The Accelerating Transport Innovation Revolution: A Global, Case Study-Based Assessment of Current Experience, Cross-Sectorial Effects, and Socioeconomic Transformations

By George Giannopoulos and John F. Munro

The Accelerating Transport Innovation Revolution: A Global, Case Study-based Assessment of Current Experience, Cross-sectorial Effects and Socioeconomic Transformations, offers a comprehensive view of current state-of-the-art and practices around the world to create innovation on a revolutionary scale and connect research to commercial exploitation of its results. It offers a fascinating new model of the innovation process based on theories of biological ecosystems, general systems theory and basins of attraction (represented through space-time graphs well known in mathematics). Furthermore, it considers – through a number of dedicated chapters - key issues and elements of innovation ecosystems, such as: Causal Factors and system constraints affecting the development and sustainability of innovation ecosystems (Chapter 4); Review of innovation organization and governance in key countries and regions (Chapter 5); the role of technological "Spillovers" (Chapter 6); Collection and use of data for innovation monitoring and benchmarking (Chapter 7); Intellectual Property protection between competing ecosystems (Chapter 8); Economics of innovation (Chapter 9); Public and private sector involvement in Transport innovation creation (Chapter 10); the role of the individual entrepreneur - innovator in energizing change (Chapter 11). Finally, in Chapter 12, there is a thorough summary of key findings.

This book uses a paradigmatic approach to augment the innovation ecosystem model of innovation that integrates beliefs and learning into the innovation ecosystems model. It therefore includes ten case studies from the U.S., Europe and Asia, detailing how innovation is created across continents and different ecosystems and what are the critical lessons to be learned. It does this, effectively, at five different levels of analysis i.e. the individual innovator / entrepreneur level, the organization level (government agency or company), the regional ecosystem level, the nation-state level and the global – systemic or international level. Each level of analysis, reveals unique features of the innovation landscape and the ten case studies allow the reader to assess when and where specific "enablers" are facilitating innovation especially on a revolutionary scale.

The need for the book came from the realization that despite the billions of dollars spent on various research programs over the past 20 years (especially in the public sector), there have been few clear and tangible efforts directed at exploring how innovation production increasingly occurs and the critical factors necessary to sustain large-scale, revolutionary change as the future unfolds. Thus, a primary theme of the book is that understanding how research results translate into market innovation and implementation, especially understanding the nature of revolutionary innovation, is as important as the creation of innovations themselves.

While the focus of the book is on Transportation, the concepts and recommendations presented apply to other fields too.

• Formulates and presents a workable and comprehensive new model of innovation
• Defines and analyzes many concepts and notions related to innovation, research and market implementation
• Examines the critical factors affecting innovation production and successful commercial implementation of research results
• Examines organizational models of coordination, governance, data collection, process analysis and use of intellectual property tools
• Includes recent, well-researched and documented case studies of successful innovation ecosystems across the world mainly – but not only – in the Transport field

• Language: English
• Publisher: Elsevier Science
• Release date: Apr 17, 2019
• ISBN: 9780128138052

George Giannopoulos

George Giannopoulos is a transportation planner, professor emeritus of the Aristotle University of Thessaloniki and corresponding member of the Academy of Athens. He is the founder and Director for 15 years of the Hellenic Institute of Transport (HIT/CERTH) and has participated in more than 200 studies and research projects in the Transport field in most of which as coordinator. He has served in many positions of responsibility in various international Organizations and the European Union such as: chairing for many years the Transport Advisory Group of the European Commission’s Directorate General for Research Technological Development and Innovation; co-chairing for six years the US TRB’s standing Committee on International Cooperation; chairing for six years the European Conference of Transport Research Institutes (ECTRI); chairing for four years the European Transport Research Alliance (ETRA); and various others. He has also been visiting or adjunct Professor in several Universities outside his home country. His fields of interest include transportation planning, transport policy, research governance, research implementation - innovation, international transport research cooperation. He has published more than 250 articles in scientific journals and Conferences as well as 12 books.

