Technology – Page 45 – artdiamondblog.com

“The Most Remarkable Period of Practical Inventiveness in World History”

Source of book image: online version of the WSJ review quoted and cited below.

(p. W8) There are technologies and then there are technologies. Some are trivial, such as Ziploc plastic bags. They’re handy, to be sure, but they don’t change the world. Some are extraordinarily simple but profound, such as the stirrup, which came along only after men had been riding horses for well over a thousand years. Nothing more than a ring of metal hung from a leather strap, the stirrup made cavalry the dominant force on the European battlefield and therefore made the mounted knight the dominant force in European society for several hundred years.

As Gavin Weightman’s “The Industrial Revolutionaries” reminds us, inventions on the level of the stirrup’s importance seemed to come every other month during the late 18th and 19th centuries — what Mr. Weightman calls “the most remarkable period of practical inventiveness in world history.”
When Thomas Hobbes famously wrote in the 17th century that the great majority of the population led lives that were “nasty, brutish and short,” he was describing an agrarian society that was, in its essence, unchanged since the advent of agriculture about 10,000 years earlier. Ownership of land was the basis of wealth. Hobbes had no reason to think that the situation would change any time soon. But it did: A rapidly accelerating development of world-transforming technologies, subsumed under the rubric of “the Industrial Revolution,” began in Britain and within 100 years had molded the modern world.
. . .

The Industrial Revolution revolutionized more than just the global economy: It transformed politics and society. A world divided between a handful of aristocrats and millions of peasants was transformed into a world dominated by the middle class, where wealth is widely distributed and the franchise universal.

For the full review, see:
JOHN STEELE GORDON. “Books; Inventing a New World; The men who engineered the astonishing emergence of the modern age.” Wall Street Journal (Sat., April 11, 2009): W8.
(Note: ellipsis added.)

The book being reviewed, is:
Weightman, Gavin. The Industrial Revolutionaries: The Making of the Modern World 1776-1914. New York: Grove Press, 2009.

Durant and Studebaker Made Transition from Carriage to Car

Christensen’s theory of disruptive innovation predicts that incumbents will seldom survive a major disruption. So it is interesting that Durant and Studebaker, appear to have been exceptions, since they made the transition from producing carriages to producing cars. (Willie Durant founded General Motors in 1908.)

(p. 189) In 1900, fifty-seven surviving American automobile firms, out of hundreds of contenders, produced some 4,000 cars, three-quarters of which ran on steam or electricity. Companies famous for other products were entering the fray. Among them were the makers of the Pope bicycle, the Pierce birdcage, the Peerless wringer, the Buick bathtub, the White sewing machine, and the Briscoe garbage can. All vied for the market with stationary-engine makers, machine-tool manufacturers, and spinoffs of leading carriage firms, Durant and Studebaker. Among the less promising entrants seemed a lanky young engineer from Edison Illuminating Company named Henry Ford, whose Detroit Automobile Company produced twenty-five cars and failed in 1900.

. . .
(p. 191) Willie Durant, who knew all about production and selling from his carriage business, decided it was time to move into cars after several months of driving a prototype containing David Buick’s valve-in-head engine–the most powerful in the world for its size–through rural Michigan in 1904. Within four years, Durant was to parlay his sturdy Buick vehicle into domination of the automobile industry, with a 25 percent share of the market in 1908, the year he founded General Motors.

Source:
Gilder, George. Recapturing the Spirit of Enterprise: Updated for the 1990s. updated ed. New York: ICS Press, 1992.
(Note: ellipsis added.)

Christensen’s theory is most fully expressed in:
Christensen, Clayton M., and Michael E. Raynor. The Innovator’s Solution: Creating and Sustaining Successful Growth. Boston, MA: Harvard Business School Press, 2003.

Our “Patently Absurd” Patent System

(p. A15) The Founders might have used quill pens, but they would roll their eyes at how, in this supposedly technology-minded era, we’re undermining their intention to encourage innovation. The U.S. is stumbling in the transition from their Industrial Age to our Information Age, despite the charge in the Constitution that Congress “promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.”
. . .

