The importance of a book like “The industries of the future”1 by Alec Ross can hardly be overstated. By his own admission, “This book explores the industries that will drive the next 20 years of change to our economies and societies” (pg. 12). Whether or not the author succeeds in his ambitious task, surely he starts from quite a vantage point: former Senior adviser for innovation to Secretary of State Hillary Clinton, during the time he spent in the role he oversaw the transition to digital ecosystems of many an operation across the globe. The book is really a rich mine of potential showstoppers, giving lots of references to keep track of going forward. Due to the scope of the book, a review will be given here of its main undercurrents.
- Algorithmic money, markets and trust
- Big Data
CH 1: HERE COME THE ROBOTS
WHAT. Cutting edge advances in the robotics landscape will be differentiated by country:
“Just as wealthier and poorer citizens reside at different technological levels, so do wealthier and poorer countries” (p.19) – where the “big five” (Japan, China, US, South Korea, Germany) will be able to accrue huge benefit from their incoming preeminence in the robotics ecosystem.
WHY. What is the reason of this Cambrian explosion in the robotics ecosystem? Because of the confluence of enabling technologies, (p23): improvements in Belief Space (Bayes); cloud (swarm) robotics
; new materials
The impact will be ubiquitous: Automotive Industry (driverless cars: Google X), Operating Room (SEDASYS, also Nanorobots for cancer radiation), Academy (Aldebaran teaching computer science classes), Hospital and Human Care (therapeutic robots) etc.
The adoption pattern of those technologies will consist by initial high up-front capex (robot labor cost) that create offsetting savings in opex (human labor cost) (pgg. 37ff). Decisions like the Taiwanese Foxconn swapping robots for 1mio humans (pg. 35) – if scaled up, will create huge geographical tensions in f.e. China where a forced urbanization policy to keep labor cost down has been enacted by fiat for more than 30 years.
WHERE: Different countries will react to the shifting landscape in different ways:
while everywhere “the ratio of [capex and opex] will determine the future of work related patterns” (pg. 37), there will be places like Africa where the robotics revolution, because married to frugal innovation, will provide leapfrogging opportunities.
CH 2: THE FUTURE OF HUMAN MACHINE
The opening remark is wonderful: “The last trillion-dollar industry was built on a code of 1s and 0s. The next will be built on our own genetic code” (pg. 44) and “Genomics is going to have a bigger impact on our health than any single innovation of the 20th century” (pg. 74). Why is Ross so optimistic?
After the sequencing of the entire human genome (2000) “the size of genomic market” today
because of falling cost of sequencing and commercialization is where e-commerce was in 1994 (p 48). Think of PGDx Personal Genome Diagnostic
or “liquid biopsy” – i.e. comparison of tumor cell with normal cells in same individual via Big Data analytics; think of CRISPR and designer babies
; think of Craig Venter’s latest projects: (a) Synthetic Genomics xenotransplantation
) and (b) Human Longevity Inc
Here the old debate nature vs nurture
risks resurfacing in a ghastly shape, whereby the socioeconomic fault lines (nurture) can be frozen in biological terms (nature). Moreover, and more concretely – by now this is not a Western-only enterprise: not no more. With Beijing Genomic Institute
, China is willing to win the genomic battle, as US did win the internet race (pg. 66).
- More books/talks on this here.
CH 3: CODE-IFICATION OF MONEY, MARKETS, TRUST
This section argues that the code-ification and app-ification of money, markets, payments and trusts is a big inflection point for the disintermediation of large part of the current economy. Square
are the next iteration of digital money – while African based M-Pesa
has succeeded in leapfrogging the banking system altogether in countries (like Kenya) where the physical infrastructure is lackluster or non-existent.
The big trend at work here is the interplay of dispersion and concentration: local communities of buyers and sellers are surely empowered by the availability of decentralized, peer-to-peer (payment) solutions (like M-Pesa) but at the same point the central routing of these transaction is operated in a progressively more and more centralized way. “Coded markets like eBay and Airbnb simultaneously concentrate and disperse the market. With coded markets available to even the smallest vendors, a trend has arisen that pushes economic transactions away from physical stores and hotels toward individual people. .. .The route through which it is dispersed, however, redirects each of those transactions through a small number of technology platforms usually based in California or China” (pg. 93)
But arguably the deepest innovation coming from techno-utopianism in the markets, payment & trust ecosystem is Blockchain (original paper
by Nakamoto; some links here
). An investor is quoted saying (pg. 115) that “the problem with the Internet from 1995 to 2010 was that it enabled information dissemination and communication but lacked any ability to transfer value between individuals. From 1995 to 2010 every industry in information services was transformed beyond recognition – newspapers, music, TV, etc. – as was any industry involved in communication and connection between individuals – phone fax auction recruiting etc. […] Conversely from 1995 to the present day there has been almost no impact by the Internet on the financial services or legal industries.”
