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Innovation, Black Swans & Disruption
Innovation, Black Swans & Disruption
Innovation, Black Swans & Disruption
Innovation, Black Swans & Disruption
Innovation, Black Swans & Disruption
Innovation, Black Swans & Disruption
Innovation, Black Swans & Disruption
Innovation, Black Swans & Disruption
Innovation, Black Swans & Disruption
Innovation, Black Swans & Disruption
Innovation, Black Swans & Disruption
Innovation, Black Swans & Disruption
Innovation, Black Swans & Disruption
Innovation, Black Swans & Disruption
Innovation, Black Swans & Disruption
Innovation, Black Swans & Disruption
Innovation, Black Swans & Disruption
Innovation, Black Swans & Disruption
Innovation, Black Swans & Disruption
Innovation, Black Swans & Disruption
Innovation, Black Swans & Disruption
Innovation, Black Swans & Disruption
Innovation, Black Swans & Disruption
Innovation, Black Swans & Disruption
Innovation, Black Swans & Disruption
Innovation, Black Swans & Disruption
Innovation, Black Swans & Disruption
Innovation, Black Swans & Disruption
Innovation, Black Swans & Disruption
Innovation, Black Swans & Disruption
Innovation, Black Swans & Disruption
Innovation, Black Swans & Disruption
Innovation, Black Swans & Disruption
Innovation, Black Swans & Disruption
Innovation, Black Swans & Disruption
Innovation, Black Swans & Disruption
Innovation, Black Swans & Disruption
Innovation, Black Swans & Disruption
Innovation, Black Swans & Disruption
Innovation, Black Swans & Disruption
Innovation, Black Swans & Disruption
Innovation, Black Swans & Disruption
Innovation, Black Swans & Disruption
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Innovation, Black Swans & Disruption

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Craig Dobson's presentation from Cybera Summit 08.

Craig Dobson's presentation from Cybera Summit 08.

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  1. Innovation, Black Swans & Disruption Craig Dobson September, 2008 As progress is exponential, in the next 100 years we will experience 20 000 years of progress at today’s rate. – Raymond Kurzweil Myth: Innovation in and of itself is valuable. – Geoffrey Moore 2008 © Taylor Warwick Consulting Limited Craig Dobson 1
  2. Perspective Agenda • Perspective • Black Swans • Innovation • Emerging Technology • Views of the Future Blanket Mountain & Glacier Perspective is more important than IQ – Negroponte. 2008 © Taylor Warwick Consulting Limited Craig Dobson 2
  3. Exponentials Exponentials are deceptive. – David Suzuki’s smart bug analogy: Say you have a colony of smart bugs living in a jar with a population that doubles every second and that in one minute, they will fill the jar and perish due to a lack of room and resources. Several smart bugs realize this and try to warn the others. Finally, once the jar is 12.5% full, others start to listen. It is too late, however, as this doesn’t occur until they have only 3 seconds left. Linear Plot Logarithmic Plot 1013 1012 1011 18 18 month month 1010 doubling doubling 109 period period 108 107 7 year 7 year 106 doubling doubling 105 period period 104 103 102 10 1 – Don’t mistake a clear view for a short distance – We tend to overestimate technology’s impact in the short term and underestimate it in the long term 2008 © Taylor Warwick Consulting Limited Craig Dobson 3
  4. History of the Universe Sources: Kurzweil, The Singularity is Near, 2005 2008 © Taylor Warwick Consulting Limited Craig Dobson 4
  5. Observations • Progress is both exponential and accelerating, and has been since long before the Internet – Builds on itself, via increasing knowledge, improved tools, etc. – As our rate of progress is currently doubling every decade, the next 100 years will see 20 000 years of progress at today’s rate. • if you think it will take ~50 years for nanotechnology to mature, it will likely take less than 20 – We currently generate the information equivalent of the Library of Congress every 15 minutes (~ 40 EB (1019B) of unique new information each year). • The amount of new technical information is doubling every 2 years. • The top 10 in-demand jobs in 2010 won’t have existed in 2004 [Richard Riley]. Hence: – We are currently preparing students for jobs that don’t yet exist – Using technologies that haven’t been invented – In order to solve problems we yet don’t know exist. • Progress by disruption – which makes it tough to project forward • Increasing order – decreasing entropy – wisdom of crowds/businesses – power of collaboration – instead of the watercooler with diversity limited by whose in the office, we’re increasingly forming our own tribes, groups bound together more by affinity and shared interests than by default broadcast schedules • Increasing complexity – decreased stability 2008 © Taylor Warwick Consulting Limited Craig Dobson 5