Book preview

Wolfrik.

Section A

Understanding Systemic Innovation

Chapter 1

Introduction—Basic Concepts and Relationships

Abstract

Technological revolution embodies risk and promise as well as anticipated and unanticipated consequences. If fully realized, the result will likely be accelerated economic growth and a level of global technological connectedness that has the potential of extending well beyond transportation. By transportation revolution we mean the punctuated confluence of a broad array of innovations—based on fundamental progress or parallel maturation—in various disciplines such as artificial intelligence, information technology, and communications. These fundamental progressions are then converted into market-valued products through various private and public organizations and entrepreneurs. Technological revolutions can produce permanent structural changes in how societies and economies function, operate, and collaborate domestically and internationally and envision the future. In this chapter we discuss the key concepts and definitions related to all these issues and set the ground for the more analytical and in-depth definitions and paradigms of the next chapters.

Keywords

Innovation; Transport innovation; Revolutionary innovation; Legacy systems; Transportation

The Changing Landscape of Transportation

Transport is Undergoing Revolutionary Change

Technological revolution embodies risk and promise as well as anticipated and unanticipated consequences. If fully realized, the result will likely be accelerated economic growth and a level of global technological connectedness that has the potential of extending well beyond transportation. By transportation revolution we mean the punctuated confluence¹ of a broad array of innovations—based on fundamental progress or parallel maturation—in various disciplines such as artificial intelligence, information technology, and communications. These fundamental progressions are then converted into market-valued products through various private and public organizations and entrepreneurs. Technological revolutions can produce permanent structural changes in how societies and economies function, operate, and collaborate domestically and internationally and envision the future.

Technological revolution often begins in a basic research sector such as solid-state physics and then spills over into other applied sectors such as transportation. This transfer usually takes place through entrepreneurial imagination, capital availability, economies of scale, and the omnipresent needs and deeds of the government. Innovation spillovers involve the optimal exploitation of what economists call positive externalities. Once spillovers begin, they often travel beyond one sector such as transportation, rippling across a broad range of sectors such as energy, agriculture, urban development, and health. These sectors are much like stacked dominoes in that the falling of one domino precipitates a chain reaction causing other dominoes (or sectors) to fall (innovate) in kind.

Technological revolutions at the systemic level are ignited through a series of large-scale disruptive innovations or alternatively, through a series of tiny incremental stepwise innovations that once synergistically linked, produce fundamental change. Invariably, technological revolutions produce both intended and unintended consequences such as wealth building which may be considered an expected outcome or unintended ones such as endemic, structural underemployment, large-scale consumer resistance to some innovations (e.g., autonomous vehicles), or a decline in privacy.

In the field of transportation, we are currently faced with the quick advent of some fundamental changes of revolutionary nature—based on a number of innovations—that are likely to form disruptive events that will define transportation in the mid-21st century. These revolutionary game-changers are the advent of:

A.Electro-mobility (through advances in electric vehicle technology propulsion and battery storage systems).

B.Autonomous vehicles and transport-on-demand systems.

C.Big data and mass information processing technologies.

D.Connected transport through vehicle technologies that enable vehicle-to-vehicle or vehicle-to-infrastructure communications through smart communication infrastructures.

E.Artificial intelligence (AI) applications in all transportation systems.

F.Cultural and socioeconomic changes that involve acceptance of new operational practices, for example, vehicle and ride-sharing services and the loosening of our previous core predisposition to individualism and vehicle ownership.

These game changers will require concomitant advances of both fundamental research as well as innovations in many sectors such as AI, uniform regulatory standards, advanced sensors and algorithms, telecommunications, vehicle to everything, connectivity, advanced batteries, etc. They also require changes in beliefs and values that will lead to paradigmatic change and—perhaps above all—the steady influx of individuals that are committed to fundamental innovation rather than stable profits and incremental change.

