innovation, black swans & disruption

Craig Dobson 12008 © Taylor Warwick Consulting Limited

Craig DobsonSeptember, 2008

As progress is exponential, in the next 100 years we willexperience 20 000 years of progress at today’s rate.

– Raymond Kurzweil

Myth: Innovation in and of itself is valuable. – Geoffrey Moore

Innovation, Black Swans&

Disruption


Perspective

Perspective is more important than IQ – Negroponte.

Blanket Mountain & Glacier

Agenda• Perspective• Black Swans• Innovation• Emerging

Technology• Views of the

Future


Exponentials

Linear Plot Logarithmic Plot

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 perishdue to a lack of room and resources. Several smart bugs realize this and try to warn theothers. Finally, once the jar is 12.5% full, others start to listen. It is too late, however, as thisdoesn’t occur until they have only 3 seconds left.

7 yeardoublingperiod

110

102

103

104

105

106

107

108

109

1010

1011

1012

1013

– 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

18month

doublingperiod

7 yeardoublingperiod

18month

doublingperiod


History of the Universe

Sources: Kurzweil, The Singularity is Near, 2005


Observations

• Progress is both exponential and accelerating, and has been since long before theInternet

– 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 15minutes (~ 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 bydefault broadcast schedules

• Increasing complexity – decreased stability


Agrarian Industrial Knowledge

Hunter – Gatherer

Sources: Tofflers, Revolutionary Wealth; 2006

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 itselfwithout a host society and culture.

– Both the host and culture themselves are shaken up as two or morewealth systems collide

• This transition is affecting three deep fundamentals: time, space, &knowledge


Deep Fundamentals• Time – synchronization industry: development

of JIT and ERP systems together withsignificant desynchronization friction.

– “Faced with a twenty-year threat,” an editor ofArmed Forces Journal International once wrote,“government responds with a fifteen-yearprogram in a five-year defense plan, managed bythree-year personnel funded with single-yearappropriations.”

– 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 theworld’s population; perhaps 40% of the global economy; more than half the world’s information technology industry; and worldclass 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 ofchange.



Observations• Institutions

– Many of our key institutions are imploding - health, education, pension, legal, political, etc. – systemicbreakdown

– 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 towardknowledge-based wealth creation and the intangibility it brings, we see yet another historic change: Theresurrection 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 becomingincreasingly 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 theratio 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


History of Technology• Each revolution takes 40-60 years to spread across the world and reach maturity• Is this cycle is accelerating?

Source: Carlota Perez, Cisco CUD Conference, 080221

A sequence of S-curves

The ages of GNR (genomics,nanotechnology, and robotics)may be here sooner than you

think.


Sources: Homer-Dixon, Upside of Down, 2006

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 naturalsystems like Earth’s climate and massively changing global cycles of carbon, nitrogen, phosphorous, andsulfur

• 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


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 failedeconomies 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

Sources: Millennium Project of WFUNA, 2007; Homer-Dixon, Upside of Down, 2006

• 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 theirindividual impacts alone


ICT’s Impact on CO2 Reduction is 10x’s More It Consumes

• Energy consumption• Greenhouse gas emissions• Use of non-renewable resources• E-waste & hazardous material

• E-government, e-business• Transportation optimization• Energy optimization• Building optimization

• Work/ life patterns• Social inclusion, education & health• Economic development• Urban design & development

Direct Resultof ElectricityConsumption(Increases CO2)

Impact ofApplications(Lowers CO2)

Long-Term,Socio-economicChanges(Lowers CO2)

TODAY

NEXT

FUTURE

Gartner Group, April 2007; “Saving the Climate at the Speed of Light,” WWF and ETNO, 2007

Broadband, ICT, and Sustainability

+4.73 MT -48.4 MT

• 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


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

Source: Carlota Perez: Cisco CUD Conference, 080221 & Economist, 030508

IT SURVEY – ECON: 030508


The ICT Wave

Sources: Forrester: 2004 08 24

Installation Deployment


Policy Makes a Difference

Source: San Jose Mercury News

Bandwidth

Cost

• Government belief in marketforces has led to a defactomarket failure in fibreinfrastructure deployment


Broadband?

