Technology evolves in big waves that we call revolutions. The first revolution was the Industrial revolution that started in Britain in 1771. Since than we have see more revolutions come and how we are in the fifth. These revolutions follow a similar path. First there is an installation period where the new technologies are installed and deployed, creating wealth to those who were are the right place at the right time. This is followed by a frenzy, where financial markets wants to be apart. The there is crash and turning point, followed by synergy, a golden age. In 1908, a new technological revolution started. It was the Age of Oil and Automobile. The technology trigger was Henry Ford´s new assembly line technique that allowed the manufacturing of standardized, low cost automobile. This created the car industry and other manufacturing companies. This also created demand for gas thus creating the oil industry. During the Roaring Twenties the stock prices rose to new levels, until a crash and the Great Depression. Only after World War II, came a turnaround point followed by a golden age in the post-war boom. In this lecture we look at a framework for understanding technological revolutions. There revolutions completely change societies and replace the old with new technologies. We will explore how these revolutions take place. We should now be in the golden age phase. We also look at generations.

1. LECTURE L08
TECHNOLOGICAL REVOLUTION

2. Agenda
Technological revolutions
The Age of Oil, Automobile and Manufacturing
Current revolution —similarities
Generations

3. WHEN IN A TECHNOLOGICAL REVOLUTION
THE HARDEST THING TO UNDERSTAND IS THAT
YOU ARE IN ONE

4. We tend to overestimate the immediate impact of technology and
underestimate the long-term impact
Timing is everything

5. We tend to place emphasis on the technology itself, when it is
really the social and cultural change that will be the most
dramatic
Perception is everything

6. WE EMPHASISE
TECHNOLOGY
BUT IGNORE THE
SOCIAL AND CULTURAL
IMPACT

7. Is it really up to politicians with their 12 point plans?
Is it possible that productivity gains from technological
advancements generate economic growth and prosperity
Economic Growth

8. Technological Revolutions and
Financial Capital
by
Carlota Perez
Technological Revolution

9. Large revolutions that transform society and change the way
people live
What is the nature of them?
Are the similarities between them?
Do they always progress in the same way?
Technological Revolution

10. Technology develops like an S-curve — what about
technological revolutions that span decades?
The S-Curve

11. The 20th century was the age of automobile, oil and mass
manufacturing
Example of a Technological Revolution

12. THE WORLD IN 1899

13. Local and linear

15. The Great Horse Manure Crisis of 1894
“In 50 years every street in London would
be buried under nine feet of manure.”
— An article in Times of London, 1894

16. New Technological Revolution takes off

17. Henry Ford (1863 – 1947)

18. Ford Model-T 1908

19. Ford Model-T 1908
IRRUPTION

20. Car companies
Hottest technology companies at the time

21. New Class Emerges
Inequality rises - few people get very rich
Right age, place, time, and sex
Andrew MellonAndrew Carnegie Henry Ford John D. Rockefeller

22. FRENZY
The Roaring Twenties

25. The 1929 Wall Street Stock Crash
The crash began on October 24. Institutions and financiers started to buy
stocks to keep them up.
The stock bounced back only to collapse on Tuesday, 29th - Black
Tuesday.

27. The Great Depression
Depression spread world-wide and lasted until the second Great
War

28. Turning Point

29. Unrest, lack of trust, and finally a world wide war
After the war, fundamental changes are made to move from the
frenzy mode, shaped by financial criteria to synergy mode, solidly
based on growing production capabilities
Turning Point
Carlota Perez, Technological Revolution and Financial Capital

30. From 1960 to 1980 there was
unprecedented consumer demand
because of the affluent middle class
(Baby Boomers) both in US and
Europe
Source: Retail Revival
SYNEGRY

31. Prosperity
Benefits of the new technology spreads
More productive economies

32. Golden Age

33. Post-war America - „The Glory Days“

34. STAGNATION

35. Improvements in technology are waining
Younger generation feels left out
Mistrust, status quo is questioned
Stagnation
Carlota Perez, Technological Revolution and Financial Capital

