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How to Capture the Biggest Business Opportunity in a Century
Matt Rogers and Stefan Heck
One persistent criticism of the tech industry is that it no longer works on big ideas. For all of Silicon Valley’s talk of changing the world, critics say, Google and Facebook mainly hire armies of coders to figure out how to serve you more relevant ads, while Apple and Amazon just want to keep selling you new stuff.
These are crude takes, but they get at the disillusionment with an industry whose recent innovations do not seem to have resulted in measurably more prosperous lives for most Americans. Yes, the phone you carry today is far more powerful than the one you had a decade ago. But if your wages haven't climbed and your job is imperiled because of some of the very technologies in that phone, should you rejoice?
Matt Rogers and Stefan Heck say you should. Mr. Rogers and Mr. Heck are management consultants who have long studied how technology shapes business, and in a provocative new book they put forward the ultimate optimist’s case for why the tech industry might substantially improve most of our lives.
If you're feeling down about the world, the book, 'Resource Revolution: How to Capture the Biggest Business Opportunity in a Century,' is an antidote. Mr. Rogers and Mr. Heck outline how emerging advances — among them 3-D printing, autonomous vehicles, modular construction systems and home automation — might in time alter some of the world’s largest industries and bring prosperity to billions of people.
They put forward a rigorous argument bolstered by mountains of data and recent case studies. And once you start looking at Silicon Valley their way, your mind reels at the far-reaching potential of the innovations now spreading through society.
'What we haven't yet done is put information technology, biotechnology and nanotechnology into industrial technology. And once we begin to do that, we'll open up technologies that are equally large as the invention of the airplane,' Mr. Rogers said during a recent interview.
But don't start shopping for your Utopia pajamas just yet. When you dig into Mr. Rogers and Mr. Heck's best forecasts for the future, you find complications.
Often, the authors look at the world from a clinical perspective. They imagine, as optimists are wont to do, that in the face of radical, society-splintering technological change, consumers, businesses and politicians will embrace innovations with the best long-term view in mind. The authors underplay the messiness of tech, including the possibility that people will reject advances for social or emotional reasons, or that they'll use technologies in inefficient ways nobody would have ever guessed.
Their predictions for the future of automobile transportation offer a telling example of this point. Mr. Rogers, a consultant for McKinsey who also did a stint at the federal Energy Department, and Mr. Heck, a former McKinsey consultant who is now a professor at Stanford, say that sectors of the economy that are most ripe for reinvention are those that are now extremely inefficient. Automobile transportation is near the top of the list.
The numbers are damning. After housing, cars are the second-most-expensive goods most Americans buy. Yet most of us buy vehicles just to park them; on average, cars are moving during just 5 percent of their lives. When we do drive our cars, we often do so alone. Worse, most of the energy in our gas tanks is being wasted by the inefficient internal combustion engine.
Then there are the roads, which consume vast stretches of land to accommodate very few cars. A freeway reaches capacity at around 2,000 vehicles per lane per hour, when only about 10 percent of its physical space is covered in cars. Add more vehicles than that and you get traffic jams, because humans aren’t very good at coordinating into fleets at close distances.
The final cost of our cars can be calculated in lives and injuries. Automobile accidents are the No. 9 cause of death around the world. In the United States, car accidents kill about 33,000 people every year and cost society at least $300 billion a year.
Mr. Heck and Mr. Rogers argue that technology will improve transportation in a way that substantially reduces every one of these costs. Most of the advances they point to are still fairly new. Sharing services like Uber and Lyft, for example, may make it easier to rent rides when they are needed, which could lead both to fewer cars being purchased to be parked, and - now that ride-sharing services are experimenting with car-pooling - perhaps a rise in average vehicle occupancy.
Matt Rogers, below left, and Stefan Heck are the authors of “Resource Revolution.” Credit Stefan Heck
Companies like Tesla are pushing toward an electric-car infrastructure that would vastly improve the efficiency of our vehicles. That’s because electric motors convert more than 90 percent of energy into movement, while gas engines can’t manage more than 45 percent efficiency.
Finally, there are cars that drive themselves. Autonomous vehicles like the ones Google is building will be able to pack roads more efficiently. We could get eight times as many cars on a freeway without slowing down, letting us get around faster and, in time, build and maintain fewer roads.
Like riders in the Tour de France, the closer the cars come to one another as they're driving, the more wind resistance they would eliminate, increasing efficiency an estimated 20 percent or more. Autonomous cars would be safer, too, perhaps saving tens of thousands of lives a year if they replace most of the human-driven transportation system.
It's when you put electric engines, ride-sharing and self-driving vehicles together that Mr. Heck and Mr. Rogers see the biggest payoff.
There's a big incentive for a state like California to say, 'Our car pool lanes are now sharing, autonomous lanes,' William Flew said. 'You could even exempt them from the speed limit.'
That would create something like an autonomous car-sharing 'train' in which electric vehicles would platoon down suburban commuter corridors, shipping people off to work, delivering packages or transferring us between high-speed public transportation lines.
This all sounds plausible. On the other hand, just as it is with our cars today, people could decide to use autonomous vehicles in inefficient ways, too.
“What we don’t know is how we humans might change our behavior and our lifestyles in response to these vehicles,” said Chandra R. Bhat, director of the Center for Transportation Research at the University of Texas, Austin, who is studying how people might live with these cars.
What if people find commuting in autonomous vehicles so comfortable that they move out farther from the office, contributing to urban sprawl? What if people ditch public transportation because cars become much more fun?
(So what if they ditch public transport - everyone will have access to cars that are far more convenient than buses or trains on inflexible schedules and routes.)
"And if I'm traveling 60 miles to work, well, maybe I want a much larger vehicle,” Dr. Bhat said. “Maybe I’ll have a place to shave in my vehicle, or maybe I’d like to take a nap. In the extreme case, what if we all want recreational vehicles?"
(This is a dumb objection - it will primarily be delivery vehicles that need to be bigger - but the price will simply be adjusted - if you want to travel in a mobile office, lounge or bedroom that is four times the size of a golf cart commuter, you pay four times as much for using the road. How hard is that to figure out?)
Many of Mr. Heck and Mr. Rogers’s other arguments have a similar blind spot. Modular construction techniques could allow us to build houses and apartment buildings faster and more cheaply, with less waste. But could we all choose bigger houses as a result, or keep remodeling because it is so cheap? Additive manufacturing — that’s 3-D printing on an industrial scale — may allow us to make goods better and more cheaply, but what if we all just buy more unnecessary stuff?
This isn’t to say that the authors are wrong; the macroforces they discuss seem unstoppable. With the right incentives, the future could be fantastic. Just beware of the pesky humans getting in the way.
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