A third Industrial Revolution?

by on October 4, 2012 at 2:37 pm in Economics, History, Web/Tech | Permalink

James Tien has a new paper:

The outputs or products of an economy can be divided into services products and goods products (due to manufacturing, construction, agriculture and mining). To date, the services and goods products have, for the most part, been separately mass produced. However, in contrast to the first and second industrial revolutions which respectively focused on the development and the mass production of goods, the next – or third – industrial revolution is focused on the integration of services and/or goods; it is beginning in this second decade of the 21st Century. The Third Industrial Revolution (TIR) is based on the confluence of three major technological enablers (i.e., big data analytics, adaptive services and digital manufacturing); they underpin the integration or mass customization of services and/or goods. As detailed in an earlier paper, we regard mass customization as the simultaneous and real-time management of supply and demand chains, based on a taxonomy that can be defined in terms of its underpinning component and management foci. The benefits of real-time mass customization cannot be over-stated as goods and services become indistinguishable and are co-produced – as “servgoods” – in real-time, resulting in an overwhelming economic advantage to the industrialized countries where the consuming customers are at the same time the co-producing producers.

Keywords: Big data, decision analytics, goods, adaptive services, digital manufacturing, value chain,
supply chain, demand chain, mass production, mass customization, industrial revolution

For the pointer I thank the excellent Kevin Lewis.

ad*m October 4, 2012 at 3:12 pm

He does not get it, and that is why it is such a long and boring paper. He uses a lot of big words like “big data” and “cloud” without really understanding their differences and commonalities, or being able to generalize from them.

The classification into 3 types of industrial revolution shows a lot of overlap and is ill-defined, so what is the point of this entire paper. There is NO (empirical) evidence for dozens of his claims.

For example on services the claim: ““satisfaction is a function of expectation,” service performance or customer satisfaction can be enhanced through the effective “management” of expectation”. I would counter that if a buy a cheap car and my expectations are minimized, you can also enhance my customer satisfaction.

Weird claims on data analytics, where they make some arbitrary distinction between “scientific analysis” and “engineering analysis”: “[scientific analysis] includes observations, measurements, and experiments, and the formulation, testing, and modification of hypotheses. On the other hand, the engineering approach – which is the focus herein and which Tien (2003) calls decision informatics – is very purposeful”. Scientific analysis is just as purposefull, and both types of analysis are essentially data compression. There is not a falsifiable distinction that can be made between these two types of analysis.

I wasted my lunchbreak on this.

Richard October 4, 2012 at 6:24 pm

It’s lunch break, ad*m, not “lunchbreak.”

He who lives by the sword, dies by the sword.

Cameron October 4, 2012 at 3:24 pm

I’d be curious to hear Tien and Rifkin discuss this.

Ray Lopez October 4, 2012 at 4:18 pm

Tien who? Maybe “James M. Tien” And I hope not Jeremy Rifkin–he’s an opportunistic buzzword generating faddist IMO, based on what I heard in his anti-patent tirades years ago. But I Google this: “Rifkin is the principal architect of the Third Industrial Revolution long-term economic sustainability plan to address the triple challenge of the global economic crisis, energy security, and climate change”. Oh gawd, that is a waste of a lunch break. I’ll pass.

ad*m October 4, 2012 at 3:40 pm
MerijnKnibbe October 4, 2012 at 3:50 pm

Just tonight I had a phonecall with a friend who had a (minor) heart attack, was taken to the hospital – and could walk out the next morning, with a stend (he was, as everybody around here, insured, by the way) – an operation which only two decades ago would have taken him and the medics and the nurses at least a week. Other people have artificial hips, or glasses, or have fillings in their teeth or something with silicones. Somebody I now very, very well is ‘monochromatic’ (can only see black and white) and she might, in the not too distant future, have some chips inplanted in her eye which might give her a sense of color. The list is endless. Bionic (wo)man is there, already. And real time mass customization is the rule, in modern medicine.

ad*m October 4, 2012 at 5:26 pm

with a stend (he was, as everybody around here, insured, by the way)
->
Right. As you know, uninsured people here in the US having heart attacks are left in the street to die. Around the ERs in this city it is full of corpses. And we eat babies too.

