Management consulting firm McKinsey has published a report which highlights what it sees as the main disruptive innovations, both already in existence and still to emerge, and assesses their potential economic impact.
A price tag of $5 million reduced to $400: a recent McKinsey report begins with this comparison between the price of the fastest supercomputer in 1975 and an iPhone 4 with equivalent performance today. This striking example is intended to illustrate the technological changes which are happening at a rate never seen before. The meaning is clear. Although several of the dozen innovations and examples set out in the report are not really new, their more widespread application, mainly due to dramatic price reductions and ongoing development through innovation clusters, is likely to lead to structural, perhaps even radical, but in any case considerable changes by 2025.
The McKinsey experts predict that the ongoing evolution of autonomous vehicles will have a huge impact on a global fleet of close to one billion vehicles. At the same time, a 40% reduction since 2009 in the price of lithium batteries used in electric cars also demonstrates that electricity could eat away part of the oil industry’s market in the coming decade. Also on McKinsey’s list is 3D printing, whose price has fallen by close to 90% in four years. But if we want to predict the biggest price reduction, we might bet on gene mapping. The Human Genome Project cost $2.7 billion and took 13 years to complete, but the consultancy firm forecasts that within a decade it will cost just $100 and take only one hour to sequence a person’s individual genes. However in choosing these 12 particular areas of innovation, leaving out for example the quantum computer and the flexible screen, McKinsey is focusing on technologies that are already mature and likely to have a wide economic impact.
The economic stakes
McKinsey also predicts that progress in techniques for extracting oil could provide US companies with an increase in petroleum production of 100 to 200% by 2025. Meanwhile the “1.5 million driver-caused deaths from car accidents” forecast to occur in 2025 are “potentially addressable by autonomous vehicles,” stresses the report. Moreover, with an estimated 2 to 3 billion extra people using the Internet by 2025, the growth in related technologies also represents an increasingly large market. Although the figures in the McKinsey report are of course rough estimates, they still serve to illustrate the potential size of these sectors. And if such high figures seem rather fanciful, they are none the less very appealing, such as the $5 to $7 trillion potential economic impact which the McKinsey experts think the automation of knowledge work may have by 2025.