Green-digital transition and techno-economic mutations

A long-term approach of economic evolutions helps the understanding of techno-economic mutations, including the ongoing ones.

 

Techno-economic systems

 

Industrial economics reminds us that technological evolutions never occur in isolation. Hence the notion of technological systems, highlighted by Christopher Freeman, Frank Geels, and other neo-schumpeterians economists.

 

A compelling example: frozen foods in the sixties and seventies. Those could have never been developped without the concomitant diffusion of freezers, their various components, specific packaging, new food products. All of which would not have been possible without adapting all related value chains: parts and components providers, electrical appliance resellers, maintenance companies, frozen food stores. Social factors or lifestyles are also involved, such as the advent of consumption society, the mainstreaming of cars, or inclinations to faster recipes.

 

Techno-economic cycles

 

Leaning on these technological systems, Carlota Perez coined the theory of "great surges of development", suggesting the succession of techno-economic paradigms guided by a two stage installation: installation and deployment.

 

The installation of the petrol and mass production era (individual car, assembly line, mass consumption, plastic) started in the early 20th century, in particular with the invention of the individual car by Henry Ford (Model T, 1908). Its deployment and immense economic growth opportunities began in the forties and fifties, first in the United States, then in other industrialised countries and the entire world.

 

Coming back to freezers, their dissemination of after World War II created considerable markets for frozen food stores, packaging producers, parts providers, the agrifood industry – to name a few.

 

Companies gradually adapted to the new technical and economic realities and took full advantage of commercial opportunities. The whole society also evolved based on the new paradigm: change in infrastructures, emergence of new competences, mainstreaming of individual cars, plastic and all related goods, for example.

 

Perez identifies five techno-economic cycles since the end of the 18th century.

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The green-digital paradigm

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The current paradigm is the one of digital technologies, triggered by the invention of the microprocessor in 1971*. The installation stage started with personal computers and internet, whose diffusion in the wider economy is still affecting our societies. These technologies also contribute to the deployment of the green economy, being both propeller and propelled, and giving rise to the green-digital paradigm**. We are currently witnessing its transition, between the installation and deployment stages.

 

A vast number of green value chains align with digitalization: organic and connected agriculture, renewables and energy efficiency, circular economy and waste reduction, smart cities, car sharing or comuting apps, and so forth. This intertwining supports the digitalization of the entire economy. Concurrently, green value chains contribute to the deployment of digital in economy. When reusing construction materials marketplaces appear, users (buyers and sellers) adopt the process which triggers new platforms, in the same industry or not. In the same way, mass production and post-war ways of life mutually fed themselves.

 

Organisations are currently operating their mutation and aligning with the green-digital paradigm, at different paces. Be it products and productions modes, infrastructures, skills, suppliers, regulation, behaviours, they all combine and mutually reinforce each other, with uncountable externalities and synergies.

 

*This discovery obviously stems from numerous previous research works and programmes.

**Carlota Perez does not mention green transition in the previous chart, but does so in her later works.

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Implications for green and circular economy

 

Green and circular economy projects are therefore strengthened by their connection with the green-digital paradigm, especially regarding competences. These reinforcements may occur via clients, suppliers, or competitors. Projects can also benefit from digital mutations, aligning with them.

 

Fitting into or taking part to this deployment is a must for companies, public bodies, and places, while first commers are making the largest gains.

 

Let's now imagine a construction company that develops a construction materials recycling/reusing solution, in an area already advanced in recycling. It will greatly benefit from local endowments: local skills, relevant suppliers and dedicated services network, technical or commercial cooperations with competitors active on recycling but not necessarily addressing the construction industry… It will also build and consolidate specific competences before the emergence of direct competitors, and stand in a pioneering position in a soon-to-grow market. Beyond local synergies, this company anticipates future regulations (reinforcement of recycling requirements) and plan ahead incurring costs, while fostering its carbon competitivity through its local supply offer.

 

For these reasons, Inecko adopts the widest possible vision on value chains and ecosystems with a very open-minded approach on all possible connexions, including the unexpected ones.

 

We encourage this open attitude within companies as we seek to multiply connections between firms and between industries. We advocate them in our deliverables and during research, all the more as they are likely to boost the green-digital transition.

 

Along these lines we have identified innovative cooperations opportunities between:

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• The fishing and concrete industries – for the valorisation of scallop shells in sand

• Quarries and a commercial port – for the valorisation of sediments and research of new formulations, e.g. for the agriculture or cosmetics industries

• Construction and steel industry – engineering of a soil mixer mounted on a mechanical digger

• A brewery and a future maker space – design of equipment suited to the brewery

• A cooperative supermarket and waste reusing companies – duplication of the cooperative model and therefore diffusion of an organisational innovation

• A composting firm and a plastic packaging producer – research and development for sustainable packaging

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The current transition is not only energetic or ecologic, it is also technological and economic. This approach teaches us how techno-economic mutations are heavy and long-term trends. They become inevitable as value chains adapt and economic players transform their production models. The earlier the transformation, the higher the socioeconomic gains.

 

To know more and explore the succession of economic cycles, as well as their social and financial implications (unfortunately only in French).