Backscatter:

Picking a Winner

by Donald Christiansen

Part of the joy of being an engineer is working on cutting-edge projects. We all like to be part of an organization that brings to market new and useful — occasionally even revolutionary — products and services.

Corporations have parallel ambitions. They hope to bet on technologies that will spawn products that can move smoothly into the marketplace — on a schedule that is predictable and with a return on investment that is satisfactory.

Unfortunately, picking a winner is not that easy. Technology forecasting — part art, part science — is called upon to help. But deciding which technologies will be successful, and how and when they will be incorporated into commercially viable products is a daunting challenge. Those who try have been notably unsuccessful. Whether based on mathematical models or experts’ opinions, the accuracy of such forecasts is often far less than that of science fiction writers.

Here are a few forecasts that were widely publicized in major business publications:

• Huge sun-reflecting satellites to illuminate night-shrouded areas of the earth (NASA said they would be able to do it by the mid-1970s)

• Human cloning by 1985 (predicted by Nobel Laureate Joshua Lederberg)

• Nuclear-powered undersea recreation areas and undersea motels by 1990 (postulated by TRW in 1966)

• Newspapers delivered by facsimile by 1978 (another TRW prediction)

• Superconductors as a billion-dollar industry (In 1967, Fortune reported it could happen by the mid-1970s)

• The demise of the internal combustion engine (Bill Lear, developer of the Learjet, predicted in 1971 that within 10 years, the gasoline engine would be a collector’s item.)

(I think I remember reading about some of these same predictions in Popular Science magazine in the 1930s.)

Some projections will never materialize, as they will be bypassed by newer technology. Others may eventually make it, but forecasts having a faulty timeline can be useless to corporate planners, or worse, turn into a money pit.

Forecasting Flaws

Forecasts that misfire are frequently based on our fascination with our own technology and the enthusiasm it generates among market analysts and business magazine writers. The popular business press has often been the first to express unbridled optimism about the expected success of a new technological development, and, often as frequently, the first to criticize its developers when expectations were not met.

With the computer field being a notable exception, most forecasts have been much too optimistic. (We all know that optimism is needed to attract capital!) Steven Schnaars, author of Megamistakes, warns that in forecasting, “a passionate focus on technology for its own sake spells disaster.” Instead, you’ve got to be aware of other factors, many of which are exogenous, some in themselves unpredictable. The poor batting average in technology forecasts can be attributed in part to over-optimism, “new” forecasts that are retreads of earlier forecasts, unanticipated fads and fashions (particularly in the consumer marketplace), and, perhaps most dramatic, “disruptive” technologies (e.g., solid-state technology) that threaten the status quo. A disruptive technology can drastically shorten the expected life cycles of numerous products and even industries.

On the contrary, the rise of a new technology may be unexpectedly delayed because companies having a large investment in skills and machinery may be reluctant to abandon a product threatened by the new technology, and may rely on marketing techniques to retard the threat. With the transistor looming on the horizon, the major manufacturers of receiving tubes banded together to form the Electron Tube Information Council, whose objective was to define and promote the advantages of vacuum tubes over transistors. Such advantages proved dubious or transitory at best, but perhaps the council’s efforts delayed the incorporation of transistors and semiconductor diodes into certain products and helped some of the receiving tube makers survive longer than they otherwise might have.

The Tipping Phenomenon

Then there’s the case of two or more manufacturers vying for the same market, exploiting the same technology but in different formats. It is possible that more than one contender can survive, but the market may “tip” to a single winner, especially for services or products that involve networks of hardware, software and users. How and when a market will tip to a particular format is not predictable. Robert Lucky, author of Silicon Dreams, called it “an instance of chaos in group dynamics.”

Sometimes the contest for a market niche will go on indefinitely before a clear winner emerges. Sony’s Betamax survived for 27 years, selling 18 million units before it succumbed to VHS, though to many the handwriting on the wall seemed clear long before Sony withdrew.

Today, people are paying a lot more attention to technology forecasting methodologies than was the case in the 1950s and 60s, when technology forecasting first gained interest as a management tool. Once, when an engineer-colleague of mine was assigned to a market research project, he complained that the major tool for technological forecasting was nothing more than a jury of executive opinion, which he disparagingly termed “circular reasoning.” But that was long ago. Today we expect more.

Even so, I can’t help but think of the comment once made by a writer for Forbes: “When you get the urge to predict the future, better lie down until it goes away.”

Resources

For more on technology forecasting, see:

• Kahn, Herman, and A.J. Wiener, The Year 2000: A Framework for Speculation on the Next Thirty-Three Years, Macmillan, 1967.

• Schnaars, Steven, Megamistakes: Forecasting and the Myth of Rapid Technological Change, The Free Press, 1989.

• Moyer, Reed, “The futility of forecasting,” Long Range Planning, Vol. 17, No. 1, 1984.

• Wise, G., “The accuracy of technological forecasts: 1890-1940,” Futures, Vol. 8, No. 5, 1976.

• Godet, M., “Reducing the blunders in forecasting,” Futures, Vol. 15, No. 3, 1983.

• Toffler, Alvin, Future Shock, Random House, 1970.

• “The future that never came,” Forbes, July 10, 1978.

• Wolff, Michael, “Carlson’s Dry Printer, IEEE Spectrum, December 1989.

Donald Christiansen is the former editor and publisher of IEEE Spectrum and an independent publishing consultant. He can be reached at donchristiansen@ieee.org.