When innovators try to envision how people will use their product they often have different ideas on what people want. Products that are of superior technology may fail and inferior succeed, only because the inferior product has some features that people are looking for. In this lecture we look at how new products or technologies get adopted my markets. We look at the Law of Diffusion of Innovation, which explains how this adoption happens. We also look at what it takes for a new innovation to move from being a visionary idea to a practical product, or crossing the chasm. Finally we explore the hype cycle. In this lecture we look at how innovation happens. We look at the slow hunch, the liquid network, the hummingbird effect, and serendipity.

1. LECTURE L05
TECHNOLOGICAL REVOLUTION

2. Modules
Module 1 - Technology Evolution
Module 2 - Innovation
Module 3 - Business Transformation
Module 4 - Infrastructure
Module 5 - Algorithms and Platforms
Module 6 - Future of Work

3. Module 2 - Innovation
L05 Technological Revolutions
L06 Innovation
L07 Diffusion of Innovation
L08 Becoming Invisible
Assignment 2

4. LECTURE L05
TECHNOLOGICAL REVOLUTION

5. Agenda
Technological revolutions
The Age of Oil, Automobile and Manufacturing
Current revolution —similaries
Generations

6. WHEN IN A TECHNOLOGICAL REVOLUTION
THE HARDEST THING TO UNDERSTAND IS THAT
YOU ARE IN ONE

7. We tend to overestimate the immediate
impact of technology and underestimate
the long-term impact
Timing is everything

8. We tend to place emphasis on the
technology itself, when it is really the social
and cultural change that will be the most
dramatic
Perception is everything

9. WE EMPHASIZE
TECHNOLOGY
BUT IGNORE THE
SOCIAL AND CULTURAL
IMPACT

10. Is it really up to politicians with their 12
point plans?
Economic Growth

11. Large revolutions that transform society
and change the way people live
What is the nature of them?
Are the similarities between them?
Do they always progress in the same way?
Technological Revolution

12. The 20th century was the age of
automobile, oil and mass manufacturing
Example of a Technological Revolution

13. THE WORLD IN 1899

14. Local and linear

16. The Great Horse Manure Crisis of 1894
“In 50 years every street in London would
be buried under nine feet of manure.”
— An article in Times of London, 1894

17. New Technological Revolution takes off

18. Henry Ford (1863 – 1947)

19. Ford Model-T 1908

20. Ford Model-T 1908
IRRUPTION

21. Car companies
Hottest technology companies at the time

22. New Class Emerges
Inequality rises - few people get very rich
Right age, place, time, and sex
Andrew MellonAndrew Carnegie Henry Ford John D. Rockefeller

23. FRENZY
The Roaring Twenties

26. The 1929 Wall Street Stock Crash
The crash began on October 24. Institutions and
financiers started to buy stocks to keep them up.
The stock bounced back only to collapse on
Tuesday, 29th - Black Tuesday.

28. The Great Depression
Depression spread world-wide and lasted
until the second Great War

29. Turning Point

30. Fundamental changes are made to move
from the frenzy mode, shaped by financial
criteria to synergy mode, solidly based on
growing production capabilites
Turning Point
Carlota Perez, Technological Revolution and Financial Capital

31. From 1960 to 1980 there was
unprecedented consumer demand
because of the affluent middle class
(Baby Boomers) both in US and
Europe
Source: Retail Revival
SYNEGRY

32. Prosperity
Benefits of the new technology spreads
More productive economies

33. Golden Age

34. Post-war America - „The Glory Days“

35. STAGNATION

36. Improvements in technology are waining
Younger generation feels left out
Mistrust, status quo is questioned
Stagnation
Carlota Perez, Technological Revolution and Financial Capital

37. Technological Revolution
INSTALLATION
PERIOD
TURNING
POINT
DEPLOYMENT
Age of Oil and
Automobile
1908
The Roaring
Twenties
1929-33 & 43 Post-war Golden Age
Source: Carlota Perez

38. INSTALLATION
PERIOD
TURNING
POINT
DEPLOYMENT
The Industrial
Revolution
1771 Canal mania 1793-97 The Great British Leap
Age of Steam
and Railways
1829 Railway mania 1848-50 The Victorian Boom
Age of Steel
and Electricity 1875
Infrastructure
bubbles
1890-95
The Belle Époque (Europe)
Progressive Era (USA)
Age of Oil and
Automobile
1908
The Roaring
Twenties
1929-33 & 43 Post-war Golden Age
Source: Carlota Perez
Technological Revolution

39. The Long View
The Industrial
Revolution
Arkwright’s mill
in Cromford
1771
Age of Steam
and Railways
Manchester-
Liverpool Rocket
line
1829
Age of Steel and
Electricity
Carnegie
Bessemer steel
plant, Pittsburg
1875
Age of Oil and
automobile
Ford’s model T
plant, Detroit
1908
Age of
Information
Intel’s microchip,
Santa Clara
1971
Technical Revolutions span over generations
Starts with a cluster of technological revolutions
in a particular place
Source: Carlota Perez

