The Role of Design Complexity in Technology Improvement

6 Pages Posted: 2 Aug 2010

See all articles by James McNerney

James McNerney

Massachusetts Institute of Technology (MIT)

J. Doyne Farmer

University of Oxford - Institute for New Economic Thinking at the Oxford Martin School; Santa Fe Institute

Sid Redner

Santa Fe Institute

Jessika E. Trancik

Massachusetts Institute of Technology; Santa Fe Institute

Date Written: June 30, 2009

Abstract

We study a simple model for the evolution of the cost (or more generally the performance) of a technology or production process. The technology can be decomposed into n components, each of which interacts with a cluster of d-1 other, dependent components. Innovation occurs through a series of trial-and-error events, each of which consists of randomly changing the cost of each component in a cluster, and accepting the changes only if the total cost of the entire cluster is lowered. We show that the relationship between the cost of the whole technology and the number of innovation attempts is asymptotically a power law, matching the functional form often observed for empirical data. The exponent alpha of the power law depends on the intrinsic difficulty of finding better components, and on what we term the design complexity: The more complex the design, the slower the rate of improvement. Letting d as defined above be the connectivity, in the special case in which the connectivity is constant, the design complexity is simply the connectivity. When the connectivity varies, bottlenecks can arise in which a few components limit progress. In this case the design complexity is more complicated, depending on the details of the design. The number of bottlenecks also determines whether progress is steady, or whether there are periods of stasis punctuated by occasional large changes. Our model connects the engineering properties of a design to historical studies of technology improvement.

Keywords: experience curve, learning curve, progress function, performance curve, design structure matrix, evolution of technology

Suggested Citation

McNerney, James and Farmer, J. Doyne and Redner, Sid and Trancik, Jessika E., The Role of Design Complexity in Technology Improvement (June 30, 2009). Available at SSRN: https://ssrn.com/abstract=1428142 or http://dx.doi.org/10.2139/ssrn.1428142

James McNerney (Contact Author)

Massachusetts Institute of Technology (MIT) ( email )

77 Massachusetts Avenue
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Cambridge, MA 02139-4307
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J. Doyne Farmer

University of Oxford - Institute for New Economic Thinking at the Oxford Martin School ( email )

Eagle House
Walton Well Road
Oxford, OX2 6ED
United Kingdom

HOME PAGE: http://www.inet.ox.ac.uk/people/view/4

Santa Fe Institute ( email )

1399 Hyde Park Road
Santa Fe, NM 87501
United States
505-984-8800 (Phone)
505-982-0565 (Fax)

HOME PAGE: http://www.santafe.edu/~jdf/

Sid Redner

Santa Fe Institute ( email )

1399 Hyde Park Road
Santa Fe, NM 87501
United States

Jessika E. Trancik

Massachusetts Institute of Technology ( email )

77 Massachusetts Avenue
50 Memorial Drive
Cambridge, MA 02139-4307
United States

Santa Fe Institute

1399 Hyde Park Road
Santa Fe, NM 87501
United States

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