The interplay of technology and know-how: the case of cotton mills

In discussions about technology and innovation is all too easy to focus on the patented technology. Other important concomitant intangible assets are thought to appear as if by magic. The reality is that these other intangible assets, including organizational knowledge and tacit know-how, are key to translating technology into practical applications. The work of Erik Brynjolfsson has explored the importance of organizational changes. I recently ran into another example in The Dawn of Innovation: The First American Industrial Revolution by Charles R. Morris. Morris notes that Richard Arkwright needed to invent more than just new cotton processing machinery such as the the water frame and the rotary carding engine.

Cotton mill management was a new discipline: it required learning how to run banks of the new machines efficiently, how to lay out the work flow, and how to manage machined cotton. The stages from machined rovings to finished yarns were subtly different from those of hand-spun cotton. Knowing what machine speeds to apply with different fibers and spotting when I yarn was about to break, knowing how to intervene and how to restart equipment after a disaster–in effect, the basic textbook of mill management–had to be invented from scratch.

An important point to keep in mind.

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