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Technological Forecasting

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Title: Technological Forecasting


1
Technological Forecasting
  • Henry C. Co
  • Technology and Operations Management,
  • California Polytechnic and State University

2
What is Technological Forecasting?
  • Technology forecasting is forecasting the future
    characteristics of useful technological machines,
    procedures or techniques.
  • Items which depend on popular tastes rather than
    on technological capability are excluded. Thus
    commodities, services or techniques intended for
    luxury or amusement are excluded from the domain
    of technological forecasting.
  • The forecast does not have to state how these
    characteristics will be achieved.

3
What Characteristics?
  • Levels of technical performance, like speed of a
    military aircraft, the power in watts of a
    particular future engine, the accuracy or
    precision of a measuring instrument, the number
    of transistors in a chip in the year 2015, etc.
  • Dates and probabilities of breakthrough events,
    technical parameter trends, technology
    substitution rates, technological impacts, and to
    some extent, market growth trends.

4
Elements of Technological Forecasting
  • Technology being forecasted.
  • Time of the forecast a single point, or a time
    span.
  • Statement of functional capability a
    quantitative measure of its ability to carry out
    the function.
  • Statement of
  • Probability of achieving a given level of
    functional capability by a certain time or
  • Probability distribution over the levels that
    might be achieved by a specific time.

5
What are we forecasting?
  • A specific technical approach, or a more general
    technology?

6
Whats the difference?
  • Specific technical approachmeans of solving a
    problem/performing a particular function.
  • For example, Piston engines and jet engines are
    two different technical approaches of the
    technology of powering aircraft
  • Incandescent lamps, fluorescent lamps, and arc
    lights are different technical approaches to the
    technology of providing illumination.
  • A technical approach may be further subdivided.
    e.g., jet engines can be divided into turbojets
    and turbofans.

7
Functional vs. Technical Parameter
  • Functional parameters directly measure the
    extent to which the technology satisfies the
    users needs (speed, power, etc.)
  • Designers adjust combination of technical
    parameters (e.g., turbine inlet temperature and
    compression ratio) to achieve the functional
    parameters desired by the engine user.

8
Why Forecast Technology?
Performance
Physical limit of technology
Effort (funds)
Foster, Innovation The Attackers Advantage,
Summit Books, 1986
9
Why Forecast Technology?
  • To maximize gain from events external to the
    organization.
  • To maximize gain from events that are the result
    of actions taken by the organization.
  • To minimize loss associated with uncontrollable
    events external to the organization.
  • To offset the actions of competitive or hostile
    organizations.

10
Why Forecast Technology?
  • For purposes of production and/or inventory
    control.
  • For facilities and for capital planning.
  • To assure adequate staffing.
  • To develop administrative plans/policy internal
    to an organization (e.g., personnel or budget).
  • To develop policies that apply to people who are
    not part of the organization.

11
For Decision Making
  • Identifies limits beyond which it is not possible
    to go.
  • Establishes feasible rates of progress, so that
    the plan can be made to take full advantage of
    such rates the plan does not demand an
    impossible rate of progress.
  • Describes the alternatives that can be chosen.
  • Indicates possibilities that might be achieved if
    desired.
  • Provides a reference standard for the plan. The
    plan can thus be compared with the forecast at
    any later time to determine whether it can still
    be fulfilled or whether, because of changes in
    the forecast, the plan must be revised.
  • Furnishes warning signals, which can alert the
    decision maker that it will not be possible to
    continue the present activities.

12
Technological Forecast Is Self-altering
  • Weather forecast must be correct if it is to be
    useful.
  • Technological forecast is self-altering.
  • A self-altering forecast is one that, by virtue
    of having been made, alters the outcome of the
    situation.
  • Suppose someone forecasts an undesirable
    situation. Then suppose a decision-maker accepts
    the forecast and acts to prevent the undesirable
    situation. Clearly the forecast did not come
    true. Was it a bad forecast?
  • It is even more important that forecasters
    educate forecast users to the idea that the
    goodness of a forecast lies in its utility for
    making better decisions and not in whether it
    eventually comes true.

