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Forecasting Technological Change Session 2. Trend Analysis Paul A. Schumann, Jr. Glocal Vantage, Inc. 06/07/09
Sessions <ul><li>Introduction </li></ul><ul><li>Trend Analysis Techniques </li></ul><ul><li>Expert Opinion Techniques </li...
Sessions <ul><li>Introduction </li></ul><ul><li>Trend Analysis Techniques </li></ul><ul><li>Expert Opinion Techniques </li...
2. Trend Analysis Techniques <ul><li>Shape of S-Curve </li></ul><ul><li>Dependent on utility function </li></ul><ul><li>Ba...
Techniques <ul><li>Analogy </li></ul><ul><li>Precursor Developments </li></ul><ul><li>Trend Extrapolation </li></ul><ul><l...
Techniques <ul><li>Analogy </li></ul><ul><li>Precursor Developments </li></ul><ul><li>Trend Extrapolation </li></ul><ul><l...
Economic Maturation of Technology <ul><li>Nonproductive (25 years) </li></ul><ul><li>Counter Productive (25 years) </li></...
Future Forecast <ul><li>First Industrial Revolution (1760 - 1860) </li></ul><ul><li>Second Industrial Revolution (1860 - 1...
Nature of Work 06/07/09 Source: Snyder, et al, “The Strategic Context of Education in America 2000 - 2020
Information Technology 06/07/09 Source: Jeremy Greenwood, The Third Industrial Revolution
Third IR Technologies 06/07/09 1950 1975 2000 NP CP HP 2025 DP
Techniques <ul><li>Analogy </li></ul><ul><li>Precursor Developments </li></ul><ul><li>Trend Extrapolation </li></ul><ul><l...
Precursor 06/07/09 Time (Effort, Experience) Utility Function
Precursor Example 06/07/09 Source: Ralph Lenz,TFI
Precursor Analysis <ul><li>Identify lead-lag relationship </li></ul><ul><li>Obtain lead-lag data </li></ul><ul><li>Decide ...
Techniques <ul><li>Analogy </li></ul><ul><li>Precursor Developments </li></ul><ul><li>Trend Extrapolation </li></ul><ul><l...
Trend Extrapolation <ul><li>If </li></ul><ul><ul><li>Technical parameter has utility </li></ul></ul><ul><ul><li>Market con...
Trend Analysis 06/07/09 Source: Ralph Lenz, TFI
First Technology Trend Forecast 06/07/09
Internet Users 06/07/09
Internet Users 06/07/09
Internet Users Analysis <ul><li>Growth </li></ul><ul><ul><li>114% increase per year </li></ul></ul><ul><ul><li>doubling ti...
IC Example 06/07/09 www. intel.com/research/silicon/mooreslaw.htm
Microprocessor Speed 06/07/09 Source: TFI (1990)
Evolution of Computer Power 06/07/09 Source: Hans Moravec
Information Revolution? 06/07/09 Source: Schumann (1982)
Genetic Sequencing 06/07/09 Source: www.ncbi.nih.gov/Genbank/ genbankstats.html
Genetic Sequences 06/07/09 Doubling every 17 months Source: Enriquez
Chromosome Mapping 06/07/09 Source: www.ornl.gov/hgmis/posters/chromosome
Trend Extrapolation <ul><li>Specify assumptions </li></ul><ul><li>Include quantitative evidence </li></ul><ul><li>Follow l...
Techniques <ul><li>Analogy </li></ul><ul><li>Precursor Developments </li></ul><ul><li>Trend Extrapolation </li></ul><ul><l...
Limit Curve <ul><li>Organic growth model </li></ul><ul><li>Often used when technology approaches a natural limit </li></ul...
Growth Curve 06/07/09 Source: Alan Porter
Limit Curve 06/07/09
Limit Curve 06/07/09
Limit Curve 06/07/09
Limit Curve 06/07/09
Limit Curve <ul><li>Pearl curve </li></ul><ul><li>y = L / (1+a e  -bt ) </li></ul><ul><li>L = 350 </li></ul><ul><li>a = 1....
