Surveying the Landscape of Economic Change

Figure 1: nested political changes

In most of our work, and particularly for our original research and content, there are one or two key frameworks that help us organize and make sense of the dynamics we (and clients) are observing and experiencing.  In the Third Era one such framework is the nested view of political changes (figure 1).  This particular construct helps us separate out the various changes in political life that are often lumped together in everyday discourse while also allowing us to consider how things interact across these domains.

The Third Era also incorporates frameworks like the Three Horizons, but the above nested view is probably the most important overall framing right now.

Figure 2: education as a socio-technical system

Another framework, this time from our most recent work on learning futures, adapts a socio-technical transitions model to viewing and understanding current and likely changes in education in the United States (figure 2).  This framework provides a compelling way of not only understanding education as a system embedded in larger systems and susceptible to developments in the margins, but also for exploring how education will become ever more shaped by technical influences.  This lets us explore the issue of education becoming a more typical socio-technical system than it has ever been before.

While there are some other, more minor models at work in our learning futures content right now, the nested view above is by far the most central to our work.

Figure 3: layered economic changes

And so, in updating the Infinite Economy, one of the new framings that emerged was that of layered views of economic change dynamics (figure 3).  For the Infinite Economy, there are a number of models/theories related to economic change that we like to draw upon, and this layered view, which builds upon the common analogy of the "30,000 foot view," allows us to incorporate multiple models while (hopefully) not muddying the issue too much.  And while Perez's technological revolutions models is also central to the Infinite Economy framing and forecasts, this layered view is almost more important in the bigger picture (ha, ha) because it allows us to capture in one view some many of the different issues and changes people are confronting.

The ability to organize the many conflicting and contending signals we are receiving today about our economic futures is, to us, a critical ability if one wants to usefully talk about the futures of economic life.

The Infinite Economy

Today we released the highlight booklet for the updated Infinite Economy material.  First presented to audiences in 2012, the Infinite Economy is a look at how the material basis of our modern lives is poised to undergo fundamental transformations over the next several years.

"A review of current global trends such as population growth, continuing industrialization, rising energy demand, massive urbanization, and long term climate change shows that humanity is entering uncharted territory with respect to the material and organizational challenges it will face in the coming decades.

Yet, despite these considerable challenges, a review of humanity’s history and an exploration of the presently dim outlines of the future both strongly suggest that humanity can and is developing the insights and tools to dramatically raise the material security and affluence for all if it chooses to do so.

Thus, the future is very much a matter of vision and of choice."

Please check it out today.

More technological revolutions

In the last post just before New Year's I included a graphic that combined the three horizons framework from Sharpe and Hodgson with the the cyclical sequence of tech-driven economic change.  As promised, here is an additional graphic (build for upcoming content) that illustrates the various technological revolutions that Perez talks about in her book, Technological Revolutions and Financial Capital: The Dynamics of Bubbles and Golden Ages.

We built the waves using the tech revolution start dates ("big bangs") and end dates that Perez identified and built the projected 5th and 6th waves using mean averages of the previous waves.

What's really interesting to me, and what I would really like to focus on more, is the idea that, if in fact innovation is accelerating globally, then will these waves begin to overlap more as the cycle (the "surges") shorten?  The result, I suspect, would be greater turbulence as the different surges, each at different phases in their life cycle, wreak increasing havoc (just kidding) through culture lag, dislocation, and what not.

Mapping technological revolutions onto three horizons

The three horizons framework developed by Bill Sharpe and Tony Hodgson is a favorite of mine, as it is both versatile and provides an good framework to explore interactions and dynamics.  And so, as I was working on new Infinite Economy content, I began mapping recent technological revolutions, a la Carlota Perez, onto the three horizons framework.

Recent technological revolutions mapped onto the Three Horizons

As detailed in her excellent book, Technological Revolutions and Financial Capital: The Dynamics of Bubbles and Golden Ages, Perez develops the notion of long waves of economic eras ever-so-briefly introduced by Schumpeter into a full-blown and well-researched framework of technology-driven economic change.  In the book, Perez talks about the "great surges of development" that have occurred five times since the advent of the Industrial Revolution.  I'll post another graphic later to gets at these "surges," but it's enough for now to say that these waves of change, and the complex dynamics behind them, map perfectly onto the Sharpe and Hodgson 3H framework.

