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.
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
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