64 kb/sPhone Line

128 kb/s(ISDN)

600 kb/s3 Mb/s

1.544 Mb/s:(T1)

20 Mb/s

3.7 Mb/s

100 Mb/s 1 Gb/s

Copper(to VDSL 2)

Coax(to Docsis 3)

WiFi / WiMax(per subscriber)

Fibre

True / BigBroadband


Broadband – Application ThresholdsAs 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 newservice possibilities.

Ethernet ~100 Mb/s Optical Ethernet ~1 Gb/s xDSL ~15 Mb/s, asymmetric

HDTV Streaming Computer BackplaneEffects

PC-Style IndustryGrowth

• Everything, but better• Increased option value. The value

in the car is not in its applications(going to the shopping centre,driving to work), it is in the optionvalue it creates – the option to dowhatever, whenever.

• May ignite unprecedented growthwithin the ICT sector. Shouldenable a sustained andpredictable growth trajectory innetworking leading to thedevelopment of multi-level valuechains, much the way Moore’sLaw has contributed to a virtuousdevelopment circle with respect toPC h/w, s/w, and applications

• True end-to-end real-timecommunications including VoIP,plus IM plus file sharing plus videoplus work-together plus…

• 3D virtual home/office(conferencing/porn)

• Peer-to-Peer applications for voice,music, storage, and video

• Distributed computing services,utility computing, Planetweb. Thisleads to Forrester’s Organic ITConcept of virtualized ITinfrastructure

• Computer services to remote thinclients

• .NFL on HDTV• enable content providers to

circumvent the cableco distributionstructure

• Video conferencing to the home sothat the grandparents can see theirgrandkids

• Do what we do now, but better -e.g., attach audio narrations toPowerPoint presentations

• With high quality audio/video as thefavoured mode of communicating,web sites would be transformed -they’d take on a new ‘personality’


Bandwidth Matters!

• Telecommuting (converged services)• File Sharing (large)• IPTV-SD (multiple channels)• Switched Digital Video• Video on Demand - SD• Broadcast SD Video• Video Streaming (2-3 Channels)• HD Video Downloading• Low Definition Telepresence• Gaming• Medical File Sharing (basic)• Remote Diagnosis (basic)• Remote Education• Building Control and Mgmt

• Telemedicine• Educational Services• Broadcast Video SD & some HD• IPTV-HD• Gaming (complex)• Telecommuting (high quality video)• High Quality Telepresence• HD Surveillance• Smart/Intelligent Building Control

• HD Telemedicine• Multiple Educational Services• Broadcast Video - full HD• Full IPTV Channel Support• Video on Demand - HD• Gaming (immersion)• Telecommuting (high quality)• Remote Server Services for

Telecommuting

• Research Applications• 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

5 – 10 Mb/s 10 – 100 Mb/s 100 – 1000 Mb/s

1 – 10 Gb/s


Phone Calls Just Aren’t the Same

Source: Ironman, Cisco CUD Program


History of Intelligence

• 3D Computing• Quantum

Computing• Spin Electronics• Nanotube

Technology• DNA Computing

Moore’s Law


Electromechanical

Relay

VacuumTube

Transistor

Integrated Circuit

The SonyPlaystation 3 has inexcess of 3 TIPSprocessing power.


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

Where are you?Planning 101:

Customer Buying

Alternate Technologies

Threat of New Entrants

PowerSupplier

Bargaining Power Telecom Industry

Porter Analysis

Applications

Technology change

Business change

GG

Problems

Solutions

A race to the finish

• This level of progress is also beingachieved in other areas…


Other Exponentials


Magnetic Data Storage(bits/$)

Nanotechnology - Decrease in Size(Diameter in mm)

DNA Sequencing Cost(per finished base pair)

Wireless Data Devices(b/s/$)


Additional Perspective

The world does not operate the way we assume it does.