  6. History of Civilization • Real revolutions replace institutions as well as technologies • Toffler’s argue that the impact of the IT technology revolution is much deeper than commonly appreciated as it underlies a change in our system of wealth – Specifically, the world is in the process of transitioning to the 3rd wealth system ever • Agarian (based on land/agriculture) to Industrial (based on machines) to Knowledge (based on ideas) • Wealth is an accumulation of possibilities and no wealth system can sustain itself without a host society and culture. Hunter – Gatherer – Both the host and culture themselves are shaken up as two or more wealth systems collide • This transition is affecting three deep fundamentals: time, space, & knowledge Agrarian Industrial Knowledge Sources: Tofflers, Revolutionary Wealth; 2006 2008 © Taylor Warwick Consulting Limited Craig Dobson 6
  7. Deep Fundamentals • Time – synchronization industry: development of JIT and ERP systems together with significant desynchronization friction. – “Faced with a twenty-year threat,” an editor of Armed Forces Journal International once wrote, “government responds with a fifteen-year program in a five-year defense plan, managed by three-year personnel funded with single-year appropriations.” – Though globalization may be interrupted, globalization of key institutions is very necessary. • Space – wealth mobility – Wealth maps of the world are changing; moving to ‘region-states’ – “Ponder the world of 2050,” Robert Manning of the Council on Foreign Relations has suggested, “an Asia with more than half the world’s population; perhaps 40% of the global economy; more than half the world’s information technology industry; and world class high-tech military capabilities.” • Knowledge – tomorrow’s oil – As the knowledge components of wealth creation – marketing, finance, research, management, communication, IT, vendor and distributor relations, regulatory compliance, legal affairs, and other nontangibles – all grow in complexity and importance, workers, like the work itself, become less interchangeable and the required skill sets more temporary. • What we’re seeing is less a race to the bottom and more of a race to the top. – Is a serious threat to capitalism as it’s properties are very unlike those valued in previous wealth systems, i.e., it is inherently non- rival • The more we use, the more we create • Is more portable than any other product and it spreads • Divides into what’s inside our brain and what’s not • We can’t learn fast enough, and every chunk of knowledge has a limited shelf life • As we move from an industrial to a knowledge-based society, we fundamentally enable the acceleration of change. Sources: Tofflers, Revolutionary Wealth; 2006 2008 © Taylor Warwick Consulting Limited Craig Dobson 7
  8. Observations • Institutions – Many of our key institutions are imploding - health, education, pension, legal, political, etc. – systemic breakdown – The life and death of corporations is now based on innovation, and that means a huge growth in intangibles. – Baruch Lev • Innovation is contagious – Mass education designed for the industrial age meets the needs of neither the pre-industrial village nor the post-industrial future • Values – As both the money economy and its non-money counterpart shift from muscles and metal-bending toward knowledge-based wealth creation and the intangibility it brings, we see yet another historic change: The resurrection of values as a central concern. – There is a direct link between the implosion of institutions and the implosion of yesterday’s value system • Economics – Economics studies aren’t providing us with much direction today as conventional economics is becoming increasingly irrelevant • growth of “network industries” • non-rival, undepleteable characteristics of knowledge products • de-massification and the rapid growth in product customization • global portability of capital • Capitalism – We’ve already changed who provides capital, how it is allocated, the way it is packaged, the speed with which it flows, the places it goes, the amounts and kinds of information and misinformation about it and the ratio of tangibility to intangibility in the property from which capital is derived. • Capitalism may not be forever - due to changes in property, capital, markets, and money – Poverty is rapidly being reduced via upgrades to 2nd and 3rd wave economies Sources: Tofflers, Revolutionary Wealth; 2006 2008 © Taylor Warwick Consulting Limited Craig Dobson 8
  9. History of Technology • Each revolution takes 40-60 years to spread across the world and reach maturity • Is this cycle is accelerating? A sequence of S-curves The ages of GNR (genomics, nanotechnology, and robotics) may be here sooner than you think. Source: Carlota Perez, Cisco CUD Conference, 080221 2008 © Taylor Warwick Consulting Limited Craig Dobson 9
  10. Anthropocene • Each revolution has increased man’s impact on the planet – Man is now a physical force on the scale of nature itself, disrupting the deepest processes of natural systems like Earth’s climate and massively changing global cycles of carbon, nitrogen, phosphorous, and sulfur • this is the ‘real’ globalization • Global economy will grow 4-times over the next 50 years, developing economies, 6 times – Need tremendous amounts of energy and it must be clean – Need to double world food production from 5.5 to 11 G-tons • Dystopia vs Utopia – the choice is ours Sources: Homer-Dixon, Upside of Down, 2006 2008 © Taylor Warwick Consulting Limited Craig Dobson 10
