I read constantly on a variety of subjects. I am interested in electric cars, wind energy, industrial productivity, electric motors, lots of stuff that would seem to be disconnected. As someone who is involved in the development of technology, it is important to me to look to the future. For my consulting clients I must often identify the barriers to entry of markets. What are the hurdles and how do we overcome them?
In case you haven’t read any of my posts, I am a bit skeptical when government gets involved in developing technology. I don’t think we the taxpayer have ever gotten a good deal in that regard. I am particularly concerned by the billions of dollars per year spent by the Department of Energy considering the very few benefits gained for the extraordinary sums that are spent.
In recent reflection I struggled with what constitutes the proper valuation of the money spent. After all, research and development are not precise sciences with predictable outcomes. And especially as we seek solutions to the big mechatronics challenges of our decade, this becomes even less clear because there are many variables of design and many parameters of merit which can be construed as value.
The question is “What is the absolute value of technology?” As the title of this post suggests, “Is there such a thing as absolute value when talking about technology?” I think the answer is “Yes, there is”. The more difficult part is applying the notion, because the parameters of merit will change for each technology that we consider. But that’s OK. What is most important here is that we try to establish what is important in each case and evaluate the merits of each technology. This is absolutely critical in deciding what to spend money on. It will also make clear when proposed technology is a not a good choice.
United States manufacturers have very objective means of deciding what to spend money on. It’s called Return on Investment. ROI. Very simple, basic stuff. If it pays for itself in 1 or 2 years, we need to go for it. Don’t we try to make those same decisions when we run our household budgets? Well, something like that.
The difficulty may be in getting agreement on the cost basis. Yes, that’s a tough one. Because in the industrial community we try to use a measure called life cycle costing. That covers the cost to acquire, install and maintain the product over its expected life. And I think the industrial model is great for this purpose.
But when talking about technology alternatives it is a little tricky. But if we can get agreement about the facts, we can always work out any differences of perspective so that the analysis makes sense. We may have differences in how we apply the methodology in a given case due to perspective issues. Are there hidden costs that need to be considered?
In the next installment I will try and apply this methodology to a couple of popular green energy discussions and see if we can gain a little clarity.