Creative destruction defines future tech. Think Amazon versus Sears. The business model of retail employees serving customers in shopping malls is being displaced by smartphones and artificial intelligence (AI) devices like Amazon’s Alexa. Amazon ends up hiring thousands of new work associates while traditional retailers like Macy’s close stores. Amazon's stock price has grown 400 percent over the last five years while Macy's is considering selling the business.
This creative destruction process defines our economic future. But it raises this question: How can companies survive, or even thrive, in a future tech economy of simultaneous value destruction and value creation?
Future tech's lower costs are killing off Industrial Age companies and jobs
Future tech’s ability to win on cost is ending the Industrial Age. AI, the Internet of Things (IoT), solar, and batteries are combining to win a price war against coal, gasoline and natural gas. Human manual labor is being displaced by lower-cost smart machines.
For example, companies like Dupont and GM earn hundreds of millions of dollars annually from zero-waste manufacturing facilities. California is pioneering Zero Net Energy buildings that use a combination of AI, IoT, LED lights, mesh connectivity, solar, and batteries to slash or eliminate electric bills.
In five years autonomous vehicles will be a reality seen on our streets and highways. The reason will be lower cost. And an autonomous riding-sharing car service will cost about a tenth of a service that depends on drivers, according to some estimates.
- Reducing labor costs. The average long-haul trucker earns $40,000 per year. Fewer truckers will be needed. It will also reduce the historical truck driver shortages.
- Reducing accidents from driver distraction or fatigue. Ninety percent of truck accidents are caused by human error. Also smart trucks will “talk” to one another to avoid collisions.
- Increasing continuous hours of vehicle service
- Increasing vehicle productivity
AI, mesh connectivity and autonomous vehicles will enable curb-to-curb mobility. Similar to how cloud services have displaced buying software, vehicle ownership will become a costly luxury compared to buying mobility as a service.
Most urban autonomous vehicles will be electric because EVs cost less to fuel and operate. The global growth in electric vehicle use, lead by China, is projected to reduce oil demand by 2 million barrels per day by 2020. The last time this happened, the price of oil dropped from $100 per barrel to $25 per barrel. This sent oil company stock prices falling while six of America's eight largest oil-producing states remain in an economic recession from this price drop.
Future tech will make recharging an electric car cheaper than filling up a gas tank. And utility-scale solar power plants now generate electricity for 3 cents per kilowatt-hour. That is less than the generating cost of coal and natural gas power plants. This holds the potential of pushing the electric utility industry over a financial cliff if their coal and natural gas plants become worthless because they cannot compete on price.
Meanwhile, virtual reality (VR) tech continues to emerge. It will massively change how people work together. VR removes the need for humans to physically meet. It replaces the conference room with a digital, three-dimensional environment. Think that sounds like years away? Ford is already designing cars and holding meetings using VR tech. This helped slash Ford's product development time while reducing transpiration costs.
Uniting America around future tech
This is the economic reality that every American (and American company) must come to accept: Future tech will win on price and productivity.
But future tech’s economic victory will be costly. Jobs will be lost. Families and communities threatened. Future tech has the potential to divide America between those who benefit and those left behind.
To avoid this dystopian future, America should take action immediately to ensure future tech leadership while so making future tech work for all Americans:
- Teach machine learning from first grade through college. Learning to work with smart machines is what learning English was during the Industrial Age. It is core to future work. It must become a core educational curriculum.
- Massively fund future tech job training. Training Americans to work in future tech is the only path for preserving jobs and human dignity. It will ensure America’s global tech leadership. This should be America’s top funded economic growth program.
- Align government policy and taxes with future tech. Future tech is not just an American issue. China and Germany are also pursuing future tech leadership. Who wins future tech leadership will determine military and economic leadership. Government policies (federal, state and local) that enable future tech innovations is required to maintain America’s economic and military super power status.
Will your company outlast the future tech revolution? Will your employees? With the right tactics, they can not only survive but thrive. But it will take intention.
Image credit: Flickr/Duncan Hill
Bill Roth is a cleantech business pioneer having led teams that developed the first hydrogen fueled Prius and a utility scale, non-thermal solar power plant. Using his CEO and senior officer experiences, Roth has coached hundreds of CEOs and business owners on how to develop and implement projects that win customers and cut costs while reducing environmental impacts. As a professional economist, Roth has written numerous books including his best selling The Secret Green Sauce (available on Amazon) that profiles proven sustainable best practices in pricing, marketing and operations. His most recent book, The Boomer Generation Diet (available on Amazon) profiles his humorous personal story on how he used sustainable best practices to lose 40 pounds and still enjoy Happy Hour!