In episode 150, I reintroduced this series with a new pitch. It was my way of taking what I've learnt over the last three years, the last 150 episodes, and almost 33 hours of content and updating the why the podcast. Over the coming episodes, I'll take a deeper dive into the themes of the pitch and why they made the cut. In this episode, I wanted to talk about why I led with "Welcome to the Age of Software and Digital".
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Published: Wed, 09 Nov 2022 16:50:04 GMT
Links
- Episode 150: An updated pitch for the podcast
- Project to Product by Mik Kersten
- Sooner, Safer, Happier by Jonathan Smart
- Wikipedia: Technological Revolutions and Financial Capital
- Wikipedia: Luddite
Transcript
In episode 150, I reintroduced this series with a new pitch. It was my way of taking what I've learnt over the last three years, the last 150 episodes, and almost 33 hours of content and updating the why of the podcast.
Over the coming episodes, I'll take a deeper dive into the themes of the pitch and why they made it into the cut. If you've not listened to the pitch, it's worth going back to episode 150 for context before carrying on with this episode.
In this episode, I want to talk about why I led with "Welcome to the Age of Software and Digital".
I've seen the theme of technological revolution being the driver for organisational change appearing in a number of places recently - and specifically in two books:.
* Project to Product by Mik Kirsten, which I talked about in Episode 100
* and Sooner, Safer, Happier by Jonathan Smart.
Both books use the work by Carlota Perez to explain the current technological age, how each technological age brings disruption, and how today's businesses need to respond to that disruption from the current technological age.
Wikipedia describes Carlota's book on the subject as:
"Technological Revolutions and Financial Capital: The Dynamics of Bubbles and Golden Ages is an academic book by Carlota Perez that seeks to describe the connection between technological development and financial bubbles as seen in the emergence of long term technology trends. The model described by Carlota Perez shows repeated surges of technological development over the past three centuries with examples such as: the age of steam and railways, the age of steel and electricity, mass production and the automobile and the current information/knowledge society."
Carlota draws a link between technological revolution and financial cycles. Carlota defines five technological revolutions:
- The Industrial Revolution,
- the Age of Steam and Railways,
- the Age of Steel, Electricity and Heavy Engineering,
- the Age of Oil, Automobiles and Mass Production,
- And the Age of Information and Telecoms, which Project to Product called the "Age of Software and Digital", while Sooner, Safer, Happier just called the "Age of Digital. While they all relate to the same thing, I felt that the "Age of Software and Digital was more accurate.
Carlota then provided evidence that for each revolution we see a similar financial cycle playing out over a 50 to 60 year period. The financial cycle will be made up of four parts - again from Wikipedia:
"Irruption phase: There is an intense funding of innovation in new technologies. Clusters of new revolutionary inventions appear. New industries are established, and the construction of new infrastructure begins.
Frenzy phase: Increased speculation and financialization leads to a decoupling between financial capital and production capital. Capital is invested more in financial innovations than in technological innovations. Asset bubbles are inflated.
Synergy phase: Growing inequality and political unrest. A need for political regulation of the financial sector is acknowledged. Asset bubbles may burst. The link between financial capital and production capital is repaired.
Maturity phase: The market for the new technology begins to become saturated. Social structure and infrastructure have adapted to the new technologies. Opportunities for investment are decreasing. The idle financial capital is moving to new sectors and new regions where it may lay the foundation of the next great surge."
So if this financial cycle follows the same phases for our current revolution, then we should be asking what phase are we currently in?
And unfortunately, I'm not sure that we know or can indeed know until we are able to look back with hindsight.
You could take any of these phases and attributes recent events to them, but it doesn't mean that an earlier phase is finished. It's not going to be as linear as that.
You could attribute the early computer work at that Irruption phase, given us an entirely new technology. But in the same way we see innovations, maybe mini-irruptions, from the technology sector on a constant basis.
We could attribute the dotcom bubble to the Frenzy phase. But equally we are seeing frenzied activities in any promising technology start up. We've seen mini-frenzies with things like Bitcoin and other blockchain innovations.
We could attribute the concerns of society over large tech companies holding so much data about us and not paying their fair level of taxation to the Synergy phase. Regulations and laws are simply not keeping pace - forever playing catch up. Even the financial markets are trying to find ways to synergize with disrupting digital currencies like Bitcoin.
And we could attribute the smartphone in every pocket, the smartwatch on our wrist, the smart tech saturating every part of our lives as a social adaptation to the new technology to that Maturity phase.
I suspect, however, we will only understand the history of this financial cycle once we have moved on to the next technical revolution, which, given the pace of innovation, is likely to occur faster than the previous revolutions.
And while I'm certainly not qualified enough to make predictions on the financial cycles of the current technical revolution or indeed the next, I draw your attention to Carlota's work for the same reason as the books Project to Product and Sooner, Safer, Happier do - the effects of the financial cycles form the backdrop of our modern business environment.
It provides a backdrop for why there is so much change, so much change leading to an explosion of opportunities and risk.
It provides a backdrop of why terms like "disrupter" and "innovator" being thrown around when we're talking about new entrants to existing markets.
It provides a background for why our focus is more about moving bytes than moving atoms - the moving of data rather than physical products.
Both books, Project to Product and Sooner, Safer, Happier, use it as the backdrop to frame a lot of the why things have to change - and I use it in exactly the same way.
I use it as the why behind the need for the businesses to change the way they work. I use it to underscore the changeable nature of the environment in which we operate. I use it as the why behind approaches that have previously brought us professional and career success (the same approach is used to great success for our parents and grandparents), don't produce the same outcomes we desire or have traditionally achieved.
Our businesses and we as professionals need to move with the technological age.
As an aside, during the Industrial Revolution, a group were formed as a response to the need for business and professional change. They were called the Luddites. Wikipedia describe them as:
"The Luddites were a secret oath-based organisation of English textile workers in the 19th century who formed a radical faction which destroyed textile machinery. ... They protested against manufacturers who used machines in what they called "a fraudulent and deceitful manner" to get around standard labour practices. Luddites feared that the time spent learning the skills of their craft would go to waste, as machines would replace their role in the industry."
History tells us that they were unsuccessful in attempting to hold back that tide of change.
The term Luddite has, however, survived as a somewhat derogatory term for a person opposed to new technologies or ways of working. And this is obviously something we need to be conscious of in our professional careers for fear of finding ourselves on the wrong side of history.
Thank you for taking the time to listen to this episode. I look forward to speaking to you again next week.