Technology has flourished as an industry by creating continuous substitutes for human processes and, lately, even for itself. Increasing compute power, storage and bandwidth – speeds and feeds- have helped us automate, accelerate and connect ever faster and with increasing richness and context. Telecoms and then mobile phones replaced mail and in-person meetings. Mainframes and PCs replaced manual computations. The Internet displaced bricks-and-mortar businesses of all kinds. Even in today’s relatively stagnant macroeconomy, there is always growth in the area of tech that is displacing an incumbent solution. However, despite the impact that technology has had on so many aspects of so many people’s lives, “tech” has remained a standalone sector.
My prediction for the biggest underlying trend in technology for 2014 is the death of tech.
Or rather, the acceleration of the death of technology as a separate and somewhat independent sector. We will see the “cross-pollination” of core technical advances applied to traditional industries, both by tech companies and also by leaders in those respective industries. Innovation, design and development will emerge from retailers, banks, medical companies, auto manufacturers and industrials. This will also affect the demand for hiring top tech talent as many companies hire directly into key business areas and not just the “IT” department.
To be sure, the evolution of Mobile, Social, Cloud and Big Data will continue and experiences and processes will get faster, easier and richer. But it is the convergence of these big four mega trends that will transform every sector in the global economy. And I personally believe that we will enter a truly magical era, where changes will be based not on just technical iteration and advances, but rather on the true marriage of engineering excellence with business model innovation and real life applications. This will go beyond doing things faster. People will be able to think differently and more creatively. They will solve bigger problems that encompass business, political and social change.
And the companies that embrace cross-pollination will gain new competitive advantage and become the truly sustainable, multi-billion dollar businesses and brands.
I have observed that the cross-pollination of technology into other industries tends to have four components:
- Applying technology originally envisioned as horizontal or for one application to a new large industry or market opportunity, often by deep integration into a specific vertical
- Developing new business models aided by the tech innovation
- Forming unlikely alliances or partnerships between tech and traditional players to reach users
- Creating new competitive advantage and leadership in an industry
Cross-pollination tends to be driven by individuals at first. The leaders who dare to cross-pollinate tend to have the ability to do the following:
- See the very big picture while knowing enough of the detail to understand feasibility
- Recognize patterns across seemingly disparate use cases
- Display the courage to start from scratch and reinvent themselves, sacrificing continued success in a given field to risk transforming another
- Possess the conviction and fortitude to inspire and convince reluctant stakeholders
- Have the patience to experiment and iterate
- Building and trusting a team of experts from both the “old” and “new” markets to transform not just products but also culture
We have already seen a few initial examples of the cross-pollination of technology. For example, Fortune’s 2013 Businesspeople of the Year has a smattering of leaders who achieved their ranking in some part by adopting this approach.
Elon Musk, ranked #1, is especially notable. After achieving success with his first software startup, an online city guide that provided content for emerging online newspapers, Musk did not rest on his laurels, but looked at how to improve the payments industry by applying emerging peer-to-peer technology to facilitate money transfer. He started X.com but then actually acquired new relevant technology from Confinity and relaunched as PayPal. The new business model was to let users make basic transfers for free and shift the burden of cost to merchants. Paypal then aligned with eBay to reach a completely new segment of underserved commercial users.
In the ensuing years, Musk has tried to transform three completely different industries – space exploration, clean energy and automobiles. He has successfully and fundamentally disrupted the auto industry, considered by many to be a dying sector in the US, and in turn reinvigorated not just electric vehicles, but the evolution of the entire auto sector. His vision of Tesla encompassed a holistic technology, business model and ecosystem view of both the automobile industry and solar-powered electric engines (see his 2006 Secret Master Plan for Tesla). His initial technology innovation was simple – applying lithium ion cells, prevalent in mobile phones and computers, to the problem of electric cars, where battery issues were key impediments to distance and design. Because this was initially expensive, Musk created a product and go-to-market strategy around sports cars that targeted high end users. With this approach, he was also able to change consumer perception of electric cars from boring and environmental to desirable objects of beauty and speed.
The result? Tesla is the first successful new automobile manufacturer in the U.S. in 50 years, and the stock was up almost 325% in 2013.
Other examples of Fortune’s top businesspeople utilizing cross-pollination are:
1. ‘Pony’ Ma Huateng (#3), CEO and cofounder of Tencent, China’s most valuable non-state-owned company, who is now trying to apply eCommerce and mobile technology to the insurance industry in China. Along with co-founder Jack Ma of Alibaba, he wants to offer comprehensive solutions to reduce risks in the digital economy environment, not just the physical economy.
2. Jeff Bezos (#6), CEO and founder of Amazon, who purchased the Washington Post last year with the ostensible aim of bringing internet technology and innovation to reinvent the news industry. Amazon itself is the model of a company continually disrupting new industries, from cloud to search to logistics and delivery (they even partnered with the US Post Office!) to payments. Remember when it was just an online bookseller?
3. Mark Parker (#13), CEO of Nike, who has transformed a sporting gear company into a top fitness, data and services brand by embracing digital feedback and personalization in both hardware and software. Nike didn’t invent sensors, but they have built an entire system for tracking, measuring and sharing “movement” through wristbands loaded with sensors which has helped make fitness the top use case of the emerging “wearables” market – and resulted in a 50% return for shareholders in 2013.
Tech as a sector also seems open to its own form of cross-pollination. Angela Ahrendts (#4), former CEO of $3.2 billion fashion house Burberry will soon take over as head of all of Apple’s $20 billion online and retail operations. She was a huge proponent of using technology at Burberry, improving customer service by putting iPads in the hands of every salesperson in every store with customer information from both website and in store activity. She may be just the catalyst to not only further elevate Apple’s brand but also to spur greater change in the retail industry overall.
I will continue to track my prediction around the cross-pollination of technology by delving deeper into specific industry transformations being driven by technology like Commerce and Retail, Financial Services and Payments, Digital Marketing, Education and Medicine. I would love to hear from you if you have any particular verticals or know exceptional leaders doing this that you would like discussed.