KTH ROYAL INSTITUTE

OF TECHNOLOGY

ME2067 Industrial Transformation and

Technical Changes (ITTEC)
Lecture 1:1:
Introduction to the course

Dr. Johan Nordensvärd

18 January 2024
Purpose of the course
The theoretical basis of the course is derived from “innovation theory” with strong connections to
evolutionary and institutional economics.

The focus of the course is therefore to discuss and use utilize theory on empirical cases in the real world
– is is therefore important to both learn the theories and how to apply them using a case study
approach.

The focus on industrial dynamics means it is an course with strong interdisciplinary character related to
fields such as technology history, technology, sociology, economic history, economic geography and
economics.

The course will cover management issues on a"meso level" - that is those concerning strategic
leadership to meet industrial change. Particular interest are on pressers for change stemming from
globalization, climate change, sustainable development policies, digitalization and radical shifts in techno
 Learning outcomes
After completing the course, students are intended to be able to:

1 Critically discuss the mechanisms that underlie industrial transformations and

technical changes and their implications

2 Evaluate theoretical concepts and current research from the field of industrial
dynamics for managing technological and industrial change processes

3 Write an analysis related to industrial and technological change and

independently discuss problem formulations and their solutions to tackle complex
change

4 Present results and conclusions based on a scientific investigation for different

types of audiences
Date Time Theme Activity Venue
2024-01-18 13:00 15:00 L1:1 Intro (JN)Introduction 1 Lecture B1
2024-01-19 10:00 12:00 L1:2 (SL) Introduction 2 Lecture B3
2024-01-23 13:00 15:00 L1:3 (JN) Innovation Processes Lecture B3
2024-01-25 10:00 12:00 L1:4 (FU) Systems in Transition Lecture B3

2024-01-31 13:00 15:00 L1:5 (EG)Dynamics in Swedish Industrial and Political Lecture B3
History

L2:1 (NA) Innovation management part 1

2024-02-01 10:00 12:00 Lecture B3
L2.2 (NA) Innovation management part 2

2024-02-07 13:00 15:00 Lecture B3

2024-02-14 13:00 15:00 Lecture 3:1 Case case study methodology and Lecture B3
literature review by EC*
2024-02-21 10:00 15:00 Seminars Seminars B24

2024-02-22 10:00 12:00 Lecture B2

2024-03-04 and By appointm. Supervisory consultations (JN) Supervision Sing Sing

2024-03-05
Examination

•INL1 - Assignment, 2.0 credits, grading scale: A, B, C, D, E, FX, F

One individual assignment, writing a 2.500 word essay based on secondary data,
with a deadline of 2024-03-15. 2 credits.

SEM2 - Seminars, 4.0 credits, grading scale: A, B, C, D, E, FX, F

One group work task of writing a 5.000 word report based on secondary and
primary data, with mandatory seminar presentation. Deadline for the final group
report of 2024-03-01 and the seminars are on 2024-02-21. 4 credits.
•
 SEM2 - Seminars
• Groups of 4-5 students (group formation to be communicated to the course responsible by
2024-01-26, please self-assign to a group).
• The task is to choose an industry of your choice that is currently undergoing transitions, such
as the energy industry, the transportation industry, the process industry (e.g. mining, steel etc),
the IT industry, the banking industry, the fashion industry, the telecoms industry etc.
• Select a case study company within that industry.
• Write a report of up to 5.000 words (plus references) to discuss how the case study company
and the industry is changing and why, what the drivers are and how this can be explained by
the use of theories from industrial economic and management that were outlined in the ITTEC
course.
• Use secondary data such as academic literature from journal articles and books, data,
company reports etc. Use course literature, as well as other sources, including latest research
findings from 2022-2023. In addition try to use primary data by contacting the company and
conducting interviews or surveys with their staff.
Outline of things needs to be done
• Present the findings of the draft report at the seminar on 2024-02-21. Prepare a short presentation
with max 5 ppt slides. Submit the final version of the group report on Canvas by 2024-03-01.
• Write a short statement of who did which tasks for the group work to explain the division of
labour. All group members are supposed to participate in the research, the report writing, attend the
seminar and be able to present / answer questions at the seminar.
• Group work and seminar attendance are mandatory.
•INL1 - Assignment
• Choose one country or city or region of your choice (be creative, not everyone needs
to choose Sweden or Stockholm).

