Dahmén, Arthur, Hughes, Geels
Pär Blomkvist Industriell dynamik, KTH [email protected] Strategic analysis of threats and opportunities Micro vs. Evolutionary economics
Neo-classical (micro) economics - Five factors of production: • Raw materials • Machinery • Labour services • Capital goods • Land
Function of production: F (X1, X2…X5) + Residual Erik Dahmén
• Equlibrium is not in focus • Metaphores from biology (population, organic growth, selection, evolution, nisch)
According to Dahmén the economy developes because of structural tension: = Certain steps in a technical or an industrial process can be ahead or lagging
• Example from the textile industry: The flying shuttle (1730--) caused a shortage of thread. • This created a structrual tension in the industry which halted developement
• A pressure was formed to develop new methods for spinning thread faster and in large quantities (1750--). • Theses new spinning machines was, in their turn, so effective that the weaving technologi lagged behind – again a new structural tension in the industry
Spinning machine
• The overproduction of thread in the spinneries became acute and was solved eventually (1790 --) by the mechanical weaving machine. • Finally the industry was in a balanced situation Structural tension
3 levels: • Technology: Bottle necks • Industry: Markets /technologies/methods of production are not fitted together • Society: When many linked industrial sectors are out of phase and not compatible The result: Develpement block
• A series of structural tensions (disequilibria) are solved and connected which leads to a balanced situation = Development block (many components in the economy pulls in the same direction) Development bloc
Dahméns metaphor: The plant – first a seed – sprouts under the soil – above the ground steam and leaves are developed (and the roots are at rest) – in the next phase it is time for the root system to develope: equilibrium or a balanced situation occurs when all components are in phase and fully developed Why transformation?
• Positive transformation pressure or…
• Negative transformation pressure Positive transformation pressure (opportunities):
• New methods for production and marketing
• New products and services better suited to the market
• The discovery of totally new markets
• New sources of raw matherial or energy sources Negative transformation pressure (necessity):
• Old methods of production, services and marketing are left behind
• Old products and services no longer wanted
• The fall of old markets
• The fall of old raw matherial and enery sources Dahmen´s challenge:
How to reformulate a necessity (negative transformation pressure) to an opportunity? Brian Arthur
• Path Dependance
• Lock-In-effect
(Random Walk – The mathematical illustration to Arthur’s thesis)
Stability…
Conservative factors: Path Dependency – Lock in – (leads to Dominant design)
OBS: Absolutly necessary with some conservatism!
WHY??? Examples
• PC – Apple/Mac (???)
• VHS – Betamax
• BlueRay – HD-DVD
• Google – Yahoo – Alta Vista
• MP3 – CD-records – Vinyl records
The long perspective The short perspective Examples
• 1956 Nuclear power in the USA
• Gas-reactors?
• Light water reactors?
• Deuterium reactors?
• The winner: Reactors cooled by light water!
• Why?: Use in Sub marines; US-Navy and NSC important actors
• Lock-in created Path Dependence even in Sweden in spite of earlier deuterium-path
Examples
• Qwerty – Dvorak • Qwerty – Objective: to slow down typing speed (1870) – most common letters at the left hand due to mechanical problems in the hammers and levers
• Obs: Old technology in a NEW combination
Where to build the factory? 4 Mechanisms creating Path Dependance/lock-in
• 1-2 Stathic factors
• 1: High fixed costs Entry on the market becomes expensive
• 2: High transaction costs Gives an advantage to big companies 4 Mechanisms creating Path Dependance/lock-in
• 3-4 Dynamic factors
• 3: Learning by doing/using
• 4: Self fulfilling prophecy Where to locate production?(Kista – Sillicon Valley)
Systems Diagnosis
Infrasystems are complicated to handle and manage becauset they are big, complex and embedded in society
System diagnosis: The method
• ”Anamnes” (the history of the patients illness)
• Find unbalanced (sick) parts in the system
• Objective: To find new business ideas and models; to deliver new services
Thomas P. Hughes
Large Technical Systems (LTS)
LTS: ”primary” infrasystems (society´s basic functions) • ”Sociotechnical systems” • ”System builder” • ”Momentum” • ”Salients – Reverse salients”
LTS dynamics – three phases
• Build up – Expansion – Stagnation
• S-curve!
• Different system builders in all three phases S-curve Where is your industry?
Build up – Expansion – Stagnation (Etablering, Tillväxt, Mognad, Nedgång) Technology diffusion and the S-curve…
Källa: http://www.dallasfed.org/fed/annual/1999p/ar96.pdf 2007-11-08. Waves of technologies - attacks and counter attacks performance a3
a2
a1 C
B
A
time
35 35 How to innovate in Large Socio- Technical (infra-) Systems?
The problem:
Momentum
Innovation i Infrasystem The problem: Momentum
”Momentum” – sociotechnical inertia • The built infra- structure • Mental ”path- dependence” Physical momentum
Mental (phsyological/social) Momentum Within the system: A shared systems culture – system builders has a common view on what is rational, possible or impossible. Actors are often not open to solutions or possibilities outside of the systems culture
In society: The system is deeply embedded in society and affects our daily lives in a profound way (where to live, how to shop, how to plan our future, etc.). Also embedded in politics, institutions, laws and in the ecomomy. Solution: Find unbalanced parts in the system ”Salients – Reverse salients”: Unbalanced parts in the system
Salient: Parts or components in a system that is more developed than other parts
Reverse salients: Parts or components in a system that is lagging behind
Ryaverket: Salients/rev. salients Reverse salient in part of the Systems culture Innovations in LTS
”Salients/ Reverse salients”
• Amorph problems in an advancing front
• Must be defined as a ”critical problem”
Reverse salient – Salient
Reverse salient Salient Salients/reverse salients
• HDTV; Jet-engine; check-in
• Magnetic compass; Electrical adapters Swedish rail road tracks: Two reverse salient in the system ”Critical Problem”
A critical problem IS NOT the same as a salient/reverse salient
”Defining a reverse salient as one or more critical problems is in it self a major step toward a solution, or invention, for it is well known that the ability to define an amorph situation as a problem is often an anticipation of a solution” (Hughes, p. 100) Innovations in LTS
• Originates from salients/reverse salients
• Find the Critical problem:
Define a salient/reverse salient as a ”critical problem” and find the solution More exemples… Identify Salients/Reverse salients in your industry – define the critical problem and suggest a solution (a business idea)
“When a reverse salient cannot be corrected within the context of an existing system, the problem becomes a radical one, the solution of which may bring a new and competing system.”
(Thomas P. Hughes)
Frank Geels: Sociotechnical systems on three levels Strategic Niche Management in Large Sociotechnical Systems