Few would disagree that technological change is a major ingredient of long-term economic growth, or that it is beset by a high degree of uncertainty. Understanding the nature of this uncertainty and the obstacles to surmounting it is not a trivial matter. It goes to the heart of how new technologies are devised, how rapidly and far they spread, and how they affect economic performance.

The deep uncertainty associated with innovation makes it hardly surprising that innovating firms have historically experienced high failure rates. Indeed, the vast majority of attempts at innovation fail. But this is only part of the story. A more intriguing field of enquiry might be the apparently widespread inability to anticipate the future impact of successful innovations, even after their technical feasibility has been established.

Uncertainty has a number of peculiar properties that shape the innovation process and hence the way in which technological change exercises its effects on the economy. In considering what has determined the trajectory of new technologies, I propose to focus on those that have made a powerful impact. A study that included unsuccessful as well as successful innovations might yield insights of a very different nature.

After a new technological...