Dennis Senik , CTO of Doyletech Corp.

S&T policy needs to put the horse of technology before the cart of science

By Dennis R Senik

Canada's $14-billion annual investment in federal and post-secondary research produces over 4% of the world's scientific research, yet earns us less than 2% of global GDP. It's a brutally straightforward statistic that reflects the failure of S&T policy to appreciate how technology drives 80% of GDP.

Technology applies know-how to add value to our lives. It creates new industries, like computers and aviation, whose products rewrite practices in old industries like banking, travel and entertainment.

Old products eventually give way to new in a well-worn cultural transition that unfolds in five steps: Introduction; Lift-Off; Transition; Build-Out; and Maturity. With Introduction, innovators eagerly embrace new products and experiment with applications, while pioneering producers learn what works. But not all potential users are willing to abandon familiar ways.

For example, over the three generations it took automobiles to fully penetrate markets, growth cooled from double-digits in Introduction to just 1% in Maturity. This recurring path of new product adoption is shaped by value from three interacting forces: product (value proposition); its underlying technology (technology system); and the industrial supply chain that creates, produces, operates and supports products. Each unfolds in highly consistent patterns driven by culture.

The value proposition lies in the eye of the beholder and is the sum of four benefits:

1. Functionality wins a toehold with innovative users but products must soon offer more.

2. Price must decrease to escape niche markets. Those that haven't so far include biofuels, manned space flight, electric vehicles and fuel cells.

3. Compatibility requires products to 'fit' society as it is. For example, early cars had high ground clearance and commonly carried two spare tires to survive rudimentary roads.

4. Ease-of-use must increase as products become commonplace. Early PCs were sold as hobby kits — today they are plug & play.

To succeed, technology must continually bend to the will of markets. For example, in Transition, wants begin to surpass needs. Henry Ford believed his Model-T was everything drivers could ever want so doubled down on engineering to make them cheaper. GM surpassed him with style, annual model changes and consumer credit.

The technology system delivers the value proposition. It is a 'layer cake' of five basic parts, e.g. the familiar PC. The first is the major device: the central processing unit. Early PCs lacked supporting systems that make computers easier to use (mouse, monitor) or assist the major device do its job (high-level software). The third layer is components and materials — transistors, circuitry and the other nuts and bolts that enable continual system improvements. Design is the 'yeast' — the ideas, rules and practices that raise product performance. Infrastructure is the 'icing on the cake,' external (yet highly relevant) factors like wireless networks and the Internet that add to product value.

Design evolves a series of paradigms, each remaking the cake to improve value proposition. For example, speed was long a primary performance objective for fighter aircraft. Each design paradigm opened a new era of product competition — each longer than the one before it. The era of pioneering flight lasted just six years before it was surpassed by the eight-year reign of biplanes powered by lightweight rotary engines. Subsequent eras lasted 10, 14 and 34 years, due in part to the growing technological complexity of integrating advances across the five interacting layers of the cake.

The evolution of supply chains

The extensive network of organizations that realize a technology's potential grows more complex. A supply chain often begins from humble beginnings under a single roof. For example, in 1903 the entire US aerospace industry was the Wright Brothers' bicycle shop. Today, in the case of Boeing, it is 6,450 suppliers in over 100 countries.

Supply chains evolve in two ways. They decouple into specialized stages with each developing supporting activities — disproportionately increasing the efficiency and effectiveness of the direct activities that get products out the door. An example is the meat industry, where cattle ranchers use bovine genetics to control animal traits like growth rate and marbling. Packing houses are highly automated, with wireless networks capturing and integrating real-time data from the slaughterhouse floor to the warehouse where software speeds order-picking and optimizes use of dock facilities. At retail, Intel and SAP combined forces to track and process real-time sales and inventory data generated by RFID tags and the electronic product code.

But supply chain evolution is a double-edged sword. Aerospace has decoupled into airframe, avionics and propulsion, all with sub-categories and specialist supporting activities. However, industry consolidation has dramatically reduced the number of prime contractors — and with it innovation all along the chain.

In the 1940s and 1950s, 40 different U.S. fighter designs flew, produced by nine different firms. Now, there are only three: Boeing, Lockheed-Martin and Northrup Grumman and only the F-35 production jet remains. In the tight circles of industry, established practices, thinking and relationships become entrenched.

In conclusion, the value proposition of new products follows a highly consistent path from Introduction to Maturity, drawing on advances in the technology system and reinvention of the industrial supply chain. These interwoven factors are choreographed by the rate at which culture's patterns of living and working can adapt to technology's new possibilities.

Industry sectors are located all along the long and familiar path of market penetration, and misalignments among the three forces of value creation continually crop up, reducing jobs and growth. S&T policy focuses on the input of science rather than facilitating critical realignments like putting the horse of technology before the cart of science in order to work with the forces that create wealth.

Dennis Senik is CTO of Doyletech Corp. Key areas of focus are policy, tech transfer, impact analysis, strategy and mentorship.

Note: A longer version of this article appears online.