3 - How Do Technologies Improve?

Summary

In this chapter, we are going to focus on technology and how technological change impacts industries. The central metaphor for understanding technological development is the technology “S-curve.” The central way to understand new technologies’ impact on industries is as cyclical, as short periods of rapid and dramatic change followed by long periods of incremental improvement. We will consider both and explore how they connect to one another, to the dynamics of Creative Destruction, to the dominant organization of industrial firms, and to the balance required between exploration and exploitation. With these basics in place, we are going to complicate the relatively straightforward story they produce. We are going to examine how technological performance at the system level is a function of sometimes highly unpredictable changes at the subcomponent level and sometimes of changes at the ecosystem level. Both can render predictions of technological change and competitive dynamics more difficult and open up new avenues for innovation management action.