and 2000. Now it is the exhaust from the jet and the ICE in the form of carbon dioxide that is driving a search for a new technology paradigm for engines.
ELECTRICITY GENERATION
Table 2.3 summarizes the technology paradigms for three types of electricity generation and several subtypes within the most common type of "generators and turbines." Building from Luigi Galvani's research on the movements of dead frogs, Alessandro Volta built the first battery in 1800. However, it was Michael Faraday who explained in the 1820s that electricity was not inexhaustible and that it came from chemical reactions within the frog and battery. Faraday's scientific explanation of electricity and its interaction with magnetism, along with improvements in batteries and other "components," made technologies such as telegraphs and electrolysis possible.
Electrolysis allowed scientists to isolate elements that do not appear as elements in nature. One reason for this is that these elements are very reactive, and it is highly reactive elements that make good batteries, since the difference in reactance between the anode and the cathode in a battery largely determines energy and power densities. Batteries with higher energy and power densities store more energy per weight or volume and provide more power per weight or volume, respectively, than do those with lower energy and power densities. They also often have lower costs per unit of energy, since battery cost is often a function of volume or weight (as is true for other technologies). Thus, the history of batteries has been a search for materials with high reactivity for the cathode and low reactivity for the anode, as well as for higher current-carrying capacity, low weight, and ease of processing. The creation of the periodic table by Dmitri Mendeleyev in 1869 and the gradual accumulation of knowledge in material science in the 19th and 20th centuries also helped scientists search for new and better materials, and new materials continue to be found.
Improvements in the last few decades have come from the use of completely new materials such as lithium and small changes in the particular combination of lithium and other materials (see Figure 2.2). This has led to a doubling of energy densities for Li-ion batteries in the last 15 years, and some observers expect a similar doubling to occur in the next 15 years from modified forms of lithium such as Li-air. Chapter 10 addresses the role of batteries and other energy storage technologies in electric vehicles.
Most electricity is of course generated by the movement of a turbine in an electricity-generating station. The rotation of a turbine can be driven by wind, water, or steam, with steam the most common medium. Similar to steam engines, steam turbines are primarily powered by the burning of oil, coal, or gas, but the steam can also come from sources such as nuclear fission, geothermal, or solar thermal. The rotation of the turbine moves an electrical conductor perpendicular to a magnetic field, which operates on the principles identified by Michael Faraday in the 1830s. The implementation of these turbines for generating electricity required improvements in a large number of complementary technologies such as alternators, rotors, dynamos, and transmission lines, many of which depended on improvements in manufacturing processes for mechanical and other components during the 1800s. Implementation also required the development of a major application for electricity, which turned out to be electric lighting, and this depended on the development of an incandescent lightbulb (see the next section). Since electricity's introduction in the 1870s, its price has dropped dramatically because of improvements in efficiency and increases in scale, which are discussed more in the next chapter.
Another aspect of a technology paradigm for most conventional electricity-generating stations is the production of carbon dioxide, particulates, sulfur and nitrous oxides, and other pollutants. These are by-products of burning coal, oil, and gas, and the difficulties in capturing them, particularly carbon dioxide, have started a search for new sources of electricity such as wind and solar that do not emit carbon dioxide and other environmental pollutants. Wind turbines and solar cells are analyzed in Chapter 10.
LIGHTING AND DISPLAY
Table 2.4 summarizes the technology paradigms for several types of lighting and display. These technologies required advances in the science of electricity and electric discharge tubes; many of those in the lower half of the table also depended on advances in the science of crystals and semiconductors. Advances in electric discharge tubes were first made in the second half of the 19th century by Heinrich Geissler and William Crookes, whose tubes still bear their names, and further advances were helped by the basic research of J. J. Thompson and Albert Einstein, among others.
As with batteries, with electric discharge tubes there has been a search for materials that more efficiently exploit basic concepts and underlying physical phenomena. This search, helped by the accumulation of knowledge in various material sciences, has been for materials and gases that convert a larger percentage of electricity into visible light when a voltage is applied across two electrodes or across a filament connecting two electrodes in a vacuum. For incandescent lights, the search has been for filaments that translate more electricity into visible light than into heat, but it has made little progress since the 1930s (see Figure 2.3). Engineers and scientists have had more luck with fluorescent lights. Although the gases used in these lights mostly emit ultraviolet light, so-called phosphors mostly emit visible light upon absorbing ultraviolet light, which enabled higher efficiencies than for incandescent lights. For other technologies, the search has been for gases that emit visible light when a voltage is applied across two electrodes that encompass them. For all of these lights, advances in pumps and seals (mostly spin-offs from steam engines) were needed to create a vacuum; these advances (along with advances in glass tubes) were realized in the second half of the 19th century. In combination with rising wages, these improvements led to a dramatic drop in the hours worked needed to acquire a lumen of lighting.
Nevertheless, limits to the technology paradigms for lighting based on electric discharge tubes emerged many years ago. Although there is currently an emphasis on replacing incandescent bulbs with so-called compact fluorescent tubes, limited improvements in efficiency or reductions in size (and thus costs) suggest that these tubes are a temporary solution before something else replaces them. For example, LEDs emit light when a voltage is applied across a semiconductor diode, which is based on the phenomenon of electroluminescence. Semiconductor lasers take this one step further and emit light for a single wavelength and phase. The phenomenon of electroluminescence was first identified in the late 19th century, and the first semiconductor LEDs and lasers were independently produced in 1962 by Robert Hall and Nick Holonyak, respectively. (Continues...)
Excerpted from Technology Change and the Rise of New Industries by JEFFREY L. FUNK Copyright © 2013 by Board of Trustees of the Leland Stanford Junior University. Excerpted by permission of Stanford University Press. All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
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Table of Contents
List of Illustrations xi
Acknowledgments xiii
1 Introduction 1
Part I What Determines the Potential for New Technologies and Thus New Industries? 19
2 Technology Paradigm 21
3 Geometrical Scaling 41
Part II When Do Technological Discontinuities Emerge? 61
4 Computers 67
5 Audio and Video Recording and Playback Equipment 82
6 Semiconductors 99
Part III Opportunities and Challenges for Firms and Governments 117
7 Competition in New Industries 119
8 Different Industries, Different Challenges 131
Part IV Thinking about the Future 143
9 Electronics and Electronic Systems 145
10 Clean Energy 158
11 Conclusions 177
Appendix: Research Methodology 199
Notes 203
References 223
Index 241