  11. Stability • Should local, regional, and global environmental damage combine to leave untold numbers of poor people around the world squeezed between a degraded environment that doesn’t provide an adequate living and failed economies that don’t supply other livelihoods, there will ensue immense social dislocation and bitter frustration, anger, and resentment that could result in a very real threat to the social and political stability of nations and, ultimately, to world order • Where we are winning – Life expectancy – Infant mortality – Literacy – GDP/cap – Conflict – Internet users • Where we are losing – CO2 emissions – Terrorism – Corruption – Global warming – Voting population – Unemployment • Multipliers – Speed and connectivity from our activities, technology, and societies – Escalating power of small groups to destroy things and people • When several stresses come together at the same time, they can produce a far greater impact than their individual impacts alone Sources: Millennium Project of WFUNA, 2007; Homer-Dixon, Upside of Down, 2006 2008 © Taylor Warwick Consulting Limited Craig Dobson 11
  12. Broadband, ICT, and Sustainability ICT’s Impact on CO2 Reduction is 10x’s More It Consumes Direct Result • Energy consumption +4.73 MT -48.4 MT of Electricity • Greenhouse gas emissions TODAY Consumption • Use of non-renewable resources (Increases CO2) • E-waste & hazardous material Impact of • E-government, e-business NEXT Applications • Transportation optimization (Lowers CO2) • Energy optimization • Building optimization Long-Term, • Work/ life patterns FUTURE Socio-economic • Social inclusion, education & health Changes • Economic development (Lowers CO2) • Urban design & development • Perspectives: – the current US power grid is capable of supporting ~84% of the 220 M cars in the US should they be exchanged for hybrid electric models like the Prius [SNS] – if we could mimic plants and convert CO2 to energy, we’d have enough energy for ever Gartner Group, April 2007; “Saving the Climate at the Speed of Light,” WWF and ETNO, 2007 2008 © Taylor Warwick Consulting Limited Craig Dobson 12
  13. Cycles within Cycles • Each technological revolution propagates in two different periods – The first half sets up the infrastructure and lets the markets pick the winners – The second half reaps the full economic and social potential – Whereas the first half is driven by market capital, the second is driven by production capital • With the bust in 2001, the golden age of ICT has just begun • As the roles shift to enable deployment, collective interests become part of the guiding mechanisms – To ensure widest possible societal benefit, government involvement is required IT SURVEY – ECON: 030508 Source: Carlota Perez: Cisco CUD Conference, 080221 & Economist, 030508 2008 © Taylor Warwick Consulting Limited Craig Dobson 13
  14. The ICT Wave Installation Deployment Sources: Forrester: 2004 08 24 2008 © Taylor Warwick Consulting Limited Craig Dobson 14
  15. Policy Makes a Difference Bandwidth Cost • Government belief in market forces has led to a defacto market failure in fibre infrastructure deployment Source: San Jose Mercury News 2008 © Taylor Warwick Consulting Limited Craig Dobson 15
  16. Broadband? True / Big WiFi / WiMax Broadband (per subscriber) 64 kb/s Phone Line 600 kb/s 3 Mb/s 20 Mb/s 100 Mb/s 1 Gb/s 3.7 Mb/s 1.544 Mb/s: (T1) 128 kb/s (ISDN) Copper (to VDSL 2) Coax (to Docsis 3) Fibre 2008 © Taylor Warwick Consulting Limited Craig Dobson 16
  17. Broadband – Application Thresholds As order of magnitude drops in price of communications often destroys the economic basis of the organizations that depended on them, the impact of 100 Mb/s distribution will be significant. Each move from 10 to 100 to 1000 Mb/s enables a new service paradigm and a plethora of new service possibilities. xDSL ~15 Mb/s, asymmetric Ethernet ~100 Mb/s Optical Ethernet ~1 Gb/s Computer Backplane PC-Style Industry HDTV Streaming Effects Growth • .NFL on HDTV • True end-to-end real-time • Everything, but better • enable content providers to communications including VoIP, • Increased option value. The value circumvent the cableco distribution plus IM plus file sharing plus video in the car is not in its applications structure plus work-together plus… (going to the shopping centre, driving to work), it is in the option • Video conferencing to the home so • 3D virtual home/office value it creates – the option to do that the grandparents can see their (conferencing/porn) whatever, whenever. grandkids • Peer-to-Peer applications for voice, • May ignite unprecedented growth • Do what we do now, but better - music, storage, and video within the ICT sector. Should e.g., attach audio narrations to • Distributed computing services, enable a sustained and PowerPoint presentations utility computing, Planetweb. This predictable growth trajectory in leads to Forrester’s Organic IT networking leading to the • With high quality audio/video as the development of multi-level value favoured mode of communicating, Concept of virtualized IT chains, much the way Moore’s web sites would be transformed - infrastructure Law has contributed to a virtuous they’d take on a new ‘personality’ • Computer services to remote thin development circle with respect to clients PC h/w, s/w, and applications 2008 © Taylor Warwick Consulting Limited Craig Dobson 17
