Revolutionary S Curve

 

Having been involved in "hi-tech" stuff most of my life, it is easier for me to follow the course of events in technology than other aspects of human affairs. I have also had the good luck to be "present at the birth" on at least two occasions, while also being ignorant of what I was witnessing.

I attended an electronics show at which the first mouse and graphical user interface (GUI) were presented by XEROX. Almost everything about computers in common use today was invented by the folks at the XEROX Research Park in Palo Alto, Calif. That electronics show was in Brooks Hall, a short walk down the street from the office where I worked as a computer programmer for the City and County of San Francisco. When asked by colleagues what I thought about the Park's GUI demonstration, I said it wasn't practical. I could see how architects or artists might use the mouse and graphical screen, but it didn't help me solve the computing problems with which I was confronted. My day-to-day experience demanded an easy to use network, a database manager, and possibly a real-time data collection system.

In defense of my lack of insight, I wasn't the only one reacting that way. XEROX management thought the Park was a waste of time and money. They didn't want to pursue the innovation put before their eyes that they owned. Of course, that stolid mentality had not been impressed on a young fellow, Steve Jobs, who visited the Park about 10 years later. Thus the Mac.

In the mid-1970s, another teenager was working on making programming so simple any dummy could do it. Bill Gates wrote an interface for the Altair computer based on a computer language invented at Dartmouth, BASIC. Gates' BASIC enabled a huge number of people to write programs for simple machines. It put him in a position to become what he became.

In 1973, I attended a Saturday seminar at which Ms. Annie Chang presented work going on in Prof. Paul Berg's Stanford lab. That work was the foundation of modern molecular biology and the theoretical basis of a company named GENENTECH. Like most people, at first I was stunned by the implications of what I was told. While I soon accepted the revolutionary ideas presented, I did not foresee their many applications. Fortunately, others were more astute. I have friends and acquaintances whose cancer was cured as a result of their insights.

For my present purpose, what is important is this: the starting point of a revolution often goes almost unnoticed. While someone has to notice it, otherwise nothing would change, for most people the innovation is incomprehensible. It simply doesn't fit into the established order; it is at best an accepted anomaly. While that discontinuity is the core of Kuhn's paradigm theory, there is more to be explained. Why do some people "see" how to apply the new experience, whereas others just ignore it? Nothing is explained by passing off the matter as, 'oh, so and so was a genius!'

Once the innovations of the late 1960s and early 1970s were in place, it remained to  find uses for them. The rise of technology behemoths, such as MICROSOFT, INTEL, GENENTECH and AMGEN and all their relatives and progeny, was rapid. The invention of the computerized spreadsheet changed the perception of bean counters. They did not have to rely on heavy iron and programmer-priests to do their jobs. The spreadsheet was the critical application because it influenced people who controlled the money, which shifted the balance of power in management. That shift first took place in smaller companies which were large enough to afford an expensive single-purpose PC, but not a mini-computer or main frame. Corporate management (larger companies) resisted the changeover for another decade. That resistance was based on contractual relationships with the old-line business services companies; i.e., existing economic and social relationships. The adoption of modern computing did not start at the country club or in the Fortune 1000.

WordPerfect was developed at the University of Utah, Orem, Utah, in the 1970s, using a DATA GENERAL mini-computer. That "word processing" program is still far and away the best one available, but it was eclipsed by MICROSOFT Word for reasons having nothing to do with its technical performance. MICROSOFT made a decision to go head to head with AT&T's UNIX system by incorporating Ethernet into Windows 3.1 in 1992. By making office connectivity relatively cheap and simple, and packaging its software as OFFICE, MICROSOFT eventually became the dominant player on the desktop. Connectivity was important to business, especially mid-sized business, because it enabled standardization. Before networking, every desktop computer was its own kingdom, which freed local users from central control. (Most users I knew at that time loved and clung onto that freedom.) The network brought back the Boss, standards, cost controls and sanctioned uses. Because MICROSOFT's EXCEL was probably the best spreadsheet out there, and MICROSOFT made it cheap and easy to get the whole OFFICE package with EXCEL, Word was introduced to millions of users. Management did not think it was worth the additional cost to buy a better word processor or other software already included in MICROSOFT OFFICE. Employees were ordered to make the best of it. Thus, MICROSOFT gained control of 90% of the PC software market and about 98% of the business market.

