McKinsey on 10 Tech Trends

McKinsey on "10 Top Tech Trends" to watch - my take on them (in the form of a precis of their argument and my response plus scoring in italics):

1. Distributed cocreation moves into the mainstream

In the past few years, the ability to organize communities of Web participants to develop, market, and support products and services has moved from the margins of business practice to the mainstream. Wikipedia and a handful of open-source software developers were the pioneers. But in signs of the steady march forward, 70 percent of the executives we recently surveyed said that their companies regularly created value through Web communities. Similarly, more than 68 million bloggers post reviews and recommendations about products and services.

This form of loose confederation seldom copes with periods of real pressure well, especially where hard execution to deadline is required. A lot of the corporate "value creation" is better described as what Nick Carr calls "Digital Sharecropping" - ie people working for free in spreading the corporate load. It's fickle (people drift off or find the new new shiny) and also tends to get messy when IP distribution raises its head. And as for 68 million bloggers reviewing products and services, often the vessels making the most noise are the "paid" blogs trying to whip up an echo chamber.

Rating: Its a popular and comforting concept that the Digital Hippies love, so it will continue to resonate, but fails in delivery when the chips are down. Best used in one-off project based environments. Read the blogs by all means, but check out the quality press too. Caveat Emptor 4/10


2. Making the network the organization

In earlier research, we noted that the Web was starting to force open the boundaries of organizations, allowing nonemployees to offer their expertise in novel ways. We called this phenomenon “tapping into a world of talent.” Now many companies are pushing substantially beyond that starting point, building and managing flexible networks that extend across internal and often even external borders. The recession underscored the value of such flexibility in managing volatility. We believe that the more porous, networked organizations of the future will need to organize work around critical tasks rather than molding it to constraints imposed by corporate structures.

Today's networks are great for "weak link" tasks, but - as with point 1 above - tend to come apart at the seams when under any pressure to deliver something hard to a hard stop. In addition, Coasian theory has yet to really become practice, as the transaction costs of capital formation, branding and market making are still very high. Nonetheless for SME companies this structure is a godsend so they will continue to push it - the pushback is the (largely poor) deal that the networked agents get - low rewards and security.

Rating: Companies will push for it and the technology will continue to aid it, but it will be limited by inability to deliver predictably and reliability when chips are down. Also, watch out if you are one of the drones in the network without a value add of your own (see point below) 6/10

3. Collaboration at scale

Across many economies, the number of people who undertake knowledge work has grown much more quickly than the number of production or transactions workers. Knowledge workers typically are paid more than others, so increasing their productivity is critical. As a result, there is broad interest in collaboration technologies that promise to improve these workers’ efficiency and effectiveness. While the body of knowledge around the best use of such technologies is still developing, a number of companies have conducted experiments, as we see in the rapid growth rates of video and Web conferencing, expected to top 20 percent annually during the next few years.

The Taylorisation of knowledge work no less, moving it from a craft to a commodity. This will reduce the per capita value of the individual and remove the surplus to the organisation that commands their labour (sorry, invaluable creativity). It was ever thus. The replacement of physical comms with electronic ones is probably an irrestable force for lower value transactions.

Rating: Will increase, as the economic forces are irresistable, but - as with the point above - try to ensure you're not one of the drones in the knowledge assembly lines. 8/10


4. The growing ‘Internet of Things’

The adoption of RFID (radio-frequency identification) and related technologies was the basis of a trend we first recognized as “expanding the frontiers of automation.” But these methods are rudimentary compared with what emerges when assets themselves become elements of an information system, with the ability to capture, compute, communicate, and collaborate around information—something that has come to be known as the “Internet of Things.” Embedded with sensors, actuators, and communications capabilities, such objects will soon be able to absorb and transmit information on a massive scale and, in some cases, to adapt and react to changes in the environment automatically. These “smart” assets can make processes more efficient, give products new capabilities, and spark novel business models.