The Nature of Change in the Transport Sector

Transportation innovations are not created in a vacuum; they often owe their existence to the birth of new sciences such as solid-state physics that came to the fore in the late 1940s. The march of science, however, is by no means a predetermined, inevitable process. A decline in the rate at which computers become faster, for instance, could delay or slow the transportation revolutionary innovation. Already the law of Moore² is likely to soon no longer hold true. The steady progression toward smaller processors over a period of 50 years has made it possible to produce supercomputers, smart phones, tablets, and a host of other consumer products such as smart TVs at the rate stipulated by Moore in the 1960s, but because transistors have reached the size of atoms, there are physical barriers that will apply and further developments will have to be based on new processes and AI rather than on smaller and smaller transistors.

Without further advances in processing speeds that enable sophisticated communication devices and sensors that endow automobiles with the awareness necessary to avoid crashes and mechanisms for storing and quickly processing huge amounts of data, the transportation revolution may be forced to take the off-ramp toward a future built on technological stasis. As technological optimists, we assume that processing speeds will not become an intractable barrier, and the next decades will see a period of discovery with competing innovations jousting and jockeying to demonstrate their relative value and degree of innovativeness. There will be both winners and losers in the launch of new innovations and the capture of market share. Brand names may disappear as companies fight to acquire knowledge, recruit human resources, and secure investment capital. For example, within the next 4 years, an electrical storage device such as lithium ion batteries may be yesterday’s technology. Electrical storage devices, in 2021 vehicles, could switch to using graphene via inexpensively manufactured supercapacitors (the result of recent innovation in manufacturing).³

These newer innovations, along with others already on the horizon, promise to set the stage for a battle royal⁴ between competing change agents and their respective innovations. Electrical storage devices incorporating lithium ion batteries are only a few of the "known innovations that will be competing for the market share and technological supremacy. There are also the unknowable unknowns"⁵ which can always change the scene completely. Innovations may, for example, support infrastructures that will govern the operation of entire road systems by adding safety through the introduction of centralized control functions and real-time feedback to individual units (automobiles) moving through traffic corridors. Congestion could become a problem of the past, as vehicles may collectively and remotely be slowed and optimally spaced in accordance with highway conditions. Unfortunately, the benefits of connectedness through governmental intervention may further compromise individualism and privacy setting the stage for cultural conflicts between consumers and companies investing in automated (autonomous) vehicles.

Seminal transport-related changes are also occurring (through innovations) on the softer, that is, the organizational or institutional side through the creation of new business and management models, funding arrangements, cross-national collaborations, and manufacturing built on AI and robotics. Efforts to build the automobile of the mid to late 21st century are transcending the parochial, nationalistic alliances that dominated the transport sector for decades. Start-up firms that did not exist 2  years ago are now partners to major automobile manufacturing multinationals such as Toyota, General Motors, and Ford as well as many of the established computer and internet companies such as Google, Microsoft, and IBM. In other words, many legacy auto-manufacturing companies find it less expensive to partner with start-up companies or outright buy them rather than to develop knowledge from the bottom up. This trend is particularly auspicious in the automobile giants in the United States, Japan, and Korea that have gone on a buying spree of companies with advanced AI knowledge, and the establishment of research centers proximate to major ecosystems such as Silicon Valley. One can expect this trend to continue over at least the next 10–15 years, that is, to 2030 and beyond.

In transportation, we are experiencing a "punctuated evolution where accelerated change is the current norm" (Gould, 2007). The lifespan of this evolution is not predetermined or inevitable; it could endure for decades or vanish in a figurative blink of the eye. Again, our considered bet is that the ongoing transport innovation revolution will endure, especially if the current technical, cultural, and organizational constraints are resolved, and the world does not devolve into the new dark ages of global protectionism or defined spheres of military influence.

Defining Innovation in the Transport Sector

General Definition

We start with Joseph’s Schumpeter’s⁶ parsimonious, generalized definition of innovation, "Innovation is the commercial exploitation of new ideas.⁷ Schumpeter’s definition is correct, but understanding the complex, multifaceted nature of revolutionary innovation in the transport sector cannot rely on this definition alone. It requires a deeper exploration of the antecedent processes of innovation that change over time. As the colloquial, often quoted in the media, saying goes, innovation in the 21st century is not your ‘mother’s innovation system."

