The process of technical change

Technical change – change in the technology we use to do things – is all around us and essential to achieving energy and climate goals, as well as to economic growth but we don’t often think about the process of change. Improving energy efficiency is a continual process of technical change. How does it happen?

There are three necessary conditions that have to be met before a technical change will occur. These are:

1) a TECHNICAL CONCEPT must exist, capable of being developed to the stage of achieving
2) an ADVANTAGE over alternative technical concepts and the status quo
3) the CAPABILITY of developing 1) to the stage of delivering 2) must exist.

All three conditions have to occur simultaneously and in the same place. An important modification to this is that it is more the perception of advantage and capability rather than any absolute values that motivate a ‘coupling agent’ to bring all three together and force a technical change. The coupling agent fulfills an entrepreneurial role even though in most cases of technical change around energy efficiency he or she is unlikely to be the classic independent entrepreneur, but rather an employee of an established organisation. The coupling agent can be motivated by many things, including: profit, position and profile, desire to change things for the better – perhaps best summed up by J M Keynes’ phrase ‘animal spirits’.

The technical concept may be a brand new idea, a new combination of ideas (old and/or new) or an old idea not previously developed because of lack of advantage or capability. The ease with which the concept can be turned into a commercially viable installation depends on the extent to which components of the concept are already embodied in available hardware. If the central concept is already embodied in commercially available hardware, then adaptation to fit the specific site – engineering – will be necessary. If hardware has to be developed, as in the case of an entirely new concept, or invention, more research and development work is necessary. Thus, there are different levels of research, design and development. Depending on the state of the concept it may involve R&D in the traditional sense, “experimental design” or more mundane “routine engineering design”. Most energy efficiency measures should ‘only’ involve routine engineering design, there is usually no need to develop new technologies with all of the risk that entails.

The advantage is usually, in the case of industry, an economic advantage. It may be an advantage over alternative concepts or over the status quo. Some advantages such as improved quality control or working environment may harder to quantify economically but may be considered strategic to the organisation. Measures judged to be strategic, for instance improving a product, or improving public perception of the company, are more likely to implemented than simple cost saving measures. An exception to purely economic and strategic drivers would be technical changes that are required to meet regulations e.g. emissions control.

Capability to develop the technical concept to the stage of achieving the required advantage over alternative concepts or the status quo may exist in either the potential host or a supplying organisation, or of course a combination of these. For most energy efficiency investments the basic hardware will already exist and the necessary capability will be the capability of adapting the basic hardware to meet the potential host’s technical and financial needs, essentially engineering work. The greater the level of research, design and development necessary to bring the concept to the hardware stage, the more important, and more difficult, it is to assess the capability of vendor companies and the host company itself. Undertaking projects that require R&D adds a significant extra uncertainty to the investment decision. For most energy efficiency investments, there isn’t a need for basic R&D, and in fact for most organisations undertaking such work would be inappropriate and far too risky.

To sum up, technical change occurs when a coupling agent, brings together a technical concept, perceived advantage and capability to deliver the change and achieve the desired advantage. This coupling activity is essentially entrepreneurial in nature and requires human energy applying development skills.