Digital agriculture technosphere

I have two rather large blog posts which I think I will hold over until September this year, giving me a chance to get them right during the summer.

However, in the meantime there is a useful little post I can contribute. The whole point of this blog has been from the very start to grapple with the emerging techno-economy, while problematising even the terms 'economy' and economics'.

While I have a fuzzy idea of the concepts I have trying to convey, without a language it gets pretty confusing.

Occasionally, however, there are glimpses onto the new emergent macro-innovation system.

The Economist May 24, did a superb article on digital agriculture.

Monsanto’s prescriptive-planting system, FieldScripts, had its first trials last year and is now on sale in four American states. Its story begins in 2006 with a Silicon Valley startup, the Climate Corporation. Set up by two former Google employees, it used remote sensing and other cartographic techniques to map every field in America (all 25m of them) and superimpose on that all the climate information that it could find. By 2010 its database contained 150 billion soil observations and 10 trillion weather-simulation points.

The Climate Corporation planned to use these data to sell crop insurance. But last October Monsanto bought the company for about $1 billion—one of the biggest takeovers of a data firm yet seen. Monsanto, the world’s largest hybrid seed producer, has a library of hundreds of thousands of seeds, and terabytes of data on their yields. By adding these to the Climate Corporation’s soil- and-weather database, it produced a map of America which says which seed grows best in which field, under what conditions. FieldScripts uses all these data to run machines made by Precision Planting, a company Monsanto bought in 2012, which makes seed drills and other devices pulled along behind tractors. Planters have changed radically since they were simple boxes that pushed seeds into the soil at fixed intervals. Some now steer themselves using GPS. Monsanto’s, loaded with data, can plant a field with different varieties at different depths and spacings, varying all this according to the weather. It is as if a farmer can know each of his plants by name. ...

So, I made the observation earlier that we are heading for economies / industries run by apps - well here we go a very clear example of that happening.

Macro-Innov 11: 'innovation systems' history and difficulties

So in my previous post I outlined briefly conventional macro-economics. In a number of ways I was overly generous to the field, alluding to developments since the early 1990s when the NIS concept was developing. Institutions where not on the radar, heck people like Romer were just beginning to publish on endogenising R&D (lets not call it technology). Economists like Douglass North have been influential in the shift to institutional economics but so has the innovation studies literature. History is relevant here of course, although technology has always been important, apart from the mega consumer technologies of auto, telephone, and TV etc, technologies have often been in the background - progressively making communications easier and making the making of products cheaper. However, since the late 1980s the computer revolution has made technologies obvious to all - even and I have say it - to Economists!

In this blog I want to contrast that with the direction innovation systems - particularly the path National Innovation Systems research took over the 1990s and 2000s.

The key points of the history are:

• policy relevant - what can shift growth
• policy focus - what effects technological competitiveness
• theory focus - do businesses compete as atoms - to which we know have a resounding NO. It is far more complex than that - businesses compete, clusters compete, business networks compete.

So lets revisit where NIS came from.

National Innovation Systems

Sharif in his excellent 2006 Research Policy article traces the emergence of the national innovation systems concept.

Keith Smith is unequivocal in his view that the concept had policy roots: “[T]he key thing about it [NIS]. . . is that it wasn’t really developed as a theoretical concept. It wasn’t a properly elaborated conceptual apparatus. It was really developed as a policy concept” (Smith interview, 13 October 03). Similarly, in the view of Staffan Jacobsson, the Innovation Systems concept took off because a policy vehicle/agency in Sweden – the Swedish Board for Technical Development – initiated a study in 1988 by asking a number of researchers to discuss and conduct research on what they called Sweden’s Technological System (Jacobsson interview, 17 October 03).....

For Bengt-Ake Lundvall, determining the NIS concept’s origins is to some extent an arbitrary chicken or-egg exercise: “[I]t’s difficult to say whether it was primarily an academic approach to inform policymaking or the otherway around” (Lundvall interview, 20 October 03). Lundvall claims that the two major contributions in academia and policymaking that launched the NIS concept were a major book edited by Giovanni Dosi, Christopher Freeman, Richard Nelson, Gerald Silverberg, and Luc Soete on technical change published in 1988 (discussed below), and a report published by the Technology/Economy Programme (TEP) in the OECD in 1992. Dosi et al. (1988) combined the writings of economists and non-economists who had been involved in critical assessments of the way in which orthodox economic theory deals with technical change. The book was supported by the International Federation of Institutes for Advanced Study (IFIAS) within the framework of their project, “Rethinking Economic Theory.” Financial support in the final phases of the project was also provided by the Maastricht Economic Research Institute on Innovation and Technology (MERIT) and a grant from the Dutch Ministry of Economic Affairs......

In the academic realm, there is a gracious rivalry between Lundvall and Freeman, with each giving credit for the introduction of the NIS concept to the other. While it is often observed that the concept of ‘National Innovation Systems’ was first introduced in academic circles by Freeman in 1987 in his book on Japan, Lundvall in fact used the concept ‘Innovation Systems’ in 1985 in a booklet on user–producer relations published at Aalborg University ....