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 BlackSwans

• 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, includingsophisticated 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 daughterThe 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 byfire 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


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

Sources: Taleb, The Black Swan; 2007; Barabasi, Linked, 2003

• 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 apower 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

Stationary Fieldslivestock judgesastronomerstest pilotssoil judgeschess mastersphysicistsmathematiciansaccountantsgrain inspectorsphoto interpretersinsurance analysts

Moving Fieldsstockbrokersclinical psychologistpsychiatrists, college admissions officerscourt judgescouncilorspersonnel selectorsintelligence analystseconomistsfinancial forecastersfinance professorspolitical scientists‘risk experts’financial advisors, etc.


PredictionForecasting Hall of Shame

– The telephone has too many shortcomings to be seriously considered as a means ofcommunication. 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, USOffice 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


Innovation

The Disruptive Technology Challenge –Play Poker Not Chess


Sustaining vs Disruptive

Sources: HBR, 0208

Sustaining innovations are howestablished companies movealong established improvementtrajectories - improvements alongdimensions historically valued bycustomers. Such innovationstypically improve existingproducts – making PCs faster,planes safer, and so on.

Disruptive innovations introduce anew value proposition and eithercreate new markets or reshapeexisting ones.


Sources: Christensen, et al, HBR, 2000 11 & Seeing What’s Next, 2004 10

Perfo

rman

ce

Diff

eren

ce P

erfo

rman

ce M

easu

re

Incremental Innovation

Bring better products into

established markets

Low-end Semi-radical

Target overshoot customers

with lower-cost business model

New-Market Radical

Compete against nonconsumption

Nonco

nsum

ers

Nonco

nsum

ing

conte

xtsCompany improvement trajectoryCustomer demand trajectory

TelephonePersonal computersPhotocopiers

Discount retailingSteel minimills

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 theincumbents. There are two types:

– New-market disruptive – create newgrowth by making it easier for people to dosomething that historically required deepexpertise or great wealth. It bringsconsumption to ‘non-consumers’ or non-consuming contexts. The Bell telephone,Sony transistor radio, and the Apple PCwere all new market disruptive innovations.

– Low-end disruptive – occur when existingproducts and services are ‘too good’relative to the dotted customerdemand/expectations curve; they areoverpriced relative to the value existingcustomers can use.


The Disruptive Advantage

In the disruptive arena, theadvantage goes to the upstart!

Sources: Christensen & Raynor, Innovator’s Solution, 2003

Founder-led Businesses

Corporate Led Disruption


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

Semi-Radical

Semi-Radical

Radical

Incremental

New

Near to theExisting

Near to theExisting

New

Business Model

Tech

nolo

gyProduct and

Services

ProcessTechnologies

EnablingTechnologiesTe

chno

logy

Inno

vatio

n

ValueProposition

SupplyChain

TargetCustomers

Business Model Innovation

Sources: Davilla, et al, Making Innovation Work, 2005

• Given that ‘The probability of success in technology push is estimated to be less than 0.3% of the probability ofsuccess in market pull’, tight program linkages to customer and business requirements is essential


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

Sources: F. Johansson, The Medici Effect, 2004; Waclawsky, BCR, 2005 03

Systems Innovation Component Innovation

• Which leads to the concept of modularity…


Value Chain EvolutionAccording to the Disruptive Innovation theory, sustaining innovation results in the

evolution of an incumbent’s value chain from a position where competitive advantagelies in integration to a commoditized environment in which value results from speed,responsiveness and convenience.

Product Architectures and Integration

Flat scale: lowdifferentiability.Ability to makemoney migrates tosubsystems andthe back end.

Steep scale; highlydifferentiable.Design /assemblymakes the money.

Sources: Christensen & Raynor, The Innovator’s Solution: 2003 10

• Put simply, firmsdealing withperformance gapsshould integrate,while those faced witha performancesurplus shouldcommoditize.

• From voice to bittransport, this issuecurrently pervades theICT industry.


