César Hidalgo: prediction

Transcript context

…So coming coming back to Thurston. So you were describing this kind of, you know, asymptotic curve of of learning. So, you know, it's a function of of experience. But then, in the next chapter, you went on to talk about disruptive technology. So you gave a great example of steel. So, know, like Yeah. To manufacture steel, there are roughly 4 or 5 tiers of of steel. And what happened was that as companies started to develop higher grades of steel, entrants would come in and develop lower tiers of steel that were kind of crap, but they had more upwards trajectory. And that would create this disruptive cycle, which wasn't this limiting curve, but it was actually a bit more like Moore's Law, it was like an exponential curve. Explain that. Yeah. So that that is the idea of disruptive innovation by Clayton Christensen, and it's the connection in some way between Moore's Law and the loss of Thurston Wright unwrapping. So if I can draw in the air here, you know, we had curves at first that are a little bit like a square root, know, that they grow fast in the beginning and then they they slow down and pitch around. And then you have Moore's curve which is an exponential that grows over several orders of money. And you have to reconcile the 2. Now the way that you reconcile the 2 is that you realize that when you're operating at the industry level or at a geographic level, you know, like at a country scale and over long periods of time, you don't have the development of a technology that involves a single learning curve, but a collection of generations of technology that have multiple learning curves and that Moore's Law is like that envelope that captures that collection of other individual learning curves. Know, so for example when you look at manufacturing of LCD panels, they go through generations and each generation is able to produce panels that are bigger you know, and that have less defects and so forth. So you have lots of examples of that, and what is interesting about that is that when you move from 1 learning curve to the next, the next learning curve, even though it can soar higher, it starts at a lower point because you are at the beginning of it. So when the new technologies are introduced, they are worse than the incumbent technologies. Like when digital photography was introduced, it was much worse than chemical photography. And people in the 19 eighties that were involved in chemical photography, the people at Polaroid, they laughed at the digital photographer. Said these guys are never gonna be able to get, you know, the type of colors and resolution that we're able to get you know with our chemistry. And the technology gets laughed at because it was worse, know. Instant photography was also laughed at at some point because it was worse, but then eventually that curve keeps on growing and it gets to like a plateau that goes even higher, and then a new technology comes along and moves into a plateau that is higher. So every time you have that intersection coming, have a window of opportunity. Because in that window of opportunity you have a technology that is worse, you know, that the incumbents don't take seriously, you know, and that is gonna be able to surpass them. And the moment that those 2 curves cross, you know, is when the incumbents get, you know, desperate and they think that they're gonna be able to get there, but usually those changes also involve architectural innovation which is what we discussed earlier. So moving from let's say chemical photography to digital photography would have required completely redoing and restructuring the entire operation of Polaroid because they were not set up to do that. So moving from let's say chemical photography to digital photography would have required completely redoing and restructuring the entire operation of Polaroid because they were not set up to do that. They were like a chemical company that started with doing polarizing film. They were heavy into chemistry, not into electronics.…

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