Modern innovation in transportation is best conceptualized through the following observations:

1.Critical transportation innovation processes and technologies are rooted in scientific research and theoretical advances of the mid-20th century in the transportation field as well as in many related fields.

2.Government involvement in innovation waxes and wanes in response to supporting policy objectives and perceived security threats.

3.Revolutionary innovation in transportation:

•Does not always involve discoveries that lead directly or immediately to commercial exploitation.

•Does not follow a linear but rather a disjointed pathway and embodies complexity, heterogeneity, uncertainty, and sometimes chaos.

•Involves multiple pathways that are not static but are evolving over time.

•Involves organizational learning channeled through an accepted set of values and beliefs (i.e., a paradigm).

•Needs individual leadership and vision as well as an affinity for risk taking within a particular system.

4.Innovation in general as well as in the transport sector closely emulates many of the features and processes of a niche-based biological ecosystem. In the next chapter, we give a complete and comprehensive definition of innovation based on the ecosystem concept. The descriptive models given in Chapter 2 provide an advanced representation of the innovation process and are put forward as an innovation itself.

Levels of Consideration

In trying to explain and assess the factors that influence transport innovation, we can usefully refer to the different levels at which one can consider the process and study its behavior. We can define five levels of consideration concerning innovation in the transport sector:

The systemic or global (international) level: This is the international level, that is, the one pursued by major national or multinational actors having the relative power to pursue innovations at an international—global level. This level is obviously related to the nature of change at the national and societal levels and utilizes inducements for cooperation between countries according to the policies for international interaction and the relative economic/scientific acumen of the cooperating countries. Obviously, the policies and interests of each country define systemic behavior for transport innovation in the international level too. Under the conditions in which the current international transportation innovation systems operate, the rules of the game are determined by a relatively small set of major national entities, for example, the United States, Japan, the European Union (EU), China, Korea, and Germany. Other countries such as Israel are contributing innovations that may make the difference in the timing of the transportation revolution, but they are not the major systemic players that will determine the structure of the international transportation system and the extent of its innovation. Systemic approaches to transport innovation are different from other levels in that the emphasis is on the constraints and not on the deterministic causal variables. The current international system of transportation is multipolar in character because of the number of national actors that have the appropriate technological power. However, players such as the United States are first among equals in the international innovation transportation system.⁸

The national level: This level refers to the strategic and institutional framework for innovation that is in place domestically to facilitate the creation of innovations within a certain country or region. It refers to the overall "innovation eco-system" of a country.

Subnational or regional level: This is the level at which local innovation ecosystems generally develop, that is, within a well-defined geographical area. It is mainly evident in large and strongly innovatory countries where there are a number of subnational innovation ecosystems with strong competition between them over the development of start-ups via the infusion of venture capital.⁹

The firm or organization level: That is, the level of a specific organization (e.g., commercial company or firm, research institute, or university, etc.) that is interested in commercial exploitation of its research results and expertise. This is the level where most of the work gets done in producing tangible innovation. It is generally at this level where also innovation producing public-private partnerships (PPPs) are occurring.

The individual level: This is the level of the single person-innovator (researcher or entrepreneur) who takes the initiative to proceed with his/her idea or research result and create the conditions for successful transformative innovation through a start-up company or other initiative.

The various case studies of innovation ecosystems that are presented in the second section of this book refer to all of the above levels and provide useful examples of how innovation is developed and maintained in each case.

