I have not posted anything for the last 3 months. I have been on an amazing adventure which is so similar to Alice in Wonderland that I might be asleep and still dreaming.
It started with a long-pursued opportunity to help a unit in the South African government prepare and think through the consequences of the “fourth industrial revolution” and the fuzzy collection of Industry 4.0 gadgetry that will soon overthrow our lives. By all popular accounts, this revolution will smack us hard, because the narrative in South Africa is that we are behind and falling further behind. The prophets blame all our usual reasons for this impending doom: our poor education system, our unskilled workforce, an unemployable youth, labour unions, capitalist greed, our government policies, inequality, high costs of everything, low public investment, corruption and the easter bunny. (OK, I made up the last one.)
Now don’t get me wrong. I know we are drifting sideways in many respects, maybe even regressing in some areas. For example, our economic complexity is in decline. Our technological capability is dropping. Many of our traditional sectors are uncompetitive. I have been working in the high-tech sectors and I know how hard it is to get to any kind of scale. Our institutions struggle to adapt, are underfunded, and our business people face high uncertainty, as much uncertainty as our public officials.
It is clear to me that the pace and convergence of change is increasing. The amount of information is increasing. We all are drowning in documents, reports, blog posts, emails, journals and correspondence. The demands both on specialists and generalists are increasing. So there is definitely something cooking.
But is it an industrial revolution?
Are revolutions not full of social unrest, upheaval of institutions, overthrowing of government structures?
That is the big question that I started with. I must admit the empirical and academic evidence is thin on this topic. The only people excited are geeks and suppliers of gadgets. This really bothered me, so I tried to figure out what all the things are that I would have to understand to sense, monitor, track and possibly predict where technologies are changing, how these shifts could affect our institutional structures, industries and jobs.
So I went on the most amazing reading journey. Down the rabbit hole I went.
I started by exploring the literature on how technological change happens, how technology cycles unfold. I could get lost in little forests of papers, books and articles by many of my favorite scholars. I followed ideas down paths (to the 1980’s) and came back again to 2018. Actually, not much has changed since the early writings of Nelson, Pavitt, Lall, Freeman, Edquist, Perez and many others. I admire these scholars because they really grasped the principles at such a fundamental level that not even the arrival of the internet really nullified any of their theories. I then investigated technological evolution and was again inspired by the clear writing of Arthur, Hidalgo, Hausmann and Rodrik (on structural change and industrialisation).
Then I stood back and wondered about all the innovation, tinkering, risk taking and failing that had to happen to lead to the patterns that I found in the chapter on technology. Again, I went into a forest, this time looking at innovation, how it happened, did not happen and why. I was inspired by the work of Dosi, Fagerberg, Malerba, Dodgson, Teece, Utterback, Clark, Henderson and Christensen.
For a week I felt paralysed by these two forests. Are they really two different domains deserving separate chapters, or should they be integrated into one? In the past I have treated them as separate. So, I procrastinated and forged into one of my favorite topics, that of innovation systems and how they change.
It was always my intention to hold back on this walk into the innovation system forest, as I wanted to look at everything here with new eyes. I plunged into my favourite authors, Nelson, Dosi, Freeman, Fagerberg, Srholec, Lundvall, and some more Nelson, and many other authors I admire. I was again struck by the importance of building technological capability, increasing absorption capacity and the importance of social, technical and other meso organisations in all of this.
Towards the end of the innovation system week I ventured into the work of Johan Schot and Frank Geels, Andy Sterling and Ed Steinmuller (the SPRU network), and got lost in the world of socio-technical transformation. I could look at the literature on institutional change and discovered the work of Thelen. I spent a whole day just reading up on Carlota Perez, and the next day I went back to the earlier works of Christopher Freeman (which then lead me down the archives of the SPRU). Perez is one of the few scholars who even mention the word “revolution” and she argues that developing countries must embrace rapid technological change to achieve structural change.
I came out of this forest dazed, confused and inspired. All at the same time. I decided I had to integrate my innovation chapter into the technology chapter. It took me three days to integrate them. I also tried to integrate the socio-technical transformation section into innovation systems.
Then I went away on a weekend in the Bushveld in the Limpopo province in South Africa. Somewhere while breathing fresh air in the country-side I realised that technology and innovation had to be separated, largely because there is a tendency in South Africa to focus on linear innovation (science=>technology application => innovation). I recalled something that my late business partner and friend Jorg Meyer-Stamer repeatedly said.
“Technology is about action, about harnessing natural phenomena to achieve something. Innovation is about a difference, it is about doing something differently”.
For my client to measure and track technological change would not be too difficult. Measuring innovation will be much harder, as a lot of the innovation caused by the “revolution” are about changes in social technologies, organisational culture and strategy.
Four weeks into my study and I was left with one messy section. It involved reconciling my views on innovation systems with the socio-technical transformation and multiple pathways literature. It felt like I was stuck in mud. The common factor between these fields is the importance of adaptive meso institutions, tied with a balanced supply side and demand side interventions. Context matters in both these fields, far more than firm level technological use and innovation practices. What I like about the social technical transformation literature is their focus on developing “niches” based on unique contextual opportunities or challenges, and their recognition of how change unfolds and spills over in time. Too often innovation systems treats the system like a static network of publicly funded organisations.
So that is where I am now. My first draft literature study is complete. I’ve had so much fun during this journey. You would notice that I did not mention economic complexity much. The days that I somehow cannot account for was spent on that, but I really tried not to get sucked in too deep. In the end I decided not to include this in this study.
Stay tuned for a future update about what I discovered.