  18. Bandwidth Matters! 5 – 10 Mb/s 10 – 100 Mb/s 100 – 1000 Mb/s • Telecommuting (converged services) • Telemedicine • HD Telemedicine • File Sharing (large) • Educational Services • Multiple Educational Services • IPTV-SD (multiple channels) • Broadcast Video SD & some HD • Broadcast Video - full HD • Switched Digital Video • IPTV-HD • Full IPTV Channel Support • Video on Demand - SD • Gaming (complex) • Video on Demand - HD • Broadcast SD Video • Telecommuting (high quality video) • Gaming (immersion) • Video Streaming (2-3 Channels) • High Quality Telepresence • Telecommuting (high quality) • HD Video Downloading • HD Surveillance • Remote Server Services for • Low Definition Telepresence • Smart/Intelligent Building Control Telecommuting • Gaming • Medical File Sharing (basic) 1 – 10 Gb/s • Remote Diagnosis (basic) • Remote Education • Research Applications • Building Control and Mgmt • Telepresence with HD Streams • Live Event Digital Cinema Streaming • Telemedicine remote control of scientific/medical instruments • Interactive Remote Visualization and Virtual Reality • Movement of Terabyte Datasets • Remote Supercommuting 2008 © Taylor Warwick Consulting Limited Craig Dobson 18
  19. Phone Calls Just Aren’t the Same Source: Ironman, Cisco CUD Program 2008 © Taylor Warwick Consulting Limited Craig Dobson 19
  20. History of Intelligence Electromechanical Vacuum Tube • 3D Computing • Quantum Computing • Spin Electronics • Nanotube Technology • DNA Computing The Sony Integrated Circuit Playstation 3 has in excess of 3 TIPS processing power. Relay Transistor Moore’s Law Sources: Kurzweil, The Singularity is Near, 2005 2008 © Taylor Warwick Consulting Limited Craig Dobson 20
  21. Observations • Again, progress is accelerating • Moore’s Law is simply a small part of a longer term trend – May run out of steam ~2020, but other technologies are coming on the scene • Increasingly powerful inexpensive computing power will yield $1000 computers with the processing equivalent of the human mind by ~2030 • Key issue is software development and the potential for strong AI – If successful, then we’ll see a singularity – Once one machine is our equal, we will be vastly surpassed the next day – Kurzweil has defined the singularity as the point when non-biological intelligence is a billion times more capable than all human intelligence today – and puts the date at 2045 – See IEEE Spectrum, 2008 06 • Will this solve our problems? – We won’t make much social progress - and it’s this that we need to solve our problems Technology cha nge ou? Busine ss cha nge A race to the finish • This level of progress is also being Applications GG achieved in other areas… Solutions Problems Alternate Technologies 2008 © Taylor Warwick Consulting Limited Craig Dobson 21 Telecom Industry Customer Buying r Power
  22. Other Exponentials Magnetic Data Storage (bits/$) Nanotechnology - Decrease in Size (Diameter in mm) DNA Sequencing Cost Wireless Data Devices (per finished base pair) (b/s/$) Sources: Kurzweil, The Singularity is Near, 2005 2008 © Taylor Warwick Consulting Limited Craig Dobson 22
  23. Additional Perspective The world does not operate the way we assume it does. 2008 © Taylor Warwick Consulting Limited Craig Dobson 23
  24. Black Swans • In each progress chart presented – from the History of the Universe to the History of Intelligence – significant progress (or change) is always via disruption, or, in Nassim Taleb’s view, via Black Swans • Black Swans are characterized by: – rarity – extreme impact – retrospective predictability • For a few examples, consider: – Financial • S&P500: half the gains in the over the past 50 years were made in 10 days – Geopolitical • terrorist attacks of 9/11 • the collapse of the USSR • the American Revolution • the birth of the nation-state at the conclusion of Europe’s Thirty Year War – The Casino (undisclosed): took extreme measures to manage their exposure to risk, including sophisticated surveillance systems to catch card counters and the like: • lost $100M when performer in their main show was maimed by his lion • caught a disgruntled contracter attempting to dynamite the foundations • became liable for huge fines and almost lost their gambling license when for several years an employee hid the casino’s internal revenue forms instead of filing them • owner illegally used gambling funds to pay a ransom demand for his kidnapped daughter The dollar value of these Black Swans swamped the on-model risks by over a 1000:1 – Rome: Between the end of the first century CE and the end of the 6th century, Rome was devastated by fire 6 times; hit by nine major earthquakes and ten disastrous floods; ravaged by plague in the 2nd century, 3 times more in the 3rd, and yet again in the sixth; and sacked in 410, 455, 472, and 546 Sources: Taleb, The Black Swan; 2007 2008 © Taylor Warwick Consulting Limited Craig Dobson 24
