Cycles of Innovation

According to Dent, every 80 years, you get an individualist, more radical generation like the last cycle, which had Henry Ford. That generation gave us the automobile, telephones, airlines, women’s rights and the assembly line. It ushered in a cultural and economic revolution. In this current cycle, the Boomer generation is also leading a revolutionary cycle, and this time innovators like Bill Gates are spearheading the change using microchip technology, the Internet, communications, etc.

The first three decades of the 1900s—the start of the last 80-year cycle—was a period of radical change driven by new inventions, social upheaval and economic growth. A war, a stock market crash and a depression slowed the momentum, allowing society time to adjust. Products and services were refined and the latter part of the cycle was marked with relative calm and stability.

The one commodity that characterized that 80-year cycle was the automobile. The impact of that innovation changed the entire global culture. In the current cycle, the microchip is the underlying commodity and we have barely begun to experience just how radical that change will be. (Could anyone have imagined how the car would change everything when the first ‘horseless carriages’ drove down Main Street?

How similar is the impact of these two innovations? Let’s compare how the automobile changed society in the last cycle and how the microchip is changing society in this cycle:

Mobility – With a vehicle, people could easily move outside of their neighborhoods to where the work was available. Technology also provides workplace mobility.

Transportation system – The automobile created a transportation system that never seems adequate to satisfy demand. With the information superhighway, speed is everything, and increasing bandwidth, optical fiber and wireless systems are the frontiers.

Employment – The automobile, and all of its offspring, created huge employment opportunities. Technology is creating a similar employment boom—all across the globe.

Socialization – With cars, people were free to move where their hearts wanted to go. The Internet global community is serving up a wide range of social and entertainment activities, like dating, gambling, chat lines, social clubs, and more.

Government involvement – The automobile forced governments to introduce laws and regulations to serve a mobile society. With technology, governments are just beginning their deliberations on how to control—and tax—technology and legislate spam, pornography, gambling and fraud.

Secondary industries – The automobile created untold secondary industries—everything and anything to serve the machine and its occupants. The microchip is birthing a similar wave and whole industries are spring up to serve the technology and make it user-friendly. Entrepreneurship is the hallmark of every cycle.

Wealth – The 1900s was a period of enormous wealth creation, particularly in North America. With technology, it’s the third world that will see an emerging middle class and rampant consumerism.

Consumer classes – Whether it was a Chev, a Cadillac or a Volkswagen, the car market responded to consumer demand. Technology does likewise and your status will be determined by your technological sophistication.

Competition – In the old economy, it was the big ate the small. In the Age of Technology, it’s the fast eat the slow.

Looking back to how the automobile changed society is easy; that’s our history. But leveraging that information to get a better understanding of where the current cycle is heading requires foresight. Trying to do business in the same old way is deadly. History does repeat itself. Only the players and the innovations change.