36. Technology develops like an S-curve — what about
technological revolutions that span decades?
The S-Curve

37. Installation period Deployment Period
Institutional
recomposition
Degreeoftechnologicalmaturity
andmarketsaturation
time
Crash 1929-1945
Big bang Ford T Next big bang
Techno-economic
split
IRRUPTION
Financial Bubble
Time
FRENZY
Golden Age
SYNERGY
MATURITY
Source: Carlota Perez

38. Technological Revolution
INSTALLATION
PERIOD
TURNING
POINT
DEPLOYMENT
Age of Oil and
Automobile
1908
The Roaring
Twenties
1929-33 & 43 Post-war Golden Age
Source: Carlota Perez

39. INSTALLATION
PERIOD
TURNING
POINT
DEPLOYMENT
The Industrial
Revolution
1771 Canal mania 1793-97 The Great British Leap
Age of Steam
and Railways
1829 Railway mania 1848-50 The Victorian Boom
Age of Steel
and Electricity 1875
Infrastructure
bubbles
1890-95
The Belle Époque (Europe)
Progressive Era (USA)
Age of Oil and
Automobile
1908
The Roaring
Twenties
1929-33 & 43 Post-war Golden Age
Source: Carlota Perez
Technological Revolution

40. The Long View
The Industrial
Revolution
Arkwright’s mill
in Cromford
1771
Age of Steam
and Railways
Manchester-
Liverpool Rocket
line
1829
Age of Steel and
Electricity
Carnegie
Bessemer steel
plant, Pittsburg
1875
Age of Oil and
automobile
Ford’s model T
plant, Detroit
1908
Age of
Information
Intel’s microchip,
Santa Clara
1971
Technical Revolutions span over generations
Starts with a cluster of technological revolutions in a particular place
Source: Carlota Perez

41. 3. Industrial Revolution2. Industrial Revolution1. Industrial Revolution
The Long View
The Industrial
Revolution
Arkwright’s mill
in Cromford
1771
Age of Steam
and Railways
Manchester-
Liverpool Rocket
line
1829
Age of Steel and
Electricity
Carnegie
Bessemer steel
plant, Pittsburg
1875
Age of Oil and
automobile
Ford’s model T
plant, Detroit
1908
Age of
Information
Intel’s microchip,
Santa Clara
1971
Technical Revolutions span over generations
Starts with a cluster of technological revolutions in a particular place
Source: Carlota Perez

42. Installation period Deployment Period
Institutional
recomposition
Degreeoftechnologicalmaturity
andmarketsaturation
time
Crash 1929-1945
Big bang Ford T Next big bang
Techno-economic
split
IRRUPTION
Financial Bubble
Time
FRENZY
Golden Age
SYNERGY
MATURITY
Source: Carlota Perez

43. An event the signifies the start of an new revolution
Something that changes the world
Technology Trigger
The Industrial
Revolution
Arkwright’s mill
in Cromford
1771
Age of Steam
and Railways
Manchester-
Liverpool Rocket
line
1829
Age of Steel and
Electricity
Carnegie
Bessemer steel
plant, Pittsburg
1875
Age of Oil and
automobile
Ford’s model T
plant, Detroit
1908
Age of
Information
Intel’s microchip,
Santa Clara
1971
Source: Carlota Perez

44. The Irruption Phase: A Time for Technology
Starts with technology trigger - an event or item that signals
beginning of a new era
Old paradigms are mature and stagnant
Unemployment rises, partly due to economic stagnation
and technological replacement
New technology is pursued by entrepreneurs

45. Despair and impotence affect those loosing out
Old industries see declining profits
Policymakers try to keep and protect outdated industries
Political uncertainty and division, sometimes new
movements
The Irruption Phase: A Time for Technology

46. The Frenzy Phase: A Time for Finance
Financial capital takes over - paper economy decouples the
real economy
Small number of people get very rich, inequality rises
Massive migration as people look for opportunities

47. The Frenzy Phase: A Time for Finance
Time of speculations, corruption, and love of wealth
The wealth that has grown and concentrated in relatively few
hands is greater that can be absorbed by real investment
Excess money goes into infrastructure, over investment

