15 Apr Why Ecosystems, Not Inventions, Truly Change the World
An ecosystem is a complex network or interconnected system and with every ecosystem there is a sort of tipping point where there are a sufficient number of inventions and participants to make a meaningful change. A novel invention is merely the start. Secondary technologies that utilize those initial inventions are also required in sufficient number to create an ecosystem before there is a significant change and value to the technology.
A few examples to illustrate
In 1879 Thomas Edison invented the electric lightbulb. Three years later he opened his Pearl Street Station in lower Manhattan New York City, the first commercial electrical distribution plant in the United States. And by 1884 it was already servicing over 500 homes.
Forty years later in 1919, electricity and electric lighting were available, but they didn’t have a measurable effect on productivity. It took time for manufacturers to adapt their factories to electricity and learn to design workflow to leverage the flexibility that the new technology offered. It was the improved workflow, more than the technology itself, that drove productivity forward.
Automobiles saw a similar evolution. It took time for infrastructure, such as roads and gas stations, to be built. Improved logistics reshaped supply chains and factories moved from cities in the north — close to customers — to small towns in the south, where labor and land were cheaper. That improved the economics of manufacturing further.
Electricity spawned secondary innovations, such as household appliances and radios. Improved logistics reshaped the retail industry, shifting it from corner stores to supermarkets and shopping malls that resulted in a 50-year boom in productivity between 1920 and 1970.
The digital revolution
In 1984, Steve Jobs and Apple launched the Macintosh, which introduced a new era of computing. Based on technology developed in the early 1970s, with a bitmapped screen, a graphical user interface and a mouse, it made computing far more accessible to regular consumers.
Before long, personal computers were everywhere. Kids would use them to write term papers and play video games. Lotus 1-2-3 spreadsheet software became a staple for small businesses and entrepreneurs. Desktop publishing helped democratize the flow of information. The computer age had begun in earnest.
Yet much like electricity and internal combustion earlier in the century, the effect on productivity was negligible with the quoted “You can see the computer age everywhere but in the productivity statistics.” In fact, it wouldn’t be till the late 90s that we saw a measurable impact from computers.
Once again, it wasn’t any particular invention that made the difference, but an ecosystem that built up over years. The internet paved the way for open-source software. Myriad application developers created industry specific tools to automate almost every imaginable business process. Computers converged with phones to create the mobile era.
The 30 years rule
Look back at the two major eras of technology in the 20th century and a consistent theme begins to emerge. An initial discovery of a new phenomenon, such as electricity and internal combustion, is eventually used to create a new invention, like the light bulb or the automobile. This creates some excitement, and builds the fortunes of a few entrepreneurs, but has little impact on society as a whole.
Yet slowly, an ecosystem begins to emerge. Roads and gas stations are built. Household appliances and personal computers are invented. Secondary inventions, such as shopping malls, home appliances, the internet and application software help create new business models. Those business models create new value and drive productivity.
The truth is that innovation is never a single event, but a process of discovery, engineering, and transformation. As a general rule of thumb, it has historically taken about 30 years for all of this to take place, because thousands, if not millions of people need to change their behavior, coordinate their activity and start new businesses.
A new era of innovation
Today, we appear to be in a very similar situation to what those people faced in 1919 and they were trying to understand the implications of electricity. We have decoded the human genome. Artificial intelligence has become a reality that everyone, for the most part, accepts. New computing architectures, such as quantum computers are in late stages of development by a variety of companies. Blockchain promises to change the way our financial system is built. And new materials are changing the way things are built and even the homes where we live.
Yet once again, the impact has been negligible and it’s not hard to see why. While these inventions, in some cases at least, are relatively mature, they have yet to create the ecosystems that can drive a true transformation. Today, however, we can clearly see those ecosystems being created.
Here’s what’s important to know: We can’t predict exactly when the system will tip, but it’s a good bet it will happen in the next decade. It is also likely that the impact will be equal to or greater than the 50-year boom that began in the 1920s. Finally, it won’t be driven by any particular invention, but by ecosystems. So if you want to change the world, figure out how you will connect or create ecosystems and remain focused on the ecosystems and not just the inventions.
By Scott Huish
Scott Huish has directed technology driven companies in finance, agriculture, energy, construction, and real estate. Scott has completed advanced education at Oxford, Harvard, and London School of Economics and Political Science.