  25. Observations • Black Swan statistics are governed by Power Laws: whereas extreme events have essentially zero probability under Bell curve distributions, they are the essence of the Power Law distribution – due to the lack of a characteristic ‘node’, power law distributions are scale-free Moving Fields Stationary Fields stockbrokers livestock judges clinical psychologist astronomers psychiatrists, test pilots college admissions officers soil judges court judges chess masters councilors physicists personnel selectors mathematicians intelligence analysts accountants economists grain inspectors financial forecasters photo interpreters finance professors insurance analysts political scientists ‘risk experts’ financial advisors, etc. • Example – at random, take two US people with a joint income of $1M/yr – what is the likely breakdown of their incomes? • Bell curve: $0.5M each • Power law: $50k and $950k • While we plan and manage risk around Bell curve statistics, much of real world operates on a power law basis – In a Power Law world, what you don’t know is far more relevant than what you do know • so the more newspapers you read, the worse off you’ll be • It’s not how often you’re right, it’s your cumulative error that counts Sources: Taleb, The Black Swan; 2007; Barabasi, Linked, 2003 2008 © Taylor Warwick Consulting Limited Craig Dobson 25
  26. Prediction Forecasting Hall of Shame – The telephone has too many shortcomings to be seriously considered as a means of communication. The device is inherently of no value to us. – Western Union internal memo, 1876 – Heavier-than-air flying machines are impossible. – Lord Kelvin, president, Royal Society, 1895 – Everything that can be invented has been invented. – Charles H. Duell, commissioner, US Office of Patents, 1899 – Who the hell wants to hear actors talk? – Harry M. Warner, Warner Brothers, 1927 – I think there is a world market for maybe five computers. – Thomas Watson, chairman of IBM, 1943 • Serendipity – engineers build toys, some will change the world The Data The Projection The Real Function Sources: Canton, Extreme Future, 2006; Taleb, The Black Swan; 2007 2008 © Taylor Warwick Consulting Limited Craig Dobson 26
  27. Innovation The Disruptive Technology Challenge – Play Poker Not Chess 2008 © Taylor Warwick Consulting Limited Craig Dobson 27
  28. Sustaining vs Disruptive Sustaining innovations are how established companies move along established improvement trajectories - improvements along dimensions historically valued by customers. Such innovations typically improve existing products – making PCs faster, planes safer, and so on. Disruptive innovations introduce a new value proposition and either create new markets or reshape existing ones. Sources: HBR, 0208 2008 © Taylor Warwick Consulting Limited Craig Dobson 28
  29. Disruptive Innovation • The disruptive innovation framework from Clayton Christensen enables potential disruptive innovations to be evaluated with respect to their potential impact on industry structure and the incumbents. There are two types: – Low-end disruptive – occur when existing products and services are ‘too good’ relative to the dotted customer demand/expectations curve; they are overpriced relative to the value existing customers can use. ionvat o Inno t me ntal oducts in Incre better pr arkets Performance m Bring ablished Difference Performance Measure est cal radi Semi- tomers -end t cus model Low vershoo ess et o usin Discount retailing Targ er-cost b Steel minimills low with dical – New-market disruptive – create new et Ra ption New -Mark onsum Telephone growth by making it easier for people to do ainst nonc Personal computers ete ag Photocopiers something that historically required deep Comp expertise or great wealth. It brings s consumption to ‘non-consumers’ or non- er u m ng ns mi Company improvement trajectory consuming contexts. The Bell telephone, co nsu s n No nco tex t Customer demand trajectory Sony transistor radio, and the Apple PC o n were all new market disruptive innovations. N co Sources: Christensen, et al, HBR, 2000 11 & Seeing What’s Next, 2004 10 2008 © Taylor Warwick Consulting Limited Craig Dobson 29
  30. The Disruptive Advantage Founder-led Businesses In the disruptive arena, the advantage goes to the upstart! Corporate Led Disruption Sources: Christensen & Raynor, Innovator’s Solution, 2003 2008 © Taylor Warwick Consulting Limited Craig Dobson 30
  31. Innovation Matrix • Innovation potential remains dormant unless coupled with a business system that unleashes its disruptive energy – Without an associated business model, innovative ideas (and IP) cannot be valued • Balanced innovation programs utilize both business model and technological innovation • In as much as the universities solely focus on technological innovation, their programs are inherently limited with respect to commercialization potential Product and Technology Innovation Services Technology New Semi-Radical Radical Process Technologies Near to the Enabling Existing Incremental Semi-Radical Technologies Near to the New Existing Business Model Value Supply Target Proposition Chain Customers Business Model Innovation • Given that ‘The probability of success in technology push is estimated to be less than 0.3% of the probability of success in market pull’, tight program linkages to customer and business requirements is essential Sources: Davilla, et al, Making Innovation Work, 2005 2008 © Taylor Warwick Consulting Limited Craig Dobson 31