The importance of Blockchain and distributed ledgers as an enabling ecosystem where smart contracts
can render entire industries obsolete or radically disrupt their internal workings (like in the financial industry
) deserves its own section
, which will be regularly updated – hence the discussion on this can finish by quoting MIT Media Lab director Joy Ito
(p 116): “My hunch is that the Blockchain will be to banking law and accountancy as the Internet was to media commerce and advertising. It will lower costs, dis-intermediate many layers of business and reduce friction. As we know one person’s friction is another person’s revenue”.
- More books/talks on this here.
CH 5: DATA: THE RAW MATERIAL OF THE INFORMATION AGE
WHAT: A few figures first: “As recently as 2000, only 25 percent of data was stored in digital form. Less than a decade later, in 2007, that percentages had skyrocketed to 94 percent” (pg. 154). This is the dataquake.
“Big data is just the application of the commodification of computing power combined with the wider availability of cloud computing” (pg. 157).
The areas which will be visited by most action are;
– Human interface in Machine Translation (pg 159): “Universal machine translation will accelerate globalization on a massive scale”. Advances in bioacoustic engineering will deliver sleek interfaces, no more robotic voice in the next 10 years;
– Precision Agriculture: native, or retasked as Monsanto with FieldScripts (pg 162)
will reshape the agribusiness landscape: “The promise of precision agriculture is that it will gather and evaluate a wealth of real-time data on factors including weather, water and nitrogen levels, air quality, and disease – which are not just specific to each farm or acre but specific to each square inch of that farmland” (pg 162);
– FinTech (pg 168ff). The financial industry is in essence an information processing operation. “A bank is basically a giant ledger of contracts that have future positive and negative cash flows. A bank’s entire income is based on how the present value of those cash flows changes moment to moment” (pg. 170). FinTech arises because banks struggle to roll up their analytics to one central view of their cash flows. Standard Treasury, the “digital first” bank, aims to exactly that. Another FinTech area is the real-time screening: “In a coded-money economy, a lender knows a merchant’s true value because it has real-time access to its books” (pg. 171). Knowing all the transaction allows Square Capital (ibidem) to open credit lines and grow the business of its clients with unprecedented accuracy;
– Our quantified selves:
Delegating more and more of our decisions to non-human actors will trigger important questions regarding our agency.
“Serendipity fades with everything we hand over to algorithms. Most of these algorithms are noiseless. They gently guide us in our choices. […] And because they constitute the value of a company’s intellectual property, there is an incentive to keep them opaque to us” (pgg. 180-1)
A couple more points: “When data goes from being unstructured to structured, it takes on the values and prejudices baked into its formulation” (pg 183) and “Correlations made by big data are likely to reinforce negative bias” (pg. 184). A thoughtful discussion on this -Dataism- is in an article by Yuval Harari, see Financial Times article.
- More books/talks on this here.
Is Silicon Valley
going to exert increasing gravitational pull or the decentralization triggered by commodification of big data ecosystems (AWS) will allow business to spread across the geographical avenues of domain expertise? Where will be the focal points of the “next economy” and its accompanying class?
Alpha cities (London, Tokyo, NY, Singapore) and places like Estonia “The Little Country that could”
(see its e-residency
scheme) and Israel, or the geographical gradient will be less steep?
“With these platforms the Valley has become like ancient Rome. It exerts tribute from all its provinces. The tribute is the fact it own these platform businesses. […] The value flows to one of the places of the world that can produce tech platforms. So the global regional inequality is going to be unlike anything we have ever seen”, argues an investor2
(p 94) in the book.
Will the vision of world leaders be commensurate to such scenarios? The big forces shaping our future – technology, platform & free-lance economy, environment no longer fall into old ideological divides. The twin faiths of the Age of Extremes – capitalism and communism – were both based on epistemological fallacies: the first that the randomness of the economic process could be eliminated in toto; the second that such randomness acts for the benefit of human society. “The principal political binary of the last half of the 20th century was communism versus capitalism. In the 21st century it is open versus closed” argues Ross (pg 215). On such a hopeful note our review of Alex Ross wonderful book terminates. It should be mandatory reading for all thinking people.
1. [ Ross, Alec. The industries of the future Simon & Schuster , 2016]↩
2. [ Charlie Songhurst, see here]↩