In the sphere of technological innovation, you don't have to look far to see creation and destruction are closely intertwined.
In the railroad industry, the same high-speed freight service that enabled growth of cities in Illinois also disrupted agricultural businesses. More recently, digital technology has routed chemical-based photography, and the Internet is thrusting the print media industry towards possible extinction. Creation and destruction side by side. Or, as the early 20th-century economist Joseph Schumpeter put it, "creative destruction."
Looking ahead, what's a business leader, policy-maker or society to do? With hundreds of new technologies vying to be "the next big thing," how can they know which will rise and which will fall? The McKinsey Global Institute has published a study that cuts through the fog, identifying the 12 technologies it considers most likely to transform life, business and the global economy by 2025. Top of the list is the mobile Internet, closely followed by the Internet of Things and cloud technology.
Mobile Internet Just Getting Started
According to the study, the 12 technologies collectively have the potential to drive direct global economic impact to the tune of $14 trillion to $33 trillion a year in 2025 (for comparison, U.S. GDP in 2011 was about $15 trillion). The study estimates $3.7 trillion to $10.8 trillion a year could be driven by the mobile Internet.
For all its rapid growth, the mobile Internet is still in its infancy, says Michael Chui, Ph.D., a principal of the Institute and one of the study's authors. With only 1 or 2 billion of the planet's 7 billion inhabitants already connected to the Internet, there's still "a tremendous amount of head room" for the mobile Internet to have even more impact than it has already had, Chui says.
"The vast majority of those who have not been connected to the Internet will be connected through mobile devices," he says. "Any global business should be thinking about the possibilities of having the mobile Internet applied to this vast majority of people around the planet who have not yet had access to the mobile Internet."
Add to that continued innovation around things like wearable mobile devices and mobile apps, Chui says, as well as innovations from enterprise IT managers driven to greater heights of creativity by employees wanting to bring their own devices to work (BYOD).
A Revolution in Management
By 2025, the Internet of Things could drive estimated economic impact of $2.7 trillion to $6.2 trillion a year, according to the study. Through connecting and embedding intelligence in billions of objects and devices around the world, the technology will touch almost every industry and enable people, processes and things to be measured with unprecedented precision and timeliness, Chui says.
"We expect revolutions in measurement to result in revolutions in management," he says, citing MIT Professor Erik Brynjolfsson.
One major benefit of the Internet of Things will be myriad improvements in the efficiency and effectiveness of current business models, as well as the enabling of entirely new business models and revenue streams, Chui says.
Products that can "phone home," for example, can provide information on how they are being used by people, which can in turn feed into a company's R&D, customer service and maintenance functions, Chui notes. These products can also lead to the creation of new services—such as proactive maintenance or a car-sharing service—and in some cases can change a product sale to a service sale, he says.
"The same thing applies to complex manufactured goods—everything from jet engines to computer hardware," he says.
Cloud technology—which the study estimates could drive economic impact of $1.7 trillion to $6.2 trillion a year by 2025—has already taken off by leaps and bounds through Internet services such as e-mail, social media, search, streaming media and offline storage of personal data (photos, books, music).
But Chui says there is still "tremendous additional upside" both for people not yet connected to the Internet and within enterprises. In particular, the cloud greatly increases the efficiency of deploying IT infrastructure, making it faster and easier for people to start new businesses and ramp up capacity, as well as giving businesses greater flexibility by changing what previously was CAPEX to OPEX, he says.
Cloud can also inspire entrepreneurs and companies to do new things—such as creating ride-sharing services like Lyft or Uber, which connect riders with drivers through smartphone apps that also process payments.
Consumers and Innovators to Win Big
It was Federal Reserve Chairman Ben Bernanke who said that, for all the technological advances of recent decades, "we are still in the early days of the IT revolution."
The study seems to support the claim, detailing nine other "most-likely-to-disrupt" technologies: the automation of knowledge work, advanced robotics, next-generation genomics, autonomous and near-autonomous vehicles, energy storage, 3D printing, advanced materials, advanced oil and gas exploration and recovery, and renewable energy.
It's a revolution, Chui says, in which consumers will be among the biggest winners, along with innovators.
"These technologies have the ability to unlock so much value," Chui says. "Those who can innovate are likely to be able to create and capture more and more of that value going forward."
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