how technological innovation happens

The Nature of TechnologyThe Nature of Technology

Feb 10, 2011

W. Brian Arthur

External Professor, Santa Fe Institute and

Intelligent Systems Lab, PARC

How does technology evolve? How does technology evolve?

• Novel technologies arise by putting together existing technologies (by combination)

© 2010 W. Brian Arthur 2

© 2011 W. Brian Arthur 3

© 2010 W. Brian Arthur 4

Ogburn’s Claim (1922)Ogburn’s Claim (1922)

William Fielding OgburnSocial Change, 1922

“It would seem that the larger theequipment of material culture, thegreater the number of inventions.The more there is to invent with,the greater will be th e number of

inventions. When the existingmaterial culture is small,embracing a stone technique and aknowledge of skins and somewoodwork, the number ofinventions is more limited thanwhen the culture consists of aknowledge of a variety of m etalsand chemicals and the use ofsteam, electricity, and variousmechanical principles such as thescrew, the wheel, the lever, thepiston, belts, pulleys, etc. Thestreet car could not h ave beeninvented from the material cultureexisting at the last glacial period.The discovery of the power ofsteam and the mechanicaltechnology existing at the timemade possible a l arge number ofinventions.”

© 2011 W. Brian Arthur 5

The Evolution of Technology The Evolution of Technology (Steps)(Steps)

1. Novel element forms as combination from existing elements. Accepted if provides a needed functionality, and is technically and economically viable

2. Novel element replaces techs and components with similar functionality across the collective

3. Adds to the substrate of elements to construct from

© 2011 W. Brian Arthur 6

Evolution of Technology Evolution of Technology (Steps cont’d)(Steps cont’d)

4. Novel element generates new needs- for supporting methods and arrangements - for methods to overcome limitations - for techs to broaden functionalities

5. New element destroys replaced technologies’ niches for their dependent technologies

6. The economy adjusts to these steps

© 2010 W. Brian Arthur 7

Biological vs. Technological EvolutionBiological vs. Technological Evolution

• Biological: – Darwinian variation and selection, – accumulation of incremental changes– But … occasional combinations

• Technological: – Combinatorial, abrupt, – self-augmenting – With much Darwinian evolution once a technology exists

© 2010 W. Brian Arthur 8

An Experiment at FXPALAn Experiment at FXPAL

W. Brian Arthur and Wolfgang PolakW. Brian Arthur and Wolfgang Polak

Idea

Create an artificial world in which technologies evolve indefinitely from previous ones.

I.e. Allow the system to create technologies by combining previous technologies

© 2010 W. Brian Arthur 9

An artificial world within the machineAn artificial world within the machine

• The “technologies” will be logic circuits

• Little agents in green eye shades

• They have a wish list of “needs” for logic circuits to be potentially fulfilled– ( 2-bit Exor, 4-bit Equals, 2-bit adder, etc)

© 2010 W. Brian Arthur 10

How the experiment worksHow the experiment works

1. Start from one primitive element (a NAND gate)

2. Make circuits by random combination of existing elements

3. Check to see if any needs (target logic purposes) are fulfilled

4. If so, these novel circuits become new building blocks

© 2010 W. Brian Arthur 11

NAND:NAND: the primitive elementthe primitive element

© 2010 W. Brian Arthur 12

NOT circuitNOT circuit

© 2010 W. Brian Arthur 13

IMPLY circuitIMPLY circuit

© 2010 W. Brian Arthur 14

3-bit AND3-bit AND

© 2010 W. Brian Arthur 15

1-bit adder1-bit adder

© 2010 W. Brian Arthur 16

2-bit adder2-bit adder

© 2010 W. Brian Arthur 17

Tech 33: And-3Tech 33: And-3

© 2010 W. Brian Arthur 18

3-bit adder3-bit adder

© 2010 W. Brian Arthur 19

4-bit adder4-bit adder

© 2010 W. Brian Arthur 20

After 250,000 steps  After 250,000 steps  

1. Quite complicated circuits have evolved

– 8-way exor, 8-way and, 4-bit equal, etc.

