disruptive technologies: advances that will transform life
TRANSCRIPT
Disruptive technologies: Advances that will transform life, business, and the global economy
Sep. 2014
CONFIDENTIAL AND PROPRIETARYAny use of this material without specific permission of McKinsey & Company is strictly prohibited
McKinsey & Company | 1
An unprecedented rise in economic growth has been fueledby innovation with disruptive technology
100
1,000
10,000
195019001850180017501700165016001550250200150100500 2000
Estimated global GDP per capita$
1450
Efficient steam engine
1769
Mass-produced
steel
1855
Internal combustion engine
Internet
Today
Technology advancements
First steam engine
1698 1860 1970s
Printing press
First Industrial Revolution
1760s to 1840s
Second Industrial Revolution1860s to 1920s
SOURCE: Angus Maddison, “Statistics on World Population, GDP and Per Capita GDP, 1–2008 AD,” the MaddisonProject database; McKinsey Global Institute analysis
InternetRevolution1990s to Present
McKinsey & Company | 2
Twelve potentially economically disruptive technologies
SOURCE: McKinsey Global Institute analysis
3D printingAdditive manufacturing techniques to create objects by printing layers of material based on digital models
Cloud technologyUse of computer hardware and software resources delivered over a network or the Internet, often as a service
Energy storageDevices or systems that store energy for later use, including batteries
Next-generation genomicsFast, low-cost gene sequencing, advanced big data analytics, and synthetic biology (“writing” DNA)
The Internet of ThingsNetworks of low-cost sensors and actuators for data collection, monitoring, decision making, and process optimization
Automation of knowledge workIntelligent software systems that can perform knowledge work tasks involving unstructured commands and subtle judgments
Advanced materialsMaterials designed to have superior characteristics (e.g., strength, weight, conductivity) or functionality
Mobile InternetIncreasingly inexpensive and capable mobile computing devices and Internet connectivity
Advanced oil and gas exploration and recoveryExploration and recovery techniques that make extraction of unconventional oil and gas economical
Renewable energyGeneration of electricity from renewable sources with reduced harmful climate impact
Advanced roboticsIncreasingly capable robots with enhanced senses, dexterity, and intelligence used to automate tasks or augment humans
Autonomous and near-autonomous vehiclesVehicles that can navigate and operate with reduced or no human intervention
McKinsey & Company | 3
Estimated potential economic impact of technologies from sized applications in 2025, including consumer surplus
SOURCE: McKinsey Global Institute analysis
Range of sized potential economic impacts
Impact from other potential applications (not sized)Low High
X–Y
$ trillion, annual
Renewable energy 0.2–0.3
Advanced oil and gasexploration and recovery
0.1–0.5
Advanced materials 0.2–0.5
3D printing 0.2–0.6
Energy storage 0.1–0.6
Next-generationgenomics
0.7–1.6
Autonomous and near-autonomous vehicles
0.2–1.9
Advanced robotics 1.7–4.5
Cloud technology 1.7–6.2
Internet of Things 2.7–6.2
Automation ofknowledge work
5.2–6.7
Mobile Internet 3.7–10.8
McKinsey & Company | 4
These high-impact disruptive technologies are related to ‘Big Data’ era
SOURCE: McKinsey Global Institute analysis
Range of sized potential economic impacts
Impact from other potential applications (not sized)Low High
X–Y
$ trillion, annual
Renewable energy 0.2–0.3
Advanced oil and gasexploration and recovery
0.1–0.5
Advanced materials 0.2–0.5
3D printing 0.2–0.6
Energy storage 0.1–0.6
Next-generationgenomics
0.7–1.6
Autonomous and near-autonomous vehicles
0.2–1.9
Advanced robotics 1.7–4.5
Cloud technology 1.7–6.2
Internet of Things 2.7–6.2
Automation ofknowledge work
5.2–6.7
Mobile Internet 3.7–10.8
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World-class use of Big Data is divided into three steps
Improve CoreExtend core
Step out
Applications Applications Applications
SOURCE: Expert interview; McKinsey analysis
▪ Build a unified source for various internal data
▪ Focus on the current core business or marketing issues
▪ Expand a scope of data use to outside of the organization
▪ Identify new opportunities within the current business area
▪ Launch a separate business based on Big Data and Advance Analytics targeting outside organizations
▪ Data commercialization
▪ Platform sales
▪ New product development
▪ New service and business model development
▪ Personalized location-based real time promotion
▪ Micro segmentation▪ NPTB (Next Product
To Buy)▪ Price optimization▪ Promotion optimization▪ Loyalty program
optimization
CCBB
AA
McKinsey & Company | 6
Algorithm emails are created based on the customer’s browsing behavior on the website
Day 1 Day 2 Day 3 Day 6 Day 8 Day 9 Day 11 Day 12Day 4
▪ Browsed: Laptops
▪ Offer: 30% off hard drives and portable storage for Father’s Day
▪ Browsed: Toys
▪ Offer: Outdoor toys for the summer with Super Saver Shipping
▪ Browsed: Outdoor power and lawn equipment
▪ Offer: Introduction of Neutron landscaping equipment
Source: Expert interview; company website; literature review; McKinsey analysis
