Technological Shift: A Cybernetic Exploration

Robinson, J.M. (1979). Technological Shift: A Cybernetic Exploration. IIASA Working Paper. IIASA, Laxenburg, Austria: WP-79-104

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Abstract

The innovation process, defined here to incorporate the full cycle from invention to full commercialization, is slow. It cannot be encompassed with time horizons of less than 26 years. Many innovations require half a century or more to reach commercial maturity.

Management of the innovation process is critical to the management of technology, but the slowness of the process makes it difficult for conventional economists or policy makers, who typically consider 15 years a long-term forecast or plan, to understand or control.

The situation, in short, is one in which the absence of theoretical understanding limits the effectiveness of managerial practice. Accordingly one appropriate niche for applied systems analysis in this case is development, application and testing of theoretical models.

Toward this end the innovation-task of IIASA's Management and Technology Area is studying the mechanisms of technological substitution. One phase of this work is being conducted through construction and analysis of dynamic simulation models.

The present paper describes TECH1, the first of these models. TECH1 is generic and views technological substitution as the interaction of product and process improvements (learning) and capacity acquisition under circumstances of market competition between an old and a new technology. Accompanying working papers, entitled "Technological Shift: A Graphical Exploration of Progress Functions, Learning Costs and Their Effects on Technological Substitution" and "Technological Shift: as Related to Technological Learning and Technological Change" develop concepts derived from TECH1 in, respectively, graphical and philosophical terms.

Discussion of TECH1 with colleagues from socialist countries suggests that the model could be made more descriptive of technological substitution through making price and investment respond in non-smooth fashion to both exogenous policy goals and to extended product delivery waiting times (or inventory pile-ups) resulting from disequilibria of supply and demand. TECH2 will be developed to take these structural features into account and will be described in a later working paper.

Another likely extension of this work is case application. If time permits the model will be adapted to describe four historical incidences of technological substitution.

In the first six months of 1980 the entire series of working papers will be collected into a IIASA Research Report. Various parts of the series are being adapted for separate journal publication. The author welcomes comments, questions, criticisms and suggestions on this or any related work.

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