In a terrific little essay on “Local Economic Revival and The Unpredictability of Technological Innovation,” Michael Mandel, the chief economic strategist at the Progressive Policy Institute, makes several important points regarding the fundamental folly for future forecasting efforts as it pertains to new innovations. He notes, for example:
There are plenty of candidates for the “next big thing,” ranging from the Internet of Things to additive manufacturing to artificial organ factories to autonomous cars to space commerce to Elon Musk’s hyperloop. Each of these has the potential to revolutionize an industry, and to create many thousands or even millions of jobs in the process–not just for the highly-educated, but a whole range of workers.
Yet the problem–and the beauty–is that technological innovation is fundamentally unpredictable, even at close range. Consider this: The two most important innovations of the past decade, economically, have been the smartphone and fracking. The smartphone transformed the way that we communicate and hydraulic fracturing has driven down the price of energy, not to mention shifting the geopolitical balance of power.
But few saw the smartphone and fracking revolutions coming, he notes. The pundits and the press were too focused on technologies of the past.
In fact, as I noted in a case study in the 2nd edition of my book, Permissionless Innovation (p. 50-51), various pundits denigrated Apple and Google’s entry into the smartphone business because many industry analysts believed the market was mature. After all, in the early and mid-2000s, the big names of the mobile world were Palm, Blackberry, Motorola, and Nokia. And their market power seemed unassailable. Thus, as perplexing as it sounds now, the common wisdom in the mid-2000s regarding Apple and Google’s potential entry into the smartphone business was that, if they dare tried, they were destined to fail miserably!
For example, in December 2006, Palm CEO Ed Colligan summarily dismissed the idea that a traditional personal computing company could compete in the smartphone business. “We’ve learned and struggled for a few years here figuring out how to make a decent phone,” he said. “PC guys are not going to just figure this out. They’re not going to just walk in.” Similarly, in January 2007, Microsoft CEO Steve Ballmer laughed off the prospect of an expensive smartphone without a keyboard having a chance in the marketplace: “Five hundred dollars? Fully subsidized? With a plan? I said that’s the most expensive phone in the world and it doesn’t appeal to business customers because it doesn’t have a keyboard, which makes it not a very good e-mail machine.” (Quotes from John Paczkowski, “Apple: How Do You Say ‘Eat My Dust’ in Finnish?” All Things D, November 11, 2009.)
Even better, in March 2007, computing industry pundit John C. Dvorak insisted that “Apple Should Pull the Plug on the iPhone,” because he believed the mobile handset business was already locked up by the era’s major players. “This is not an emerging business,” Dvorak said. “In fact it’s gone so far that it’s in the process of consolidation with probably two players dominating everything, Nokia Corp. and Motorola Inc.”
Just a few years later, of course, Nokia’s profits and market share plummeted, and Google had purchased the struggling Motorola. Meanwhile, Palm was dead, Blackberry was languishing, and Microsoft continued to struggle to win back market share lost to Apple and Google. So much for tech prophecy!
Tech pundits also usually fail when forecasting the professions of the future. As I noted in Chapter 5 of my Permissionless Innovation book (p. 101-2):
It’s also worth noting how difficult it is to predict future labor market trends. In early 2015, Glassdoor, an online jobs and recruiting site, published a report on the 25 highest paying jobs in demand today. Many of the job titles identified in the report probably weren’t considered a top priority 40 years ago, and some of these job descriptions wouldn’t even have made sense to an observer from the past. For example, some those hotly demanded jobs on Glassdoor’s list include software architect (#3), software development manager (#4), solutions architect (#6), analytics manager (#8), IT manager (#9), data scientist (#15), security engineer (#16), quality assurance manager (#17), computer hardware engineer (#18), database administrator (#20), UX designer (#21), and software engineer (#23).
Looking back at reports from the 1970s and ’80s published by the US Bureau of Labor Statistics, the federal agency that monitors labor market trends, one finds no mention of these computing and information technology-related professions because they had not yet been created or even envisioned. So, what will the most important and well-paying jobs be 30 to 40 years from now? If history is any guide, we probably can’t even imagine many of them right now.
Indeed, as Mandel concludes in his new essay, history tells us that, “the next big job-creating innovation isn’t likely to announce itself in bold letters before it arrives. Just because the next big thing isn’t obvious today doesn’t mean it won’t be obvious a year from now.”
Today’s tech pundits would be wise to remember that insight when making forecasts about a future that is, as Mandel suggests, so “fundamentally unpredictable, even at close range.”
The Technology Liberation Front is the tech policy blog dedicated to keeping politicians' hands off the 'net and everything else related to technology.