• Choose one industry of your choice that is undergoing industrial transformations and
technical changes (e.g. the energy industry (wind, solar, hydro, bioenergy, hydrogen,
nuclear, carbon capture and storage CCS, bioenergy carbon capture and storage
BECCS, energy storage etc), the transportation industry (road, air, sea, rail, could also
be autonomous vehicles), the process industry (e.g. mining, steel, batteries etc), the IT
industry (e.g. digitalization), the banking industry (e.g. blockchain, cryptocurrencies),
the fashion industry, the telecoms industry etc. Do NOT use the same industry as the
one you used for the group work. We will check that everyone will choose another
industry than their group work.

• Choose one theory of your choice from the ITTEC course, apply this theory to your
case and explain how industrial transformations and technical change are happening
in the country/city/region and the industry you selected based on this theory.
Individual assignment

• Use secondary data such as academic literature from journal articles and books, data, company
reports etc. Use course literature, as well as other sources, including latest research findings from
2022-2023.
• Use data sources from reports and databases that are specific for your chosen industry and your
chosen geographic location. Include information about the data sources you are using, where they
come from, data quality etc. Include figures and graphs to support your arguments.
• Use proper referencing and add a full bibliography. Use the Harvard style referencing system:
https://libguides.scu.edu.au/harvard/books
• See here for proper academic conduct for writing: https://www.kth.se/en/biblioteket/skriva-
referera/skriv-referenser-1.856564
 General info on writing
• Use proper referencing and add a full bibliography. Use the Harvard style referencing system:
https://libguides.scu.edu.au/harvard/books
• See here for proper academic conduct for writing: https://www.kth.se/en/biblioteket/skriva-referera/skriv-
referenser-1.856564
• Use GPS as an analytic method that needs to be explained. Note that the report should include primary
data as well, such as from interviews with experts and company representatives. It is therefore very
important that every statement in the report is supported by academic references. If you are referencing
incorrectly you will fail or you will have to resubmit a new version with references.

Follow the outlines of a journal paper for writing your report:

- Introduction
- Material and methods (including data sources)
- Theory
- Findings
- Discussion
- Conclusion
 KTH ROYAL INSTITUTE
OF TECHNOLOGY

ME2067 Industrial Transformation and

Technical Changes (ITTEC)
Lecture 1:2:
Concepts for Industrial Transformations and Technical Change

Dr. Johan Nordensvärd

18 January 2024
Content

1: Global challenges that drive industrial transformations and technical

change

2: Theories and concepts

- Transformations
- Technological trajectories and path dependency
- Lock-in: Unruh
- Diffusion of innovation: Rogers

3: Leading into the next lectures

1. Global challenges that drive industrial transformations
and technical change – why is change happening?

• Changing world, e.g.

• Globalisation
• Digitalisation
• Sustainability (e.g. climate change, air pollution, resource scarcity, need for
sustainable development)
• Human limitations
• Etc
 1. Globalisation
• ”Globalisation is the ongoing process that is linking people, neighbourhoods, cities,
regions and countries much more closely together than they have ever been before.”
(UNESCO, 2010)
 1. Globalisation
• “I think that globalization, as defined by rich people like us, is a very nice thing,
because you’re talking about the Internet, about cell phones, about computers.
This doesn’t affect two-thirds of the people in the world who are living on less than
$2 a day. They are never touched positively by globalization.” (Jimmy Carter,
2001)
• Luckily this has changed to some extent over the last 20 years
• Example African Renewable Energy Distributor (ARED) – solar-powered cell
phone charging in Rwanda and Uganda where 70% of people own a mobile phone
but only 18% have access to electricity – benefitted from international crowd-
funding and EU/US donors, international tech
1. Digitalisation