AA
McKinsey & Company | 7
Mastercard Advisor is an example of Data Monetization where credit card transaction data is provided to marketing agencies
▪ Maxpoint is a digital marketing agency that has combined extensive open data from Department of State, CDC’s of different countries to identify target customers located in a particular postal code area
▪ Digital Zip, a proprietary technology of Maxpoint that layers offline and online data sources helps to build brand, expand market share and ultimately boost sales within stores
▪ eXelate is a data company that powers smart digital marketing decisions worldwide for marketers, platforms, publishers and data providers
▪ On its smart data platform, eXelate offers accurate, actionable and agile data and analytics on demographics, intention to purchase and behavioral patterns of different countries online
▪ Not only does it have several trillions of online data points that it directly measures and collects, it also has data distribution partnerships with leading information players including Nielsen, Nielsen Catalina, and MasterCard Advisors
BB
SOURCE: Company website, web search, team analysis
McKinsey & Company | 8
SingTel made bold moves into the digital space includingpersonalized marketing platform
SOURCE: Company Website
Advertising
Lifestyle
Commerce
Social media
payTV
Description SingTel’s Group Digital Life
▪ A global advertising platform that gives advertises an integrated digital marketing proposition
▪ Lead and shape the global digital advertising revolution through Amobee’s comprehensive mobile advertising solutions
▪ A lifestyle delivery platform that offers personalized digital infotainment
▪ Double-down on successful plays in infotainment , particularly in food, news and gaming
▪ A digital commerce platform (local, mobile, personalized) to compete the purchasing cycle
▪ Participate in the upside of the m-commerce growth
▪ A social media interaction platform engaging a critical mass of mobile OTT customers
▪ Own the social and digital interactions spaces through tailor-made content experiences
▪ A pay TV platform that adds value to our telco assets that could be extended regionally
▪ Consolidate TV play in Singapore and explore opportunistic options across its associates footprint
CC
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Creating opportunities for productivity and innovation
Creating transparency, e.g., as follows:▪ Making public sector data available in departments to reduce search time▪ Integrating design/engineering R&D databases to enable concurrent engineering
Segmenting populations to customize actions, e.g., as follows: ▪ Segmenting labor department training programs based on skill and will▪ Real-time microsegmentation of customers to target promotions and advertising
Replacing/supporting human decision making with automated algorithms, e.g., as follows:▪ Automated risk engines to flag candidates for further examination in tax agencies▪ Automatic fine-tuning of inventories and pricing in response to real-time in-store
and online sales
Innovating new business models, products, and services, e.g., as follows:▪ Location-enabled services, from navigation apps to people tracking ▪ Using product sensor data to create innovative after-sales service offerings
Enabling experimentation to discover needs, expose variability, and improve performance, e.g., as follows: ▪ Comparative effectiveness studies to determine optimal treatment pathways▪ Use of dashboards to uncover performance variability among subunits
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2
3
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5Source: McKinsey Global Institute
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$2bn-$10bnin new business opportunities
in select sectors for aggregating, linking, and
packaging data
$100bn-$300+ bnshifts in profit pools the major
sectors affected through: better pricing, product design,
and operations
? bnfrom new game-changing business opportunities –
many of which are still to be envisaged
Significant value at stake, particularly in improving the competitiveness of the core business of most large companies
Data Analytics>decisions New services
Fasterexperimentation
Transparency
Automation (empirical
rules)
New services Smartersegmentation
▪ Transactions
▪ Mobile
▪ Sensors
▪ Social
▪ Science/engineering
▪ Audio/video
▪ New risk management solutions
▪ New marketing services
▪ New logistics services
▪ New energy solutions
▪ Personalized/targeted health solutions
Source: McKinsey Global Institute
McKinsey & Company | 11
Strategy choices
Data Analytics>Decisions New Services
▪ Internal or external data?
▪ Secure privileged access or prevent being locked out of external data?
▪ Leverage market innovation or accelerate data access?
▪ Source of revenues?
▪ Strategies enabled, threats addressed?
▪ Value to be targeted: pricing, product design, operations, etc.?
▪ Sources of differentiation, e.g., talent, proprietary analytics, speed?
▪ Extending the core vs. new businesses/services?
▪ Opportunities to change the rules?
▪ Target now or leave as ‘call option’ for later?
▪ Right to play?