There is also a horizontal level of consideration. This is the socioeconomic—cultural level. It refers to the society as a synthesis of human reactions—trends—and attitudes. It is the level that may render an innovation successful or not and also it is the level most directly impacted by transformative innovation. Societal attitudes and beliefs can be transformed by the constraints imposed by the national level and through the concerted actions by organizations and individuals to bring innovations to the market place. Entire economies can be transformed by innovations affecting the levels of employment and the nature of work. The "societal relevance" for transport research has been stressed by relevant advisory bodies to both the United States and the EU research administrations.¹⁰ This level of consideration is increasingly visible in the current transport research program funding. The idea is that the technology-oriented mindset of research and innovation can be superseded by a broader set of research and innovation dimensions that include issues such as:

•understanding of travel demand, needs, and behaviors;

•social inclusion, access, and social equity in transport systems;

•economic and commercial competitiveness, business models, and markets;

•issues of efficiency, resilience, and effectiveness.

The Chaotic and Divergent Face of Innovation—The Shiny Object Syndrome

Innovation-based revolutionary change is an uncertain process. The success of an innovation that passes over the bright gold line, dividing the dusty shelf of unused technologies from those innovations that are commercialized, is counterintuitively both a random and deterministic event. It is random simply because it is so hard predicting (even through market research) that an invention will reach a sufficient level of consumer desire or acceptance so that it remains competitive for a sufficient period of time to turn a payoff equal to, or greater than, the total investment. However, it is determinate in that there are specific processes leading from conception to commercialization that can be identified, particularly in successful innovations viewed through hindsight.

Consumer preferences are labile¹¹ and producers and consumers of innovation are always looking for the next shiny object much like ravens¹² that are reputed to always be searching for something shiny to bring back to their nests. When new transport technologies enter the market—involving new and revolutionary pieces of hardware or processes—they are often infected by the "Shiny Object Syndrome—SOS,¹³ that is, the trend of entrepreneurs and technologists to be distracted from the bigger picture and go off on tangents in search of the most flashy" technology rather than focusing on innovations already far down the pipeline and ready for introduction to the market place. The SOS can introduce a form of organizational attention deficit disorder (ADD) into innovation ecosystems wherein financial interests and technologists are unable to maintain a consistent direction or product follow-through in line with their mission plan.

In order to understand better the nature and impacts of the SOS and the ADD syndromes in transport innovation ecosystems, let us consider two examples of world famous innovative companies: Microsoft and Tesla. While no company in the past 30 years has been as innovative as Microsoft, this company has created an entirely new business model and came to dominate corporate technical infrastructure from the desktop to the server room. It has made inroads in products as diverse as ATMs, video game consoles, and wristwatches. According to Patrick Gray, Microsoft attacks a new technical challenge with intensity, delivering a robust yet unpolished solution, then abandoning the product when a modicum of effort would take the product from a slightly dysfunctional stone to a shining gem (Gray, 2008). Microsoft’s inability to follow through has cost the company dearly as it failed to understand and execute on the five most important technology trends of the 21st century: smartphones, mobile operating systems, media, AI, and the cloud. Microsoft is now playing the game of catch-up with the partial return of Bill Gates. The other example is Tesla and its creator Elon Musk,¹⁴ who regularly pursue multiple innovations across a wide range of sectors. He offered to build an electrical battery backup system to Australia’s electrical grid using the excess capacity in his Reno, Nevada lithium ion battery production system and has installed a number of such systems by his company SolarCity. He has also promised to fix South Australia’s energy crisis—due to severe blackouts caused by storms—within 100 day, or do it for free if he did not meet the deadline. As facts would have it, the disjointed and multifaceted actions of Musk appear to be paying off.¹⁵

A one-horse innovation ecosystem is very susceptible to downturns in the market; for instance, all the abandoned towns throughout the Western United States that depended on a single commodity such as gold. Biological ecosystems comprising one or two dominant animal or plant species are equivalently susceptible to rapid breakdown if physical changes (e.g., introduction of diseases) occur in a direction that the dominant species are particularly vulnerable too. An innovation supported by the latest science can easily sidetrack another innovation, often for good reasons, but sometimes the consequences include chaos. When innovation is chaotic and divergent, it can stymie revolutionary or transformative change. It can add a level of uncertainty to the process that dissuades investment by financial institutions, including venture capitalists, which legitimately worry that investment in one innovation will prevent them from investing in better technologies on the horizon. Opportunity costs are a powerful barrier to investment in innovation.