Predicting Google

After writing this morning's post, I was thinking about the supreme difficulty of accurately anticipating the new businesses and new business models that emerge in the world (i.e. that "stick"), and the even greater difficulty of anticipating what those new businesses then evolve to become/create/reshape.  Thinking first about the graphic from this morning (Figure 1), consider the "entrepreneurial experimentation" occurring in the Surface layer.

Part of the great challenge in knowing how the economy will ultimately be affected by the entire landscape of changes lies in this area, what roughly corresponds to the "Emergent Models" section of the original Infinite Economy landscape image (Figure 2).  This is an area of basically evolutionary action: variation and selection.  Out of this competitive space eventually emerges the businesses and business practices that go on to (re)define normal.

And this jumps us to thought leadership/consultant's s-curve from "Working the hype cycle, part 2" (Figure 3).  See the orange line the defines the "Application Gap?"  This is the space in which VCs and other investors are developing ever-greater interest in other people trying to develop new things and to make businesses out of new things.  This, of course, is where people are looking for "the next Google."

But of course you can't really know ahead of time what invention/innovation/new venture will succeed (i.e. stick).  That's why they're all bets.  But even if you could get really, really good at anticipating what new piece of technology or what new venture goes on to become established and mainstream, you still couldn't know what they will go on to do outside of their intended application or their original business plan.  It's essentially an issue of, to use Google as an example: Could the folks who invested in Google at their outset truly have been able to anticipate what they might yet do to shape broad economic change in a variety of areas, far beyond improving internet search?

I am certain that the answer is no.  So consider the difficulty in not just "picking winners" amongst all the emerging technologies and business models out there right now (in terms of what they're trying to do right now), and then anticipating how they will evolve to introduce even more fundamental economic changes beyond their original intents.

Thinking about economic futures...

After yesterday's round-up of articles related to economic futures, I spent the early part of my morning thinking more on what the landscape of economic changes looks like today.

For those of who attended the 2012 Hawai'i Futures Summit, you will be familiar with my framing of the Infinite Economy.  For those of you who aren't, you can check out yesterday's post or the 2012 slide deck on slideshare.  The Infinite Economy looks at the full breadth of changes occurring in the world that, collectively, will shape economic life.  In this way the Infinite Economy looks much farther afield than just one or two developments, say 3D printing or renewable energy.  And in it there's a graphic that conceptually tries to see all the elements of this "landscape" (see Figure 1).

Figure 1: the Infinite Economy

In reflecting on this image this morning, I started to list some of the big trends and emerging issues that are found within the Infinite Economy and which people are discussing today.  The list began with:

• Automation
• Digital fabrication
• DIY movement
• Maker movement
• Social financing
• Alternative currency
• M2M/internet of things/ubicomp

A comprehensive list would of course be huge, but after just getting this far I started thinking in a new direction.  Switching to a layered view, I started to list some of the major trends, but also started to add some of the change dynamics that are relevant to anticipating economic futures (Figure 2).

Figure 2: initial iteration of a layered view

In starting to draft this visual I soon realized (and was reminded of) a number of things:

1. This image will need a lot more time and effort to capture enough of the different dynamics of which I think people need to be aware
2. I need to switch to my preferred 11x17 page size :)
3. Thinking about economic futures today truly requires a global perspective.  An exploration that simply focuses on, say, the American scene, will overlook critical shifts and interdependencies shaping economic life
4. And this requires a much more systemic perspective than I think we've traditionally employed when thinking about the "economy"
5. Partly because there seem to be changes occurring on so many levels and across some many domains/boundaries, employing only an "economics" viewpoint will not provide real insight
6. Considering economic futures today requires a practice of zooming in and out to see the different kinds of change dynamics underway (future iterations of Figure 2 will illustrate this point)

Economic futures round up for Thanksgiving

Because everyone has nothing better to do today than hang around on the web reading articles, I've included below a few good articles that bear on economic futures (not to be confused with the stock market term).

