We Don’t Have Access To The Best Technology

Do you ever wonder why some industries advance quicker than others? Why it takes so long for innovations to reach the mainstream? And why don’t we have a time machine or flying cars yet? Well, lets take a look.

To understand why we don’t have access to the best technology out there, we must first understand how businesses work. Externally, a businesses’ purpose is to drive innovation and to raise the standard of living by providing great products and services. However, internally, a business’s main goal is to earn a profit. The Economist’s Financial Management defines a business as “a commercial operation that provides products or services with the aim of making a profit for the benefit of its owners… A profit is an essential element of running a successful business. It is a trading surplus whereby the revenues earned exceed the costs.”

The best classification of a successful business is one that creates a sustainable superior return on investment, also known as ROI (return on investment). In order for businesses to earn revenue they must have a great product at a price that people are willing to pay. To turn the revenue into a profit, business managers need to make sure that they create the best product while spending less than they sell it for, resulting in a net positive income.

To maintain a competitive moat, businesses continuously innovate their product making them better and better. If you look at the history of any industry, products have naturally gotten better over the years due to competitors threatening to take over their business with an even better product. Cars started out very slow and fragile. They only worked on good roads and had no electronics and they were pretty uncomfortable. Today, cars have lane assist and adaptive cruise control and can practically drive themself while we relax in a cabin with air-conditioning and dual-density foam seats. Phones started out bulky, unportable, unreliable, expensive, and unappealing. Now, not only can we video-chat with anyone around the world, but we can listen to any song, watch any movie, or access any information in just the palm of our hand. Our smartphones can now film, edit, and publish a movie, render 3D models of architectural plans on our OLED Super Retina XDR display.

Technological innovation is great for consumers. As technology advances, prices drop and products get better. One of the main reasons technology gets cheaper over time is from advancements in manufacturing. Companies find new materials to use, they build robots and machines to help make things faster and cheaper, and they find new ways to put together the product and send it out in a cheaper way through supply chain redesign. Competition forces competitors to find more cost-effective ways to make and deliver their products.

Companies are always looking for a way to improve their competitive moat, but some innovations are too expensive for it to be worth adding. Some innovations greatly improve their final product but require too much time and energy to manufacture, greatly increasing their costs. As the manufacturing cost goes up, the company is forced to increase their price to protect their profit margin, otherwise, the opportunity cost of the innovation just isn’t worth it. Depending on how much the price increases, and how significant the innovation is to the product, the change could completely change the company’s target audience or diminish the demand for the product. With commodity products or necessity goods, customers usually aren’t willing to pay much more for innovation. The trade-off just isn’t worth it. This explains why most of us still use the same broomstick since the 1800s. This situation leaves a lot of potential innovations unborn in many industries.

One industry I would like to mention is the healthcare industry. In the United States, employers pay over 80% of our insurance, which pays for the medical bills. This means that the healthcare industry is not consumer-oriented. If you go to a clinic and receive sub-par service, you often do not have the power to change clinics due to insurance policy restrictions, availability and clinics within proximity, and other factors. Because we have limited options, healthcare providers don’t feel pressure to innovate to impress the customer, but instead, focus on how to satisfy the ones who are paying—the employers. This is not the same for companies in other industries. Blackberry phones were the hottest tech in the early 2000s, but then Apple and Samsung released slimmer phones with touchscreen technology, HD cameras, and better features. From there, it became survival of the fittest—whoever could provide the best product for the best value for the price, wins. And whoever fails to impress and satisfy, drowns *cough *cough Nokia, Motorola. Healthcare lags behind every industry in consumer-focused innovation. Healthcare providers were dealing with paper records only until 2012 when electronic medical records became required. That’s pretty late if you ask me.

There are many examples of cool technology that exist but are only seen on luxury items or one-of-one products because of the high manufacturing cost. Carbon fiber is five-times stronger and twice as stiff as steel, extremely light, resistant to corrosion, and has tons of other benefits making it perfect for vehicles, sporting goods, aerospace, and many other things. However, the processing and manufacturing process is very difficult and costly. Because of this, carbon fiber is only seen on luxury and one-off products where producers can raise the price of the product to maintain a healthy margin and making it worth while for them to build.

Do you hate potholes and bumpy highways? One cool technology that we could (and should) have in all of our cars is a suspension that makes it feel like you are floating above the road.

Bose suspension was a technical success but a commercial failure because the unique suspension system is still too heavy and expensive for automakers to incorporate into vehicles. Remember, the ultimate goal for a business is to earn a profit.

