Disequilibrium and innovation
I wasn’t sure what all the antonyms of equilibrium were until I looked them up. Disequilibrium is indeed one of them and it is a word that sounds as unsettled and unpredictable as its meaning conveys.
Yet it is a word that also has the feel of a persistent condition, whereas alternatives such as “unbalanced” feel transitory, a temporary condition, encountered whilst waiting for balance to be restored.
Many economic theories are centred on the assumption that economies will tend towards equilibrium as market forces find the point where supply meets demand and markets are ‘cleared’. It’s an explanation that feels reassuring, predictable and one, which conveniently lends itself to mathematical modelling.
In my experience and I suspect yours, real world economies are rarely in equilibrium and in his book “The Nature of Technology”, Brian Arthur puts forward a compelling explanation as to why this might be.
Arthur points out that our deepest hopes as humans often lie in technology and whilst we know a great deal about the details of individual technologies we know very little about the nature of technology itself: where it comes from and how it evolves? And:
If we could understand [technology's] evolution, we could understand that most mysterious of processes: innovation.
Brian, you have my full attention.
The nature of technology
Through his examples, Arthur shows how new technologies inherit key components from the technologies that proceed them, leading to his theory that technologies come into being as new combinations of what already exists. This puts evolution through combination at the heart of the nature of technology.
It is a process, which will inevitably expand continuously.
Firstly, through the arrival of each new combination, as each addition will expand the potential for further combinations .
Secondly, through the world of scientific research, which will add in new technologies by harnessing new aspects of natural phenomena.
Finally and more intrinsically, through each new combination creating a new set of problems and opportunities to be addressed. Technology creates itself.
Arthur draws a very clear distinction between his theory of technology evolution through combination and the nature of genetic evolution. Evolution through combination is not incremental:
[Technology evolution] shows bursts of acceleration and avalanches of replacement. It continually explores into the unknown, continually uncovers novel phenomena, continually creating novelty.
This conjures up a very vivid description of a system, which is in a continuous state of disequilibrium.
The nature of innovation economies
Critically, Arthur doesn’t think of economies as something, which adopt new technologies, like a container, which you simply drop technology into.
Rather he sees economies as something, which encounter technologies and this brings with it a clearer understanding of what we might mean by an innovation economy.
On the one hand we have technology creating an ever-increasing set of capabilities through cascading combinations and on the other hand, an economy poised to react to those capabilities in order to satisfy the needs of its society.
Arthur encourages us to look at:
an economy as something constructed from its technologies.
So in an innovation economy it is the technologies themselves, which are in fact forming and changing the economy’s structure.
This insight provides us with a clearer explanation as to why the seeds of disruptive change are implicitly embedded into our economies. It is through the continuous creation of novel technology combinations that Schumpeter’s process of creative destruction is enacted:
- incessantly revolutionising the economic structure from within
- incessantly destroying the old one
- incessantly creating the new one
We can also see now why these gales of creative destruction don’t come to an end, as envisaged by Schumpeter, because every new technology combination brings with it new problems and opportunities which in turn bring forward further technologies.
As Arthur concludes, it is:
this dance [which] condemns technology – and the economy as a result – to continuous change.
Shaping the future
As with many insightful theories, Arthur’s conclusions seem straightforward.
Firstly, new technologies are fuelled by combinations of existing technologies.
Secondly, science also builds on existing technologies in order to harness new aspects of natural phenomena and so broaden the pool of available technologies.
Finally, it is this process of technology evolution through combination, which keeps our innovation economies in continuous disequilibrium.
The consequences of these insights, though, go much deeper for any business within an innovation economy, which wants to stay at the forefront of disruptive change.
To achieve this, Arthur points out that they need to shift their focus:
- from optimising to creating new combinations
- from rationality to sense making
- from commodities to skills
- from acquiring components to forming alliances
It is encouraging to see how well this fits with Innovate UK’s approach to accelerating growth and productivity in the UK’s innovation economy.
Our competitions enable new collaborations between:
- research and businesses
Our Knowledge Transfer Network communities and special interest groups help businesses to make sense of their fluid and complex landscapes.
Our Knowledge Transfer Partnerships ensure that businesses can bring in the new skills that they need to adapt.
Our Catapult network brings together the expertise and resources, which are needed to hammer out the new technology combinations, which will solve the challenges of the future in areas such as:
- cell and gene therapies
- high value manufacturing
- future cities
- transport systems
- satellite applications
There is still a great deal for Innovate UK to learn in the delivery of its mission but perhaps the clearest message from Brian’s work is that:
innovation not only shapes technology, it shapes the economy and as a result it shapes the future.
Shaping the future of medicine
On May 19th, I have the privilege of presenting to the Precision Medicine World Congress. The event will bring together experts and practitioners focused on shaping the future of medicine through precisely targeting therapies at specific populations and even individuals. It is a radical departure turning business models and care pathways on their heads.
Precision medicine is a good example of technological combination in action, drawing on: biomarker discovery and validation, biosensors, novel chemistries, proteomics, genomics, micro-electromechanical systems (incl. microfluidics), engineering, sequencing technologies, nanotechnology, advanced materials, bioinformatics, information and communication technologies, data mining and fusion, big data, high value manufacturing, social and behavioural science.
Earlier in the conference, the Chairman of the Precision Medicine Catapult, Richard Barker, will be discussing how partnering across the industry and research base will overcome the main bottlenecks to greater momentum. Forming the new technology combinations, which will solve the challenges in delivering Precision Medicine and at the same time unconsciously forming the building blocks from which future waves of new technology will be created.
What does technology evolution through combination look like today?
It looks like Owlstone’s biomarker detectors, which harness the natural phenomena of ion mobility as a method of detection and combine it with micro and nano scale fabrication methods to put a spectrometer into a chip.
It looks like Endomag’s lymph node localisation system, which harnesses the natural phenomena of magnetic susceptometry to replace the use of radioisotopes.
It looks like the X-Lab NETIMIS modelling tool, which optimises sepsis treatment pathways with simulation techniques inspired by approaches to traffic congestion.
Brian, thank you for a stimulating read and for providing insights into the nature of technology and the role of Innovate UK in shaping the future.
 Arthur terms this “combinatorial evolution” but I have avoided using the term “combinatorial” here as it has a very specific meaning in drug discovery.
You can follow me on Twitter: @KevinBaughan
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