Internet Users 06/07/09
Limit Curves <ul><li>Pearl </li></ul><ul><li>Fisher-Pry </li></ul><ul><li>Gompertz </li></ul><ul><li>Bertalanffy </li></ul...
Limit Curves <ul><li>Pearl </li></ul><ul><li>Fisher-Pry </li></ul><ul><li>Gompertz </li></ul><ul><li>Bertalanffy </li></ul...
Limit Curves <ul><li>Pearl </li></ul><ul><li>Fisher-Pry </li></ul><ul><li>Gompertz </li></ul><ul><li>Bertalanffy </li></ul...
Limit Curves <ul><li>Pearl </li></ul><ul><li>Fisher-Pry </li></ul><ul><li>Gompertz </li></ul><ul><li>Bertalanffy </li></ul...
Limit Curves <ul><li>Pearl </li></ul><ul><li>Fisher-Pry </li></ul><ul><li>Gompertz </li></ul><ul><li>Bertalanffy </li></ul...
Envelope Curve 06/07/09 Source: Ralph Lenz, TFI
Scanning 06/07/09
Envelope Curve 06/07/09 Source: TFI 1983
Techniques <ul><li>Analogy </li></ul><ul><li>Precursor Developments </li></ul><ul><li>Trend Extrapolation </li></ul><ul><l...
Learning Curve <ul><li>Some improvements can be forecast better based on experience rather than time. </li></ul><ul><li>Fr...
Learning Curve <ul><li>Frequently experience is equivalent to cumulative production quantity  </li></ul><ul><li>Usually ex...
Learning Curve Example 06/07/09 Source: Porter
Residential Electric Power Learning Curve 06/07/09
Residential Electric Power Learning Curve 06/07/09
Residential Electric Power Learning Curve 06/07/09
Techniques <ul><li>Analogy </li></ul><ul><li>Precursor Developments </li></ul><ul><li>Trend Extrapolation </li></ul><ul><l...
Fisher-Pry Substitution Analysis <ul><li>f = 1/2 (1 + tanh a (t - t 0 )) </li></ul><ul><li>f = fraction of applications in...
Shape of Fisher-Pry Curves 06/07/09 t 0  = 3 a = 0.5 a = 1 a = 1.5
Substitution of Steam for Sail 06/07/09 Steam Sail
Steam/Sail Fisher-Pry Substitution 06/07/09
CATV Substitution in US 06/07/09 Source: Martino, 1983
CATV Substitution (US) 06/07/09
Telecommunication Technology Substitution 06/07/09 Source: Lenz & Vanston, TFI 1986
Telecommunications Substitution Analysis 06/07/09
Techniques <ul><li>Analogy </li></ul><ul><li>Precursor Developments </li></ul><ul><li>Trend Extrapolation </li></ul><ul><l...
Multiple Substitution Analysis <ul><li>Requires a more generalized substitution model </li></ul><ul><li>Lotka-Volterra equ...
Multiple Substitution Example 06/07/09 Source: Porter
Comparison of Models 06/07/09 Source: Porter
Summary <ul><li>Trend analysis has strong historical validation </li></ul><ul><li>Models have been accepted but not explai...
Summary (cont.) <ul><li>First noticed by Henry Adams in 1918 </li></ul><ul><li>“ Knowledge begets knowledge as money beget...
IC Line Width 06/07/09
Trend Analysis <ul><li>Analogy </li></ul><ul><li>Precursor Developments </li></ul><ul><li>Trend Extrapolation </li></ul><u...
Glocal Vantage, Inc. <ul><li>PO Box 161475 </li></ul><ul><li>Austin, TX 78716 </li></ul><ul><li>(512) 632-6586 </li></ul><...
Paul Schumann <ul><li>Futurist and innovation consultant </li></ul><ul><li>Application of web 2.0 to market & strategic in...
This work is licensed under the Creative Commons Attribution license. You may distribute, remix, tweak, and build upon thi...
