Onward and upward? The transformative power of technology
A look at the powerful technological trends fuelling the digital revolution.
The digital revolution is already transforming many aspects of business and even whole industries. Just as the steam engine and electrification revolutionized entire sectors of the economy from the 18th century onward, modern technologies are beginning to dramatically alter today’s industries.
Previous industrial revolutions have had huge societal impacts, supporting an explosion in the world’s population over the past 200 years. The global population has doubled in the past 50 years and is forecast to grow to 11 billion by the end of the century. It took until 1804 for the global population to reach 1 billion. The most recent addition of 1 billion people took just 12 years.
To keep up with increasing demand, technology has had to accelerate. It’s been frequently observed that improvements in computing power have largely kept pace with Moore’s Law. After four decades of exponential increases, we are now doubling an immense amount of processing power in every two-year period, which is leading to astonishing leaps forward in technological capabilities.
The cost of advanced technologies is also plummeting. Consider just one example: a top-of-the-range drone cost $100,000 in 2007; in 2015 a model with similar specifications could be bought for $500. As technology becomes cheaper, world demand is being met at lower price points and fueling an explosion of devices with ever more connections. Sophisticated artificial intelligence devices are now mass-market and better known as personal assistants by the names of Alexa, Siri and Cortana¹. In less than five years, basic queries such as “What is the time?” have quickly become more sophisticated requests such as “Does the person I just talked to like me?” Technology has been the multiplier.
The ‘combinatorial’ effects of these technologies – mobile, cloud, artificial intelligence, sensors and analytics among others – are accelerating progress exponentially (see Figure 1). Once we overcome physical and chemical limitations that are inhibiting exponential gains in mass-market technologies such as battery storage and wireless charging, it is likely that the pace of change will accelerate even faster.
As technology becomes ubiquitous and accessible to the wider population, it is having a profound impact on how customers behave and the expectations they have. Customers across B2C and B2B worlds are developing an insatiable demand for speed, convenience, contextualization and nonstop connectivity. Further, as newer generations are raised as ‘digital natives’, they are not only harder to surprise, but can also imagine for themselves how technology can be used to improve their lives. It is possible that children born today may never need to drive a car due to autonomous-driving technologies. It is even possible that humans will colonize Mars within a generation.
Digital transformation provides industry with unparalleled opportunities for value creation from expanding industry profit pools, creating new revenue models, and enabling unprecedented access to global markets. It used to take Fortune 500 companies an average of 20 years to reach a billion-dollar valuation; today’s digital startups are getting there in four.
At the same time, digitalization could produce benefits for society that equal, or even surpass, the value created for industry. Digital initiatives have the potential to improve environmental sustainability, create employment and make our lives safer. For instance, the mass adoption of autonomous vehicles and usage-based car insurance could save 1.1 million lives a year.
The importance of realizing the combined value of digital transformation cannot be overstated, given digitalization’s central role in tackling many of the challenges we face today. For instance, the world’s energy usage is unsustainable, with emissions from the energy sector doubling over the three decades to 2012. The world’s population is forecast to grow to 11 billion by the end of the century, increasing pressure on food supplies and natural resources. Maintaining the current trend of rising life expectancy will become more taxing, as overburdened health systems struggle to cope with ageing populations.
1. Artificial intelligence device names relate to Amazon (Alexa), iOS (Siri) and Microsoft (Cortana)
Demystifying Digital and Securing $100 Trillion of Value for Society and Industry by 2025, an overview of the World Economic Forum’s Digital Transformation of Industries (DTI) initiative, is available here
The DTI initiative has focused so far on six industries (automotive, consumer, electricity, healthcare, logistics and media) and four cross-industry themes (digital consumption, digital enterprise, societal implications, and platform governance).
To explore a selection of related articles and case studies, please select one of the tags below.