Benz,
1885
1. Digitalisation and going beyond human limitations
 1. Environmental challenges like climate change
• Environmental limits to economies,
societies, industries
• Atmospheric concentrations of CO2,
CH4, NO2 are at the highest since
the last 800,000 years (IPCC, 2018)
• Climatic impacts: warmer
temperatures, more frequent and
more intense extreme weather
events like floods / storms / wildfires
/ droughts, melting of ice sheets
and glaciers, ocean acidification,
sea level rise (IPCC, 2018)
 1. Environmental challenges
• Challenges drive opportunities
 1. Sustainable development

• Sustainable Development Goals: SDGs

 1. Sustainable development
SDG 6: clean water and sanitation for
everyone: Bill Gates invests 200 million
USD for a toilet revolution

SDG 2: zero hunger and SDG13: climate

action: drought-resistant crops in Sub-
Saharan Africa to adapt to a changing climate
2. Theories and concept: Transformations
• Transformations are the processes of re-structuring
economies and societies, e.g. from polluting to environmentally-
friendly / from analog to digital / from cash-based to cash-less
• Practices of radical economic, societal, technological and
institutional change.
• Many actors
• Many potential outcomes
• Different from more incremental, smaller, structured transitions
• Technological transformations require shifts in technological
paradigms / regimes / trajectories (Scoones et al, 2015)
2. Technological paradigms

• Paradigm: an outlook which defines the relevant problems, a

model or a pattern of enquiry. The paradigms conditions our way
of identifying problems, it provides our picture of the world.
• Technological paradigm is an outlook on the technological
problem: identifying problems and solutions through a specific
pattern (Christensen and Rosenbloom, 1995) – e.g. digitalization
as integral to our technological world
• Paradigm shift is a shift in the basic understanding of a scientific
theory (Kuhn, 1962) – e.g. from analog to digital
2. Technological regimes

• Technological regime: system or established order that directs

technological change, based on the views of engineers, experts
and institutions (Nelson & Winter, 1982)
• Technological trajectories: innovation pathways of technologies
(Dosi, 1982)
• Technical change requires changes in technological paradigms
and technological trajectories (Dosi, 1982)
• Dominating world views of our artificial world, on fundamentals of
technology and where to search for technical solutions.
2. Technological trajectories - same tech, different mechanism

• Example wind energy turbine: gear-box versus direct drive

2. Technological trajectories – same tech, different mechanism

• Example wind energy turbine: gear-box versus direct drive

 2. Technological trajectories & paradigm shift

• Why not completely different design of wind turbines?

 2. Technological trajectories

• Why not completely different design of wind turbines?

 2. Technological trajectories
• Similar to gear-driven car and automatic car

• Easier to change a technological trajectory than to change a

technological paradigm or a technological regime
• Requires engineers, experts, governments, firms, consumers and the
wider public to understand the reason for and the need for change
Break
2. Technological change (or not)

• A technological paradigm creates the foundation for research &

development / engineering programs
• Following a program will move technological development along a
conditioned trajectory, e.g. R&D on combustion engine means
limited research on battery technology
• Certain technologies get a momentum which pervade the whole
system
• Technological regimes can lead to path dependency and lock in
on systems level, e.g. the automotive system
 2. Path dependency
• A certain trajectory or pathway that technologies and industries
follow, often for long periods of time
• Industries gain momentum following certain trajectories
• Opening of new opportunities
• But also closing of potentially alternative development paths
• History matters, including small historical events – what Brian
Arthur (1989) calls random events
 2. Example of path dependent systems
• Transport system
• Huge infrastructure based on roads and cars
• Completely dominates cityscapes
• Has marginalised other forms of transport, like walking, cycling
etc
• Future is locked in a system of the past
• Needs a radical rethinking of
mobility and urban & rural planning
to break through the current system
 2. Path dependency in designs
• Bus / train / metro design
• Modern public transport in the UK: London’s red double-decker bus
• Path dependency but evolved

Past Present: 2018

 2. Path dependency in tech, designs & fuels (or not?)
• Modern public transport in Europe (German ICE train, Stockholm’s hybrid
electric and bioethanol buses, metro)
• Path dependency but evolved
2. Path dependency and lock-in of tech and designs
• New York City buses, emergency vehicles and subway trains
1980s and 2018: lock-in of technology and design