Freeman’s usage of the concept in explaining national differences between economies, particularly with reference to Japan, was the first widely published use of the concept. Freeman formally introduced the Innovation System concept to the literature in Technology, Policy, and Economic Performance: Lessons from Japan (1987), in connection with his analysis of the institutional reasons for the ‘developmental gap’, that is, differences in the rates of economic growth among nations. Preceding both these developments, however, was the first use of the terminology in written form by Christopher Freeman in August 1982 in a paper titled, ‘Technological Infrastructure and International Competitiveness’, which was presented at the OECD’s expert group on Science, Technology and Competitiveness, but which went unpublished at the time. Freeman was working then as an advisor to the OECD ad hoc group on science, technology, and competitiveness, chaired by John Ingram. In a paper presented to the group, Freeman described in detail Friedrich List’s advice to Germany on catching up with the UK, staunchly defended Listian economics, and also described why qualitative, history-friendly (indeed historically deterministic) economic analyses have a place in economic thinking. In the paper, Freeman rather casually mentions the ‘National Innovation System’ concept when discussing the role of ‘creation’ in technological innovation.

Freeman's 1982 OECD paper (finally published in ICC in 2004) 

The paper states in parts:

If it is accepted that success in technical innovation is a crucial element in competitiveness and if we wish to place it at the heart of our analysis, instead of relegating it to a peripheral or residual role, then it follows that some basic characteristics of innovation must be taken into account. These may be summarised as:
I. Coupling (of changing technology, production and markets)II. Creating (new products, processes, systems and industries)III. Clustering (of groups of related innovations)IV. Comprehending (new skills, new technologies, new markets)V. Coping (with the technical and market uncertainty of innovation)

For 1982 that is fairly impressive categorisation of the stylist facts which we have been filling in ever since but have we gone beyond them yet?

The first use of systems was in relation to entrepreneurship.

2. Creating: As has already been indicated above, creativity is an essential element of entrepreneurship, since it involves the bringing together of what were previously disparate and scattered pieces of knowledge to create something new. Sometimes the term ‘creativity’ is reserved for those abilities of the scientist, which lead to new discoveries or of the artist, which lead to new works of art. These kinds of creativity are important for innovation too. But when we are considering national innovation systems (as opposed to global civilisation and the world economy) then at least in the past they have not been so central to innovative success as those types of creativity which are characteristic of the engineer in the work of invention and design and of the entrepreneur. In these entrepreneurial/engineering types of creativity the synthesis and creative application of information from a variety of different sources (including the arts and sciences) is, critical. Another contention of this paper is that the capacity for such creative synthesis has become increasingly related to more effective modes of coupling with the arts and sciences and their creative initiatives.

In essence this paper by Freeman as the introduction by Lundvall to the 2003 Globelics Conference version notes is a paper about systems of systems.

First, there is a chain of links established in the paper that helps us to understand the evolution of the innovation system perspective. It begins with the work by Pavitt and Soete on how R&D and patenting affect international specialisation and links it to competitiveness. It goes on to point to a much broader set of factors such as financial markets, education systems and working organisation hereby already signalling the broad definition of the national innovation system. It brings in the long historical time by telling stories about how catching-up can be understood in the context of long waves, new technological systems and national innovation systems.

 So it is, that national systems from the beginning had an institutional framing, except for the point about entrepreneurship. Macro-economic settings are far from the vision.

Problematically 'institutions' refers both the organisations in law - universities, government organisations etc and the rules of the game; for example Australia has long supported the idea of living wage and thus higher minimum wages than the USA. However, institutions in the second sense are hard to define and measure so the fall back has been institutions in primary sense.

The Institutional Paradigm

Across a number of publications the concept of NIS has been depicted as a series of linked institutions.

OECD 1999 Managing National Innovation Systems.

Holbrook 1997 (CPROST 1997-06)

And you can google image search to find many more NIS diagrams, almost all of which follow similar patterns. Regional innovations systems have been depicted with a large variety of diagrams, but institutional analysis has been a part of that spectrum.

http://www.publications.parliament.uk/pa/cm200809/cmselect/cmneast/memo/industry/memo06.htm

Clusters research, on the other hand have focused on more tangible features - actual firms, technological strengths and linkages between universities and businesses.

The primary problem

I see the biggest failing of 'innovation systems' has been to develop anything coherent enough to be debated. I think it is a test of of a concept / paradigm or theory that it can be debated. I don't remember ever seeing an article that contests some 'stylised fact' of the NIS model - except maybe the 'N' - which I more strongly than many even now dispute.

You can not debate IS because it is not debatable - will a million case studies, but not foundational principles every case is simply a new twist.

Second Problem: What is it exactly - where is the systemness in the 'systems'

The first problem leads to the second. NIS has proven to be incredibly difficult to operationalise, it is not a concept that can easily be measured. This has led to many now focusing on microdata - the microeconomics of innovation at the firm level. But the question is does micro scale to macro.

Well of course in many ways it does but in many important ways it doesn't. So we then have the void - the nothingness that I call macro-innovation.