13
Contour Map of the Future
  • Future fans out as a wedge-shaped terrain of
    peaks/valleys of threats/opportunities
  • Probability of following any one given pathways
    into the future is small, but the sum of the
    probabilities of all the different discrete
    pathways through the terrain 1.
  • Forecasters job is to map out the contours
    (threats and opportunities) of the futures
    terrain and show the potential routes through it
    so the decision maker can judge the best path.
  • Forecasters Dilemma the finer the details used
    to describe the pathway through the terrain, the
    lower the probability of that exact pathway being
    followed and that particular terrain being
    traversed as the future unfolds.

(after Porter et al, 1991)
14
Process and Philosophy
There is no such thing as a value-free forecast
Its influence starts with where and how we search
for and select our input data and continues on
through how we analyze and interpret the results.
15
Methods of Forecasting
  • Growth curves and Extrapolation
  • Leading indicators
  • Causal models
  • Probabilistic models
  • Environmental Monitoring

16
Extrapolation
  • Assumption Time series data from the past
    contains all the information needed to forecast
    the future.
  • The forecaster extends a pattern found by
    analyzing past time series data.
  • For example A technological forecaster who was
    attempting to forecast aircraft speed would
    obtain a time series of aircraft speed records,
    find a pattern (trend), and extend to the future
    to obtain a forecast.

17
Trajectory of Tech Innovation
Physical limit of technology
Performance
Effort (funds)
Technological performance often follows an
S-shaped curve
Foster, Innovation The Attackers Advantage,
Summit Books, 1986
18
The Pearl-Curve (Excel)
19
The Pearl-Curve (Excel)
20
Leading Indicators
  • Assumption The time series of interest shows the
    same behavior as another time series (the leading
    indicator), but with a known time lag. Thus, what
    the leading indicator is doing today will be
    matched by the time series of interest at a
    specific time in the future.
  • The forecaster uses one time series to obtain
    information about the future behavior of another
    time series.
  • For example A weather forecaster uses turning
    point in the time series of barometric pressure
    to forecast a future turning point in the amount
    of precipitation.

21
Causal Models
  • Assumption The cause-effect linkages in the
    topic of interest are known and can be expressed
    mathematically or in some similar fashion (e.g.,
    a mathematical model).
  • Incorporates information about cause and effect
    relationship, involving some fundamental laws in
    physics.
  • For example A forecast of solar eclipse is based
    on a causal relationship, involving some
    fundamental laws of physics.

22
Probabilistic Models
  • Instead of producing a single-valued forecast,
    probabilistic models produce a probability
    distribution over a range of possible values.
  • Example The probability of rain tomorrow may be
    stated as, for instance, 30. This means that
    over the range of possible outcomes, rain and
    no-rain, the associated probabilities are 30 and
    70, respectively.

23
Environmental Monitoring
  • Forecasts based on trends or growth curves
    require continuity between the past and the
    future.
  • Forecasts based on causal models require the
    consistent operation of the causal factors.
  • Environmental Monitoring of precursor events made
    it possible to forecast the eventual development
    of breakthrough technologies.

24
Forecasting a technological breakthrough requires
that precursor events be identified and used to
provide advance warning.
(after Fahey Narayanan, 1987)
25
Process of Monitoring
  • Collection
  • Screening
  • Evaluating
  • Threshold-setting

26
Collection
  • Aircraft engine company (1930) Concerned about
    possible threats to its business of reciprocating
    aircraft engines.
  • The firm's technological forecasters track
    patents granted in the field of aircraft
    propulsion.
  • Patent granted in 1930 to Flying Officer Frank
    Whittle (Royal Air Force) for an aircraft engine
    based on the jet principle.
  • Air is drawn in through a turbine compressor,
    fuel is burned in the compressed air, and the
    combustion gases are used to drive a turbine,
    which in turn drives the compressor, while
    providing some net thrust to propel the aircraft.
  • This important signal must be screened for
    significance.

27
Screening
  • The jet engine patent is clearly significant to
    an aircraft engine company. It is potentially a
    disruptive technology. The forecaster should
    search further for past signals.
  • 1910 Henri Coanda proposed a jet propulsion
    system in which the compressor would be driven by
    a reciprocating engine instead of by an exhaust
    turbine (ramjet).
  • 1913 French Engineer Rene Lorin proposed a jet
    engine in which the compression is derived
    entirely from the aircrafts forward velocity,
    eliminating the need for a compressor
    (turboprop).
  • 1921 Maxine Guillaume received a French patent
    on a jet engine with a turbine-driven compressor
    similar to Whittles design.
  • 1929 A. A. Griffith of the Royal Aircraft
    Establishment proposed that a turbine engine be
    used to drive a propeller for providing aircraft
    propulsion (turbojet).

