Winning the Hardware Software Game Winning the Hardware-Software Game - 2nd Edition

Using Game Theory to Optimize the Pace of New Technology Adoption
  • How do you encourage speedier adoption of your product or service?
  • How do you increase the value your product or service creates for your customers?
  • How do you extract more of the value created by your product or service for yourself?



  • Social Development Requires More Than Just New Technology

    This post continues the discussion about what society needs in addition to technology to develop. In my previous entry, The Growth and Development Paradox, I established that

    • Technology enables societies to develop.
    • Foundational technologies have existed for thousands of years.
    • Yet, sustainable development didn’t occur until the Industrial Revolution.
    • Technological development is thus not sufficient for societies to develop. There’s something else — in addition to technology —that’s necessary for society to develop.

    Let’s consider the automobile as a case study of what else society needs, in addition to technology alone, to be able to develop.

    Most people would agree that the automobile has been one of the most influential technologies of all time. Since its inception in the late 1800s/early 1900s, the automobile has fundamentally shaped American society: it has provided unparalleled mobility to the masses, engendered suburbia, empowered women to take a more active role in society, created numerous jobs, and shaped our leisure activities (cruising and road trips, drive-in movies and restaurants, etc.).[1] In short, the motor vehicle has turbo-charged social development.

    Currently, about 100,000 patents cover automobiles.[2] That’s a huge amount of innovation! But it wasn’t just automobile technology alone that enabled society to develop based on the automobile. Yes, the automobile offered society the potential to develop. However, to realize that potential, society needed more than just the technology alone: Society needed changes in Community, Markets, and Government to accommodate changes in Technology and unlock the potential that technology provides. Let’s consider the changes in Technology, Community, Markets, and Government required for successful widespread adoption of the automobile in society, thereby enabling mobility of the masses.

    Automobiles replaced railroads, horse-drawn carriages, and bicycles as more comfortable, convenient, and efficient means of traveling short and long distances.[1] However, in addition to automobile technology, widespread adoption of the automobile in the US required the majority of Americans to have: (i) disposable income and access to affordable automobiles; (ii) roadways and infrastructure; (iii) widely available sources of fuel and repair services; (iv) public space for parking; and (v) education and licensing programs to teach people how to drive and how to follow the rules of the road.

    4 systems automobile

  • The Four Social Forces That Shape Our Actions

    Our desire to fulfill our wants and needs motivates us to act.

    A lot has been written about what, exactly, constitute our wants and needs as human beings. Examples include:

    • Food, clothing and shelter
    • Health, safety, and protection
    • Self-preservation, sex, and procreation
    • Social status, competition, acquisition, rivalry, power
    • Love, belonging, connection
    • Self-expression, creativity, contribution, independence

    I tend to think of these needs as falling within two basic realms

    • Darwinian Needs are those involving self-interest and survival, along the lines of Darwin and evolutionary biology.
    • Maslowian Needs are those involving human connection, contribution, and fulfillment.

    Overall, I think Maslow’s Hierarchy of Needs does a good job of capturing what most scholars deem our wants and needs to commonly include. Maslow’s Hierarchy depicts our needs in the form of a pyramid. Our most basic physical needs form the bottom of the pyramid, psychological needs form the middle, and higher-order needs – self-actualization – form the top (see Figure 1).

    Figure 1

    Maslow’s Hierarchy of Needs

    1 maslow


    Human wants and needs are internal drives, and they have remained largely unchanged over the millennia. What have changed, though, are our external expressions of those drives, that is, the actions we have taken to fulfill them. Suppose, for example, you’re hungry, and you want to get something to eat. What actions will you have taken in different environments to satisfy that same need for food?

  • The Growth and Development Paradox

    Wheat yields in the UK hovered around ½ tonne per hectare for hundreds of years (see Figure 1). Imagine being able to generate no more wheat per unit of land than your ancestors who had lived 100 generations before you had been able to grow! The introduction of crop rotation was the first major breakthrough, roughly doubling yields. Later, during the Industrial Revolutions, the invention of new farm tools, such as the seed drill, brought still greater yields. Truly momentous gains in productivity, however, didn’t appear until the 20th century: The use of cross-breeding to create more resistant strains, together with the use of fertilizers and pesticides, achieved enormous gains in yields.[1]

    Figure 1

    1uk wheat yields

    Improvements in technology and know-how have increased crop yields. Societies have thus been able to devote fewer resources — land and labor—to generate the food we need to nourish members of society. Freed-up resources have been redirected to fulfill other wants and needs.

    In short, technology helps societies develop.

    Societies can grow simply by adding more people. If Joe can grow a bushel of wheat by himself, then Frannie and Joe together can double Joe’s output, by growing two bushels of wheat between them. Growth is total output or total income. An economy can grow simply by adding more people: double the number of people will get you double the amount of output.

    Development, on the other hand, is output or per person, a measure of the standard-of-living. Development requires more than just additional people. A society develops when its citizens can produce more output from the same amount of input. Development happens when people become more productive, that is, when they gain know-how or improve technology.

    Puzzle Piece #1: It doesn’t take long to realize how important technology has been historically for enabling social development and increasing our standard of living.

  • What Promotes Social Well-Being?

    It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us, we were all going direct to Heaven, we were all going direct the other way…

    — Charles Dickens (1859), A Tale of Two Cities

    What Charles Dickens wrote 150 years ago before and during the French Revolution rings eerily familiar today. The upper classes in the US today have never had it better: health, comfort, and convenience like no other time in history. Yet, at the other end of society lies a rising tide of homelessness, addiction, and mental illness.

    What contributes to peoples’ health and well-being, and why are we simultaneously experiencing such highs and lows in society today?


    Technology has enabled people to amass wealth like never before. Advances in communication and transportation technologies in particular have given us access to whole new markets that have rained untold wealth on those who have been able to master them.

    Yet, technological avenues to amassing wealth require access to resources, information, and expertise that are not accessible to many people in today’s society.

    There’s more. Technology is a tool. It can be used either to the benefit or to the detriment of select individuals and, more broadly, of society as a whole. Plenty of technologies have been developed and used to increase social well-being overall. These are positive-sum uses of technology, and they should be applauded. Unfortunately, plenty of other technologies have been developed and used to promote the well-being of some, but at the greater expense of others, leading to losses in social well-being overall. There are zero-sum or negative-sum uses of technology.