The second point of importance is that application overrides invention. "Nice guys finish last," and so do inventors. The high technology winners have not been those who thought up the revolution, those who could see things a different way. The winners have been those who could turn the idea into a product, something people could see and feel. That was the story of 20^th century inventions: radio, TV, microwave ovens, phonographs and movies. Victory belongs to improvers, not inventors. The power and glory are awarded to salespeople.

The third point of importance is the attraction of wealth and power motivates widespread adoption of innovation. Most of the people who latch onto and sell new product ideas are not overly bright. They see it as a gimmick by which you and your money are soon parted. Most of the buyers are not really sure how they will use the product. They buy it because sales people have mesmerized them. Many a PC ended up on its special desk where it was worshipped from afar, but rarely touched.

The start of a revolution is slow because a new idea, a change, is hard to accept. Even the inventors usually don't recognize the full blown concept. What's involved in revolutionary ideas is a change of thinking, foreground and background. It isn't just recognizing that energy and matter are equivalent, or that there is a photoelectric work function. Einstein's 1905 papers took 20 years to become an image orthicon and picture tube (the key TV inventions), 40 years to generate The Bomb, and 50 years to become a nuclear power reactor. What was generally accepted at first was the physical implementation; e.g., the TV set. Most people had no idea, and still have no idea, how most modern contraptions work. That understanding requires looking at the world in new and different ways which takes many generations to "seep in."  Most people, societies and businesses are still Newtonians, while everything about them is Einsteinian and beyond.

It is the slow adoption of the new way of looking at things, the new worldview, that eventually stalls every revolution. While a few people "get it," and they are able to apply the new ideas as technologies, most people have no idea what is happening. Computers are used everywhere because millions of people have been told how and when to use them. It's the same with most of the other gadgets in common possession. Ideas that cannot be made over into physical things, little buttons and boxes, remain the property of the technological elite. The power of that elite is derived from their understanding of the ideas; therefore, their control of uses. (Plato: "Knowledge is Power.") The elite do not have any interest in changing things further: they've got what they wanted. Thus, yesterday's wild eyed revolutionary becomes a plump and sleepy occupant of a Board chair.

MICROSOFT went public in 1986 and skyrocketed to fame and fortune until 2000. After that, the stock and the company went nowhere. It's not that MICROSOFT's products are worthless, even if they are not perfect; rather, the technology has reached a useful limit. INTEL, AMD and others have followed the same trajectory. Even the Internet is becoming a thing of the past, despite the recent love affair with GOOGLE. We are in an age of consolidation: cut, trim and pare. Yesterday's Olympians spend a lot of time burnishing their awards and freshening up the laurels.

Now, you may object that I have forgotten the biotechnology and healthcare industries, which are undergoing tremendous growth. I have so far ignored, but not forgotten, them in this article. They are following the same pattern as the computer industry, but lag by a few years. Biotechnology growth is likely to flatten out within the next 5-10 years as the original ideas of 30-40 years ago are more fully developed. Neither the electronic nor biological industries have acquired any fundamentally new science in the last quarter century. Most of the big profits have been made in biotechnology and healthcare, profits associated with the rapid growth phase. Healthcare and its supporting industries are ripe for retrenchment and cost control, just as happened after 1999 in electronics.

The S-curve explains the comings and goings of capitalism. Capitalists love periods of rapid growth, because that's when profits and millionaires are made. When the growth disappears, so does the capitalist. It's no fund managing a business that slogs along, even if one can make a comfortable living. That's why most of yesterday's entrepreneurs have cashed in their chips and gone on to other things. There is not only a business cycle, there is an innovation cycle.