Abstract

The innovation process, defined here to incorporate the full cycle from invention to full commercialization, is slow. It cannot be encompassed with time horizons of less than 26 years. Many innovations require half a century or more to reach commercial maturity.

Management of the innovation process is critical to the management of technology, but the slowness of the process makes it difficult for conventional economists or policy makers, who typically consider 15 years a long-term forecast or plan, to understand or control.

The situation, in short, is one in which the absence of theoretical understanding limits the effectiveness of managerial practice. Accordingly one appropriate niche for applied systems analysis in this case is development, application and testing of theoretical models.

Toward this end the innovation-task of IIASA's Management and Technology Area is studying the mechanisms of technological substitution. One phase of this work is being conducted through construction and analysis of a series dynamic simulation models, TECH1, TECH2,..., TECH.N.

The present working paper is one of a series describing these models. Its purpose is one of clarification, simplification and communication. It attempts, by use of static graphical figures, to make the dynamic process described in the models more understandable. It is complementary to working papers by the same author entitled "Technological Shift: A Cybernetic Exploration", a semi-technical description of TECH1, and "Technological Shift: As Related to Technological Learning and Technological Change", a discussion of some theoretical and philosophical aspects of the structure posed in the TECH models.

Later papers in the series will describe TECH2, a variant of TECH restructured to assume a planned economy rather than free market competition, and application of TECH to historically observed technological substitutions.

In the first six months of 1980 the entire series of working papers will be collected into a IIASA Research Report. Various parts of the series are being adapted for separate journal publication. The author welcomes comments, questions, criticisms and suggestions on this or any related work.