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Forecasting Technological Change (2)

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Part two of a five part seminar on technology forecasting, tools, techniques and processes. Part four covers the trend analysis techniques.

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  • Transcript of "Forecasting Technological Change (2)"

    1. 1. Forecasting Technological Change Session 2. Trend Analysis Paul A. Schumann, Jr. Glocal Vantage, Inc. 06/07/09
    2. 2. Sessions <ul><li>Introduction </li></ul><ul><li>Trend Analysis Techniques </li></ul><ul><li>Expert Opinion Techniques </li></ul><ul><li>Integrative Techniques </li></ul><ul><li>Closing </li></ul>06/07/09
    3. 3. Sessions <ul><li>Introduction </li></ul><ul><li>Trend Analysis Techniques </li></ul><ul><li>Expert Opinion Techniques </li></ul><ul><li>Integrative Techniques </li></ul><ul><li>Closing </li></ul>06/07/09
    4. 4. 2. Trend Analysis Techniques <ul><li>Shape of S-Curve </li></ul><ul><li>Dependent on utility function </li></ul><ul><li>Based on historical data (time or experience) </li></ul><ul><li>Not causal </li></ul><ul><li>Reproducible </li></ul><ul><li>Requires analysis of driving forces </li></ul>06/07/09 If you don’t know where you are, and how you got there, how can you possibly know where you are going? Abe Lincoln
    5. 5. Techniques <ul><li>Analogy </li></ul><ul><li>Precursor Developments </li></ul><ul><li>Trend Extrapolation </li></ul><ul><li>Limit Curve </li></ul><ul><li>Learning Curve </li></ul><ul><li>Substitution Analysis </li></ul><ul><li>Multiple Substitution Analysis </li></ul>06/07/09
    6. 6. Techniques <ul><li>Analogy </li></ul><ul><li>Precursor Developments </li></ul><ul><li>Trend Extrapolation </li></ul><ul><li>Limit Curve </li></ul><ul><li>Learning Curve </li></ul><ul><li>Substitution Analysis </li></ul><ul><li>Multiple Substitution Analysis </li></ul>06/07/09
    7. 7. Economic Maturation of Technology <ul><li>Nonproductive (25 years) </li></ul><ul><li>Counter Productive (25 years) </li></ul><ul><li>Hyperproductive and Transformational (25 years) </li></ul>06/07/09
    8. 8. Future Forecast <ul><li>First Industrial Revolution (1760 - 1860) </li></ul><ul><li>Second Industrial Revolution (1860 - 1950) </li></ul><ul><li>Third Industrial Revolution (1950 - 2020) </li></ul>06/07/09
    9. 9. Nature of Work 06/07/09 Source: Snyder, et al, “The Strategic Context of Education in America 2000 - 2020
    10. 10. Information Technology 06/07/09 Source: Jeremy Greenwood, The Third Industrial Revolution
    11. 11. Third IR Technologies 06/07/09 1950 1975 2000 NP CP HP 2025 DP
    12. 12. Techniques <ul><li>Analogy </li></ul><ul><li>Precursor Developments </li></ul><ul><li>Trend Extrapolation </li></ul><ul><li>Limit Curve </li></ul><ul><li>Learning Curve </li></ul><ul><li>Substitution Analysis </li></ul><ul><li>Multiple Substitution Analysis </li></ul>06/07/09
    13. 13. Precursor 06/07/09 Time (Effort, Experience) Utility Function
    14. 14. Precursor Example 06/07/09 Source: Ralph Lenz,TFI
    15. 15. Precursor Analysis <ul><li>Identify lead-lag relationship </li></ul><ul><li>Obtain lead-lag data </li></ul><ul><li>Decide whether lead-lag relationship will continue </li></ul><ul><li>Causal connections are best </li></ul><ul><li>Similar control factors are next best </li></ul><ul><li>Accidental relationships are misleading </li></ul>06/07/09
