Applying Experience Curves to Utility-Scale Solar Electricity

My father worked for IBM in the 1960s, and one time someone showed him a megabyte of memory. The machine filled a whole room. It reportedly cost $1MM, and it was a big deal. Checking on Amazon, you can buy a 64GB thumb drive for $13. Unpacking this, we can adjust $1MM in, say, 1965 to $8MM in 2018 dollars using the consumer price index. So, in 2018 dollars, this early megabyte of memory apparently cost $8Bil./GB. Today, it costs $0.20/GB, which is nearly an 11 order-of-magnitude difference! Could they have predicted in the 1960s that memory would become ubiquitous and near free?

What about solar power? According to LBNL’s 2018 Utility Scale Solar report, solar energy now makes up about 2% of the electricity used in the U.S.1 It is beginning to achieve market penetration but is still frequently grouped into the “Other” category in power generation pie charts. Will costs of solar power fall substantially, and will solar power become ubiquitous? There may be reasons besides cost that holds back the solar industry, but lowering cost always helps to expand a market. Continue reading “Applying Experience Curves to Utility-Scale Solar Electricity”

A Book Review: _Competing Against Luck_ by Christensen, Hall, Dillon, and Duncan

Competing Against Luck: The Story of Innovation and Customer Choice by Clayton Christensen, Taddy Hall, Karen Dillon, and David Duncan, 2016.

Christensen and his team start with a McKinsey poll that 84% of global executives acknowledge that innovation is extremely important to their growth strategies but 94% were unsatisfied with their own innovation performance. In 2015, U.S. public companies spent $680 billion on R&D showing innovation is indeed important. Since perceived need and effort are not the problems, Christensen and team conclude innovation efforts are directed in a haphazard way and propose a “jobs to be done” theory for products. What job is a customer hiring a product to do? People want a quarter inch hole and so they go to the hardware store to buy a quarter inch drill bit. No one actually cares about drill bits. The book discusses how you figure out exactly what it is your customer needs and how to provide that for them. Why does a company ask what someone’s favorite milk shake flavor is when the most important thing to them that it fits in the car’s cup holder? Why would V-8 be marketed as a good tasting drink when people buy it to replace cooking vegetables? The book teaches how to ask the right questions when marketing products.

As an engineer, it’s heart-breaking to spend blood, sweat, and tears to get something working only to find out that no one wants it. This well-written book provides hope that misdirected development is avoidable and shows how to ask the right questions to tune what you are doing to what someone wants. Certainly, others have written books on this topic, and the authors acknowledge as much. But for those who haven’t already got a favorite on the topic, I thought this book was great and would recommend it.