  32. Targeting Disruption • The Medici Effect – Directional versus Intersectional Ideas • biggest breakthroughs, intellectually and financially, occur when two or more breakthroughs converge or are plugged together – Disciplinary science has died – Alan Leshner, CEO, AAAS • Target component ecosystems Systems Innovation Component Innovation • Which leads to the concept of modularity… Sources: F. Johansson, The Medici Effect, 2004; Waclawsky, BCR, 2005 03 2008 © Taylor Warwick Consulting Limited Craig Dobson 32
  33. Value Chain Evolution According to the Disruptive Innovation theory, sustaining innovation results in the evolution of an incumbent’s value chain from a position where competitive advantage lies in integration to a commoditized environment in which value results from speed, responsiveness and convenience. • Put simply, firms Product Architectures and Integration dealing with performance gaps should integrate, Flat scale: low while those faced with differentiability. a performance Ability to make surplus should money migrates to subsystems and commoditize. the back end. Steep scale; highly differentiable. Design /assembly makes the money. • From voice to bit transport, this issue currently pervades the ICT industry. Sources: Christensen & Raynor, The Innovator’s Solution: 2003 10 2008 © Taylor Warwick Consulting Limited Craig Dobson 33
  34. Swarm Innovation • It is now generally recognized that the Western World’s lack of ‘collaboration for the common good’ relative to that evident in the Far East puts us at a significant disadvantage, particularly with respect to innovation. • Swarm innovation networks are similar to Open Source Networks in which once a reference implementation is put forward, a swarm of development arises around it – producing superb code (in the open source case) in record time. – in the Far East, such networks result in coordinated innovation amongst swarms of companies – examples include original design manufacturers (ODMs) in electronics and Li & Fung in clothing – with reduced transaction costs, horizontal markets now develop early in the innovation cycle – as opposed to waiting for standards and interfaces to mature • Countering such networks, requires companies and universities to utilize process networks, performance fabrics, and social software. • While neither Western Canada nor our universities can match the scale and scope of these networks, we can collaborate to facilitate and leverage ICT innovation across the region, embed it within a global context, and effect an impact disproportionate to our size • The Emerging Technology Forum is a step in this direction 2008 © Taylor Warwick Consulting Limited Craig Dobson 34
  35. Emerging Technology Emerging Technology Arena • Emerging technology refers to potentially disruptive technology in the earliest stages of adoption, i.e., technologies with the potential to marginalize existing technology or their associated business models – Information technology is an example of a technology which has already proven disruptive, whereas artificial intelligence is a subset information technology with the potential of becoming disruptive in its own right • Many lists of emerging technologies are available so will be up for discussion in the Emerging Technology Forum. – Example possibilities include conductive polymers, composite materials, energy, medicine, microfluidics, cloning, supramolecular chemistry, optics, memory research, nanotechnology, and scores of others. – Opportunity areas include hyper-agriculture, neurostimulation, customized health care, nanoceuticals, bizarre new energy sources, streaming payment systems, smart transportation, flash markets, new forms of education, non-lethal weapons, desktop manufacturing, programmable money, risk management, privacy-invasion sensors that tell us when we’re being observed – indeed, sensors of all kinds – plus a bewildering array of other goods, services, and experiences Sources: Wikipedia; Tofflers, Revolutionary Wealth, 2006 2008 © Taylor Warwick Consulting Limited Craig Dobson 35