    16. 16. Techniques <ul><li>Analogy </li></ul><ul><li>Precursor Developments </li></ul><ul><li>Trend Extrapolation </li></ul><ul><li>Limit Curve </li></ul><ul><li>Learning Curve </li></ul><ul><li>Substitution Analysis </li></ul><ul><li>Multiple Substitution Analysis </li></ul>06/07/09
    17. 17. Trend Extrapolation <ul><li>If </li></ul><ul><ul><li>Technical parameter has utility </li></ul></ul><ul><ul><li>Market continues to value utility </li></ul></ul><ul><ul><li>Driving forces remain same </li></ul></ul><ul><ul><li>Not approaching limit </li></ul></ul><ul><li>Then </li></ul><ul><ul><li>Most technologies follow a pattern of constant percentage increase </li></ul></ul><ul><ul><li>y = y 0 e mt i.e . (log y = log y 0 + m t ) (natural log) </li></ul></ul>06/07/09
    18. 18. Trend Analysis 06/07/09 Source: Ralph Lenz, TFI
    19. 19. First Technology Trend Forecast 06/07/09
    20. 20. Internet Users 06/07/09
    21. 21. Internet Users 06/07/09
    22. 22. Internet Users Analysis <ul><li>Growth </li></ul><ul><ul><li>114% increase per year </li></ul></ul><ul><ul><li>doubling time = 11 months </li></ul></ul><ul><li>Surpass world’s population in 2005 </li></ul><ul><li>Is it a utility function? </li></ul><ul><li>Limits to growth? </li></ul><ul><li>What’s a user? </li></ul>06/07/09
    23. 23. IC Example 06/07/09 www. intel.com/research/silicon/mooreslaw.htm
    24. 24. Microprocessor Speed 06/07/09 Source: TFI (1990)
    25. 25. Evolution of Computer Power 06/07/09 Source: Hans Moravec
    26. 26. Information Revolution? 06/07/09 Source: Schumann (1982)
    27. 27. Genetic Sequencing 06/07/09 Source: www.ncbi.nih.gov/Genbank/ genbankstats.html
    28. 28. Genetic Sequences 06/07/09 Doubling every 17 months Source: Enriquez
    29. 29. Chromosome Mapping 06/07/09 Source: www.ornl.gov/hgmis/posters/chromosome
    30. 30. Trend Extrapolation <ul><li>Specify assumptions </li></ul><ul><li>Include quantitative evidence </li></ul><ul><li>Follow logical approach </li></ul><ul><li>Use prior rates of improvement unless </li></ul><ul><ul><li>There is a limit </li></ul></ul><ul><ul><li>Utility is changing </li></ul></ul><ul><ul><li>Approach is changing </li></ul></ul><ul><ul><li>Driving forces are changing </li></ul></ul><ul><li>Document reasons </li></ul><ul><li>Useful to develop alternative projections </li></ul><ul><li>Provide a basis for rational discussion </li></ul>06/07/09
    31. 31. Techniques <ul><li>Analogy </li></ul><ul><li>Precursor Developments </li></ul><ul><li>Trend Extrapolation </li></ul><ul><li>Limit Curve </li></ul><ul><li>Learning Curve </li></ul><ul><li>Substitution Analysis </li></ul><ul><li>Multiple Substitution Analysis </li></ul>06/07/09
    32. 32. Limit Curve <ul><li>Organic growth model </li></ul><ul><li>Often used when technology approaches a natural limit </li></ul><ul><li>Limit may not be real </li></ul><ul><li>Use limit and make forecast </li></ul><ul><li>Review limit - real? </li></ul><ul><li>Shifts usually occur as limit is approached if utility still exists </li></ul>06/07/09
    33. 33. Growth Curve 06/07/09 Source: Alan Porter
    34. 34. Limit Curve 06/07/09
    35. 35. Limit Curve 06/07/09
    36. 36. Limit Curve 06/07/09