The structural and institutional divergence can result from the SOS causes chaotic results and stymies productive change, thereby potentially perpetuating technological stasis. New but reasonably stable paradigms, supported by technology development leaders, can provide the necessary environment for transport innovation systems to advance along multiple pathways.

The Dystopian and Protopian World Views: Two Sides of the Transportation Innovation Paradigm

The dystopian worldview is one that refers to a society that favors the economic and social status quo and erects barriers to social, technological, and political innovation no matter the negative consequences. By contrast, "protopia" is a state of achievement and happiness—a state of becoming—such as in the 1933 novel Shangri La.¹⁶ Protopian systems are always leaning forward toward new ideas as a matter of course and discarding those ideas that are no longer useful. A protopian perspective combines the qualities of realism, pragmatism, and optimism.

The dystopian view characterizes large parts of the technology and innovation literature—transportation included. This in general, is associated with the hypothesis that transportation is an example of the problem of innovation in a middle-aged capitalist system where criticisms of the rate of innovation are also, in large part, attack on the continuing viability of free market capitalism (Erixon and Weigel, 2016).¹⁷

Currently, the dystopian argument is more popular than the protopian perspective in the recent literature on transport innovation. And why not? Taking a 360 degree view, one cannot ignore growing congestion, decaying bridges, wavy highways, and a lack of mass transportation, especially in low population density areas. Moreover, political institutions appear to lack the will to invest in innovative infrastructure. Moreover, the continuing emphasis on the carbon producing internal combustion engine in certain countries, most notably in the United States by the current US federal administration, is contributing to climate change and is disheartening to many committed to a sustainable future.

In this book, we characterize the institutional forces opposing transport innovation as "dystopian and those advocating innovative change as protopian." A protopian leaning system can be built on a basket of incremental innovations or through several large, revolutionary changes¹⁸ that transform entire systems. Transformational (revolutionary) innovations are constrained by legacy paradigms within the political-economic system. If private and public decision makers are not committed to embedding innovations within the structure of markets and industry or in a way consistent with how the economy works, productive change will rarely succeed. Accordingly, the existential challenge is to break the habit of corporate and political reluctance to foster, diffuse, and adapt to transformative innovation, rather than to cling to immediate profitability and the low risk of incremental technological change.

Transportation as a Legacy System

Legacy Systems Defined

The perspective that capitalism is failing, is reinforced by the view that certain parts of Western economies—the so-called legacy sectors—are holding back innovation and economic growth on a systemic scale. Legacy systems are tied to the status quo and are conceptually, politically, and economically supportive of incremental changes that primarily sustain the current regime at lower risk and higher profits in the short term. Legacy interests can constitute a large percentage of a country’s GDP.¹⁹ Together, legacy systems are posited to be highly resistant to revolutionary or transformative innovation.

There are some experts who classify transportation as a pure legacy system²⁰ where the application and scale-up of new ideas are stymied by entrenched paradigms, sharply limiting growth rate (Bonvillian and Weiss, 2015). They classify transportation as a disruption-resistant legacy system that is characterized by stable, well-defended technological/economic/political/social paradigms that lock in compatible technology and resist fundamental change. These paradigms provide the conceptual structure into which any innovation must be vetted. Although parts of the transportation sector are averse to change, nevertheless other elements are producing innovations at an accelerating rate. We will document the dynamic side of transportation throughout this book.

The above general definition of legacy sectors puts them outside the two well-known economic laws: the Moore’s Law mentioned earlier and the Kondratiev Cycle.²¹ In other words, legacy systems are neither able to achieve revolutionary increases in productivity nor subject to a cyclical growth pattern.