Third Problem: What shapes the institutions

History, resources etc..
Nelson in the last chapter of his book on Innovation systems and also printed in Industrial and Corporate Change 1992 states.

Whether or not a country had rich natural resources or ample farming land clearly is another important variable influencing the shape of its innovation system. It turns out that all our 'small' high income countries also were well endowed in this respect. Among the large high income countries the US was far and away the best endowed here. Countries that possess resources and good farm land face a different set of opportunities and constraints than countries without these assets. Countries that lack them must import resources and farm products, which forces their economies towards export-oriented manufacturing, and an innovation system that supports this. One sees this strikingly in the cases of Germany, Japan, and Korea. On the other hand, countries with a rich resource base can support relatively high living standards with farm products and resources and the affiliated industries providing exports to pay for imported manufactured goods. The countries that have been able to do this—Denmark, Canada, and Australia stand out in our set—have developed significant publicly supported R&D programs to back these industries. So also has the United States. While effective agriculture and resource exploitation does require R&D, compared with 'high tech' industry the R&D intensity here is low. The discussion above suggests that, to some extent at least, a nation's innovation system is shaped by factors like size and resource endowments that affect comparatively advantage at a basic level. But it also is true that a nation's innovation system tends to reflect conscious decisions to develop and sustain economic strength in certain areas, that is, it builds and shapes comparative advantage.

So lets make a stark point; Australia and Argentina had similar resources and living standards at the turn of 19 century, but they went in two different directions. Also the quotes above fails to acknowledge just how important science has been for Australian farming, given it exists on the driest continent (except for Antarctica).

An assesment

When you read through these comments it becomes clear that in some foggy way NIS is both a response to macro-economics but still not divorced from it. The arguments try and improve on macro but some of the deeper assumptions about the construction of the economy appear to remain. The best imagery I can come up with is this.

The twin analysis are linked but don't really 'talk' to each other either. So we are left heading off in the distance without an assessment of where we are and where we are going. What do we need to study in innovation studies at the macro level. In my next blog I will compare macro-economics and innovation systems perspectives to find the black holes in their worldviews. Both are incredibly useful but both have missed important intersections and both have often missed the same phenomena.

Macro-Innov 10: Macro-economics and innovation

In my previous blog here, I explained that I am interested in deep structure - the new combinations that Schumpeter implied at the whole economy level. But to establish a case that there is hole at the centre of the 'economics of innovation' it is best to first establish what macro-economics is all about and from there discuss what innovation systems theory is all about.

So to begin: Macro-economics

There are two important elements of macro-economics that are linked but can be treated separately. First, what may be called the aggregate monetary structure of the economy.

Source: Parkin, M. and Bade, R. Macroeconomics : Canada in the global environment 5th ed. Toronto : Pearson, c2003.

As an approximation of the the way money flows around economies for much of the 20th Century, this is not bad. However, increasingly even for money flows this is a bad representation. In 2006 global flows of capital had reached at least 16 % of global GDP. Even the Economist seems almost to be saying there should be greater cooperation between countries on macro-economic policy even if they don't believe it will happen.

So we should start drawing the diagram more like this.

The global is important, more and more so even for the basic macro-economic management - lets ditch the single economy diagram..

Two important criticisms have often been made of the circular flows diagrams. 

The first by ecological economists is that the real world does not exist - natural resources such as minerals, air, water etc and waste are not part of the flows. However, it would be very hard to incorporate material flows and environmental services into this diagram. In any case that is not the point of this diagram, this diagram is of particular use when thinking of the monetary economy - of inflation, interest rates, fiscal policy (in grand terms), unemployment, trade and so forth. help . That does not mean that resources should not be incorporated in an enlarged conceptualisation of the economy, but it doesn't fit here and that is partly the point of my deep structure.

The second is that a dynamic is missing. Search the web and you will see dozens of circular flow diagrams that include an 'entrepreneurial' segment. Again, fundamentally I think this misses the point this diagram is about money flows.

So both of these commentaries are suggestive of the deeper issues, including the powerful nature of visualisations. The criticism are valid, first, these macro-economic flows only represent cash accounting and thus we have no idea of the asset bases of economies. What business would derive its profits statement from just the cash book? Second there is no agency in these diagrams or notations for the changing nature of the structures that operate. Labour has gone through a number of phases - agrarian/feudal, factoryisation - servicisation and now fragmentation. There are others.

Growth

The second half of macro-economics is growth accounting. I am not a growth metrics expert so I will keep this short.

For something as conceptually simple as economic growth, it sure causes lots of problems. Sure we can measure increases in expenditure or income year on year - or recessional periods but what is behind the growth. A simple question but it still seems to remains a mystery (Economist 1999 and Helpman 2005).
Productivity matters - it frees up resources to invest elsewhere, but productivity measures are in my opinion increasingly iffy (if you think of servicisation measurement). Even when you accept productivity measures then you have to ask where do they come from. Helpman argues technological change and institutions - because of course as we know technological change is dependent of institutions and institutions that can themselves drive change.

