Our ability to create and use technology is what makes us innately human. The ability of that technology to change the world around it is what makes the modern world so amazing.
Our fascination with this change, and technology more broadly, is a relatively new thing. Just look at how our use of the word has grown over the last 100 years.
Although the term has only come on strong since the start of the 20th century, over the last 250 years we have lived through 5 major technology revolutions. Carolota Perez, in her excellent book, Technological Revolutions and Financial Capital: The Dynamics of Bubbles and Golden Ages, looked at these revolutions and the patterns that they created. I was really struck by what she had to say and will reference her work throughout this post in order to explain how technology shapes our life and how we can better predict the impact new technology will have on us.
Before I jump into explaining what those revolutions were, I want to define what makes a technology revolution. For Perez, there are two basic features:
1)The strong interconnectedness and interdependence of the participating systems in their technologies and markets.
2)The capacity to transform profoundly the rest of the economy (and eventually society).
In other words, the way technology moves through our life impacts our entire world. From the culture we live in to the way we work.
Laying the Foundation: The five technology revolutions
Excellent, now let’s jump into the five technological revolutions of the last 250 years.
1) Industrial Revolution: The industrial revolution is widely considered the first great technology revolution. It all started in England around 1771 with the invention of new ways to use water for power. Specifically, Richard Arkwright, a barber and wigmaker, figured out how to hook up a new spinning machine to a water wheel. Another inventor, Samuel Crompton, combined the spinning and weaving process into one machine in 1774. Raw cotton could be introduced in one end and produce cloth on the other. The invention was called a spinning “mule” (the feature image above) because, like a mule, it was the offspring of two different types of parents. The spinning mule created the factory, the most productive textile mills in the world and officially kicked off the industrial revolution.
2) Steam & Railways: In 1829 we had our second great technology revolution, again in England, with the advent of the steam engine and railway system. It was widely considered the ultimate triumph of the Industrial Revolution. The railroads allowed people, raw materials, and finished goods to rapidly move around England. People arrived in new industrial cities; trade within England, Europe, and the world gradually increased. The British Empire continued it’s dominance of the world because of their driver seat position through the first two technology revolutions.
3) Steel, Electricity, & Heavy Engineering: In 1875, we had the age of steel and electricity and for the first time it was Germany and the U.S. with enterprises like Carnegie Steel and General Electric leading the world through this revolution. With steel ships we could ship products around the world. Cheaper steel also meant we could build the transcontinental railway and have packaged and preserved food. Electricity networks illuminated the workplace and the wired networks brought us the worldwide telegraph.
4) Automobile, Oil, & Mass Production: In the early 20th century we had the dawn of the automobiles, oil and the age of mass production, led almost exclusively by the U.S. with companies like Standard Oil and Ford Motor Company. Materials like Oil were becoming cheaper through a better refinement process and the automobile through the factory line started to make affordable for the middle class.
5) Information & Telecommunications: Finally, in 1971, with the advent of the microprocessor from Intel, we kicked off the latest revolution in Silicon Valley, the Information Age.
Changing the game: technology revolutions also build new organizational models
As the new technologies transform our world, they also transform the way work and businesses are organized. The use of technology creates the need for new workflows that prove superior to previous ones and become the new normal for efficiency and effectiveness.
As an example, Perez talks about the the national railways in the second great technology revolution. The railways themselves became very large business structures requiring what were then the most advanced organizational and logistics innovations for the management of complex systems. The railways also had effects on other industries, as an example the structure of the banking industry moved from isolated local institutions to national networks with local branches. While the most obvious change was the ability to get from point a to point b more quickly, the real change that came as a result of the introduction of railroads was a fundamental rethinking of what was local, something that fundamentally changed many of our ideas around how commerce functioned.
In the 4th revolution (Automobile, Oil, & Mass Production), the most important invention wasn’t the automobile, it was the assembly line that changed the way products were made and eventually led to the new standards of mass automation. But just like the previous age, the change went far beyond the factory, as the line also created a clear separation between blue and white collar workers that had far-reaching social and cultural consequences.
Bringing us to where we are: Where does this all lead?