From Transport Legacy to Transport Innovation and Vice Versa

Innovation on the legacy side of transportation is typically slow and limited to incremental innovations such as road barriers to prevent crossovers, the extensive use of roundabouts, warm asphalt, accelerated review processes for processing of environmental documents, and premanufactured modular bridge structures, to name a few. These innovations increase safety and sometimes achieve lower costs, but they are not contributing to revolutionary change or the resolution of major systemic problems, including the congestion pandemic. A typical example of this can be found in the US transportation legacy, which traces its roots to the interstate highway system with the passage of the Federal-Aid Highway Act of 1956. This iconic system of the 1950s smoothed and encouraged travel east-west and north-south in the country and it was a nationwide project that brought the United States together in ways no other transportation system had done until then, including the railroads. The US interstate highway system was a point of national pride in the post-World War II period, a technological highlight of the 1950s and 1960s that underscored the American preference for large-scale infrastructure and individual-driven mobility. At the beginning, it was an example of revolutionary innovation. However, as we move through the 21st century, the US federal and state highways of the 1950s and 1960s are accentuating congestion and urban sprawl while degrading rapidly from severe weather patterns, increased automobile and truck traffic, spotty maintenance, and the wages of time. Likewise, the revenue available to sustain the system through gasoline taxes continues to shrink.

In spite of the US experience, even today, the solution to congestion by expanding highway capacity is still considered as a legitimate approach by some political leaders around the world. The policy makers and agencies do not give the necessary consideration to integrating light rail within highway expansions nor any thought is given to empirical lessons such as nature abhors a vacuum, that is, the fact that expanded highway capacity quickly is filled by new traffic. Thus, conventional solutions in transportation often reinforce problems such as sprawl, social segregation, and air pollution. The lesson to be learned from this reality is that the innovations of one period can bind future generations to courses of behavior that are no longer innovative. In other words, what was innovative in transportation in the 1950s—such as the US Interstate System—creates a powerful barrier to subsequent innovation in the 21st century when the nature of transportation problems has changed.

The power of legacy systems to resist change and innovation, brings to mind the Ulysses and the Sirens story from the Odyssey and the Ulysses theory that has been developed—based on this story.²² In book XII of the Odyssey, Ulysses, and his crew must pass by Sirens’ island. Circe warned Ulysses that anyone who hears the Sirens’ song will irresistibly be drawn to them and killed, so Ulysses commands his sailors to plug their ears with wax and then says to them you must bind me hard and fast, so that I cannot stir from the spot where you stand me…and if I beg you to release me, you must tighten and add to my bonds. We mention this as an example of institutional precommitment, that is, a rational action constraining future actions because one fears that he/she will be irrational when a future event occurs.²³ This attitude is more or less what occurs with the transition from transport legacy to innovation and vice versa.

To describe this situation somewhat differently, most legacy systems of the 1950s were originally composed of outliers (i.e., in their past role as revolutionary innovations). As time progressed and new social realities emerged such as population growth, congestion, and white flight to the suburbs, these outliers regressed toward the mean of the social-technical system and became part of the underlying problem rather than continuing as an innovative solution.

Legacy components resident in transportation systems have now reached a ripe old age. When change occurs in the transportation legacy subsystems it is usually pathologically consistent with 20th-century ideas, modes, and infrastructures (Erixon and Weigel, 2016). Public policy in a legacy system is constrained through the dominant policy paradigm composed of beliefs that direct perceptions toward lessons of the past and the maintenance of the status quo. These beliefs enable political consensus, high profits, and problem solving, but the result may be an incomplete understanding of changing realities, growing problems, and new possibilities.

The Impact of Transportation Legacy Systems Across a Sample of Countries

Let us consider now, in more detail, the situation as regards legacy and innovatory systems in the transport sector in countries that are considered to be global leaders in this sector.