One-off production naturally tends to be avoided due to the massive expenses. To bring a new product to market, it must pass through a number of stages, each requiring significant capital and different experts to build. Fundamental science is used to understand the underlying functionality of a tool. Once the fundamental science is laid, engineers use the known science to hypothesize the bounds of the tools’ functionality. Engineers also create a means of production of such tools which also takes time and money to develop. If a customer hasn’t placed a down-payment on the product beforehand, then marketing is needed to convince a customer of the value of the added innovation. When a product is one-off it requires all these extra costs for something that will not be repeated and destroys profits long-term. Unless it is a strategic bespoke product like for R&D, or for PR, a business that only sells bespoke products is often bound to fail and isn’t scalable.

Another reason we may not have access to the highest tech is that it is protected as a competitive advantage. Companies aren’t the only wealthy entities who seek advantages. Governments always look to have the best of the best military, communication tech, cybersecurity, vehicles, and anything else that can help protect and serve their country. This is what makes a country powerful. The US government, with trillions of dollars in spending power annually, is able to acquire one-off products with the most efficient material and technology because they can afford to pay for the extra costs. Lockheed SR-71 “Blackbird” is an incredible showcase of technology. It is a jet that can cruise near the edge of space and outfly a missile (even faster than a bullet, 2,193 mph). To this day, it holds the records for the fastest and highest-flying aircraft ever. And it was released in 1966 which is over five decades ago. Just think what technology the government has access to today in 2021…

Lockheed SR-71A photographed in front of the Smithsonian National Air and Space Museum at Dulles International Airport, Chantilly, Virginia

For technology to advance and reduce cost, it needs two things. Firstly, a moonshot innovation needs foundational infrastructure. You cant create a car without wheel technology, or a smartphone if CPUs weren’t created yet. You must first walk before you can run. Secondly, innovation requires investment—usually a long term which takes years before seeing any significant ROI. Investment in moonshots is often risky because the technology could work, but if customers don’t adapt to the innovation, or it doesn’t bring significant improvements then it wasn’t worthwhile. But when an investment is successful, they reap massive rewards for both the company and society. Electric vehicles (EV’s) have been around since 1830 and were a contender against gasoline cars until Ford’s internal combustion engine (ICE) cars became too efficient and affordable for EV’s to compete. ICE cars had some infrastructural advantages over EV’s to propel their success. Electricity was not yet widely available outside city centers, severely limiting the market for cars tied to that infrastructure. Drivers could carry spare cans of gasoline for long journeys, but spare batteries were a lot heavier per unit of energy. By the mid-1900, most EV’s either converted to ICE or went bust. The few that remained kept experimenting because of some promising advantages to EV: they had more torque and had fewer moving parts which made them more reliable and easier to maintain. Since so few manufacturers ventured into EV’s, there was not enough capital or resources invested into the technology for the batteries to develop.

Tesla Model X

Wright’s law (AKA learning curve) explains this situation down to a tee. Wright’s law states that progress increases with experience: each % increase in cumulative production in a given industry results in a fixed % improvement in production efficiency. So due to infrastructural hurdles EV’s were not produced as much as ICE cars, and as cumulative ICE production increased, so did its production efficiency and innovation, furthering the gap between EV efficiency and ICE efficiency. Since 2008, Tesla Motors focused all its capital and resources on EV’s and managed to build a product appealing enough to sell to enough people which attracted investors. With the extra capital of investors, Tesla was able to increase production as well as R&D. Through that, they have made massive improvements to lithium-ion battery efficiency such as range, safety, charge time, and life cycle. In addition to improving battery technology, they have helped cultivate the investment into self-driving technology, over-the-air (OTA) software updates, and the supercharger network. EV’s have actually always been quicker, more efficient, more reliable, and of course more eco friendly than ICE’s, but due to Wright’s law and the nature of business (profit or die), it took a while to develop. EV’s are now finally making their way to their rightful place as the mainstream car.

Wright’s law was actually determined while studying airplane manufacture—for every doubling of airplane production the labor requirement was reduced by 10-15%. The law can be used to predict prices of products in many different industries.

All of this makes me wonder what amazing technology we have out there that is either exclusively for luxury goods, for exclusive clients, or on stand-by until it is financially viable for the manufacturer. I’m sure there is also unimaginable technology built into one-off products for the government or exclusive organizations for special purposes. It is possible that we have lightning fast internet, flying cars, war drones, and even a time machine, but due to the nature of business and supply chain, we just don’t have access to it… yet.