Brian Lee CrowleyThe world is in need of a productivity revolution, writes Brian Lee Crowley in the Globe and Mail, and new technologies are going to take us there – even if their development is uneven.

By Brian Lee Crowley, Oct. 15, 2015

There I was in Seoul, standing next to the minister of defence for a mid-sized African country that has been involved in several peace-keeping operations in recent years. Did we talk about Canada’s peacekeeping record? It didn’t even come up. We were too fascinated by watching a 3-D printer at work in a private-sector sponsored facility for high-tech start-ups.

What was this machine doing, the minister wanted to know? We worked through the idea of creating a detailed and precise digital image of a complex object, and then using the printer to reproduce it, using various kinds of raw materials according to the properties you wanted the finished product to have.

Is that an important thing to be able to do, he asked? The $64,000 question. I cast around for an answer to illustrate for him how important this innovation was destined to become. Well of course, I hazarded, it has important military applications. His eyes lit up.

Think about a military campaign where transport is being provided by trucks. The breakdown of a single $5 part can immobilise an entire truck, but you cannot predict which parts will break down in which trucks, so you have to transport a lot of spare parts, most of which you will not need. The number of spare parts goes up exponentially if your convoy involves different kinds of vehicles whose parts are not interchangeable.

Technological change is one of the best places to look for productivity improvements, but changing technologies cannot be conjured out of the air, and their effects are slow to be felt.

Suppose instead that you carried no spares at all, but digital images of all the parts, together with a few heavy duty 3-D printers. Any part you needed could be printed to exact specifications on the spot. Suddenly the minister wanted 3-D printers.

The problem is that 3-D printers are not ready for such prime time uses and this tells us a lot about how productivity revolutions occur.

We certainly need a productivity revolution right about now. Most of the world is dogged by the problem of low productivity growth, and since rising productivity drives rising incomes, everybody wants more of it. Technological change is one of the best places to look for productivity improvements, but changing technologies cannot be conjured out of the air, and their effects are slow to be felt.

Humankind has benefited from revolutions underpinned by water power, steam and electricity. Our mobility and velocity have been transformed by canals, then railways, cars and airplanes. Our ability to send each other news and information went from the pony express to the penny post, the telegraph, telephone, radio, television and internet.

But one characteristic of such transformations is that they do not happen instantaneously. On the contrary, the early versions are often cumbersome, expensive and dangerous. The first steam-powered railway journey took place in the UK in cars open to the elements with occupants breathing coal smoke and showered with sparks from the engine. It was, shall we say, an inauspicious beginning that made travel by horse look quite appealing.

Something similar could be said about the early stages of almost every one of the technological revolutions that have transformed human life in the last three centuries or so. Early cars were dirty, expensive and unreliable. Early computers cost a bomb, filled large rooms and could only be used by experts.

Yet every one of these technologies went on to transform human life as incremental improvements brought down costs and increased quality, making them suitable for mass consumption and therefore capable of massive impact, including on productivity.

The cognoscenti think the next such wave of transformative innovation will come from the NBIC technologies (Nanotechnologies, Biotechnologies, Information and Cognition). But we are largely still quite low on the implementation and quality curve.

A good example is surgical robots in hospitals. According to technology analyst Nicholas Bouzou, “In theory these robots drive huge productivity gains: less invasive and more precise surgeries, less post-surgery complications, outpatient hospitalization. Only good news. Yet nearly all hospital managers who bought a robot assert that they are not able to make their expensive investment profitable.”

This shouldn’t be surprising. Innovation always meets resistance, especially from those whose skills might be made redundant or at least less valuable, but also from those who are familiar with and therefore trust the outmoded but tried and true. Early versions of new technologies are almost invariably less robust and require more upkeep than later versions, and firms always have an existing stock of people and equipment that they have invested that are both poorly suited to the new technological world and yet deeply embedded in established operations.

The pattern is now well-established. Early innovation not only may not improve productivity, it may raise costs and cause expensive disruptions. I suspect that’s where we are with the newest wave of technological change. The course of true love, including with technology, never did run smooth.

Brian Lee Crowley (twitter.com/brianleecrowley) is the Managing Director of the Macdonald-Laurier Institute, an independent non-partisan public policy think tank in Ottawa: www.macdonaldlaurier.ca.

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