The Industries of the Future by Alec Ross
Read the summary below and get the key insights in just 10 minutes!
In this summary, you will learn
- What the most significant new industries of the coming decades will be,
- How these new technologies will interact and generate opportunities, and
- What economic and social implications these disruptions portend.
Big Data and the Internet of Things
Computing power is growing exponentially and becoming ever cheaper. Big data’s rate of growth continues to increase. Processing masses of data has become an increasingly viable option in business and science. More than 90% of the world’s digital data have been generated since 2013.
Data are the digital age’s raw material, just as land and iron were the core elements in previous revolutions. The big data revolution goes beyond volume. It includes making data searchable, and processing, transforming and communicating it in ways that help people visualize patterns. Big data helps firms “chew through” or “navigate” large amounts of information in real time.
Robots that collect masses of information in self-correcting, evolving cloud databases could actually “learn” the emphasis, slang and accent that make up everyday human speech. As computing horsepower gets cheaper, more of your possessions and devices will contain computing ability and web connections to enhance their usefulness or save waste. This Internet of Things could have more impact “in one decade than the whole Internet to date has been.”
Today’s confluence of advances in artificial intelligence, computer science and big data mean that a steep increase in robots’ capabilities and usefulness is underway. Japan is the leader in robotics. The Japanese government has invested $24.6 million in robots to aid movement and provide entertainment for the elderly. Honda is working on robotic legs to help people walk.
Other robotics pioneers along with Japan include China, South Korea and Germany as well as the US, with President Obama’s 2011, $100-million National Robotics Initiative. These top five countries are working to establish the lucrative back-end support systems that will be the real earners in robotics since the industry will need their services, much as Cisco Systems and Juniper Networks serve the Internet revolution.
The combination of increasing computing muscle, big data, and cloud data transmission of robotic artificial intelligence will foment a potent shift. Robots will go beyond the control of specific programs and become self-evolving learning machines that can increase their own capabilities. Breakthroughs will see robots conquer tasks once deemed too difficult for them, like developing the real-time feedback mechanisms and reasoning needed for hand-eye coordination.
Besides funding from various national governments, private venture capital for robotics grew from $160 million in 2011 to $341 million in 2014. Google’s investment in driverless cars and Amazon’s experiments with delivery drones are among today’s high-profile projects. In 2013, companies bought 1,300 surgical robots for an average of $1.5 million each; surgical robots made up 41% of the total sales value of the robotics industry. Such robots have already performed procedures on one million Americans. As robots become more capable and useful to the economy, they will cause a dramatic and controversial disruption in employment. More than “half of US jobs could be at risk of computerization in the next two decades.” Unlike previous developments, which saw the mechanization of manual labor jobs, those now in the 60% of the workforce whose job involves aggregating and applying information could find their jobs at risk. Nations such as China, where social and political stability depend on mass employment in manufacturing, are wary of the way ever-cheaper, labor-saving robotic technology could affect their economies.
Biotechnology and the Genome
The buzz promises great breakthroughs in this area, but most people don’t yet understand how massive an entity genome technology could become. As data crunching and computing capabilities rise, the price of mapping genomes drops. It will continue to fall rapidly, creating scalable rewards in increasingly targeted drugs and personalized diagnostics. For instance, cancer is in the sights of the genome industry, which is making great, rapid progress in early detection. As science develops precision cancer treatments that can “melt away” cancer growths, standard cancer treatment could come to be seen as “primitive.” Genome advances in treating mental health conditions also are progressing quickly.
A few innovative firms already offer a commercial service that sequences a customer’s DNA and provides personal health recommendations based on expert interpretation of the results. Using knowledge of the genome to modify pigs genetically to make their “lungs, kidneys, and hearts” compatible with human organs and suitable for harvesting could revolutionize the problematic area of human organ donation. China is working on a massive effort to become a genome research hub. Beijing’s Genomic Institute now has more sequencing machines than the entire US.
Mobile Phones and Encryption
The use of sophisticated encryption in mobile devices or cellphones opens up new alternatives for payment and commerce. Such technology could replace ATMs and wallets full of cards and cash. This “code-ification” of money and trust is important for all consumers. However, it may have a more profound effect in developing countries, especially considering that only 20 of the world’s 195 nations have fully modern banking systems. The mobile phone holds the most potential for progress in the codification of money and trust. For instance, 80% of Africans now have mobile devices, adding up to 650 million mobile users. Kenya “created an entire banking system using mobile phones and scratch cards.” Saving money and being innovative, it “leapfrogged over the creation of a traditional banking system, at least as it exists in much of the rest of the world.”
Companies now use smart mobile phone technology to perform such diverse tasks as transmitting blood sample results, mapping landmines, distributing vaccines and diagnosing vision problems. Just as many developing countries skipped setting up a landline phone infrastructure, mobile technology is helping them close the development gap in other areas, such as health care.