Based on Perez’s definition of a technological revolution (interconnectedness/interdependence and ability to transform the economy), I’d argue the information age we are now living through is the largest of all technological revolutions and it is important to understand exactly what that means for all of us.
First, let’s break down the information age: I see it as having three main components.
1) Computing Hardware. What kicked the information age off was the microprocessor and the advent of the microprocessor can still be felt most in computing hardware. The hardware innovation model, thanks to Moore’s law, looks something like this:
2) Information networks. In the 70’s we started to wire all countries for telecommunications. Over time we started to get more sophisticated across these pipes. Roughly 25 years ago we invented the true catalyst to the information age, the public internet and we are in the midst of the greatest installation period of human history. It took 25 years to reach 3 billion internet users and it’s predicted we’ll double that number in just the next five.
3) Software. As the now famous saying goes, software is eating the world. The genius of software is it is the glue between the two other large catalyst of the information age.
The revolution in my mind can be framed as:
Waves of a revolution: Installation to Bubble to Deployment
Now we’ve laid out how technology changes the world around us, what the five revolutions look like, and given ourselves a good picture of what actually makes up the information age, let’s talk about where we are in the development of this fifth revolution. Here, again, we turn to Perez, who uses a concept called Kondratiev long waves to define these bursts of innovation throughout history and how long the good times will last. These waves describe the ebbs and flows of the economy over long period of time and Perez maps these long waves onto each technological revolution by by breaking them down into two distinct periods: 20-30 years for installation and 20-30 years for deployment with a bubble that happens between the two periods as expectations outstrip the ability to execute against them. The graph can help illustrate this:
The technology revolution we are now living through, The Information Age, started 44 years ago in 1971. The internet has been around for roughly 25 years (1989). The bubble Perez predicts for each revolution happened in 2000 with the dotcom crash. But that wasn’t really the worst of it, as you could make a pretty good case that from 2000-2010 the U.S. had one of the worst decades of it’s young life: We not only had one bubble, we had two.
“In 2000 the tech bubble popped, and in 2008 the housing bubble followed. Each of these asset price crashes represented $6.2 trillion dollars of financial wealth vanishing into thin air. That means each was larger, as a percentage of U.S. gross domestic product, than the stock market crash that touched off the Great Depression.”
Assuming we’ve officially burst that bubble we can now move onto the deployment age and start to realize some of those gains from the last thirty years. What will this look like and how do we expect organizations to adapt to take advantage of this period?
The Deployment Phase and Organizational Changes. What does it mean for marketers?
From an enterprise perspective we are now moving from the core adoption of infrastructure for the information age to more specialized applications. In Perez’s language, we are moving out of the installation phase and moving into the broader deployment phase. From an adoption perspective this is nicely summarized by venture capitalist Chris Dixon:
“In the transition from installation to deployment, the bulk of the entrepreneurial activity moves “up the stack”. For example, in the installation phase of the automobile revolution, the action was in building cars. In the deployment phase, the action shifted to the app layer: the highway system, shipping, suburbanization, big box retail, etc.”
Chris Dixon continues, putting this idea into the context of today’s growing software companies:
“This pattern is repeating itself in the computing/internet revolution. Most of the successful startups in the 90s built core infrastructure (e.g. optical switching) whereas most of the successful startups since then built applications on top of that infrastructure (e.g. search). The next phase should see startups higher in the stack. According to historical patterns, these would be ones that require deeper cultural change or deeper integration into existing industries”
At Percolate, we’re looking at ourselves in this context as well. Marketing is moving through these phases and for marketers, the Information Age really kicked off with the public internet (1989) and browser (1994), not with the microprocessor (1971). Beginning with websites, e-commerce and digital strategy and moving through to CRM and Analytics, Marketing in the Information Age has moved through installation. Now we’re thinking about what deployment looks like.
At the Client Summit on February 5th, we’re planning on diving further into this idea. What does marketing look like as we move from installation to deployment? And as we continue on into the golden age of this technology revolution, how can we re-think all phases of marketing and how technology can sit at the center of the process? We live in the most amazing times to be a marketer and we have to take on the responsibility to make the changes that will bring our enterprises through this next great deployment phase.
I hope to see you at the Client Summit and I look forward to building with you.