TECHONOMICS: THE DEFINITION

1. The study of trends in technology and their resulting economic effects on
organizations.
2. A theory of organizational evolution that results from technology advance
selected by economic success.

Combination of technology + economics:
•
technology:
Greek
tekhnologia,
– systematic treatment of an art or craft:
tekhne,
– skill or craft + -
logos,
knowledge or reason.
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•
economics
: Middle English
yconomye,
management of a household, from
Latin
oeconomia,
from Greek
oikonomia,
– from
oikonomos,
manager of
a household:
oikos,
house +
nemein,
to allot, manage.
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The two words,
tech
nology and ec
onomics,
have been fused to derive
techonomics:
the study of how technology shapes organizations through the economy. For
clarity in the engineering professional, techonomics should not be confused with
Technometrics,
which is the name of an industrial engineering technical publication
focusing on measurement of technology.
Techonomics combines technology and
economic measurements to objectively observe trends related to organizational
success.
Among Sir Isaac Newton’s famous statements is this one:
For every action there
is an equal and opposite reaction.
Techonomics views technology as the driving
action,
the instigator, of new opportunities, the force behind new organizing principles.
The economic
reaction
of organizations is the observable result. The reactions
in organizations are not precisely “opposite,” of course, but measurable economic
costs for technology implementation are fundamental to predicting the likelihood of
successful deployment.
Technological advance creates opportunities for new organizational
structures, while economic success determines long-term viability of
organizations.
Traditionally, economics has been guided by the study of fundamentals of supply
and demand in the free market to determine the pricing of goods and services.
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Marketplace fundamentals of supply and demand are no longer the same in an era
where technology makes it possible for most consumer goods to be overproduced.
Even more telling, constraints on “supply” are nonexistent in the world of a “virtual”
information-based product. As Nicholas Negroponte describes in
Being Digital,
we
are well into the economic journey from atoms (things) to bits (information).
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The
fittest organizations in today’s business environment survive and prosper because
they focus on deploying
all
resources wisely. Successful organizations capitalize on
the understanding that technological advancement precedes economic opportunity.
The lexicon used to describe commerce is filled with an ever-expanding list of
new terms: mass customization, globalization, networking, off-shoring, virtual companies,
rationalization, micro-multinational, rolling warehouse, just-in-time. It is
difficult to sort all these changes out, let alone put them all back together into a
worldview that makes sense. Techonomics provides an observation post — an
analysis process grounded in technology — for evaluating the root causes producing
these emerging terms and practices. It reveals the
why
behind the
what,
fueling major
trends in fast-paced twenty-first-century organizations.
A few common terms will be used frequently in the discussion of techonomics.
The specific techonomic context of these terms will aid your understanding of the
subject. These terms include:
Organization
is broadly applied to reference any group of people who
share a definable, common affiliation — business, geographic location,
citizenship, religious affiliation, civic association, nonprofit business, volunteer
group, etc. Organizations are as diverse as the people and the
endeavors they pursue, yet all organizations share observable characteristics.
Every organization has a purpose, some better than others. Every
organization has a beginning and, probably, an ending someday — a life
cycle. Every organization requires energy, direction, and communication
and creates some form of community structure. For organizations to thrive,
they must pursue sustainable economic models.
•
Endeavors
are the products and services that organizations produce, the
valued output. Endeavors for your business organization might be products
or services. For the nonprofit organization, the endeavors might be education,
a catalyst for public action, or spiritual conversion. Business
endeavors range from tangible products to intangible information with a
myriad of possibilities. The local community might broadly classify the
quality of life as its main endeavor. The societal value of endeavors relative
to their cost to produce is a key determinant of the prosperity of the
organization. When multiple organizations perform the same endeavor,
the most efficient/effective organization typically thrives, while others
diminish. In a free-market economy “natural selection” causes vibrant
organizations to adopt best practices for the performance of their endeavors.
•
Transactions
are the interchange between organizations or individuals in
the marketplace. Participants in transactions are either the buyer (customer)
or seller (producer). Transactions are the fundamental building
blocks of commerce — no transactions, no commerce. The observation
of shifting organizational transaction patterns gives direct insight into the
impact of technology on the economy.
•
Metrics
are the combination of measurements into a value that can be
useful as an unbiased, numerical indicator of a trend when computed over
spans of time. Techonomic metrics (techonometrics) combine technology
measurements with economic measurements to track the market potential
of innovation. A complete discussion on the formulation of techonomic
metrics is found in the next chapter.