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Hal Varian, professor of information sciences, business, and economics at the University of California at Berkeley, says it's imperative for managers to gain a keener understanding of the potential for technology to reconfigure their industries.
"We're in the middle of a period that I refer to as a period
of "combinatorial innovation." So if you look historically, you'll
find periods in history where there would be the availability of a different
component parts that innovators could combine or recombine to create new
inventions. In the 1800s, it was interchangeable parts. In 1920, it was
electronics. In the 1970s, it was integrated circuits.
Now what we see is a period where you have Internet
components, where you have software, protocols, languages, and capabilities to
combine these component parts in ways that create totally new innovations. The
great thing about the current period is that component parts are all bits. That
means you never run out of them. You can reproduce them, you can duplicate
them, you can spread them around the world, and you can have thousands and tens
of thousands of innovators combining or recombining the same component parts to
create new innovation. So there's no shortage. There are no inventory delays.
It's a situation where the components are available for everyone, and so we get
this tremendous burst of innovation that we're seeing."