    37. 37. Limit Curve 06/07/09
    38. 38. Limit Curve <ul><li>Pearl curve </li></ul><ul><li>y = L / (1+a e -bt ) </li></ul><ul><li>L = 350 </li></ul><ul><li>a = 1.71 </li></ul><ul><li>b = .038 </li></ul><ul><li>t = 0 in 1937 </li></ul>06/07/09
    39. 39. Internet Users 06/07/09
    40. 40. Limit Curves <ul><li>Pearl </li></ul><ul><li>Fisher-Pry </li></ul><ul><li>Gompertz </li></ul><ul><li>Bertalanffy </li></ul>06/07/09
    41. 41. Limit Curves <ul><li>Pearl </li></ul><ul><li>Fisher-Pry </li></ul><ul><li>Gompertz </li></ul><ul><li>Bertalanffy </li></ul>06/07/09 y = L / (1 + a exp (- b t)) y = L / (1 + 10 (A - B t) ) L = limit a = controls location b = controls shape
    42. 42. Limit Curves <ul><li>Pearl </li></ul><ul><li>Fisher-Pry </li></ul><ul><li>Gompertz </li></ul><ul><li>Bertalanffy </li></ul>06/07/09 f = 1/2 (1 + tanh a (t - t 0 )) f = fraction of applications in which the new technology has been substituted for the old t 0 = time for 50% substitution a = controls shape
    43. 43. Limit Curves <ul><li>Pearl </li></ul><ul><li>Fisher-Pry </li></ul><ul><li>Gompertz </li></ul><ul><li>Bertalanffy </li></ul>06/07/09 Y = L exp (- b exp ( - k t)) Non symmetrical
    44. 44. Limit Curves <ul><li>Pearl </li></ul><ul><li>Fisher-Pry </li></ul><ul><li>Gompertz </li></ul><ul><li>Bertalanffy </li></ul>06/07/09 y = L + (y 0 - L) exp (- b t) L = limit y 0 = initial value b = controls shape of curve
    45. 45. Envelope Curve 06/07/09 Source: Ralph Lenz, TFI
    46. 46. Scanning 06/07/09
    47. 47. Envelope Curve 06/07/09 Source: TFI 1983
    48. 48. Techniques <ul><li>Analogy </li></ul><ul><li>Precursor Developments </li></ul><ul><li>Trend Extrapolation </li></ul><ul><li>Limit Curve </li></ul><ul><li>Learning Curve </li></ul><ul><li>Substitution Analysis </li></ul><ul><li>Multiple Substitution Analysis </li></ul>06/07/09
    49. 49. Learning Curve <ul><li>Some improvements can be forecast better based on experience rather than time. </li></ul><ul><li>Frequently production costs follow this type of relationship </li></ul><ul><li>y = a x - b </li></ul><ul><li>log y = log a - b log x </li></ul>06/07/09
    50. 50. Learning Curve <ul><li>Frequently experience is equivalent to cumulative production quantity </li></ul><ul><li>Usually expressed as percent improvement for each doubling of experience </li></ul><ul><ul><li>5% cost reduction in 2x </li></ul></ul><ul><ul><li>95% learning curve </li></ul></ul>06/07/09
    51. 51. Learning Curve Example 06/07/09 Source: Porter
    52. 52. Residential Electric Power Learning Curve 06/07/09
    53. 53. Residential Electric Power Learning Curve 06/07/09
    54. 54. Residential Electric Power Learning Curve 06/07/09
    55. 55. Techniques <ul><li>Analogy </li></ul><ul><li>Precursor Developments </li></ul><ul><li>Trend Extrapolation </li></ul><ul><li>Limit Curve </li></ul><ul><li>Learning Curve </li></ul><ul><li>Substitution Analysis </li></ul><ul><li>Multiple Substitution Analysis </li></ul>06/07/09
    56. 56. Fisher-Pry Substitution Analysis <ul><li>f = 1/2 (1 + tanh a (t - t 0 )) </li></ul><ul><li>f = fraction of applications in which the new technology has been substituted for the old </li></ul><ul><li>t 0 = time for 50% substitution </li></ul><ul><li>a = controls shape </li></ul>06/07/09