Kenya’s M-Pesa program is a leading example of this “frugal” technological innovation. It enables Kenyans to use their mobile phones to send and receive money. Some 19 million of Kenya’s 43 million people have M-Pesa accounts, and approximately 25% of Kenya’s GNP passes through the network. Experts estimate that the advantages of M-Pesa lifted the income of rural households by 5% to 30%. With M-Pesa, Kenyans don’t need expensive bank branches. Instead, a person with a valid ID card or passport can register with one of the thousands of stores or gas stations that provide physical cash from an M-Pesa balance. Sending money to someone else is as easy as sending a text.
Encryption technologies provide game-changing ways to trade and manage personal finances, helping “the little guy” by giving users the flexibility of cash while keeping their funds safe behind passcodes. The minimal 40-cent charge on remittances, compared to the 8% that standard operators assess, means more money for the recipient. India invested a lot of money and effort into introducing biometric identity cards, which – although they are not based on mobile phone technology – can help 120 million of its disadvantaged people open bank accounts.
The eBay Trust Model
In the eBay economy, Internet platform companies and the sellers who use them establish “trust through algorithms and ratings.” The sellers’ concern for their reputations, future sales and online ratings convince consumers that they can safely pay a stranger for goods now that they’ll receive later. Airbnb takes advantage of this trust model. Using the web’s searching and matching power, it has become “effectively the worlds largest hotel chain,” with more than 800,000 listings in 34,000 cities. These successful trading platforms have a disruptive effect on the wider economy. They destroy old business models. Uber, one of the most controversial and disruptive platforms, has provoked taxicab drivers to stage protests around the world. The abilities of Uber’s efficient routing technology may enable its possible expansion into the growing sector of parcel delivery.
The logical progression of methods for harnessing the Internet’s strengths in peer-to-peer marketplaces arguably could produce quite a neoliberal, transient labor market. Some workers may find that this framework, based on individual engagements, rewards their niche spectacularly. Workers with fewer skills could find themselves in a race to the bottom, trapped in an environment of perpetual bargaining and short contracts.
Cybercrime’s growth rate is commensurate with the international proliferation of the Internet, and it costs the world $400 billion a year. That makes cybersecurity one of the most lucrative, fastest-growing sectors of the economy. It’s current value, $175 billion a year, could easily double by 2021. Cyberattacks vary in format and target, including broad intellectual property activity theft coming out of China, terrorist attacks, and political attacks, such as those that Russian political groups directed at Estonia and Georgia.
The “weaponization of code” is a major concern for security officials, since cyberweapons are far easier to obtain than armaments or nuclear material, and since cyberwarfare isn’t limited by any accepted boundaries or norms. As people connect more and more aspects of their lives to the Internet, the general population will be more at risk. Cars and pacemakers are perhaps the most evocative examples of possible personal exposure to malicious cybercriminals.
Experts in financial technology (fintech) are in the business of applying big data, blockchain and algorithm developments to the retail financial industry. The essence of a retail bank hinges on its data about its customers and its asset-and-liability relationships with them. The financial crisis highlighted banks’ “clunky technology” and their lack of real-time, aggregated consolidated positions. This lack of hard numbers increased banking uncertainty during the fiscal crisis. A blockchain, by contrast, is “the big ledger” on which Bitcoin records “all transactions.” This blockchain-and-ledger method of verifying provenance and preventing fraud, as Bitcoin demonstrates, will be the magic ingredient that eventually allows such sectors as law and finance – which depend upon secrecy and trust – to follow in the Internet revolution. Such a move may render certain existing jobs and business models in those industries extinct.
For example, blockchain-and-ledger technology could create a “walled garden” behind which large companies could exchange money and information across national boundaries. Square Inc.’s new bank program, “Square Capital,” uses modern technology to create a more informed relationship with its business customers. Customers allow Square’s technology to track their companies’ collections and payments in real time. This gives Square Capital an ongoing live assessment of the health of the business. Clients can even receive loan repayments as a straight percentage that Square Capital removes live from incoming receipts.
Silicon Valley is the undisputed winner of the Internet revolution. Other cities should not hope to create a better Internet start-up hub. They should instead focus on being the center of expertise for a new domain. China understands this approach and is investing resources into new high-potential domains like robotics and the genome. A city or region’s domain expertise may dictate where the next clusters of future industries will succeed. London and New York want to lead on fintech. Boston is a hub for biotech. Washington, DC and its environs specialize in law and intelligence. Ex-government intelligence personnel often form cybersecurity firms there. Any industry that has the “domain expertise” to “apply big data technologies” will attract people determined to establish the “businesses of the future.”[/text_block]