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Technology (11): The World Turned Upside Down; or, the rise and fall of techno-economic regimes

Why is the transition from one techno-economic system to another so disruptive for companies and individuals?

On rookies and old pros

We know that it takes time for a new, immature and (as yet) inefficient technology to develop enough to out-compete a mature, well-integrated and efficient one. For example, the first computerised word processors were a much slower way of getting words onto the page than typewriters or handwriting. They looked like toys, but in time word processing technology gained in speed and power as the technology and its network of complements (computing power, laser printers, networking standards, the culture of computer use) matured.

Fear of falling

We can use this example to see why new technologies start slowly and then become increasingly disruptive. Dominant incumbents (say, expert cursive hand-writers and companies optimised to make good use of them) are usually the most reluctant to transition to a new system of doing things because they have the most to lose.

It’s exactly because they’re the fastest, most efficient and best-adapted to the old ways that the change to a newer-but-currently-slower technology seems unattractive. They pay the same installation costs for the new technology as everyone else, but they pay far more than their mediocre competitors in terms lost productivity and frustration at the switch. The slow-down hurts them the most.

Last to leap

Incumbents’ high performance within the old system also means that they’re the very last to be out-competed by the new technological system as it develops, so (assuming they don’t jump early) they’re the last to be pushed into transitioning. This leaves their competitive niche in the new paradigm wide open for others to exploit, so by the time they finally make the switch they find themselves left behind in terms of both technical and managerial adaptation and market position.


So it’s easy for incumbents go from first to last… or to nothing at all. All that is solid melts into air.

*As in, time to actually produce words on a page ready for use.

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