It is stent, BTW, not stend. Let me ask you, who paid for the science behind the development and seemingly interminable approval process of these wonderful stents? Was it the healthcare system in your country that paid for this?

TheDCake October 4, 2012 at 6:44 pm

On Adams tip, I offer this observation. The burst of innovation that I am seeing in banking systems (et al) is being funded in no small part by Dodd frank amongst other regulation and federal bungling. I call it the ‘Consulting & Corporate Lawyer Full Employment Act’. The benefits will be realized, by whom is the question. Marijn makes a strong point, what was yours by the way?

Tl/dr- banker cops to socio-libertarian views. Still spends governments $$$

Ronald Brak October 4, 2012 at 7:23 pm

Dr Charles Stent was an English dentist.

Bill October 4, 2012 at 4:42 pm

This is S O O S O O 21st century.

I am writing this post with my mind,

And

No Keyboard

And even know what you’re thinking.

Stop.

Frank October 4, 2012 at 6:08 pm

What if tech change reduces productivity conventionally measured but reduces human impact on the environment? I think, although many on this blog would disagree, that this might be welfare enhancing, especially in the long run.

TheDCake October 4, 2012 at 6:24 pm

Only read free abstract, it resonated with me.
I work on the credit side of banking. (loans are my goods) The ops models I see are evolving to theconcepts. The fungibility of resources (facilities, IT, drones) is a real focus. The physical and technical infrastructure necessary to muster these ‘frictionless workstreams’ (vomit) are baked or in the oven. The leadership and customer base simply need one more solid molt. That is, it’s the social science that lacks ‘robustness’. When the next revolution occurs (industrial, technical, or old fashioned), the succession leadership will have the tools to build-to-suit everything – see Merijn’s post, see 3-d printers, see cars driving them selves — greed and fear are the only things gumming the gears.

TL;DR – mid life banker questions capitalism, buys calls on The Jetsons 2.

John Thacker October 4, 2012 at 9:25 pm

I assume there has to be a nod towards 3D printing in this paper, as it’s an important part of the idea of customization IMHO.

Zigmund October 4, 2012 at 10:56 pm

This abstract sounded to me like a Sokol-style article. It says something and nothing. Mostly nothing. But the author is writes in an official jargon and has achieved success, so his words are accepted as wisdom without questioning if there is any meaning behind them.

I particularly liked this sentence: “As detailed in an earlier paper, we regard mass customization as the simultaneous and real-time management of supply and demand chains, based on a taxonomy that can be defined in terms of its underpinning component and management foci.” It contains lots of buzzwords I am not familiar with: mass customization (is that an amazon front page?), taxonomy defined in terms of component foci (whosit?) and real time management of supply and demand (I give up).

I think this is an example of Prof. Cowen testing its readership’s BS detectors. Or maybe I’m already old and cranky and fields even a little outside my own are alien to me.

Best

Zigmund

derek October 4, 2012 at 11:27 pm

A very large portion of the economy is made up of producing one offs. Mostly by assembling components into something not repeated elsewhere; construction is like this, especially commercial. In what I do the majority of the cost of a working installation is not the mass produced goods, but the labor and expertise required to assemble the mass produced goods into a product that serves the customer’s needs. There is enormous room for improved efficiencies. Maybe of the same magnitude as the move from hand weaving to steam powered weaving machines. The logistics, the communication and process tracking, all which has been implemented in manufacturing production facilities, are now becoming available at a cost where it can be applied in these circumstances. I can see a more custom manufacturing type system where I identify the individual customer’s specific requirements and through the communication technologies direct the mass production facilities to build a custom one off that works for that specific customer, at a similar cost to mass produced goods. In what I do it is nowhere near that capability either at the production facilities, the communication means nor the customer. Some of the bits are close.