Both sides may be right. New empirical research by Boston University law professors James Bessen and Michael Meurer, reported in their book, “Patent Failure,” found that the value of pharmaceutical patents outweighed the costs of pharmaceutical-patent litigation. But for all other industries combined, they estimate that since the mid-1990s, the cost of U.S. patent litigation to alleged infringers ($12 billion in legal and business costs in 1999) is greater than the global profits that companies earn from patents (less than $4 billion in 1999). Since the 1980s, patent litigation has tripled and the probability that a particular patent is litigated within four years has more than doubled. Small inventors feel the brunt of the uncertainty costs, since bigger companies only pay for rights they think the system will protect.
These are shocking findings, but they point to the solution. New drugs require great specificity to earn a patent, whereas patents are often granted to broad, thus vague, innovations in software, communications and other technologies. Ironically, the aggregate value of these technology patents is then wiped out through litigation costs.
Our patent system for most innovations has become patently absurd. It’s a disincentive at a time when we expect software and other technology companies to be the growth engine of the economy. Imagine how much more productive our information-driven economy would be if the patent system lived up to the intention of the Founders, by encouraging progress instead of suppressing it.

For the full commentary, see:
L. GORDON CROVITZ. “OPINION: INFORMATION AGE; Patent Gridlock Suppresses Innovation.” Wall Street Journal (Mon., JULY 14, 2008): A15.
(Note: ellipsis added.)

Berkshire BYD Technology Bet Based on Munger’s View of BYD Manager

“BOOK VALUE: Berkshire Hathaway’s Charles Munger reads businesses well — and, as a bibliophile, he goes through several books a week.” Source of caricature and caption: online version of the WSJ article quoted and cited below.

At a Berkshire Hathaway annual meeting a few years ago, I remember hearing Warren Buffett say that he stays away from technology stocks because he does not know how to judge which technologies are likely to succeed in the long-run. So I was a bit puzzled by the news that Berkshire Hathaway was investing in BYD, a Chinese company producing an electric car.
The passages quoted below may partially solve the puzzle: the investment in BYD was pushed by Charlie Munger and David Sokol, and was based more on a judgment about the quality of BYD’s management, than the prospects for BYD’s technology.

(p. C1) Mr. Munger’s views have pushed Berkshire into some surprising directions. Several years ago, Mr. Munger learned of an obscure Chinese maker of batteries and automobiles called BYD Inc., which hopes to create a cheap, functional electric car.

A Chinese tech company is nothing like the shoe and underwear makers Berkshire had been buying. But Mr. Munger was enthusiastic, less about the technology than about Wang Chuanfu, who runs BYD. Mr. Wang, Mr. Munger says, is “likely to be one of the most important business people who ever lived.”
Mr. Buffett was skeptical at first. But Mr. Munger persisted. David Sokol, chairman of Berkshire utility MidAmerican Energy Holdings Co., paid a visit to BYD’s factory in China and agreed with Mr. Munger’s assessment. Last year, MidAmerican paid $230 million for a 10% stake in BYD.
“BYD was Charlie’s idea,” Mr. Buffett said. “When he encounters genius and sees it operating in a practical way, he gets blown away.”

For the full story, see:

SCOTT PATTERSON. “Here’s the Story on Berkshire’s Munger.” Wall Street Journal (Fri., MAY 1, 2009): C1 & C3.

“Flock of Intellectuals” Called Eiffel Tower “Dizzily Ridiculous”

(p. W12) The tower is so beloved that few today remember the storm of vitriol, mockery and lawsuits provoked by its selection as the startling centerpiece of the 1889 Paris Exposition Universelle. (One of the losing entries was a gigantic working guillotine!) Even as Eiffel was breaking ground by the Seine River in February 1887, 47 of France’s greatest names decried in a letter to Le Temps the “odious column of bolted metal.” What person of good taste, this flock of intellectuals asked, could endure the thought of this “dizzily ridiculous tower dominating Paris like a black and gigantic factory chimney, crushing [all] beneath its barbarous mass”? The revered painters Ernest Meissonier and William-Adolphe Bouguereau, writers Guy de Maupassant and Alexandre Dumas fils, composer Charles Gounod and architect Charles Garnier all signed this epistolary call to arms, stating that “the Eiffel Tower, which even commercial America would not have, is without a doubt the dishonor of Paris.”

Gustave Eiffel, a self-made millionaire whose firm constructed much-admired bridges all over the world, happily twitted his critics: “They begin by declaring that my tower is not French. It is big enough and clumsy enough for the English or Americans, but it is not our style, they say. We are more occupied by little artistic bibelots. . . . Why should we not show the world what we can do in the way of great engineering projects?”

For the full commentary, see:
JILL JONNES. “MASTERPIECE; ‘Odious Column’ of Metal; The Eiffel Tower wasn’t always a beloved icon.” Wall Street Journal (Tues., MAY 9, 2009): W12.
(Note: ellipsis in original.)