Tag: The Next Fifty Things that Made the Modern Economy

💎 Why it becomes harder to predict technological change (as technology develops)

Perhaps we should have seen this acceleration coming. In the 1930s an American aeronautical engineer named T. P Wright carefully observed aeroplane factories at work. He published research demonstrating that the more often a particular type of aeroplane was assembled, the quicker and cheaper the next unit became. Workers would gain experience, specialised tools would be developed, and ways to save time and material would be discovered. Wright reckoned that every time accumulated production doubled, unit costs would fall by 15 per cent. He called this phenomenon ‘the learning curve’.

Three decades later, management consultants at Boston Consulting Group, or BCG, rediscovered Wright’s rule of thumb in the case of semiconductors, and then other products too. Recently, a group of economists and mathematicians at Oxford University found convincing evidence of learning curve effects across more than 50 different products from transistors to beer – including photovoltaic cells. Sometimes the learning curve is shallow and sometimes steep, but it always seems to be there.

The learning curve may be a dependable fact about technology, but paradoxically, it creates a feedback loop that makes it harder to predict technological change. Popular products become cheap; cheaper products become popular.

Excerpt from: The Next Fifty Things that Made the Modern Economy by Tim Harford

💎 How reform of organisations often requires an outside perspective (unfamiliarity with the department)

‘It should be remembered, that in few departments have important reforms been effected by those trained up in practical familiarity with their details. The men to detect blemishes and defects are among those who have not, by long familiarity, been made insensible to them.’

Excerpt from: The Next Fifty Things that Made the Modern Economy by Tim Harford

💎 How Sears outdid their main competitor (by making their catalogue slightly smaller)

And it inspired competitors – notably Sears Roebuck, which soon became the market leader. (The story goes that the Sears Roebuck catalogue had slightly smaller pages than Montgomery Ward’s – with the intention that a tidy-minded housewife would naturally stack the two with the Sears catalogue on top.)

By the century’s end, mail-order companies were bringing in $30 million a year – a billion-dollar business in today’s terms; in the next twenty years, that figure grew almost twenty-fold. The popularity of mail order helped fuel demands to improve the postal service in the countryside – if you lived in a city, you’d get letters delivered to your door, but rural dwellers had to schlep to their nearest post office.

Excerpt from: The Next Fifty Things that Made the Modern Economy by Tim Harford