Does Competition Drive Innovation?

What became of the Stanley Steamer, the manual typewriter, or the black-and-white television? With our endless focus on the shiny and new, it’s easy to forget that no technology lasts forever. Examining the birth and death of old technologies, though, can yield new insights into the nature of innovation.

Take the automobile, for example. Erik Gjesfjeld, a postdoctoral fellow at the Institute for Society and Genetics at the University of California, Los Angeles, recently adapted an approach used to study the evolution of fossil plant and animal species to examine the birth and death of 3,575 car models.

The research revealed why innovation has ebbed and flowed in the American auto industry since 1896. It also created a valuable quantitative tool to study the evolution of any technology, from typewriters to televisions.

Gjesfjeld earned a doctorate in archaeology studying the development of ancient Siberian pottery. “As archaeologists, we were aware that a lot of technologies go extinct over time, and we don’t see that technology anymore,” he said.

Thanks to carmakers’ habit of giving models unique names and dates (a 1965 Mustang, a 2005 Prius), Gjesfjeld and his postdoctoral advisor, UCLA evolutionary biologist Michael Alfaro, had a ready trove of data on the birth and death of car models.

Using a statistical method called Bayesian modeling, they examined 3,500 models produced from 1896 to 2014 to determine which of three factors determined innovation the most: economic growth, changing oil prices, or the diversity of car models already on the market.

They found that since the 1980s, fewer new American car models have been introduced each year, and fewer have been discontinued. And to their surprise, they found that more have gone extinct than have been introduced. “We may be driving more cars, but we’re driving more of the same cars,” Gjesfeld said.

The results square with theories of technological evolution that predict that as technologies become ever more specialized, it gets more expensive to make radical innovations, and diversity decreases, the researchers reported recently in the open-access journal Palgrave Communications.

The researchers’ model predicts the ongoing explosion of electric car models, but it also predicts that competition in the marketplace will ultimately kill off many of them. The results suggest that “later in the life of an industry, it’s really hard to make new things,” Gjesfjeld said.

Read the most recent issue of Mechanical Engineering.