1980s 2018
2. Path dependency and lock-in of tech and designs

1987 2018
 2. Path dependency and lock-in of tech & designs

1980s 2018
 2. Lock in
• Being trapped in a specific technological regime, such as:
• Automobile industry

• The visions, dreams of and dependency on private transport

• The role of cars for problem solving:
• School run
• Commuting to work
• Shopping
• Holidays
• Linked to lifestyle, status and success
• City and country planning for cars and roads
• The automotive system dominates everything
 2. Lock in
• Auto-industrial/technological system:
• Cars
• Car industry
• Fuel/oil industry
• Road system
• Service/fueling system
• Engineering visions
• And also:
• Retail industry, service industry,
tourist industry, social planning
2. Carbon lock in

• Gregory Unruh (2000): Carbon lock-in

• Technologies, infrastructure and investments locked into fossil

fuel-powered, carbon-intensive pathways for decades
• Difficult to break the lock-in
• Institutions, firms, governments, systems, public perception,
values, cultural understanding, mindsets etc build on
technological regimes and their values and beliefs
2. Path dependency, lock in and disruption – or not?

• Technological paradigm and path dependency can be broken

through by disruptive innovation (Christensen and Rosenbloom,
1995)
 2. Creative destruction and disruptive innovation

• Joseph Schumpeter (1883 – 1950)

• Creative destruction
• Widening innovation: innovations are introduced by
firms that did not innovate before
• Deepening innovation: Creative accumulation
• Christensen and Rosenbloom (1995): Disruptive
innovation: An innovation that creates a new
market and value network and disrupts the old
ones
• Can break through a lock-in of technology and systems
 2. Alternatives to break out of this lock in?

• Barcelona, Spain
• Radical innovation
in city planning to
redefine mobility
 2. Alternatives to break out of this lock in?

• Heathrow airport, UK: Pod Parking – automated driving

 2. Alternatives to break out of this lock in?

• Volocopter: electric helicopter taxis

• Breaking the path-
dependency of old
transportation
systems requires
disruptive
innovation, both in
technologies and
business models
• Needs financial and
policy support
 2. Disruptive enough? Example of EVs
• 1830s: first electric cars
• 1897: electric taxis in USA
• 1899: electric car faster that 100 km/h (France)
• Early 20th century: electric cars in majority (short period)
• 1908: first hybrid car built by Porsche
• 1920: decline of electric cars due to cheap, mass-produced model T by Ford
and cheap oil
• 1996: Interest in electric cars grows again due to GM’s EV1, Toyota Prius
hybrid - gap of about 80 years
• 2006: Tesla enters the industry
• 2010: Nissan Leaf launched

• Brian Arthur: history matters and random events

• EVs today: costs are
going down, sales are
going up
2. Defining innovation
• Innovation: defined as creating something new or developing a new product,
service or idea (Rogers, 1962 / 2003).

• Definition is variable:
• New to the world
• New to the system
• New to the firm
• New product / process / material / organisation
• Incremental
• Radical
• Disruptive
2. Diffusion of innovation

• We will talk more about this in later lectures

• We only introduce some main concepts here

• Everett Rogers
• Diffusion of innovations is a theory that helps to explain why, how,
and how fast new ideas and technologies spread.
• These theories can help to explain why some technologies are
not being adopted at large-scale, despite being better in many
ways.
Stern 2015
2. Diffusion of innovation
• Technology S-Curves: a standard tool for analysis of
diffusion and performance
2. Diffusion of innovation
2. Diffusion of innovation

• Sometimes an issue of mindsets,

values, behaviours, culture,
maybe even generations
2. Diffusion of innovation

• Tech developers and

their challenges: from
R&D to
commercialization
• When government
funding ends and
mass markets haven’t
been reached yet.
Group work:

Discuss in break-out groups what you understand under:

- Innovation
- Technological regime
- Path dependency and lock in

Give practical examples.

Thank you for your attention

Questions? Comments?
Johan Nordensvärd
Johan.nordensvärd@indek.kth.se
Emily Christley
emilych@kth.se