1. "A Skeptic's Guide to 3D Printing": as I was saying on Twitter a couple of days ago when this article got posted, this is the best starting point for exploring the futures of 3D printing I have seen yet. And as I've said in previous posts, in its full suite digital fabrication clearly will play in interesting role in rewiring some of our economic life, but the current hype around 3D printing is animated a bit more by people's excitement and imagination than by critical examinations of the development and diffusion of a new technology, which is something this article does well.
2. "Google Enters 3D Printing Arena": Follow the digital fab vein, this short article as an announcement about a development agreement between Google (dba Motorola Mobility LLC :) ) and 3D Systems to build a high speed digital fabrication and fulfillment system to support Motorola's mobile device customization project, Project Ara.  As a colleague has often said, take a quick peek at anything Google gets into.
3. "The Reluctant Visionary": This is a review-of-sorts of Eric Drexler's new book, Radical Abundance: How a Revolution in Nanotechnology Will Change Civilization, which returns us to an examination of what Drexler now calls "atomically precise manufacturing."  Nanotechnology has had its own massive hype in decades past, but in various forms the science and engineering continue to advance and, as always, the promise of what manipulation at the atomic level could mean for human economy is nothing short of revolutionary.
4. "How Google's "Deep Learning" Is Outsmarting Its Human Employees": The last article is from Fast Company and takes us back to Google and into the realms of neural networks and machine learning to look at how Google's system for deep learning is evolving capacities to distinguish objects in the world around it that it's programmers never provided.  Augmentation of human capabilities with machines and the replacement of human effort with machine effort, both fundamental aspects of technological change since the beginning, will of course portend even greater changes in economic life.

And for our early work from last year on framing many of these larger economic shifts:

The Infinite Economy from Richard Lum

A better forecast for 3D printing

Today I was pleasantly surprised to come across what is by far the best example of proper forecasting regarding the future of 3D printing that I have seen yet.  It's an article titled, "A Skeptic's Guide to 3D Printing," from of all places, Booz & Company.

In particular, I like the authors' employment of well-documented patterns of change to develop their sense of the future potential and time horizon for 3D printing: experience curves, economies of scale, and total landed cost.  Would that more folks would employ some of these models when contemplating the future of emergent issues and technology.

Having said this, I also offer that this is an excellent example of how good forecasting, particularly that which aims beyond a three year horizon, should begin.  Beyond what these authors have presented there are a number of additional models that could and should be brought to bear in considering the multiple possible trajectories that 3D printing could follow.

Anticipating Economic Change

The Free exchange blog on The Economist recently had the post "The illusion of stasis." commenting on techno-pessimism in other recent writing.  Largely about anticipating the extent or pace of economic transformation, the piece responds to skeptics who, for instance, do not believe that technologies like 3D printing or self-driving cars will be economic game changers.

I'm a big fan of co-evolutionary theories of change, which is why the issue of the co-evolutionary development of a broad landscape of issues lies at the heart of my Infinite Economy concept.  And for that reason I both appreciate and basically agree with the Free exchange author's critique of the current spate of techno-pessimism.  As they say in the post,

In general, a very good way to underestimate the potential impact of a new innovation is to consider its possible contributions all other things equal, that is, assuming that nothing in the economy changes to accommodate or complement the new discovery.

And this is where I have considerable empathy for all those currently looking at digital fabrication (most specifically, 3D printing of plastic) and concluding that most of the excited visions of the future built on extrapolating a future of MakerBot-type appliances are unrealistic hype. The history of economic and technological evolution and revolution shows that concepts and things are involved in oft times intricate interactions with infrastructure, other technologies, social biases, regulatory regimes, and structures like financing regimes. And the essence of co-evolution is that they continually impact each other.

Especially in a globalized, highly interconnected and interdependent world, single-issue or single-technology extrapolation is as bad as single point forecasting.

The Infinite Economy from Richard Lum