United States

Bonvillian and Weiss argue that there are structural barriers to introducing revolutionary innovation into the US transportation because this is basically a legacy sector. Transportation, like the health system and the electrical power grid are figuratively anchored to the economic status quo. They argue²⁴:

The American innovation system is in trouble. Like the innovation system itself, the trouble comes in two parts. One part of the innovation system turns out dramatic discoveries and innovations in information and biotechnology at a breathtaking rate. The trouble is that too few jobs are being created by this trend in the United States. The second part has been developing badly needed ideas that address environmental, public health, and policy goals in other, equally important parts of the American economy—energy, manufacturing, transport, agriculture, construction, and health delivery, to cite a few examples. Here the trouble is that these sectors successfully resist the introduction and scale-up of such innovations.

A similar, if not more general, argument is presented in Erixon and Weigel (2016) where the authors argue about the lack of revolutionary innovation in the modern capitalist system and they place the primary blame, for this lack of innovation, on the "lethargy" of modern capitalism. Bonvillian and Weiss are more precise in their analysis and recognize that certain sectors are highly capable of innovation while others are not (legacy systems). We appreciate Bonvillian and Weiss’s arguments regarding the initial difficulty of introducing innovation to legacy sectors including the transportation sector. It is also evident that virtually every major economy and technological sector have elements chained to the past.

In contrast to Bonvillian and Weiss, we view the US legacy transport sectors in more granular terms, where opportunities for innovation are extensive and productively exploited. Almost daily there are reports of new innovations emerging that range from new materials for batteries to new operating system platforms for autonomous connected cars to advances in AI. The organizations and national transportation systems in the United States are beginning to restructure themselves as the realities of revolutionary innovation in transportation are seeping into the consciousness of investors and political decision makers.

Using case studies, we will document the nature of change in key elements of the US transportation sector (see Chapter 5 and Case Studies VIII and IX). We shall further establish that fundamental changes in transportation are quickly becoming revolutionary in character and scope.

European Union

As in the United States, the context of innovation, beliefs, and practices in the EU are different in the areas of vehicle and equipment manufacturing vs infrastructure construction and maintenance and—partially—transport service provision. The European transport sector, when it comes to vehicle and equipment manufacturing, evolves in a context of global competition and performance-related regulations. It is therefore highly innovative. In the other domains mentioned, legacy systems as well as cultural and regulatory impediments prevent the establishment of rigorous and sustainable innovation ecosystems and thus innovation production remains at a relative disadvantage. Between the EU member countries there are also great disparities as regards the amount of national research and development and the level of transformational innovations that are finally produced. The levels of these disparities vary depending on the subset of the transportation sector considered.

In the latest EU’s research and innovation program, the Horizon 2020 covering the period 2014–20, there was a visible concern developed about the relative low level of innovation that was finally produced in spite the many worthwhile research products. The policy goal to produce innovation that contributes to enhanced economic performance and competitiveness was—for the first time—embedded in the Horizon 2020 program by including financing instruments aimed to support such innovation and provide expanded resources for the involvement of industry in research activities through the creation of research and innovation PPPs (Aparicio and Munro, 2014). These instruments were introduced for the first time and are expected to be reinforced and expanded when the new RTD²⁵ framework program of the EU starts in 2021.

While the EU, being highly innovative, has struggled to create viable innovation ecosystems in the sense used and defined in this book. Despite a significant policy commitment by the European Commission to the creation of such ecosystems, the process is slow and impeded by a structural financing impediment for early stage high-technology development, especially when compared to the financing available for such developments in other competing regions namely the United States and the P.R. China. Highly successful basic research, for example, in physics, chemistry, biotech, and more is carried out at universities and other European public research organizations. Yet, European universities are generally slow in assisting the maturation and commercialization of new technologies. This contrasts with the situation in the United States or Israel, where universities are often the key player in their innovation ecosystems. For example, in the United States, almost all of the key start-ups in Silicon Valley were created by graduates of Stanford University; while all the six major Israeli universities are literally hubs of innovation activities (see also the Case Study for Israel). The integrated culture of technical and scientific excellence and entrepreneurship that is found in areas like the Silicon Valley seems hard to be found in the EU, at least outside a handful of key innovation performing member