    57. 57. Shape of Fisher-Pry Curves 06/07/09 t 0 = 3 a = 0.5 a = 1 a = 1.5
    58. 58. Substitution of Steam for Sail 06/07/09 Steam Sail
    59. 59. Steam/Sail Fisher-Pry Substitution 06/07/09
    60. 60. CATV Substitution in US 06/07/09 Source: Martino, 1983
    61. 61. CATV Substitution (US) 06/07/09
    62. 62. Telecommunication Technology Substitution 06/07/09 Source: Lenz & Vanston, TFI 1986
    63. 63. Telecommunications Substitution Analysis 06/07/09
    64. 64. Techniques <ul><li>Analogy </li></ul><ul><li>Precursor Developments </li></ul><ul><li>Trend Extrapolation </li></ul><ul><li>Limit Curve </li></ul><ul><li>Learning Curve </li></ul><ul><li>Substitution Analysis </li></ul><ul><li>Multiple Substitution Analysis </li></ul>06/07/09
    65. 65. Multiple Substitution Analysis <ul><li>Requires a more generalized substitution model </li></ul><ul><li>Lotka-Volterra equation </li></ul><ul><ul><li>dX n / dt = X n M n (X n ) = growth in technology </li></ul></ul><ul><ul><li>X = existing levels of technology </li></ul></ul><ul><ul><li>M(X) = market potential </li></ul></ul><ul><ul><li> = a n - b n X - c n Y </li></ul></ul>06/07/09
    66. 66. Multiple Substitution Example 06/07/09 Source: Porter
    67. 67. Comparison of Models 06/07/09 Source: Porter
    68. 68. Summary <ul><li>Trend analysis has strong historical validation </li></ul><ul><li>Models have been accepted but not explained </li></ul><ul><li>Quantitative </li></ul><ul><li>Does not explain how change will occur </li></ul><ul><li>Often misused and misunderstood </li></ul>06/07/09
    69. 69. Summary (cont.) <ul><li>First noticed by Henry Adams in 1918 </li></ul><ul><li>“ Knowledge begets knowledge as money begets interest.” - Arthur Conan Doyle </li></ul>06/07/09
    70. 70. IC Line Width 06/07/09
    71. 71. Trend Analysis <ul><li>Analogy </li></ul><ul><li>Precursor Developments </li></ul><ul><li>Trend Extrapolation </li></ul><ul><li>Limit Curve </li></ul><ul><li>Learning Curve </li></ul><ul><li>Substitution Analysis </li></ul><ul><li>Multiple Substitution Analysis </li></ul>06/07/09 Data, Insight Surveillance Material Change Trend Analysis Formal
    72. 72. Glocal Vantage, Inc. <ul><li>PO Box 161475 </li></ul><ul><li>Austin, TX 78716 </li></ul><ul><li>(512) 632-6586 </li></ul><ul><li>[email_address] </li></ul><ul><li>www.glocalvantage.com </li></ul><ul><li>http://incollaboration.com </li></ul><ul><li>Twitter: innovant2003 </li></ul>06/07/09
    73. 73. Paul Schumann <ul><li>Futurist and innovation consultant </li></ul><ul><li>Application of web 2.0 to market & strategic intelligence systems </li></ul><ul><li>Web 2.0 tools & technologies </li></ul><ul><li>Application of web 2.0 to democratic processes </li></ul><ul><li>Broad perspectives on the future </li></ul><ul><li>Services </li></ul><ul><ul><li>Strategic market research & technology forecasting </li></ul></ul><ul><ul><li>Intelligence systems consulting </li></ul></ul><ul><ul><li>Seminars, webinars & presentations </li></ul></ul>06/07/09
    74. 74. This work is licensed under the Creative Commons Attribution license. You may distribute, remix, tweak, and build upon this work, even commercially, as long as you credit me for the original creation as Paul Schumann, Glocal Vantage Inc, www.glocalvantage.com. 06/07/09
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