The Five Technological Revolutions
In Technological Revolutions and Financial Capital, [1] Carlota Perez plots the evolution of societal, industrial, and economic capital based on Technological Revolutions that occurred over the last few hundred years. She opines that these disruptive trends happen every generation or so.
It started with the Industrial Revolution in the 1770s, followed by the Age of Steam and Railways in the early 19th Century, then the Age of Steel and Heavy Engineering in the late 19th Century bringing us to the Age of Oil and Mass Production in the 20th Century. We conclude with the current Age of Software and Digital into the 21st Century (see Figure 1.1):
Figure 1.1 – The five Technological Revolutions, adapted from Technological Revolutions and Financial Capital by Carlota Perez (© Scaled Agile Inc.)
Each revolution has a regular sequence of three distinct phases:
- Installation Period: New technology and financial capital combine to create a “Cambrian explosion” (a geological term for a relatively short time over which a large diversity of life forms appeared) of new entrants
- Turning Point: Existing businesses either master the new technology or decline and become relics of the last age
- Deployment Period: The production capital of the new technological giants starts to take over
Carlota also explains that she has observed from history that during the Installation Period, while there is an influx of financial capital to support the new entrants, this is followed by some form of “crash” or multiple crashes.
If we consider the Age of Oil and Mass Production, we had the Roaring Twenties, but in 1929, we had the Wall Street Crash, which affected markets around the world. We then encountered the longest Turning Point in history, which is often when we see a period of political uncertainty, and in the 1930s, we saw the rise of fascism in Europe through to the conclusion of the Second World War in 1945. Those that survived took advantage of the biggest boom in history, with the likes of Toyota coming to the fore in car manufacturing.
If we turn to the Age of Software and Digital, we had the Dotcom crash that peaked in 2000 and the global financial crash in 2008. Carlota was on stage in Paris in 2019, presenting at Sogeti’s Utopia for Beginners’ Summit about our Digital Future [2], and she said:
Bearing in mind this was in 2019, and then in March 2020, we had the unprecedented Covid-19 Pandemic. It was as if Perez predicted this months earlier.
Pro tip
Watch the video of Carlota Perez on stage in Paris in 2019 because it will help with a great narrative if you are teaching lesson one in Leading SAFe®. You will find the link in the Further reading section [2].
Post Covid-19 Pandemic, it is clear that we are now firmly in the Deployment Phase of the Age of Software and Digital.
We often get asked, “What is the next Technology Revolution?” We are neither Futurists, nor Clairvoyants. That said, we know that the rise of new technologies comes with the decline of the previous technology. We then have a period of bubble prosperity with financial capital supporting the new entrants.
If we follow the current financial capital, then we will see investment in Artificial Intelligence (AI), Big Data, and the Cloud.
Research by PWC found 72% of executives believe that AI will be the most significant business advantage of the future.
The company Snowflake, which provides data warehouse-as-a-service, was the biggest software Intellectual Property Office (IPO) in 2021 and implied five-year sales growth of 819%. In the cloud, there are three or four major providers, and the worldwide end-user spending on public Cloud services was forecast to grow to $332.3 billion in 2021.
The future is ABC – AI, Big Data, and the Cloud, which is reflected in SAFe® 6.0, where all three elements are represented in the Big Picture.
Caution
In a survey, only 9% of respondents strongly agree that their companies have Leaders with the skills needed to thrive in digital workplaces. Therefore, if we are going to survive the next Technological Revolution, we need to upskill our Leaders, fast!