As the devices get cheaper and easier to integrate the IOT will become more pervasive, due to the efficiencies it can bring across a value chain. Forces against will emerge if this is used for widespread privacy abuse, or to gouge customers in any way. One can imagine all sorts of things akin to "region imprinting" on DVDs (means you can't play music you bought in country X on your media player in country Y) will be tried. Also, "location" based IOT services that hand away too much privacy will rapidly wane once a few scare stories circulate.

Rating: No brainer 10/10 but beware the backlash if gouging or inappropriate usage occurs

5. Experimentation and big data

Could the enterprise become a full-time laboratory? What if you could analyze every transaction, capture insights from every customer interaction, and didn’t have to wait for months to get data from the field? What if . . . ? Data are flooding in at rates never seen before—doubling every 18 months—as a result of greater access to customer data from public, proprietary, and purchased sources, as well as new information gathered from Web communities and newly deployed smart assets. These trends are broadly known as “big data.” Technology for capturing and analyzing information is widely available at ever-lower price points. But many companies are taking data use to new levels, using IT to support rigorous, constant business experimentation that guides decisions and to test new products, business models, and innovations in customer experience. In some cases, the new approaches help companies make decisions in real time. This trend has the potential to drive a radical transformation in research, innovation, and marketing.

We (humans) are still largely structured for a world of data scarcity so dealing with data over-abundance is a new thing. Handling it well is critical, but there are 3 key requirements for this to become a trusted and deployable technology:

(i) Trustable filtering - filters that get a high level of choices right, without too many false negatives and positives.
(ii) Moderation of "black hat" datamining - which, if Google and Facebook are anything to go by, will be quite an ask. Probably needs regulation
(iii) The power cannot be too asymmetric, if users feel it is astacked against hem and used for gouging they will walk away. Already movements like VRM are looking at ways to make the power more equal, this will increase too

Rating: Fairly inevitable, should be largely beneficial, but beware the backlash if there is too much "black hat" datamining 9/10

6. Wiring for a sustainable world

Even as regulatory frameworks continue to evolve, environmental stewardship and sustainability clearly are C-level agenda topics. What’s more, sustainability is fast becoming an important corporate-performance metric—one that stakeholders, outside influencers, and even financial markets have begun to track. Information technology plays a dual role in this debate: it is both a significant source of environmental emissions and a key enabler of many strategies to mitigate environmental damage. At present, information technology’s share of the world’s environmental footprint is growing because of the ever-increasing demand for IT capacity and services. Electricity produced to power the world’s data centers generates greenhouse gases on the scale of countries such as Argentina or the Netherlands, and these emissions could increase fourfold by 2020. McKinsey research has shown, however, that the use of IT in areas such as smart power grids, efficient buildings, and better logistics planning could eliminate five times the carbon emissions that the IT industry produces.

The environmental impact of the ICT industry is a large and growing probem that it will have to take on board, but ultimately nearly every country will opt for digital dark satanic mills that drive economic progress over bucolic underachievement. And the technology to solve these issues will emerge where the costs are seen to justify it.

Rating: Overhyped - over time technology will reduce energy usage where it is economcally useful to do so, with or without any Green agenda - it's best option is to deploy subsidies in the areas that drive maximum sustainability. Sustainability PR will be the major industry here as companies compete to look Greener Than Thou. I would give it a lower mark than 6, except there will be subsidies so it will look more attractive than it actually is 6/10.

7. Imagining anything as a service

Technology now enables companies to monitor, measure, customize, and bill for asset use at a much more fine-grained level than ever before. Asset owners can therefore create services around what have traditionally been sold as products. Business-to-business (B2B) customers like these service offerings because they allow companies to purchase units of a service and to account for them as a variable cost rather than undertake large capital investments. Consumers also like this “paying only for what you use” model, which helps them avoid large expenditures, as well as the hassles of buying and maintaining a product.

Asset owners like to rent them out, users like to control the assets themselves until they are absolute commodities. Cloud based ICT assets are no yet simple, reliable or fungible enough to be consumed like water or electricity, and won't be for quite a few years yet.