  36. Views of the Future – Networks? • Netness – Sheldon Renan – Netness is a term describing a state of deep connectedness which is enabled and intensified by the evolving ubiquity of connectivity. Netness defines a new kind of connectivity in which computational services will increasingly be implicit, autonomous, pervasive and continuous. Users will experience netness as an environment and a state of being rather than as a specific technology or service. The most powerful effect of netness will be the seamless way in which it will support interaction of the physical world and digital capabilities. – If there is a law of netness, it observes: • All things want to be connected. • The more things are connected, the greater the opportunity created. • As netness becomes pervasive, networks and systems will begin to function like fields. • Netness opens the door to a Post-Network world. • Bandwidth Ocean – Nico Baken – Massive liquid bandwidth from a quot;bandwidth oceanquot; (the fixed Telecom-mycelium that will grow with FTTH) will be evaporated by radio into services for the end user and vice versa the data of the end user or any communicating entity will be condensed in to the fixed wells/fountains. • All kind of street furniture can serve as basis for these wells/fountains, e.g. streetlights of which in the Netherlands alone we have some 4.000.000 of them like mushrooms on the mycelium. quot;Netness emerges to entanglequot; Sheldon Renan would say. Sources: Cook, Arch Econ Discussions, 2007; Baken, TCN Conference, 2007 05 16 2008 © Taylor Warwick Consulting Limited Craig Dobson 36
  37. Science • With the four factors that underlie Science and Technology revolutions in place, i.e.: – Scientific anomalies – 22 % of matter has yet to be identified; 74% of energy hasn’t been – New instrumentation – e.g., the large Hadron Collider, Utility computing, e-Science – Effective communication – Internet as an ongoing, non-disruptive, perpetual collaboration – Supportive Political and Cultural Environment it’s time for some breakthroughs • Three types of breakthroughs: – Those based on developments that are underway – Moore’s Law: speech recognition, flexible displays, retinal scanners, … – Those at the forefront: NBIC – Those we’ve no clue about: dark matter, dark energy, structure of the universe, … After spending trillions of research dollars to disassemble the universe [we now realize that] we’ve no clue how to put it back together. – A-L Barabasi The difficult problems lie in architecture, component synthesis, and system-level engineering [not in the component technologies themselves]. – M. Satyanarayanan Antonio Santucci’s Armillary Sphere Sources: Schwarz, Inevitable Surprises, 2003 2008 © Taylor Warwick Consulting Limited Craig Dobson 37
  38. The Free Lunch • Prosuming – The invisible economy is likely as large as the visible (money-based) one, i.e., some ~50T$/yr • it is therefore huge, it encompases some of the most important things we do, and • it is largely ignored by economists – Is about to explode – there is indeed a free lunch • think of biology, nanotools, desktop factories, fantastic new materials, and so on, that will permit all of us to do things for our selves that we could never have imagined – In health, hospitals have become huge bureaucratic institutions, linked to even more bureaucratic government agencies, insurance companies, and pharmaceutical giants • do nothing to protect us from cross-border transmission of diseases, not to mention global pandemics • medical knowledge is exploding and availability of the knowledge is growing • so we’re doing more ourselves and for our families • Knowledge – Opensource is making s/w largely free – Skype provides free telephony – Joost provides free cable – Google’s initiative to take computing cycles off the table – With carbon credits, power companies might provide free broadband (Bill St. Arnaud) – Peer production • Coase theorem and business horizontalization – As the costs of manufacturing , marketing, and distribution go to zero, you can exploit long tail business models – this leads to the economics of abundance (the web has unified the SCM elements that’s been brewing for decades) • the web enables the formation of a reservoir of proto-Googles waiting in the background • it also promotes the inverse Google, i.e., it allows people with a technical speciality to find a small, stable, audience Sources: Tofflers, Revolutionary Wealth; 2006; Chris Anderson 2008 © Taylor Warwick Consulting Limited Craig Dobson 38
  39. Views of the Future • Community – When social communication media grow in capability, pace, scope, or scale, people use these media to construct more complex social arrangements—that is, they use communication tools and techniques to increase their capacity to cooperate at larger and larger scales. Human history is a story of the co-evolution of tools and social practices to support ever more complex forms of cooperative society. – Technologies of cooperation create opportunities for new relationships with property that go beyond public versus private; these relationships create new ways to generate both public and private wealth and suggest principles for protecting and growing common-pool resources. – Blogging moves power from extremists to the moderates, who will take back control and fix things • Health – Ultra-fast telemedicine and telecommuting can save money and improve quality of life (in the US, over half a trillion dollars by 2031) – Robert Litan – The public is coming to recognize that health is the product of more than simple cause-and-effect disease relationships, and results from complex interactions between a whole spectrum of environmental factors. This evolving ecological perspective is supported by scientific evidence that is beginning to demonstrate that where and how we live our lives can have as great an impact on health as genetics, behavior, or exposure to specific risks. – For the first time in history, our children will be less healthy and live shorter lives than ourselves – Relationship with animals (except dogs) will diminish – as pop increases, so does density & if we continue to harbour animals for food, the probability of infectious, virulent microbes increases and we’re already losing as our current generation of antibiotics/vaccines are failing – Medicine needs to be pre-emptive, predictive, personalized, and participatory – Medical care for all – Will cure cancer with therapeutic viruses and bacteria Sources: Institute for the Future; Wallace, Ed., 50 Years From Today, 2008 2008 © Taylor Warwick Consulting Limited Craig Dobson 39