49. The Turning Point
A conceptual device to represent the fundamental change
required to move from frenzy mode to synergy
Process of contextual change
Move from individualism to collective well-being
Period that is ripe for reshaping regualtions and policies

50. The Synergy Phase: A Time for Production
Golden age
Infrastructure serves as engines of growth
Wealth gets distributed as investment is in production

51. The Synergy Phase: A Time for Production
Full employment - production
Reign of the middle class
New paradigms are now accepted and permeates every
activity

52. The Maturity Phase: A Time for Questioning
Markets get saturated
Technology is stable and mature, productivity gains are
drained
The young start to see things as ‘all wrong’ - movements
form
Time of questioning

53. The Maturity Phase: A Time for Questioning
Company mergers
Migration of activities to less-saturated markets abroad

54. Age of Information and Telecommunications

55. 1947
Programmable all-purpose
electronic computers start to have
impact on big businesses and
government
Automation starts, jobs get lost
IBM mainframes
Mainframe

56. 1965
Minicomputers allow mid-sized
companies and academia to have
time shared computing power
Automation continues
Minicomputers

57. Fifth Technological Revolution
starts
Intel 1971
The Technology Trigger 1971

58. 1981
Personal Computer allowed
small companies and
individuals to own and
program computers
Generative platform
Opened up a huge revolution
- created a new industry
Personal Computers

59. IRRUPTION

60. Bill Gates Steve Jobs Michael Dell Larry Ellison
Tech Companies

61. 1995
Opened up a new way for people to
communicate and exchange data
Generative platform,
permissionless innovation
Created new industries,
transformed businesses
3.4 billion connected
Internet

62. FRENZY

64. 2007
The smartphone revolution takes off
with new possibilities
Powerful computer in your pocket
Access to 4 million apps
Constant access to the Internet
Smartphone

65. Mainframe
1947
Minicomputer
1965
PC
1981 1995
Internet Smartphone
2007
The Shortening Waves

66. INSTALLATION
PERIOD
TURNING
POINT
DEPLOYMENT
Age of
Information
1971
Internet mania and
financial casino
2000 & 2008
The Industrial
Revolution
1771 Canal mania 1793-97 The Great British Leap
Age of Steam
and Railways
1829 Railway mania 1848-50 The Victorian Boom
Age of Steel
and Electricity 1875
Infrastructure
bubbles
1890-95
The Belle Époque (Europe)
Progressive Era (USA)
Age of Oil and
Automobile
1908
The Roaring
Twenties
1929-33 & 43 Post-war Golden Age
The New Golden Age?
Source: Carlota Perez
Technological Revolution

67. Installation period Deployment Period
Institutional
recomposition
Degreeoftechnologicalmaturity
andmarketsaturation
time
Crash 2000 & 2008
Big bang Ford T Next big bang
Techno-economic
split
IRRUPTION
Financial Bubble
Time
FRENZY
Golden Age
SYNERGY
MATURITY
Source: Carlota Perez

68. Is the turning point over?

69. The Danger in Turning points
After synergy and maturity, unrest and new movement start to emerge
and they are not silence, but people start to listen.
1. Rising Immigrations
2. Increasing inequality
3. The Perception of corruption
4. A big financial crisis

70. Talking About Generations

71. Generations
Major technological shifts always happens with generations
Research into understanding generations and how they behave
Here are some of the stereotypes - and should be used as a guideline,
not absolute facts
Although we see trends human nature is usually the same in any
generation

72. Gen Z, iGen, or Centennials: Born 1996 – TBD
Millennials or Gen Y: Born 1977 – 1995
Generation X: Born 1965 – 1976
Baby Boomers: Born 1946 – 1964
Traditionalists or Silent Generation: Born 1945 and before
Generations

73. Silent Generation
Born 1925 until 1945, sometimes called “Lucky Few” and are retired
today
Born too early for WWII but before the Baby Boomers
Entered the workplace in a booming economy, the Sputnik Era - high
wagers, low fixed rate mortgages
The healthiest and most educated generation of elders that ever lived—
and, of course, the wealthiest.
The last Silent cohort reached age 65 in 2007 - perfect timing to the end!