Okay but then we have the paradoxes. High growth old manufacturing industries - the Austrian Paradox. We could go further and claim that Australia and Canada are simple anomalies for whichever theory - technological or comparative advantage (trade theories) you want to bet on as they are high income largely resource based economies.  Another problem for these two is a different kind of productivity paradox. Canada is supposedly way behind the USA but on life indexes such as that developed by the OECD , while the USA compares well on material living standards (no surprise) it compares less well on other measures of well being.

And now there is a new paradox - that of New Zealand. So in this paradox NZ under-performs on growth and productivity, despite having implemented neoclassical policies over many years. So NZ it seems has under-invested in innovation and human capital as well physical infrastructure - including communications. But it turns out just sheer distance matters alot. So short of towing NZ north closer to markets and sources of inputs the country will suffer a productivity gap.

So whats the state of play - well this is what the Economist said in 2006:

How much guidance do these theories offer to policymakers, such as those sitting on the World Bank's commission? In Mr Solow's model, according to a common caricature, technology falls like “manna from heaven”, leaving the bank's commissioners with little to do but pray. Mr Romer's theory, by contrast, calls for a more worldly response: educate people, subsidise their research, import ideas from abroad, carefully gauge the protection offered to intellectual property.

But did policymakers need Mr Romer's model to reveal the importance of such things? Mr Solow has expressed doubts. Despite the caricature, he did not intend in his 1956 model to deny that innovation is often dearly bought and profit-driven. The question is whether anything useful can be said about that process at the level of the economy as a whole. That question has yet to be answered definitively. In particular, Mr Solow worries that some of the “more powerful conclusions” of the new growth theory are “unearned”, flowing as they do from powerful assumptions.

At one point in Mr Warsh's book, Mr Romer is quoted comparing the building of economic models to writing poetry. It is a triumph of form as much as content. This creative economist did not discover anything new about the world with his 1990 paper on growth. Rather, he extended the metre and rhyme-scheme of economics to capture a world—the knowledge economy—expressed until then only in the loosest kind of doggerel. That is how economics makes progress. Sadly, it does not, in and of itself, help economies make progress.

Deep structure 

I started by stating I am interested in something I call deep structure - but there is noting of that kind emerging in macro-economics.

Macro-Innov 9: Dimension 3 - Economies

In this the third section of my blogs on macro-innovation I want to explore the connections between innovation studies and conceptions of the macro-economy in a more dissecting way than I have to present.

• what are 'industries' and how do we define them;
• how does innovation change the character of labour markets
• market formation and definition
• money flows versus substance flows
• the technospehere and macroeconomics
• economic growth, structural change and technology
• etc.

I want to highlight where innovation studies has succeeded in helping us developing a better understanding of the economy, where it still has blind spots as well as where it has tried to fold itself ill fittingly into an economics agenda that has all the same primary compass points even if the actually modelling can look very different.

What do I mean by this last comment. Well for years the complaint of those that studied the economics of technology is that technology was part of an unexplained residual in economic growth analysis. So technology and then innovation studies took as its compass points the agreed agenda of traditional economic growth. But problematically, perhaps the measures of growth and change are inadequate for measuring the changes.

As a part of this series I want to dig away at this paradox, the attempts at constructing something new within an old pre-existing outdated framework. Not surprisingly then, innovation studies is rapidly retreating away from the macro to the micro. More and more academic work deals with innovation at the firm strategy level. Much of this innovation does not alter economies it merely shifts economic activity between actors (see Baumol 1996).

In investigating the the macro I want, as a radical suggestion, to leave the question of economic growth to one side as we explore the notions of configurations of economies.

The Heart of Innovation:  Economic Growth or Deep Structural Change

The following is extracted from Knudsen, T. and Swedberg, R. (2009) "Capitalist Entrepreneurship: Making Profit through the Unmaking of Economic Orders," Capitalism and Society: Vol. 4: Iss. 2, Article 3.
DOI: 10.2202/1932-0213.1057-pp3-4.



The central concept in Schumpeter’s theory of entrepreneurship is that of combination, both for the work it does in his own theory and for its general potential for theorizing and explaining entrepreneurship (Swedberg, 2007). Why does Schumpeter use the concept of combination in his theory of entrepreneurship and where does it come from? Schumpeter refers to the work of 19th century economist Jean-Baptiste Say on this point:

His contribution [to the theory of entrepreneurship] can be summed up in the pithy statement that the entrepreneur’s function is to combine the factors of production into a producing organism. Such a statement may indeed mean much or little. He certainly failed to make full use of it and presumably did not see all its analytical possibilities. He did realize, to some extent, that a greatly improved theory of the economic process might be derived by making the entrepreneur in the analytic schema what he is in capitalist reality, the pivot on which everything hinges. (Schumpeter, 1954:555).

Schumpeter distinguishes between the following two cases: there exist new combinations as well as already existing combinations. New combinations are defined as innovations by Schumpeter. And there are five main types of innovations: “a new good”, “a new method of production”, “a new market”, “a new source of supply of raw materials”, and “the carrying out of a new organization of any industry” (Schumpeter, 1934:66).

