Technological Revolutions and Financial Capital

June 30th, 2006

I have been tucking into a book entitled Technological Revolutions and Financial Capital

The author Carlota Perez observes that there are 3 key features which interact and influence each other

1). The fact that technological change occurs by clusters of radical innovations forming successive and distinct revolutions that modernize the whole productive structure.

2). The functional separations between financial and production capital, each pursuing profits by different means; and

3). The greater inertia and resistance to change of the socio-institutional framework in comparison with the techno-economic sphere, which is spurred by competitive pressures

Interesting. I had a fascinating chat with a colleague yesterday, concerning the marketing communications and media industries. And we both agreed, there is a great deal of inertia and feet dragging as this existing business and media ecology struggles to get to grips with the full force of digitilisation.

Too much at stake, too much money to be lost, too much pain in the process of transition, and a floundering around as to exactly what skill sets are required to enable their clients to succeed in this hyper-competitive world.

I have certainly witnessed this trend.

And having been in the US recently, I witnessed, an incredible surge of innovation clustered around community based business models and structures.

So for those that are still in denial – clients will eventually be asking their big agency networks what exactly they are doing to counterbalance this trend.

The question is whether they will have any real answers?

Perez also states

A technological revolution can be defined as a powerful and highly visible cluster of new and dynamic technologies, products and industries, capable of bringing about an upheaval in the whole fabric of the economy and propelling a longer-term upsurge of development. It is a strongly interrelated constellation of technical innovations, generally including an important all-pervasive low cost input.

Think Skype or google , or OhMyNews or Second Life or Current TV Then think about the cost of setting up an iPTV channel.

Once upon a time it would cost $5 million to do that, today the cost $150k

That is the scale of the disruption

Yet what warrants the title for the present purposes is that each of those sets of technological breakthroughs spreads far beyond the confines of the industries and sectors where they originally were developed

This is what all these examples do – plus the create a different type of value.

Life simplifying
Life Enabling
Navigational

So if I was a company with a massive advertising budget, I suggest that one needs to think very hard about the principles of modern day marketing, and I would think also very deeply as to whether the challenges to your economic model is not exactly the same as your marcomms companies.

Whose going to blink first?

Clients will drive the change. And remember it was Jim Stengel of P&G that said that TV advertising stopped working circa 1987 – which curiously enough is the time warp that a lot of agencies seem to be stuck in.

Hideki Komiyama the COO of Sony electronics said