Rating: It will come, but with lower penetration, will take longer and cost more than xAAS and Cloud enthusiasts believe (I say that with 10 years of close experience of the server-side of the industry, which renames itself every 2 years as the last "big hype" push crumples). Grid yesterday, Cloud today, what tomorrow? 7/10


8. The age of the multisided business model

Multisided business models create value through interactions among multiple players rather than traditional one-on-one transactions or information exchanges. In the media industry, advertising is a classic example of how these models work. Newspapers, magazines, and television stations offer content to their audiences while generating a significant portion of their revenues from third parties: advertisers. Other revenue, often through subscriptions, comes directly from consumers. More recently, this advertising-supported model has proliferated on the Internet, underwriting Web content sites, as well as services such as search and e-mail (see trend number seven, “Imagining anything as a service,” earlier in this article). It is now spreading to new markets, such as enterprise software: Spiceworks offers IT-management applications to 950,000 users at no cost, while it collects advertising from B2B companies that want access to IT professionals.

Having worked on multisided business models in IP Telcos 10 years ago and done some work with the Telco 2.0 Initiative and their 2 sided business mdel, my take on this is that:

(i) The concept is very seductive, the execution is very much harder
(ii) There is a limit to the industries it can be applied to in ICT (or anywhere in fact) as you have to be in the middleof a supply chain that has revenue opportunity on 2+ sides
(iii) Complexity and transaction costs are higher than simpler models, which increases risk. My observation is that this solution largely seems to arise in "duck and weave" markets under pressure, so I suspect it is evidence of a transitional phase in any market evolution

Rating: A few companies will be able to use this very well, some will get a small benefit, but many will find it impossible to manage as they are in flux 5/10

9. Innovating from the bottom of the pyramid

The adoption of technology is a global phenomenon, and the intensity of its usage is particularly impressive in emerging markets. Our research has shown that disruptive business models arise when technology combines with extreme market conditions, such as customer demand for very low price points, poor infrastructure, hard-to-access suppliers, and low cost curves for talent. With an economic recovery beginning to take hold in some parts of the world, high rates of growth have resumed in many developing nations, and we’re seeing companies built around the new models emerging as global players. Many multinationals, meanwhile, are only starting to think about developing markets as wellsprings of technology-enabled innovation rather than as traditional manufacturing hubs.

Necessity is the mother of invention, and developing economies' necessities are more urgent than rich economies - ergo higher innovation. It is also our view in fact that too much of what the OECD calIs it's "Innovation" is better described as "Continuous Improvement that doesn't rock the status quo". There is thus no doubt that a huge amount of potentially disruptive innovation is going on in the developing world, I've been watching mobile and payment services in Africa an Asia for example.

But I also know that there are 3 barriers:

(i) "Not invented here" syndrome
(ii) Most rich countries erect barriers to keep developing country "low cost" technologies from queering the pitches of their (lobbying) champions
(iii) Just because an X is extremely relevant in Africa, does not mean it will tranfer to America

Rating: Not as big or as quick as the enthusiats think, but there will be some real home runs 7/10

10. Producing public good on the grid

The role of governments in shaping global economic policy will expand in coming years. Technology will be an important factor in this evolution by facilitating the creation of new types of public goods while helping to manage them more effectively. This last trend is broad in scope and draws upon many of the other trends described above.

Its hard to argue with this as it is so broad, it is inevitable that governments will try and manage national assets better and there is a whole Government 2.0 movement going on. The difficulties will be all the ancillary efforts required to make it happen (eg making the water grid more efficient requires massive investment in new meters), and what to do about the 25% or so of any population who will be "digitally excluded" and cannot use the new services, thus removing a large swathe of the possible benefits

Rating: 10/10 for likelihood something will be done, but its a trend in the same sense as "I grow older every year" is a trend. Likely to take longer in many cases owing to upfront investment costs required, so 7/10 overall.

These things are always thought provoking though.