If innovations are new combinations, according to Schumpeter, what does he have in mind when he refers to combinations that already exist? The answer can be found in Schumpeter’s discussion of “economic combinations” versus “technological combinations”. The central argument is as follows:

Technologically as well as economically considered, to produce means to combine the things and forces within our reach. Every method of production signifies some such combination. This concept may be extended even to transportation and so forth, in short to everything that is production in the widest sense. An
enterprise as such and even the productive conditions of the whole economic system we shall regard as ‘combinations’. (Schumpeter,1934:14)

Combination, then, is a term that Schumpeter also uses to capture the process of production – what Say called a “producing organism”. While it is often said today that the economic process consists of “production, distribution and consumption”, Schumpeter can – with a little stretch – be said to suggest a different way of conceptualizing it: as a combination.

Why does Schumpeter make a distinction between technological and economic combinations? The answer has to do with the fact that the economic process can be organized according to different criteria. If technological criteria are prevalent, the technologically most efficient solution will be chosen. But in a capitalist society, “economic logic prevails over the technological” (Schumpeter, 1934:14-5). He adds: “in consequence we see all around us in real life faulty ropes instead of steel hawsers, defective draught animals instead of show breeds,the most primitive hand labor instead of perfect machines, a clumsy money economy instead of cheque circulation, and so on” (Schumpeter, 1934:15).

Therefore, going back to Schumpeter and with the aid of Knudsen and Swedberg we can see that there is an explored domain of questions - combinatorial configuration of economies, and how these change across time. We could also call this the structural change beyond industrial structure change.

Macro-Innov 8: Dimension 2 - Social issues

I am not going to spend much time on the social dimensions of macro-innovation (just 1 blog for the moment) but clearly the social issues are increasingly important.  Open a newspaper 10 years ago and there may be the occasional article on one of these issues. Today, because of the rise of the digital world, some or many of these topics may appear on any given day in a leading newspaper or in any issue of a news magazine like the Economist.

These topics should not be just left to sociological sidelines, they are indeed front and centre to the new world. They are issues of importance for innovation policy. If entrepreneurship, technology and innovation matter then the following issues are critical for national / regional attention - although it will probably be a long time before they are.

• Cyber (everything digital) crime;
• privacy issues (re Snowden);
• distrust of government;
• possibility of the breakdown of the internet due to insecurities;
• distrust of science findings (growing social movements that distrust government and science - vaccinations for example);
• the role of terrorism in halting or causing huge defensive innovation budgets - not national Defence necessarily but cyber defence etc;
• resource constraints - food, water, energy;
• middle income disparities - it is one thing to discuss the new possibilities of robot and 3D additive manufacturing technologies but who is going to buy the merchandise - the economics of new technologies is not being discussed yet;
• re-emergence of tax shelters GLOBALLY; 
• and modern digital corporations reinventing the transfer pricing of the bad old multinationals, playing off jurisdictions so where is home (recent stories on Candy Crush , Google pays little tax etc).

And this list ignores the growing controversial topics of whether game playing is addictive, reduces attention span is bad for social manners, bad generally .....

The social dimensions of technology have been obscure and little understood for too long. , Apart from big names like Marshall Mcluhan it has often been the domain of obscure sociology researchers who would claim that technology and its uses are 'socially constructed', most of whom where never interviewed on radio or television. This is changing for the better, leaving aside the modern McLuhan like prognosticators, social dimensions get more airplay now and that is good because it undermines the technological determinism of past ages and implants a sense of uncertainty over technological trajectories, use and interpretation. 

Innovation studies take note Hall and Martin[i] point out that an innovation must pass four hurdles: technical feasibility, commercial viability, organizational capability, and social acceptability. What is true at the micro level of products and companies is also true for techno-economic ecosystems. The social is important and getting bigger. What the society wide issues with technological acceptance and usage. 

The social dimensions of technology still has some way to go to be truly mainstream but it is on the way.

---

[i] Hall, J.K., Martin, M.J.C., Disruptive technologies, stakeholders and the innovation value-added chain: a framework for evaluating radical technology development. R&D Management (2005) 35, 3, 273 -284.

Macro-Innov 7: Kevin Kelly's 'Technium'

The first dimension of my analysis of macro-innovation introduced the concept of the technosphere, in contrast to The Technium a concept introduced by Kelly, K. (2010) What technology Wants. Viking, New York

The Technium, the 7th Kingdom of life.

This book is for the popular market, it argues from basic analogies that technology has a number of characteristics that are similar to biological evolution and from there it takes this logic to its full ultimate conclusion - that technology is its own kingdom of life.

Although I agree with many of the facts presented in the book, the overall argument construction is unconvincing, but is yet still enough to light a candle of doubt.  Despite appropriately making mention of contingencies, cautions and limitations the book is definitely not an academic treatment of the concept.

One of my frustrations with the book is the use of digital technologies as the proxy for all technologies and the speed of technological change. But digital world is not a proxy for the rest of the 'technology kingdom'. For example, there is no supersonic passenger flight transporters at present. Even while Concorde flew, it was uneconomic. In the January 2013 issue of The Economist ran a lead article on how innovation is stalling across a number of non-digital domains. Moving physical stuff through space is hard - the physics of mechanical objects such planes, trains, autos or of energy creation and use move very slowly in comparison. More recognition of this would have been welcome.