40. 3. Industrial Revolution2. Industrial Revolution1. Industrial Revolution
The Long View
The Industrial
Revolution
Arkwright’s mill
in Cromford
1771
Age of Steam
and Railways
Manchester-
Liverpool Rocket
line
1829
Age of Steel and
Electricity
Carnegie
Bessemer steel
plant, Pittsburg
1875
Age of Oil and
automobile
Ford’s model T
plant, Detroit
1908
Age of
Information
Intel’s microchip,
Santa Clara
1971
Technical Revolutions span over generations
Starts with a cluster of technological revolutions
in a particular place
Source: Carlota Perez

41. Installation period Deployment Period
Institutional
recomposition
Degreeoftechnologicalmaturity
andmarketsaturation
time
Crash 2000-2008
Big bang Intel 4004
1971
Next big bang
Techno-economic
split
IRRUPTION
Financial Bubble
Time
FRENZY
Golden Age
SYNERGY
MATURITY
Source: Carlota Perez

42. An event the signifies the start of an new
revolution
Something that changes the world
Technology Trigger
The Industrial
Revolution
Arkwright’s mill
in Cromford
1771
Age of Steam
and Railways
Manchester-
Liverpool Rocket
line
1829
Age of Steel and
Electricity
Carnegie
Bessemer steel
plant, Pittsburg
1875
Age of Oil and
automobile
Ford’s model T
plant, Detroit
1908
Age of
Information
Intel’s microchip,
Santa Clara
1971
Source: Carlota Perez

43. The Irruption Phase: A Time for Technology
Starts with technology trigger - an event or
item that signals beginning of a new era
Old paradigms are mature and stagnant
Unemployment rises, partly due to
economic stagnation and technological
replacement
New technology is pursued by
entrepreneurs

44. Despair and impotence affect those loosing
out
Old industries see declining profits
Policymakers try to keep and protect
outdated industries
Political uncertainty and division, sometimes
new movements
The Irruption Phase: A Time for Technology

45. The Frenzy Phase: A Time for Finance
Financial capital takes over - paper economy
decouples the real economoy
Small number of people get very rich,
inequality rises
Massive migration as people look for
opportunities

46. The Frenzy Phase: A Time for Finance
Time of speculations, corruption, and love of
wealth
The wealth that has grown and concentrated
in relatively few hands is greater that can be
absorbed by real investment
Excess money goes into infrastucture, over
investment

48. The Turning Point
A conceptual device to represent the
fundamental change required to move from
frenzy mode to synergy
Process of contextual change
Move from individualism to collective well-
being
Period that is ripe for reshaping regualtions
and policies

49. The Synergy Phase: A Time for Production
Golden age
Infrastructure serves as engines of growth
Wealth gets distributed as investment is in
production

50. The Synergy Phase: A Time for Production
Full employment - production
Reign of the middle class
New paradigms are now accepted and
permeates every activity

51. The Maturity Phase: A Time for Questioning
Markets get saturated
Technology is stable and mature,
productivity gains are drained
The young start to see things as ‘all wrong’ -
movements form
Time of questioning

52. The Maturity Phase: A Time for Questioning
Company mergers
Migration of activities to less-saturated
markets abroad

53. Age of Information and Telecommunications

54. 1947
Programmable all-purpose
electronic computers start to have
impact on big businesses and
government
Automation starts, jobs get lost
IBM mainframes
Mainframe

55. 1965
Minicomputers allow mid-sized
companies and academia to have
time shared computing power
Automation continues
Minicomputers

56. Fifth Technological Revolution
starts
Intel 1971
The Technology Trigger 1971

57. 1981
Personal Computer allowed small
companies and individuals to own and
program computers
Generative platform
Opened up a huge revolution - created a
new industry
Personal Computers

58. IRRUPTION

59. Bill Gates Steve Jobs Michael Dell Larry Ellison
Tech Companies

60. 1995
Opened up a new way for people to
communicate and exchange data
Generative platform,
permissionless innovation
Created new industries,
transformed businesses
3.4 billion connected
Internet

61. FRENZY

63. 2007
The smartphone revolution takes off
with new possibilities
Powerful computer in your pocket
Access to 4 million apps
Constant access to the Internet
Smartphone

64. Mainframe
1947
Minicomputer
1965
PC
1981 1995
Internet Smartphone
2007
The Shortening Waves

65. INSTALLATION
PERIOD
TURNING
POINT
DEPLOYMENT
Age of
Information
1971
Internet mania and
financial casino
2000 & 2008
The Industrial
Revolution
1771 Canal mania 1793-97 The Great British Leap
Age of Steam
and Railways
1829 Railway mania 1848-50 The Victorian Boom
Age of Steel
and Electricity 1875
Infrastructure
bubbles
1890-95
The Belle Époque (Europe)
Progressive Era (USA)
Age of Oil and
Automobile
1908
The Roaring
Twenties
1929-33 & 43 Post-war Golden Age
The New Golden Age?
Source: Carlota Perez
Technological Revolution

