In business, the idea of “disruption” is often framed as a threat that comes from other companies. Upstarts armed with new technology come out of nowhere to turn an industry upside down, leaving established players scrambling to catch up.
But the truth is more complicated.
Technology may be the game changer of our era, but disruption doesn’t happen in a vacuum. Broader, outside forces like shifting demographics, and globalization all feed into these changes—and are, in turn, fed by them. Understanding the big picture is critical to see disruption not as an existential threat, but rather an opportunity for innovation.
This is the central idea behind the recently released EY Megatrends Report 2018: The Upside of Disruption. Produced by EYQ, EY’s think tank, the report examines the biggest trends and advances that are shaping business and the world at large, from personalized healthcare technology to the changing nature of cities. Unlike most trend papers, this study explores these issues holistically, linking conclusions and their causes back to world-shifting events, such as aging global populations and the rise of populism. They then project how those events might shape the nature of markets, alter the social contract, and change global order in the near future.
The report was a hot topic at Innovation Realized 18, EY‘s recent two-day executive retreat in Amsterdam. Business leaders from around the world convened to discuss the ideas and technologies shaping their companies, and the importance of continuous transformation and innovation as a way to seize disruption as an opportunity.
Here’s a look at some of the key megatrends and the challenges and opportunities they could bring.
1. The Rise Of The Super Consumer: Advances in artificial intelligence, sensors, smart devices, and new computing interfaces are converging, spurring a new breed of consumers, empowered by voice technology, digital assistants, and intelligent physical environments. Calibrated to their needs and desires, these technologies will develop a profound understanding of individual consumers and could one day lead to a scenario where they routinely make decisions on behalf of humans.
The Opportunity: When used correctly, these technologies enable companies to offer new personalized services and products. Their ubiquity will allow brands to reduce the friction between consumer touchpoints, reaching them wherever they are when they’re most relevant, ultimately establishing deeper brand loyalty.
The Challenge: According to EY, we could be looking at too much of a good thing. “Consumer interfaces and channels are proliferating,” the report says. “Companies may struggle with where to make their investments for the future while executing on the basics today.” Questions about data and consumer privacy may lead some consumers to resist bringing these intelligent ecosystems into their lives at all. Additionally, rising economic inequality and infrastructure disparities could mean that much of the developing world is left out.
2. Molecular Economy: Nanotechnology has reached its disruptive phase — it’s now making a tangible impact in a variety of disciplines, such as biology, computing, materials, electronics, mathematics, physics, and chemistry.
The Opportunity: Enabled by advances in nanotech, molecular manufacturing would allow producers to manipulate atoms and molecules and construct complex objects with atomic precision. Artificial intelligence will make advanced manufacturing smarter and more productive. Additionally, distributed manufacturing aided by advanced 3D printing will allow production to take place closer to where it’s needed. This has the potential to redefine all phases of production, from R&D to supply-chain management, ultimately making manufacturing much cheaper, faster, and more efficient.
The Challenge: While nanotechnology is likely to make a historically significant impact on a range of disciplines within the next few decades, EY’s report urges caution: “Scientific uncertainty remains, particularly around molecular manufacturing and the ability to scale up some of the most promising research. At the same time, we are likely entering a multiyear period of nanotechnology-derived disruption, with a variety of new specialty applications coming to market.”
3. Behavioral Design: As technology assumes an increasingly active role in our lives — forging our relationships, automating our jobs, driving our cars — it has the potential to trigger human psychology in unprecedented ways. Understanding the relationship between tech interactions and human behavior is critical, and companies will need to carefully design these products with their impact on human behavior in mind.
The Opportunity: Smart behavioral design has the potential to have a positive impact in people’s lives and on the environment. “AI could enable personalization to a degree never before possible,” the report says. “[And] autonomous vehicles (AVs) and future mobility options could drive more efficient use of natural resources.” Healthcare could benefit as well: “‘Digital twin avatars could show individuals the long-term consequences of their health decisions. Achieving this vision would deliver significant benefits to society by addressing expensive societal challenges. It would also profit companies by boosting customer engagement and loyalty.”
The Challenges: According to EY, “Leaders must attend to the implications of behavioral design for everything from customer engagement to fears about automation to the outcome of elections.” Designers will have to overcome consumer fear of new technologies, the desire for control in an increasingly automated world, as well as human cognitive biases, such as the human tendency to anthropomorphize inanimate objects. (Think robot design, and how we may see ourselves in them.)
These trends and the others in the report have complex causes, and are sure to have outsized impacts. EY calls on business leaders to take on disruption with both a broad and deep view, looking outside their competitive set at larger, world-shifting forces, while simultaneously trying to focus on the trends and challenges that are most likely to strike their sector. It’s no easy task, but it begins with the right information.
This story was created for and commissioned by EY.