Essentially the book makes a rather simple argument, that has a number of facets. Kelly summarises biological life in the following diagram.

He then argues that technological 'life'  has many similarities.

In the book What Technology Wants, Kelly in a number of places produces diagrams such as these.

The point of these is to impress upon the reader the speed of change and from that imply the evolutionary processes now at play in technology.

A recent interview

In a recent article on Kelly here at The Edge, the evolutionary argument is summarised clearly. The ideas discussed above were covered. One point of significance was this one.

There are two strands in technology: There's evolutionary change and there's developmental change, just like in our own bodies most of what we experience as individuals is developmental. So while we're growing up we start off as an egg and we become a blastocyst and then we become an embryo and then become a fetus and then newborn. That trajectory is very determined and developmental. And then there is also within us, these other forces of mutation in our genes, which are more evolutionary. A lot of what we see in technology is not evolutionary, it's developmental, meaning that if we were to look at a thousand or a million different planets with sentient life and civilizations, we would find that there's a general developmental course for the course of technology on a planet, in the sense that you would have a natural occurrence of pottery before you have electronics, whatever it is. There are certain precursors to certain technologies, and the same thing is happening right now on the growth of this connected world. There are certain developmental stages, and part of this is a cyclic thing where there's a period of openness, then a period of consolidation, and then the next rev of that is open while things kind of settle, and then that becomes consolidated and there are respiration cycles.

What is present in the interview and not the book is the sense of the linkages between technologies.

The ordinary pen you use every day seems very simple but it probably took 100 different technologies to make this pen technology, technologies of plastic, ink, ball bearing, metal, and each of those different technologies probably themselves required another 100 sub-technologies to support it and, of course, there's kind of a circular way in which pens might be necessary to make a ball bearing in the same way that electricity is necessary to make a generator, and a generator may be necessary to make the wires of an electrical system. A hammer requires a handle and a head, and the saw requires the hammer to make the saw that cuts the handle, so there is a sense in which all of this is very recursive and that there is a network of different supporting technologies, and that the whole web of all these things I call the technium. The technium is that largest network of all the technologies working together to support each other, and while this pen is definitely not alive, there is a sense in which the technium as a whole exhibits life-like behaviors in the same way that your neuron doesn't really think, but the network of neurons in your brain can make an idea. And so I look at the network of all the technology in the world, past and present, as forming a system that seems to have its own urges and tendencies.

Problems

The book What Technology Wants doesn't ignore some of the subtler points of the human use of technology although in the end it paints over these somewhat with the rather singular point it is hammering home. While Brian Arthur's 'The Nature of Technology' leave much understated or unsaid at all, by leaving open space the reader starts to work out the implications for themselves. In the way Arthur writes in an open sketchy style. Kelly on the other hand writes in rather slow moving style with the end always clearly insight.

This book is disturbing in one important respect. While anybody with a sense of history and being literate in the innovation studies of the last twenty years will fight with the book for most of the journey, it does nonetheless leave the reader with an uneasy feeling. That uneasy feeling is that despite all the problems with the technicalities of the argument, Kelly's bigger point is probably more accurate than inaccurate.

I don't naturally gravitate to evolutionary arguments because the focus tends to be on change and the mechanism (carriers like DNA) of those changes rather than the interdependencies that interlock with those changes. That is why I have started playing around with the 'technosphere' concepts.

But as an initial sketch and a call to take technology more seriously than we have been to this point, Kelly is worth paying serious attention to. Whether you call it the Technium, the Technosphere or something more intelligent it is time to work on technology as an integrated subject matter.

Macro-Innov 6: Strategy in the Technosphere

Following the suggestions in my December 2013 blog on the possible strategy of Google Inc, I had an interesting discussion with a friend and colleague - twitter @GordonBrianR who is a keen observer of the strategy literature and the strategy of firms. His point in simple terms was that I was arguing that Google was pursuing a strategy in non-related activities. For me, I don't have a problem with that if 'related' is conventionally understood. It then occurred to me that it is was the perfect point in the blog cycle to discuss corporate strategy in the technosphere and in doing so help give more depth to the concept. All that said, the ideas here are rough sketches, there is the tip of an idea but they are not well developed.


However, I am happy to point out that in my blog on Google I suggested it was positioning itself as the new GE, a conclusion that the Economist came to as well in a recent print edition 2014 Jan 18. 

Strategy

There are many different academic 'takes' on strategy. Mintzberg has come up with a list of 10 different perspectives on what the study of strategy focuses on. This comes from his book Strategy Safari.

• The environmental school
• The cognitive school
• The entrepreneurial school
• The power school
• The positioning school
• The cultural school
• The planning school
• The learning (or emergent) school
• The design school
• The configuration (or transformation) school

Currently, the Resource Based View of the firm and the Dynamic Capabilities concepts are both popular issues in the strategy literature. Both look for some core attribute of the organisation that give it the edge through time. Of course defining those capabilities and even what capabilities are is proving to be tricky even in abstract academic terms.