74. Baby Boomers
Born 1946 until 1964, following the booming years after World War II.
Larger than previous generation.
Associated with privilege. Time of widespread government subsidies in
post-war housing and education, and increasing affluence. The boomers
moved to the suburbs and were perfect consumers for the newly erected
malls.
Received peak levels of income. Therefore, the boomers were perfect
consumers. In 2015, the boomers are between 51 and 69 years.

75. Generation X
Born ca. 1965 until 1976, MTV generation
Grew up when the wife stopped being a housewife and started working
so Xers became latchkey kids, and got used to daycare and divorce as
well as microwave dinners (there is a theory that states that microwave
owens and divorce is related).
This is the generation in the middle - boomers and millennials
Got access to computers at school and later work, played video games
in arcades. Just as the baby boomers, the Xers are passive consumers.
This is the last generation to use email as main form of correspondence.

76. Born ca. 1977 until 1995 - the net generation or NetGen
Grew up with computers and the internet, and played video games on
consoles at home. With online technologies this generation is much
better connected with their parents.
More liberal than previous generations and more open minded, don’t
mind big governments if they get service.
Unlikely to conform to a routine schedule like working 9-5 or showing up
at any particular time, work according their own schedule, output driven.
Not as loyal, move from one job to the next.
Millennials

77. Many millennials prefer smartphone and a laptop to having a car
They like staying in crowded urban areas and are less likely to choose to
live in suburbs
Workplaces that want to attract millennials are open spaces, elegantly
designed with lots of different places to work like sofas, picnic tables - far
away from Dilbert like cubicle place
Millennials

78. Millennials
Millennials are self centered and want to be the centre of attraction
Whereas ad for the Xers and boomers showed some hero or role model
that they should look up to and want to become (and thus buy the
product, see the movie etc)
These ads don’t work for millennials as they are used to be the star - and
don’t want to be anybody else

80. Millennials

81. Have the reputation of choosing brands but lacking loyalty
They are quicker to switch brands, loyalty is shorter
Today we have much more choses, much more brands are available and
the sources of information that let you switch brands is far bigger than
ever
A consumer may choose a brand if a friend recommends it
Millennials

82. In the book Retail Revival, author points out that brands that are winning
with the millennials, of course they need to be good, but also:
•Authentic like Lululemon, living what their brands espouses and being
real
•Purpose driven like TOMS Shoes, supporting human purpose beyond
pure profit;
•Quick to change like Apple, constantly driving obsolescence with its
latest products; and
•Socially savvy like Zappos.com, nurturing the visibility of everyone in
the company through social networks.
Millennials

83. Comparing Generations
Millennials use technology differently

84. Born 1996 and later
Grew up with mobile phones and smartphones, and played real-time
graphically stunning video games. Connection is seamless. Grew up with
social media. First generation to behave well and safely online. And they
don’t use email, but use Snapchat.
Conscious on the environment, health, and animal rights. Worry about
climate change. Favour cool experience to cool products
Grew up with global terrorist threats and financial crises. Have reputation
for frugality and caution.
Gen Z

85. What makes your generation unique?
Comparing Generations

86. 0
1000
2000
3000
4000
5000
6000
7000
18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 100101102103104105106107108
ICELANDIC AGE GROUPS
Millennials
97.016
Gen-X
52.965
Baby boomers
69.330
hippies/“counterculture”
Beatles Kingdom
World war II
World war I
Values and traditions
MTV
Latchkeys
smartphones
computers/net
computers/BASIC
Punk
Born at farms
TV
Religion
Gögn frá Hagstofunni
Radio/telegrams
Rás2Youtube
Social Media
Selfies
Bond
Movie stars
Queen
Live Aid
Spotify
Netflix
Silent and before
25.029
game consoles
Arcades
Generations
Industrial/progress
LP
CD

87. Key Insight
Research suggest that millennials are in some ways different than the
previous generations, in particular their use of technology.
This is the generation that established businesses need to attract as
customers, and that means using the same technology as they do -
smartphones, web sites, and social media.

88. Next
This was end of Module 2
Now we move on to Module 3, Business Transformation
L09 Disruptive Technology
Next week: video lecture due to travels