Innovation trends
Innovation is the process of discovering new technologies, new ideas and turns them into something that can change the ways people live and work. In the early 20th century innovation has transformed the U.S. economy from agriculture base into industrial base through the development of automobiles, highways, airplanes, etc. all of which have made it easier for businesses to build and sell their products all over the world. For example, the assembly line production invented by Henry Ford allowed car manufacturers to massively produce automobiles faster, better and at lower prices. Therefore it allowed more people to afford what had once been a luxury for the rich. Before the assembly line, automobile industry produced only few thousand cars per year, mostly for the very rich. With the assembly line, Ford was able to build few hundred cars per months and with several assembly lines he could produce several hundred cars per week. Building a large amount of cars allowed him to negotiated better prices with suppliers and reduced the price of car about 25% in the first year. By continue improving the building process, he could build thousand cars at much reduced prices. When the price of a car was reduced about 68%, it is no longer a luxury item for the rich but for everybody. Within ten years, about 80% of working people in the U.S can afford to buy a car. The automobile industry exploded, employed more workers which drove U.S. economic growth. This rapid pace of innovation and increases in productivity continued for most of the century, expanding the efficiency of American workers and providing more export of products and services all over the world.
In the late 20th century another innovation wave hit the global market with semiconducting, electronics, computing, and telecommunication which again drove the U.S. economic to another higher level. It raised wages, expanded the market and changed the way people work and live. The personal computer industry put a computer in every household in the U.S. then all over the world. The electronic industry developed thousand of devices, from transistor radio to MP3; from black and white television to flat screen 3D digital TV. The telecommunication connected everybody via wire telephones then wireless mobile phone, and Voice over Internet Protocol (VOIP) that allowed people to talk to anybody in the world via their computers. These innovations drove economic growth by helping businesses to be more efficient, achieved higher productivity. As businesses become more productive, the prices of products and services fall but workers’ wages rise, thus improving the standard of living. When workers produced more, they earned more and with more money, they purchased more things and pushed the consumer economy to another level of growth.
Beginning in the 21st century, another innovation wave is taking shape with Information Technology, Biotechnology, and Nanotechnology. There is a major change in modern manufacturing factories with the application of automation and robots. The new digital manufacturing technology is so efficient that it is no longer be economical to manufacture in lower cost countries such as China, Malaysia any more. In the past twenty years the reason for outsourcing was cost of labor but with robotic manufacturing, the cost is lower and the productivity is higher as robots operate 24hour and 7 days nonstop. Why outsource works somewhere when things can be manufactured locally for much lower price? The new trend today is insource, NOT outsource and it completely changes the balance of economic power. Countries that are depending on low labor cost will see their economies shrinking fast. The robotics industry was kept quiet for number of years suddenly exploded with thousands of new robots that can do many things, from building cars, move large and heavy equipments in construction to perform surgery, and doing military combat. It is estimated that currently the U.S already have over thousand startups specialize in robots. The most expensive robots are priced at million dollars for large construction works and the least expensive is only less than a hundred dollars for sweeping floor at home. A robot in assembly line performs moving and shipping boxes in warehouse and post offices only cost about twenty thousand dollars. A robot executive declared: “Every job that has been outsourced for low labor costs now can be done back in the U.S. for fraction of the cost with better quality, efficiency and accuracy. For example, a car manufacturing worker in China works 8 hours and make $25 dollar a day, the same job can be done by a robots who works 24 hours but costs less than $4 a day and after 2 years the cost is almost zero because the only cost is electricity to operate the robot.
Another innovation called ‘Additive manufacturing’ is making cost-effectively ‘print’ 3D products. In a traditional manufacturing, things are produced by people using tools such as saws, lathes, milling machines and drill presses. This is a long process that requires accuracy and time-consuming. The more complex the product, the more labor is required and that is why things are expensive and why many manufacturing outsource to low cost countries. However with additive manufacturing, things are produced by melting successive layers of materials based on 3D models. The 3D printers use powered metal, droplets of plastic, and other glue materials similar to the toner cartridges in current laser printers. This 3D printer allows people to create many things without buying any tools. Just like today we are using laser printers to print a page. The new 3D printer can “print” many physical things at similar cost. Today 3D printers can create many mechanical devices, medical implants, and jewelry. Depending on the physical things, a 3D printer can cost hundred thousand dollars for sophisticate things such as electronic circuits, electronics devices or a few hundred dollars for children‘s toys and household products. This is what President Obama called: “The renaissance age of manufacturing” as it once again becomes a major industry in the U.S.
How will these innovations affect China and low cost Asian countries? The answer can be “Significant” or “Disaster” depend on who do you ask. Of course China’s manufacturing do not stand still and will also applies these technologies sooner or later. But the issue is what will happen during the transition? What will happen to hundred millions of labor workers suddenly out of work? It took the U.S about 20 years for the transitions from industrial base into knowledge base economy but it would be much longer and more painful for other countries.
To successfully make this transition the requirement is a strong education system based on science, technology, engineering and math (STEM). The new environment will need thousands of 3D printer designers, Robots designers, Computer specialists, Data analysts, Design engineers and scientists to design, operate and maintain sophisticated computer-based equipments. These are skills that will be in the highest demand in the future to keep the new economy running. With new innovations and new technologies, there will be new demands and new markets for startups found by entrepreneurs. The current U.S technology market is now booming with people who have worked for years in the technology industry and now become entrepreneurs as they seize new opportunities. Today in almost every city in the U.S. you can see many entrepreneurs starting their companies. You also see many college graduates become entrepreneurs as they are know about the rapidly changing technologies and want to make a difference.
This is the new trend and it is expected to spread all over the world as young technical people are quickly realize about their potentials and want to help their country to innovate too. Innovations will create massive change in our society and our world and it will change the way people live and work but the pace of change is still depending on the education system and how fast it can adapt to this trend.
Sources
- Blogs of Prof. John Vu, Carnegie Mellon University
