Technological change or technological development, sometimes is viewed as a single event – but more often than not, it is viewed as a series of interconnected events. It is, for example, an example of a feedback loop. This type of development occurs because something was improved upon, or new technological know-how was discovered. For instance, something might be invented to improve upon the light bulb, but someone then found a way to make even brighter light bulbs, so the cycle starts all over again. Technological change can therefore be seen as a sort of process, where the preceding one was an improvement on existing methods.
Technological development usually is viewed as a product or process related to technology, but in fact, it is also an event. For instance, when people were looking for a better way to build cars, they had many options available. Ultimately, the decision was made to go for the new assembly line production process, which was the equivalent of the technological development associated with the industrial revolution. And this process was later complemented by the development of the assembly line itself.
Today, the same processes are at work. Leading venture capitalists are pouring money into companies that are doing exciting work in areas like nanotechnology, computer science, and biomedical engineering. In addition, the leading research universities are discovering cutting-edge innovations in fields such as stem-cell research, energy, and health care. These are just some of the emerging fields that are being developed for the purposes of enhancing human health, making our lives easier, and fulfilling our needs for modern living. Venture capitalists are putting their money into these emerging fields because these new products or processes can provide substantial returns, thereby creating a huge economic stimulus for these firms.
This kind of emergence is playing an increasing role as globalization continues to cause economies to open up and produce goods and services beyond what had previously been available locally. One example of this is the emergence of Japan as a world leader in terms of technological lead. While the U.S. has long been a technological laggard, the Japanese have been quickly closing the gap. Venture capitalists in both Europe and the U.S. are now funding firms in Japan solely for the purpose of acquiring technology that will allow them to become a technological leader.
This trend is playing out across all the sectors of the economy, with firms from the U.S., Japan, and Europe all pursuing this strategy. Even in the manufacturing sector, companies are following this strategy by investing in research and development that will lead to more efficient manufacturing processes, thereby allowing those firms to serve customers around the world. Just recently, Honda announced that it would be investing approximately one billion dollars in research and development in the areas of medical device innovation, driver assistance systems, and transportation technologies.
Venture capitalists are jumping on the bandwagon, chasing after this emerging trend. The key to success in these endeavors is being able to identify the innovations that will be most beneficial to a particular firm. For firms such as Toshiba or Honda, the process of identifying which technological innovation will yield the greatest results is relatively straightforward. Many firms, however, are somewhat more difficult to evaluate. In order to avoid missing out on budding new innovations, venture capitalists must take a look at the following factors.