Last week, Steve Case, the legendary founder of AOL spoke at the NY Media conference about his investment group Revolution Growth, which is focused on 3rd Wave investments.
He sees this as the next frontier for the digital revolution: transforming older, traditional and infrastructure industries. This is not sexy and it requires partners in disruption. Often, the required partners are those who would reflexively resist progress with all their might. Therefore changes are likely to be slower and more complex but they also run deep.
These changes are also likely to be more transformative than anything we have seen before. Or perhaps not. They just might become the new normal for traditional industries – adapt or die. The floor has just risen. There may be a race for who is most innovative and so the stumbles may be in the direction of innovation and not resistance.
The perfect example is Uber, which has been rocking the transportation industry worldwide. For years, the taxi industry fought them in courts, legislation and in street riots. But never with technology. Until now. New York now has two apps than can order your yellow cab exactly the same way as Uber. The cabs come at about the some time, you pay less and maybe the taxi industry has chance to survive, sending the value of medallions back up – just a little if too late.
Wall Street Journal to be better than Way2ride and seems to be more of startups product while Way2ride has more of the corporate development origin. This is probably the signature story, the public case study of the old empire taking adapt and survive via technology vs. the old Luddite sue ‘em, legislate and agitate approach.
We could compare this to VW’s diesel division which used adapt and die via technology the wrong way. Instead of fixing their diesel emissions they simply faked it through software. That was a devastatingly bad idea that only an entrenched company might come up with. But they would not be alone in trying to rig the system rather than fix the problem. U.S. Railroads, are mandated to fix their safety system by 2015 through a technology paradigm called Positive Train Control. The vast majority of railroads including most of the commuters either couldn’t do it or just didn’t try. So they went back to Congress and told them to push back the deadline and in some cases threatened to halt their trains and cause and estimated $30 billion in economic damage.
In the Railroads case, which may be emblematic of most infrastructure fixes, the protocols were so overdesigned and obsoleted by the time they came out in 2010, that they we overpriced beyond reason. Today, they could simply leverage existing technology, Elon Musk-style and do everything plus a few extra things like adding genuine safety to their antiquated railroad crossings, for pennies on those federally mandated dollars. Smart sensors with WiFi, Bluetooth, RFID, webcams and communications are cheap tech commodities now. A group of enthusiasts from Maker Faire with $40 Raspberry Pi's could fix almost everything in about a month.
So it goes for bridges and roads. Do we not have new liquid graphene technology that can shore up rusting old bridges? Is there no new polymer that can resurface roads or fix potholes so that post-winter driving is no longer driving through the jungle?
I’ll bet there is a startup in some remote part of country with a laptop full of solutions and none of the right connections. Naturally, government isn’t looking there - they want their familiar suppliers and their trusty old pals. Then they have entrenched stakeholders, union members and civil servants whose main mission is to rack up overtime and accumulate pensions. Not all, of course, but enough that they have zero interest in improvement for the public interest.
The good news, if we have any, is that innovators are running out of new Social Media and Ad Tech wrinkles and will be forced to look at real industrial issues. For example, when we run our Startup events in Boston we see some of this - like Concrete Sensors, a startup that puts sensors into poured concrete so engineers get a real time readout of its curing rate – essential before proceeding to the next stage - which is currently being done with expensive pilot drillings. Innovations like these could push the entire industry forward.
Typically, these ideas are resisted at first. The big players don’t think they need them or fear disrupting their systems. Then, a competitor somehow breaks through. The old-timers pull off every dirty trick they can think of to resist it. Finally, they capitulate and start begging for innovation. That is generally when they lose leadership, go under or get acquired.
If we don’t learn how to introduce innovation into public works, we will become a new kind of economy – an ex-first world country with an antique infrastructure, a massive public payroll and a culture that lost its way.
© Alan Brody 2015