The focus on disruptive scenarios continues in the next several posts with a look at the work of Jeremy Rifkin and his recent book titled The Zero Marginal Cost Society. In his book, he describes the economic paradigm shifts of the past, and points to three elements that converge to create a general purpose technology platform to drive the shift: new forms of communication, new forms of energy, and new mechanisms for transport and logistics. Rifkin believes a powerful Third Industrial Revolution platform (The Internet of Things) is emerging to drive an economic paradigm shift in the next 40 years. The new form of communications in this context is the Internet, while renewable energy represents the new form of energy. The new mechanisms for logistics and transport involve sensors, coordinated logistic networks, renewable energy, and driverless cars. Mr. Rifkin describes this Third Industrial Revolution platform as three Internets (Communication, Energy, and Logistics) converging to operate as one. He sees the Internet of things bringing these three elements together to manage (Communications), power (Energy), and move (Logistics) economic activity.
Does the combination of emerging disruptive scenarios create a new economic paradigm? In The Zero Marginal Cost Society, Jeremy Rifkin describes a world where nearly free goods and services are enabled by the Internet of Things to drive a new paradigm that eclipses capitalism – the Collaborative Commons. It seems the exponential curve of technology is pushing the operating logic of Capitalism – which focuses on driving ever increasing levels of productivity – towards an extreme level of productivity. Its success could therefore be its undoing. I am a firm believer that this emerging period will ultimately be viewed as the most transformative of all time – but I must admit – I did not make this leap. While reading, I found myself focused on business model questions facing every industry – and through that lens, the story resonated with me. It prompted me to revise the anchor visual that I have used throughout this look at disruptive scenarios. I posed this simple question: does combinatorial innovation create a third curve?
In my continued look at disruptive scenarios, the focus shifts to Connected Health. In a recent White Paper, the term is used as an umbrella description that covers digital health, eHealth, mHealth, telecare, telehealth, and telemedicine. Analyst firm IDC defines it as “a broad spectrum of technologies that use telecommunications to facilitate the exchange of health information and delivery of care across a geographic distance as well as manage chronic conditions and promote health and wellness.”
There are several drivers that make this both a viable and desperately needed scenario. According to the IBM Institute for Business Value, inefficiency in the Healthcare ecosystem wastes over 2 trillion USD per year. According to the popular Internet Trends Study produced by Mary Meeker each year, healthcare costs have reached 17% of the U.S. GDP and 27% of health spending is wasted. The same study found that over 25% of family income is likely to go to health spending in 2015, and 50% of bankruptcies are driven by health costs.
In my continued look at disruptive scenarios, the focus shifts to 3D printing. Growth in this key innovation is expected to accelerate to $10.8 billion by 2021 according to Goldman Sachs. The economic implications are significant: Research by McKinsey Global Institute suggests a possible impact of $550 billion per year by 2025. Some believe that 3D printing will play a crucial role in launching a third industrial revolution at a personalized level.
This next post in the analysis of disruptive scenarios focuses on next generation automation enabled by combinatorial innovation. By way of reminder, the visual below depicts a convergence of innovations that have historically been viewed in isolation. As the building blocks of innovation multiply, their combination drives disruptive scenarios. By analyzing these scenarios, future implications and potential responses are determined.
What are the key innovations that combine to enable the next generation of automation? A recent forward looking McKinsey report assessed the potential impact of Disruptive Technologies, providing a perspective focused on the year 2025. Looking at their list of twelve disruptive technologies, I see five primary drivers of advanced automation: the automation of knowledge work, advanced robotics, autonomous vehicles, the Internet of Things, and the mobile Internet. Based on McKinsey sizing, these five disruptive technologies could have an economic impact between $14 and $30 trillion.
This post continues a disruptive scenario analysis focused on assessing the transformative environment that faces companies, Industries, Governments, and society as a whole. Much attention is paid to several digital forces (e.g. Mobile, Social, Cloud, Big Data, The Internet of Things, AI, Robotics), but for the most part, the focus is isolated in nature. As described in The Second Machine Age, the combinatorial effect of these forces enables disruptive scenarios at an unprecedented pace. While some of these forces and their combinations are growing more visible, many are far off on the horizon, and countless scenarios are not yet visible. The visual below depicts this phenomenon, underscoring the difficulty of responding to the forces in our line of sight – and the near insurmountable task of responding to those further on the horizon. At its furthest point, lack of visibility to future combinatorial innovation drives a high degree of uncertainty.
The last two posts focused on disruptive scenarios driven by the future introduction of autonomous vehicles. However, the context for viewing disruptive potential must be broad – not just one possible scenario. With that in mind, let’s take a look at the Healthcare industry with a broader lens. The authors (Chunka Mui and Paul Carroll) of The New Killer Apps do a masterful job of doing just that. They make a rather bold statement in a chapter dedicated to the Healthcare industry – specifically:
“Without a course correction, hospitals will lose their central place in medicine and many will disappear.”
Strong maybe, but not hype. The risk is real and not limited to Healthcare. The visual below is a great representation of the law of disruption. The progression of technology is riding an exponential curve. With this acceleration comes a progression of disruption where incremental business change can no longer keep pace. Disruption and the need for transformative actions occur when this scenario takes hold, and the enterprise has not taken steps to respond. A failure to respond in this fast paced, change oriented world is likely catastrophic, but the opening for killer apps depicted in the visual presents both risk and tremendous market opportunity.
The Law of Disruption (source: Unleashing the Killer App)