Swarm Innovation

• It is now generally recognized that the Western World’s lack of ‘collaboration for thecommon good’ relative to that evident in the Far East puts us at a significantdisadvantage, particularly with respect to innovation.

• Swarm innovation networks are similar to Open Source Networks in which once areference 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 ofcompanies – 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 processnetworks, performance fabrics, and social software.

• While neither Western Canada nor our universities can match the scale and scope ofthese networks, we can collaborate to facilitate and leverage ICT innovation acrossthe region, embed it within a global context, and effect an impact disproportionate toour size

• The Emerging Technology Forum is a step in this direction


Emerging Technology

• Emerging technology refers to potentially disruptive technology in the earliest stages of adoption, i.e., technologieswith 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 asubset 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, desktopmanufacturing, 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

EmergingTechnology

Arena

Sources: Wikipedia; Tofflers, Revolutionary Wealth, 2006


Sources: Cook, Arch Econ Discussions, 2007; Baken, TCN Conference, 2007 05 16

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 evolvingubiquity of connectivity. Netness defines a new kind of connectivity in which computational services willincreasingly be implicit, autonomous, pervasive and continuous. Users will experience netness as anenvironment and a state of being rather than as a specific technology or service. The most powerful effect ofnetness will be the seamless way in which it will support interaction of the physical world and digitalcapabilities.

– 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 "bandwidth

ocean" (the fixed Telecom-mycelium that willgrow with FTTH) will be evaporated by radiointo services for the end user and vice versathe data of the end user or anycommunicating entity will be condensed in tothe fixed wells/fountains.

• All kind of street furniture can serve as basis forthese wells/fountains, e.g. streetlights of which inthe Netherlands alone we have some 4.000.000of them like mushrooms on the mycelium."Netness emerges to entangle" Sheldon Renanwould say.


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 theuniverse [we now realize that] we’ve no clue how to put itback together. – A-L Barabasi

The difficult problems lie in architecture, component synthesis,and system-level engineering [not in the componenttechnologies themselves]. – M. Satyanarayanan Antonio Santucci’s Armillary Sphere

Sources: Schwarz, Inevitable Surprises, 2003


Sources: Tofflers, Revolutionary Wealth; 2006; Chris Anderson

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 beenbrewing 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: Institute for the Future; Wallace, Ed., 50 Years From Today, 2008

Views of the Future• Community

– When social communication media grow in capability, pace, scope, or scale, people use these media toconstruct more complex social arrangements—that is, they use communication tools and techniques toincrease their capacity to cooperate at larger and larger scales. Human history is a story of the co-evolutionof 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 publicversus private; these relationships create new ways to generate both public and private wealth and suggestprinciples 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 atrillion dollars by 2031) – Robert Litan

– The public is coming to recognize that health is the product of more than simple cause-and-effect diseaserelationships, 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 thatwhere and how we live our lives can have as great an impact on health as genetics, behavior, or exposureto 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 losingas 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


Views of the Future, 2• Commerce

– Due to decreasing transaction costs, the boundaries between industries and firms are breaking down leading to complex arrays ofhorizontal networks of players

– With the pervasive availability of information, firms can no longer realize a sustained value proposition by finding and protecting adefensible position, but rather by developing a business system that is quicker and better at using information and by adapting thesystem 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 competitivebattleground 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 managednetworks 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


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


Conclusion

• Progress is dominated by exponentials, disruption,and power laws, not linear progressions and bellcurves

• In a world of Black Swans, what we don’t knowmatters more than what we do

• To manage risk, a bar bell strategy is key – hedge80% on the safest path possible and bet 20% onitems 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 anongoing academic-industry forum in which we can jointly pool our expertise anddiverse perspectives to explore and evaluate the opportunities and technologiesthat we think may change the world.

• There is a free-lunch.


Questions and Follow-up

Disruptive Technology Challengehttp://www.trlabs.ca/trlabs/research/dtc

[email protected]

Emerging Technology Forumhttp://www.trlabs.ca/trlabs/research/etf

[email protected]

Craig [email protected]

Rainer [email protected]

403-338-6385