Traditionally, strategy modelling were built around ideas that seems less nebulous like industry or markets. 

Classically we have Porter's five forces

• Supplier Power: Here you assess how easy it is for suppliers to drive up prices. This is driven by the number of suppliers of each key input, the uniqueness of their product or service, their strength and control over you, the cost of switching from one to another, and so on. The fewer the supplier choices you have, and the more you need suppliers' help, the more powerful your suppliers are.
• Buyer Power: Here you ask yourself how easy it is for buyers to drive prices down. Again, this is driven by the number of buyers, the importance of each individual buyer to your business, the cost to them of switching from your products and services to those of someone else, and so on. If you deal with few, powerful buyers, then they are often able to dictate terms to you.
• Competitive Rivalry: What is important here is the number and capability of your competitors. If you have many competitors, and they offer equally attractive products and services, then you'll most likely have little power in the situation, because suppliers and buyers will go elsewhere if they don't get a good deal from you. On the other hand, if no-one else can do what you do, then you can often have tremendous strength.
• Threat of Substitution: This is affected by the ability of your customers to find a different way of doing what you do – for example, if you supply a unique software product that automates an important process, people may substitute by doing the process manually or by outsourcing it. If substitution is easy and substitution is viable, then this weakens your power.
• Threat of New Entry: Power is also affected by the ability of people to enter your market. If it costs little in time or money to enter your market and compete effectively, if there are few economies of scale in place, or if you have little protection for your key technologies, then new competitors can quickly enter your market and weaken your position. If you have strong and durable barriers to entry, then you can preserve a favorable position and take fair advantage of it.
• - See more at: http://www.mindtools.com/pages/article/newTMC_08.htm#sthash.VBfemOvV.dpuf

Such strategy methods are often written rather abstractly, away from place and time. Who are your competitors for example? Even this is rather problematic sometimes. For me the 4Ps of marketing has often been the most clear for defining the issues - Product, Price, Promotion and Place. Obviously, this is not without problems either and can be extended in multiple ways but for simplicity its still hard to beat.

But the 4Ps is probably not helpful for giving a perspective on overall corporate strategy particularly if we talking Google at the moment. The first problem is to define the current economic structures, not as easy as it sounds.

Techno-Economic Structures

We often speak of economies as though they are an object that we can measure and visualise, a idea that is not undermined by texts that rarely present multiple views of the economy side by side. But economies are like ecologies they have multiple layers. There industries, transport routes, resource supplies, component supplies, 

Industrial Interdependencies


Fig 1. An Econscape Image of the the World Economy 2008 (approx) 

The data for this econscape comes from the WIOD database y2008. http://www.wiod.org/new_site/home.htm
It's an approximation because Excel is limited to 255C*255R whereas the full dataset is 1435*1435 so some averaging of 6*6 cells was done. When I find some software that can do the full dataset I will create a blog about the global economy.

This image is constructed from the industrial interactions within and across 41 economic regional (40 nation-states + 1 rest of world). The diagonal in this image is national economies - ordered alphabetically. The large cluster at the bottom right is the USA visually merged with the Rest of the World as the last two economic blocks in the table). Within each economy (the diagonals) there is in the original data interactions between 35*35 industries).

The interactions of industries is one perspective but it is but no means the only one.

Economic Geography

Fig 2. Geography of GDP (geo cells)

http://gecon.yale.edu/

If you go to William Norhaus' homepage at Yale you will discover economic geography images for most countries on the planet and on the home page you will see a rotating gif image of a globe (economic activity) - unfortunately they didn't create a flat version. So the industries interacting (Fig 1.) do so in particular places (Fig 2.). Mostly economic style value is captured in cities and more value is captured perhaps disproportionately in strategic 'global cities'.

Natural Resources
The curious thing about the economy is that it is measured in money - obviously D'uh. But the economy is also stuff. So for example cities are the interstices - those places where transactions occur, but the stuff can come from elsewhere - the geography of raw stuff looks different.

Fig 3. Metal Ores Extraction 2007

http://www.materialflows.net/visualisation-tools/worldmapper/

This map morphs the globe to emphasise the source of metal ores - it would be fabulous to have a geo cell (AKA Nordhaus image) for raw materials - ie where are the mines and the fields.

Transportation
To move this stuff (Fig 3) in between industries (Fig 1.) requires transportation routes

Roads, Shipping and Air routes. Taken from an article http://www.dailymail.co.uk/sciencetech/article-2134979/Video-lights-road-shipping-route-flight-path-Earth.html#ixzz1t9b1tHmv accessed 13 Jan 2014.

Fig 4. Just Cargo shipping

Published  Pablo Kaluza, Andrea Kölzsch, Michael T. Gastner and Bernd Blasius Journal Royal Society Interface 2010.

While money moves electronically between global cities (an entire literature in its own right but visible in the Nordhaus images) goods flow on road/rail/shipping and air routes between nodal gateway cities. Global financial capitals are rarely the nodal gateways although many were once the important trade cities. 