– An 8-bit adder (16 inputs, 9 outputs). This

is one of 10177,554 possible circuits

© 2010 W. Brian Arthur 21

But these complicated technologies But these complicated technologies require intermediate steps  require intermediate steps  

• They require intermediate (simpler) technologies

… which only appear if there are intermediate needs

- (Cf. R. Lenski et al. Evol. Origin of Complex Features)

© 2010 W. Brian Arthur 22

A Cambrian explosion?  A Cambrian explosion?  

After about 30,000 steps, sudden appearance of key circuits (enabling technologies) then quick use of these

– Full adder appears after 32,000 steps; 2,3,4-bit adders

quickly after that

© 2010 W. Brian Arthur 23

The evolution is history dependent  The evolution is history dependent  

New technologies build out of ones “discovered” earlier

So the order in which techs are invented matters

© 2010 W. Brian Arthur 24

Schumpeter’s Gales of DestructionSchumpeter’s Gales of Destruction

When a technology disappears (is replaced) a technology it used may have no further use. That tech then disappears … etc.

Q. Are these gales “sand-pile avalanches”? –I.e. is the system at self-organized criticality?

© 2010 W. Brian Arthur 25

Avalanches of destruction follow a power lawAvalanches of destruction follow a power law

© 2010 W. Brian Arthur 26

© 2010 W. Brian Arthur 27

Joseph Schumpeter Joseph Schumpeter

“Add as many mail-coaches as you please, you will never get a railroad by so doing.”

© 2010 W. Brian Arthur 28

François JacobFrançois Jacob

“In our universe, matter is arranged in a hierarchy of structures by successive integrations. Whether inanimate or living, the objects found on earth are always organizations or systems. Each system at a given level uses as its ingredients some systems from the simpler level. … The great diversity of vertebrates results from differences in the arrangement, in the number and distribution, of these few [building blocks].”

© 2010 W. Brian Arthur 29

Laser printerLaser printer

© 2010 W. Brian Arthur 30

Part 2. Bodies of technology …Part 2. Bodies of technology …

and how innovation works in the and how innovation works in the economyeconomy

© 2010 W. Brian Arthur 32

Innovation: works differently for bodies of technologyInnovation: works differently for bodies of technology

Domains offer a toolbox of technologies:

they emerge, aren’t invented

… build slowly …  and profoundly change the economy

© 2010 W. Brian Arthur 33

Since 1600sSince 1600s

• Optical phenomena

• Chemical phenomena, heat phenomena

• Electrical, electronic, digital

• Genomic, photonic, nanotech

© 2010 W. Brian Arthur 34

A domain offers a world where things can be done differentlyA domain offers a world where things can be done differently

Real Real WorldWorld

Digital RealmDigital Realm

Real world object

Digital Version

Manipulated Version

New, processedobject

© 2010 W. Brian Arthur 35

Domains go through stagesDomains go through stages

1. Early phase: many companies, turbulence, missing pieces, sometimes a crash

2. Sustained buildout, steady growth

3. Mature technology

© 2010 W. Brian Arthur 36

How does innovation work with a domain?How does innovation work with a domain?

• The economy doesn’t adopt a domain, it encounters it

• All parts of the economy encounter the domain– many change as a result (if the change is significant, we call that a revolution)

© 2010 W. Brian Arthur 37

A domain and industries that use itA domain and industries that use it

• Put together combinations drawn from each – E.g. Banking and financial derivatives, Movie industry and CGI

© 2010 W. Brian Arthur 38

Why is technology becoming more “biological”?Why is technology becoming more “biological”?

• A chemistry of functionalities, programmable, remotely

connectable-- Everything in conversation with everything

• Can sense environment, and thus reconfigure appropriately

• Thence self-configuring, self-optimizing, self-healing

© 2010 W. Brian Arthur 39

Three overall observationsThree overall observations

• Technology is a vast “chemistry” of functionalities, that in combination give rise to further functionalities

• Bodies of technology are worlds in which things can be done differently. They are not adopted, but encountered

• Technology is becoming biological

© 2010 W. Brian Arthur 40

We feel an unease with this huge thing We feel an unease with this huge thing building out …building out …

We place our hopes in technology, but we place our trust in nature

Modern mythology