The "unpredictability of technology" is an old slogan.
Indeed, it underlies to a considerable extent the widespread "fear of technology."
But it is not even true that invention is incapable of being anticipated and planned.
Indeed, what made the "great inventors" of the nineteenth century—Edison, Siemens, or the Wright brothers—"great" was precisely that they knew how to anticipate technology, to define what was needed and would be likely to have real impact, and to plan technological activity for the specific breakthrough that would have the greatest technological impact—and, as a result, the greatest economic impact.
It is even more true in respect to "innovation" that we can anticipate and plan; indeed, with respect to "innovation," we have to anticipate and plan to have any effect.
And it is, of course, with "innovation" rather than with "invention" that the businessman is concerned.
Innovation is not a technical, but a social and economic, term.
It is a change in the wealth-producing capacity of resources through new ways of doing things.
It is not identical with "invention," although it will often follow from it.
It is the impact on economic capacity, the capacity to produce and to utilize resources, with which "innovation" is concerned.
And this is the area in which business is engaged.
It should be said that technology is no more "predictable" than anything else.
In fact, predictions of technology are, at best, useless and are likely to be totally misleading.
Jules Verne, the French science fiction writer of a hundred years ago, is remembered today because his predictions have turned out to be amazingly prophetic.
What is forgotten is that Jules Verne was only one of several hundred science fiction writers of the late nineteenth century—which indeed was far more the age of science fiction writing than even the present decade.
And the other 299 science fiction writers of the time, whose popularity often rivaled and sometimes exceeded that of Jules Verne, were all completely wrong.
More important, however, no one could have done anything at the time with Jules Verne's predictions.
For most of them, the scientific foundations needed to create the predicted technology did not exist at the time and would not come into being for many years ahead.
For the businessman-but also for the economist or politician-what matters is not "prediction," but the capacity to act.
And this cannot be based on "prediction."
But technology can be anticipated.
It is not too difficult—though not easy—to analyze existing businesses, existing industries, existing economies and markets to find where a change in technology is needed and is likely to prove economically effective.
It is somewhat less easy, though still well within human limitations, to think through the areas in which there exists high potential for new and effective technology.
We can say flatly first that wherever an industry enjoys high and rising demand, without being able to show corresponding profitability, there is need for major technological change and opportunity for it.
Such an industry can be assumed, almost axiomatically, to have inadequate, uneconomic, or plainly inappropriate technology.
Examples of such industries would be the steel industry in the developed countries since World War II or the paper industry.
These are industries in which fairly minor changes in process, that is, fairly minor changes in technology, can be expected to produce major changes in the economics of the industry.
Therefore, these are the industries which can become "technology prone."
The process either is economically deficient or it is technically deficient-and sometimes both.
We can similarly find "vulnerabilities" and "restraints" which provide opportunities for new technology in the economics of a business and in market and market structure.
The questions:
what are the demands of customer and market which the present business and the present technology do not adequately satisfy?, and:
What are the unsatisfied demands of customer and market?—that is, the basic questions underlying market planning—are also the basic questions to define what technologies are needed, appropriate, and likely to produce economic results with minimum effort.
A particularly fruitful way to identify areas in which technological innovations might be both accessible and highly productive is to ask: "What are we afraid of in this business and in this industry?
What are the things which all assert 'can never happen,' but which we nonetheless know perfectly well might happen and could then threaten us?
Where, in other words, do we ourselves know at the bottom of our hearts that our products, our technology, our whole approach to the satisfaction we provide to market and customer, is not truly appropriate and no longer completely serves its function?"
The typical response of a business to these questions is to deny that they have validity.
It is the responsibility of the manager who wants to manage technology for the benefit of his business and of his society to overcome this almost reflexive response and to force himself and his business to take these questions seriously.
What is needed is not always new technology.
It might equally be a shift to new markets or to new distributive channels.
But unless the question is asked, technological opportunities will be missed, will indeed be misconceived as "threats."
These approaches, of which only the barest sketch can be given in this essay, apply just as well to needs of the society as to needs of the market.
It is, after all, the function of the businessman to convert need, whether of individual consumer or of the community, into opportunities for business.
It is for the identification and satisfaction of that need that business and businessmen get paid.
Today's major problems, whether of the city, of the environment, or energy, are similarly opportunities for new technology and for converting existing technology into effective economic action.
At the same time, businessmen in managing technology also have to start out from the needs of their own business for new products, new processes, new services to replace what is rapidly becoming old and obsolescent, that is, to replace today.
To identify technological needs and technological opportunities one also starts out, therefore, with the assumption that whatever one's business is doing today is likely to be obsolete fairly soon.
This approach assumes a limited and fairly short life for whatever present products, present processes, and present technologies are being applied.
It then establishes a "gap," that is, the sales volume which products and processes not yet in existence will have to fill in two, five, or ten years.
It thus identifies the scope and extent of technological effort needed.
But it also establishes what kind of effort is needed.
For it determines why present products and processes are likely to become obsolescent, and it establishes the specifications for their replacement.
Finally, to be able to anticipate technology, to identify what is needed and what is possible, and above all what is likely to be productive technology, the business manager needs to understand the dynamics of technology.
It is simply not true that technology is "mysterious."
It follows fairly regular and fairly predictable trends.
It is not, as is often said, "science."
It is not even the "application of science."
But it does begin with new knowledge which is then, in a fairly well-understood process, converted into effective—that is, economically productive—application.
Toward the Next Economics and Other Essays
by Peter Drucker