Product complexity

U.S. Product complexity map

THE ATLAS OF ECONOMIC COMPLEXITY MAPPING PATHS TO PROSPERITY
AUTHORS: Ricardo Hausmann | César A. Hidalgo | Sebastián Bustos | Michele Coscia Sarah Chung | Juan Jimenez | Alexander Simoes | Muhammed A. Yıldırım 


The big point

Read up on ancient history and the organisation of the economy bears remarkable similarities to today. The ancient Greeks moved 100s of thousands of litres of wine around Europe and the Mediterranean basin. Individual vineyards had their own brands and were known for their quality.

Or if you think product complexity and modularity are new, read the history of Bolton and Watt before they built their factory. At this point in their history they only built specialised parts - the main components of the steam engines well built by standard producers. Everything was shipped as components to the site for assembly.

Operating Systems

So the technosphere for any particular point in time is the accumulation of the ability to extract resources move them and transform them into the stuff that gives human life a certain standard of living. But we are moving from the the industrial technosphere to the digital technosphere - one where the linkages shown above can take on new dimensions. At this point I could show a map of the internet traffic but that would not show the digital technoshere IMHO, it would only show physical linkages or at best the flow of bytes and bites.

 But many feel that something different is happening, not just a change in extensiveness but qualitative difference. What I am thinking is the idea is that economies run on operating system principles.


Perhaps and analogy might help.

Computers OS v1. Direct input. To program the original computers you had to know machine code and directly tell the computer what to do.  If you want to runs some stats you had to know the code and would not know there was an error till it had printed out.

Computers OS v2 WYSIWYG what you see is what you get. The Mac introduced a new thing; it was an operating system that took care of the machine language. Then there were programs that sat of top of that. People could then interface somewhat normally typing and drawing on the computer so that what you see is what you get. But this was rather limited traditional programs no matter how good they get are kinda clunky.

Computers OSv3 Apps. Apple much later then marketed the next great innovation; Apps. Combined with the internet they can be like old programs (games, wordprocessors, drawing etc) or more importantly they can interact with the real world - start your car, turn on the heating in your house etc. Apps can be static but they can be dynamic - controlling and integrating with real world objects - this is where the digital technoshpere is evolving to an Internet of Things as it is called, where everything is online and therefore app-able.

So the digital world needs Operating Systems....

If we stand back we could say that the economy works on operating system models. Pre-industrial agriculture was direct machine language - humans and animals did all the work.

The Industrial Revolution was OS 2 - carbon energy freed up the ability for machine power and industries developed - large clunky blocks of activity with large orgnsations of scale and scope at there centres (a bit like word processing or spreadsheet programs on a computer).

As I can conceive of it at the moment Technosphere Operating Systems are kind of the rules of the system operating at multiple levels. Now usually Rules of the Systems means institutions but I am meaning here the actual physical connectedness - even if that is digital.

Strategy in the Digital Technosphere (OS3)

So here is a picture of the U.S. Economy.

Lets discuss some peaks.

Many of the peaks are still basic industries - mining, metals, agriculture/food - which digital technology is certainly getting a strong foothold but is perhaps a little harder to explain.

The services complex - bottom right.
Over the last couple of decades governments and service industries have faced the problem of inter-operability - data transfer. I suspect that the problem is still not solved but it is obviously getting better. It is a big deal moving data between banks and governments and other services is hugely important.

But those issues will move into the rest of the economy.

The auto Industry
At the recent Consumer Electronics Show, the auto industry was more represented that usual. The big news Apple and Google moving inside the car to connect the car to the world with their Operating Systems. I suspect Apple does not actually have much of a strategy here - except that lots of people use their tech so Apple should give them access in their cars. Google, I think has a bigger strategy. This is the first step in connecting their technologies up. They can auto pilot a car but that is distant from the normal car - the intermediate step is to get Android inside the car and then introduce full car control systems, which if successful would leave Google as the Mircosoft of auto transport. The car makers will just be sophisticated metal bashers.

The Electronics hardware industry
Curiously, the interactions in the matrix of electronics equip buying from electronics equip is quite small in the USA, presumably because manufactures are mostly imported now. But the hardware, computers, mobile devices etc which is where Apple is happy to focus is only the tip of the iceberg of the digital technoshere. the real money will be in the Internet of Things operating systems.

Google's strategy

So here is my point, digital connectiveness links up real devices, objects and entire industries. Thus what links up Google's diverse unrelated activities is its operating system relatedness. Back here I discussed the changes 3D printing could make to global manufacturing structures. Google is not just an advertising company although that is where it is getting its revenue. It isn't just a company with some strange auto industry technology, it will introduce an electronic operating system for cars and it will own the technology. Just as we see it buying Nest that links the home to the owner, we will see it own technology that brings digital control and operating systems to the industrial sector.

Think of the all those existing layers of the economy as a piece of hardware, the box and the bus and circuit board, the chips and harddrive - what will really make the digital technosphere fly are the operating systems that makes it run. Google, won't be the only company and in the end maybe it going too fast, but if it wins the prize it will be the mega-goliath corporation of the 21st Century.