Revolutionary Technologies

Biotechnology material and IT:

Firm specific technological trajectories change over time as improvements in the knowledge base open up new technological opportunities. Since the beginning of the 1980s biotechnology, new materials and IT have been widely identified by corporate R&D directors as the three fields with the greatest promise. This is confirmed by data showing that the number of the world’s largest firms which have competencies in these fields has increased greatly since then.

Third generation biotechnology has not yet had such wide spread effects but is beginning to change methods of product development in drugs and agricultural products. Materials technology has been advancing steadily with a strengthening science base.

However, it is information technology that has had so far the most revolutionary effects, and is likely to continue to do so in the foreseeable future. As in the midst of all revolutions the single are incomplete, confusing and sometimes misleading so that information and experience must be interpreted with particular care. In the 1970s the so called microelectronics revolution was associated with the spectacular achievements in semiconductor technology: in particular the microprocessor and the capability to store and manipulate vast quantities of information on a small and increasingly cheap electronic chip. Thereafter the phrase IT revolution has come into increasing use, reflecting similar advances in the capacity to transmit information culminating in the Internet.

Perhaps even more importantly, we have seen the spectacular advance in software technology (i.e. techniques for manipulating information) which had previously been developed and closely controlled by manufacturers of computer hardware. The steep reduction in hardware costs and the emergence of cheap standard products (such as personal computers) have resulted in the emergence of two other major sources of software technology: independent software suppliers (e.g. Microsoft) and operators of large scale systems (e.g. banks, retail chains, airlines) as a result the technological trajectories of firms and countries in the development of software have progressively become decoupled from their trajectories in computer hardware.

The table compares and contrasts the characteristics of the two trajectories which can be summarized as follows:

1) The microelectronics revolution is about designing and producing electronic chips and the IT revolution about producing software.

2) The former (microelectronics) is located firmly in manufacturing and principally involves the highly sophisticated and demanding design and manufacturing of hardware. It opens up technological opportunities mainly for firms in or close to the electronics,
3) The latter (software) involves not only the design and manufacturing function but also the administration, co-ordination and distribution functions. It opens up technological opportunities in all sectors in both manufacturing and services
4) This reflects major differences in the size of the barriers to entry into the two technologies. In chip manufacture, they are massive with major investments required in difficult and demanding design and manufacturing activities. The development of chip technology is in fact one of the most concentrated in the world. In software they are much lower, with software skills and access to a workstation being all that is required for specialized applications.
5) Since chip manufacture is a large scale activity undertaken by well established manufacturing firms, it is clearly visible in a whole a range of published statistics. Software development on the other hand is often hidden away either in small and specialized firms in the service sector, or embedded in large organizations in sectors like retailing and finance and is therefore hardly visible in established statistics. Perhaps the most important comprehensive statistics so far is buried in the periodic US reports Science and Engineering Indicators (National Science Foundation, Washington) and shows that the number of qualified scientists and engineers employed in US manufacturing was overtaken by the number employed in services in 1989, and that in finance and retailing a high proportion are software specialists.
Source: Managing Innovation