66. Installation period Deployment Period
Institutional
recomposition
Degreeoftechnologicalmaturity
andmarketsaturation
time
Crash 2000-2008
Big bang Intel 4004
1971
Next big bang
Techno-economic
split
IRRUPTION
Financial Bubble
Time
FRENZY
Golden Age
SYNERGY
MATURITY
Source: Carlota Perez

67. Is the turning point over?

68. The Danger in Turning points
After synergy and maturity, unrest and new movement start
to emerge and they are not silence, but people start to listen.
1. Rising Immigrations
2. Increasing inequality
3. The Perception of corruption
4. A big financial crisis

69. Talking About Generations

70. Generations
Major technological shifts always happens with generations
Research into understanding generations and how they behave
Here are some of the stereotypes - and should be used as a
guideline, not absolute facts
Although we see trends human nature is usually the same in any
generation

71. Silent Generation
Born 1925 until 1942, sometimes called “Lucky Few” and are retired
today
Born too early for WWII but before the Baby Boomers
Entered the workplace in a booming economy, the Sputnik Era - high
wagers, low fixed rate mortgages
The healthiest and most educated generation of elders that ever
lived—and, of course, the wealthiest.
The last Silent cohort reached age 65 in 2007 - perfect timing to the
end!

72. Baby Boomers
Born 1946 until 1964, following the booming years after World War II.
Larger than previous generation.
Associated with privilege. Time of widespread government subsidies
in post-war housing and education, and increasing affluence. The
boomers moved to the suburbs and were perfect consumers for the
newly erected malls.
Received peak levels of income. Therefore, the boomers were
perfect consumers. In 2015, the boomers are between 51 and 69
years.

73. Generation X
Born ca. 1965 until 1980, MTV generation
Grew up when the wife stopped being a housewife and started
working so Xers became latchkey kids, and got used to daycare and
divorce as well as microwave dinners (there is a theory that states
that microwave owens and divorce is related).
This is the generation in the middle - boomers and millennials
Got access to computers at school and later work, played video
games in arcades. Just as the baby boomers, the Xers are passive
consumers. This is the last generation to use email as main form of
correspondence.

74. Born ca. 1980 until 2000 - the net generation or NetGen
Grew up with computers and the internet, and played video games
on consoles at home. With online technologies this generation is
much better connected with their parents.
More liberal than previous generations and more open minded, don’t
mind big governments if they get service.
Unlikely to conform to a routine schedule like working 9-5 or
showing up at any particular time, work according their own
schedule, output driven. Not as loyal, move from one job to the next.
Millennials

75. Many millennials prefer smartphone and a laptop to having a car
They like staying in crowded urban areas and are less likely to
choose to live in suburbs
Workplaces that want to attract millennials are open spaces,
elegantly designed with lots of different places to work like sofas,
picnic tables - far away from Dilbert like cubicle place
Millennials

76. Millennials
Millennials are self centered and want to be the center of attraction
Whereas ad for the Xers and boomers showed some hero or role
model that they should look up to and want to become (and thus buy
the product, see the movie etc)
These ads don’t work for millennials as they are used to be the star -
and don’t want to be anybody else

78. Millennials

79. Have the reputation of choosing brands but lacking loyalty
They are quicker to switch brands, loyalty is shorter
Today we have much more choses, much more brands are available
and the sources of information that let you switch brands is far
bigger than ever
A consumer may choose a brand if a friend recommends it
Millennials

80. In the book Retail Revival, author points out that brands that are
winning with the millennials, of course they need to be good, but
also:
•Authentic like Lululemon, living what their brands espouses and
being real
•Purpose driven like TOMS Shoes, supporting human purpose
beyond pure profit;
•Quick to change like Apple, constantly driving obsolescence with
its latest products; and
•Socially savvy like Zappos.com, nurturing the visibility of everyone
in the company through social networks.
Millennials

81. Comparing Generations
Millennials use technology differently

82. What makes your generation unique?
Comparing Generations

83. 0
1,000
2,000
3,000
4,000
5,000
6,000
20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 100 101 102 103 104 105 106 107 108
Series1
Millennials
76,321
Gen-X
59,302
Baby boomers
69,897
hippies/“counterculture”
Beatles Kingdom
World war II
World war I
Values and traditions
MTV
Latchkeys
smartphones
computers/net
computers/BASIC
Punk
Born at farms
TV
Religion
Gögn frá Hagstofunni
Radio/telegrams
Rás2
Youtube
Social Media
Selfies
Bond
Movie starsQueen
Live Aid
Spotify
Netflix
Silent and before
30,054
game consoles
Arcades
Generations
Industrial/progress
LP
CD

84. Key Insight
Research suggest that millennials are in some ways different than
the previous generations, in particular their use of technology.
This is the generation that established businesses need to attract as
customers, and that means using the same technology as they do -
smartphones, web sites, and social media.
Then try to figure out the Snapchat generation

85. Next
Innovation