SOLITONS OF BUSINESS ACTIVITY

Y. B. Karasik,
Thought Guiding Systems Corp.,
Ottawa, Canada.

High-tech is in depression. Hundreds thousands of software, electronic, etc. engineers lost their jobs. Everybody is wondering: when is it going to turn? But nobody wonders: has it to turn at all?

At the first sight, the question should be answered in positive. Indeed, in the market economy booms are followed by crises. Demand and supply are never perfectly balanced. At times hiring prevails, but at times, alas, firing takes sway. Good times give way to bad times and vise versa.

However, some counter-examples to such cyclical recurrences immediately come to the mind. Building of skyscrapers began in the late XIX century, peaked in the first 1/3 of the XX century (from the standpoint of the number of skyscrapers built annually) and never recovered thereafter. Construction of hydro power plants (and, accordingly, dams on rivers) peaked in the 1930s and waned thereafter. How many new major dams were erected in the last 3 decades? Probably none. Civil aircrafts design peaked in the 1960s and since then we have not seen many new airplanes. We are still flying on planes designed mainly in the beginning of the 1970s (such as Boeing 747, etc.) or their later modifications. Spacecraft design peaked in the 1970s and since then NASA was busy with trimming its staff. Etc., etc., etc.

It seems that such single crested (or solitary) waves of economic activity were overlooked by economists. At least I did not see them mentioned in the economics textbooks and monographs. They all described the ordinary waves of the aggregated economic activity, which have many crests (i.e. so called fluctuation of economic activity). And the economists seemed to be primarily concerned with proposing means of preventing recessions or mitigating their severity and spurring growth in the time of decline, etc. It looks like they tacitly assumed that if the aggregated economic activity fluctuates, then economic activity in the individual fields of business fluctuates too.

That is true, to a degree, of course. Manufacturing of cars fluctuates year over year. But can these fluctuations be compared to the magnitude of the upswing that took place in the beginning of XX century ? The cars production back then went up from a few cars a year to millions cars a year just in a matter of a decade. All subsequent fluctuations were just ripple on the top of this giant wave, which has not passed yet. We still have not seen the dramatic plunge in the cars manufacturing, which will definitely come about when new transportation technologies come into existence.

Thus, business activity in many particular fields of business does not look like this:

but rather like this:

The latter picture is a superposition of an ordinary wave that has many crests with a much bigger solitary wave that has just one crest. Such solitary waves are called solitons in physics.

This brings us to

It immediately follows from the hypothesis that if the business activity in a particular field has significantly and abruptly plunged, then it is unlikely that it will ever recover again (because a significant and abrupt plunge may indicate the beginning of the end of the soliton).

Given this pessimistic prospect, it is important to work out recommendations for people affected by the demise of a soliton. A trivial recommendation could be to jump on another soliton. In other words, retrain yourself for another area of economic activity, which has not passed its crest yet.

Let us test the validity of such a recommendation on the historical data. The years 1900s – 1930s witnessed both rising and declining solitons. Amongst the declining ones there were the rail roads building, the bridges over the major rivers building, etc. Amongst the rising solitons there were aviation soliton, radio soliton, automobile soliton, etc. The number of receding solitons was smaller than the number of rising solitons. The people could “easily” (actually not so easily, of course) change their profession and find a place under the sun. By the late 1940s the predominance of rising solitons over receding ones increased even further. Nuclear technology, rocket technology, etc. started to boom. However, by the 1970s the situation changed quite dramatically. Radio soliton has almost died by then. TV soliton that came to take over in the 1940s, has also passed its crest. The nuclear technology soliton, aviation soliton, and the space soliton were also in decline. The only soliton that was on the rise at the time was computer & software soliton. And people released from other solitons were jumping on it. Physicists, aviation and mechanical engineers, electrical and radio engineers all went to programming. Luckily enough, the computer soliton turned out to be so huge that it alone could absorb people released from all other receding solitons. And finally it burst in 2000. And there is no new soliton in sight to jump on.

Thus, we come to a conclusion that the number of solitons of business activity also fluctuates over time. At times, the number of receding solitons exceeds the number of rising solitons, but at times it is the other way around. Moreover, we can propose the following

It is obvious that if D(t) becomes a soliton, then catastrophic consequences for economy may follow. Thus, a question immediately arises: how to prevent D(t) from becoming a soliton, how to keep it as an ordinary wave (i.e. as a fluctuating process), or even how to always keep the number of rising solitons higher than the number of receding solitons in order to keep economy expanding?

Since, economy cannot expand unless the rising solitons absorb people released from the dying solitons, we arrive at the following

dM+ (t)   >   dM- (t)
dt dt

The simplest tactics to try and make this relationship to hold is to keep the number of rising solitons greater than the number of dying solitons. Since the rising solitons are associated with innovative ideas, to achieve the aforementioned goal, the creativity has to be unleashed.

One might think that resorting to technologies of creativity (such as TRIZ) would be enough to this end. Unfortunately, paraphrasing Altshuller, one can say that such technologies are as useful as "ivory fans for people dying of hunger". The main obstacle to unleashing creativity is not ignorance of technologies of creativity but the humble conditions of the vast majority of really creative people. That is why, creation of favorable conditions for really talented people is a much more important necessity than teaching TRIZ to the corporate "talent".

Until the latter objective is achieved, TRIZ etc. will remain mostly redundant. And the economy will face the horror of rising solitons being increasingly damped by the dying ones.