  40. Views of the Future, 2 • Commerce – Due to decreasing transaction costs, the boundaries between industries and firms are breaking down leading to complex arrays of horizontal networks of players – With the pervasive availability of information, firms can no longer realize a sustained value proposition by finding and protecting a defensible position, but rather by developing a business system that is quicker and better at using information and by adapting the system as the industry evolves – The Only Sustainable Edge – Innovation is key to developing such a business system and will supplant cost reduction and M&As as the competitive battleground over the coming decade • Technology – Cultural demands on ICT will emphasize persistence, contextual awareness, and communication rather than content delivery – Advances in RF-ID tags, organic displays, GPS, and sensors will bring cyberspace into the physical world and in so doing, will enable a plethora of new services and place significantly new demands on network capabilities – Wind farms, electric/Hydrogen cars, -- oil will only used to make plastic • Sustainability – Global infrastructure is rapidly shifting to networks of smaller, smarter, more independent components. Such systems can be organized in more efficient, more flexible, and more secure ways than the capital-intensive, centrally planned and managed networks of the last century. As these lightweight infrastructures come online, they may be able to boost emerging economies, mitigate the environmental impacts of rapid global urbanization, and offer alternate paths to economies of scale. – Busy shorelines - floating and anchored habitats, wind power stations, tidal current generators, artifical islands • Geopolitical – Need people centred security to take over from nation state security • freedom from want and fear – Nationalism will disappear – world without borders, where humanity comes first – Almost total urbanization – No war – truly flat world - multiracial and integrated Sources: Institute for the Future; Wallace, Ed., 50 Years From Today, 2008 2008 © Taylor Warwick Consulting Limited Craig Dobson 40
  41. Remember When? • Cyberspace was restricted to our computer terminals • Active displays were limited to computer monitors • We had phone listings instead of web pages • TV schedules, channels, and network content dominated • Computer output was limited to paper and keyboards were common • Books and newspapers were made of paper that had to be recycled • Privacy was real and people could actually get lost • Data resided mostly in databases that required huge staffs to maintain and keep relevant wrt the real world • A understanding of the dynamics of most processes eluded us • We went out to socialize, work, and conduct commerce • We had to buy items as is • Genetic diseases were common • We sterilized things since we couldn’t tell the ‘good’ microbes from the ‘bad’ … Sources: Sterling, Tomorrow Now, 2002 2008 © Taylor Warwick Consulting Limited Craig Dobson 41
  42. Conclusion • Progress is dominated by exponentials, disruption, and power laws, not linear progressions and bell curves • In a world of Black Swans, what we don’t know matters more than what we do • To manage risk, a bar bell strategy is key – hedge 80% on the safest path possible and bet 20% on items with the potential for disruption • The Disruptive Technology Challenge is TRLabs’ way of: – leveraging your expertise and that of your peers to determine where it’s disruptive allocation ($100 000) should be placed – encouraging interdisciplinary academic/industry collaboration, and – establishing synergy between the unversities • The Emerging Technology Forum will support the DTC activities and provide an ongoing academic-industry forum in which we can jointly pool our expertise and diverse perspectives to explore and evaluate the opportunities and technologies that we think may change the world. • There is a free-lunch. 2008 © Taylor Warwick Consulting Limited Craig Dobson 42
  43. Questions and Follow-up Disruptive Technology Challenge http://www.trlabs.ca/trlabs/research/dtc dtc@trlabs.ca Emerging Technology Forum http://www.trlabs.ca/trlabs/research/etf etf@trlabs.ca Craig Dobson cdobson@taylorwarwick.ca 780-669-1605 Rainer Irashko iraschko@cal.trlabs.ca 403-338-6385 2008 © Taylor Warwick Consulting Limited Craig Dobson 43

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