28
Evaluating
  • What does this mean to my organization?
  • If it represents the start of a trend or pattern,
    would it affect our mission?
  • Would it make a product obsolete?
  • Would it alter a production process?
  • Would it have an impact on a customer? A
    supplier?

29
Whittles Patent
  • For Whittles engine to work, a compression ratio
    of 4 to 1 and a compressor efficiency of 75
    would be required. The turbine blades would have
    to withstand a temperature of 1500?F. Thus a
    forecaster would be interested in seeking
    information on these parameters.
  • A 1923 report published by Dr. Edgar A.
    Buckingham (National Bureau of Standards) showed
    that only at speeds above 500 mph would the jet
    engine be competitive in fuel economy. Hence the
    forecaster would also be interested in tracking
    aircraft speed.

30
Threshold-Setting
  • As evaluation continues, the evidence for one or
    more hypothesis will become stronger and
    stronger. When the confirming signals show that
    the hypothesis has exceeded its threshold, it is
    time to make a breakthrough forecast.
  • Thresholds passed by 1938 Whittles engine
    requires compression ratio of 4 to 1 and
    compressor efficiency of 75. Turbine blades
    would have to withstand a temperature of 1500?F.
  • In 1931, compression ratio and compressor
    efficiency were 21 and 65, respectively.
  • By 1935, these had reached 2.51 and 65.

31
  • In 1935, Hans von Ohain obtained a German patent
    on a turbojet engine similar to Whittles
    received support from the Heinkel company for
    development of a jet engine.
  • In 1936, Whittle founded Power Jets Ltd. To
    develop an engine according to his design.
  • In 1938, the U.S. Army Air Corps laboratories at
    Wright Field (Dayton, OH) began a 5 year program
    of development of gas turbines for jet engines.
    NACA began a program of compressor development.
    RAE began work on a turbocompressor based on
    Griffiths 1929 design.

32
  • Hans von Ohains jet engine achieved flight in
    1939.
  • Whittles engine flew in 1941.
  • In 1940, the Caproni-Campini CC-2 flew with a
    Coanda-type jet engine.
  • In 1942, a U.S. aircraft flew using a jet engine
    developed by General Electric. That same year saw
    the flight of German jet aircraft that was no
    longer experimental but a combat aircraft.

33
Technological Breakthrough
34
Forecasting a Breakthrough
  • Breakthroughs in technology do not come as bolts
    from the blue.
  • Breakthroughs are the end result of a chain, or
    even a network of precursor events, and these
    events give warning of a breakthrough is coming.
  • Forecasting a technological breakthrough requires
    that precursor events be identified and used to
    provide advanced warnings. The monitoring process
    is designed to help the forecaster answer two
    question
  • Which events are precursors?
  • What do the precursors do?
  • See Martino, J. P., Using Precursor as Leading
    Indicators of Technological Change, 32 341-360
    (1987).

35
Forecasting a Breakthrough
  • Involves a systematic search for these precursor,
    coupled with an evaluation of the significance of
    the precursor.
  • The forecaster seeking advanced warning of a
    breakthrough must search all the relevant sectors
    of the environment in order not to miss important
    signals of coming breakthroughs.
  • The signals found must be synthesized into
    possible patterns of change, and the forecaster
    should continue to search for additional signals
    suggested by the hypothesized patterns.
  • It is important to search for both confirming and
    disconfirming signals.

36
Precursor Events
  • There are many precursor events leading to a
    breakthrough.
  • For instance, there are many precursor events
    between the unpredictable scientific breakthrough
    of 1905 and the eventual commercial use of atomic
    power in 1956.
  • Not all these precursor events provided positive
    signals.
  • Some, such as the impracticality of atomic energy
    plants using particle accelerators, were false
    negative signals.
  • Some, such as the possibility of fusing light
    atoms into moderately heavy ones, pointed in the
    wrong direction.
  • Nevertheless, atomic energy was not an unheralded
    event.

37
Precursors to Commercial Use of Atomic Power
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