This is how very large industrial components are done. If I am building a power generator, the engineers work with the production facilities to build me a one off to fit. I can see this process trickling down to much smaller projects and installations, just as I as a small shop can access and afford IT infrastructure that a decade ago was only within reach of very large corporations.

A third industrial revolution? A bit hyperbolic, but close.

derek October 4, 2012 at 11:41 pm

I’ll also add that almost all low cost goods production are done far away far in advance. For time sensitive customer demand, that requires expensive stocking and distribution systems, a one to many type scenario. Fine with cheap energy for hauling containers across the ocean. Globalization has meant production farther and farther away. Fine as far as it goes, but what if production, or a good portion of the production can be done at competitive prices in many locations where the local customer demand can be met by one off or fewer offs than having identical production done far away?

I find it interesting that Apple has defined success as producing very large numbers of identical copies of less than five products. You can have it in any color you want as long as it is black. We yearn for the 30’s in so many odd ways.

TheDcake October 5, 2012 at 10:08 pm

Yes. Glad to see a quantum influence. Think and share more Derek.

The Original D October 5, 2012 at 9:28 pm

Mass customization has been around for decades. It was a key part of Dell’s success.

prior_approval October 5, 2012 at 3:22 am

Well, there is also this reality of what some might call the third wave, involving the cloud and personal technology –

‘Want a new part for your synthesizer? Need a replacement knob or dial? In a first, one company is telling its customers to just print their own.

It’s a move that signifies a major step into a new commercial marketplace, where customers can buy products directly from companies for on-demand, at-home manufacturing. And while we probably won’t see complicated, mechanical products from big corporations reaching us through Thingiverse for a while yet, knobs and dials are the perfect static, detachable objects to begin the movement.

Teenage Engineering, makers of a popular synthesizer known as the OP-1, posted the 3-D design files of various components on digital object repository Shapeways, and is instructing 3-D printer-equipped users to print them out instead of buying them.

“As an alternative to shipping plastic parts around the world, we let anyone print their own,” said David Möllerstedt, head of audio at Teenage Engineering, in an e-mail interview with Wired. “It’s a really interesting development that 3-D printing is becoming more accessible.”’

http://www.wired.com/design/2012/09/synthesizer-lets-you-3-d-print-your-own-parts/

And let us just abstract this a bit (for the old fashioned, this is the basic principle behind DIN – though I’m sure some here would believe DIN and its old fashioned ilk are just part of the over-regulated German manufacturing economy, which still struggles in the world marketplace, unlike its innovative cutthroat capitalist competitor in the U.S ) – if the 3d file contains the specs for where the knob meets the controller, you can actually created any design you want incorporating the necessary functional specs – in other words, you could create knobs of any style desired.

Sounds like a revolution – without any buzzwords, available today for anyone with a 3d printer and an Internet connection.

The free software movement pretty much created the Internet that allows 3d files to be available to anyone with a PC connected to the Internet – imagine what the free manufacturing movement will look like, following the same principles (still a shame that one cannot directly link to the fully legal Physibles section of the Pirate Bay here). Though much like Linux two decades, still at its very beginning – with all of the same deficiencies that Linux displayed then, deficiencies that have been overcome to the point that the odds that Linux is running the mobile computing device that connects to the server that is routed through the telecom mainframe is higher than 50% (and if you are using an iPhone, the odds of using free software in terms of BSD and Linux is essentially 100%).

However, there will be many attempts of many vested interests (including numerous front groups with such buzzwords as ‘free market,’ ‘competition,’ and ‘free trade’ in their names) to take away the air supply of this still being born infant. And part of that will include the filtering of data so seamlessly that many will remain unaware of how to become participants beyond the reach of those wanting to restrict access.

Dan October 5, 2012 at 12:01 pm

Sounds like a coinage troll to me. Really, ‘Servgoods’? I hope none of these terms stick.

Foo October 5, 2012 at 4:37 pm

Examples?

As far as I can tell, no mainstream mass produced products is customized in the production stage.

The only customization lies in assembly (e.g. computers, cars) or in things that are not mass produced (e.g. custom fitted clothes).

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