Mckinsey’s ten high tech-supported business innovation trends

A new article on Mckinsey Quarterly outlines the top 10 innovation trends in business that are being enabled by new technologies — and shows how they trends are re-shaping the challenges and opportunities for companies, society and their ability to reach sustainability goals.

Mckinsey’s ten high tech-supported business innovation trends are:
Trend 1: Distributed cocreation moves into the mainstream. Getting incentives right for people to participate in a collaborative design process is essential, as ‘co-creators often value reputation more than money.’

Trend 2: Making the network the organization. Suggests that the ‘more porous, networked organisations of the future will need to organize its work around critical tasks rather than modelling it to the constraints imposed by corporate structures.’

Trend 3: Collaboration at scale. Issues like carbon emissions and slashed travel budgets are creating incentives for companies to invest in collaborative technologies like video conferencing and shared electronic working spaces. A company that reduced the physical travel of its employees’ and made their work patterns more collaborative through networks, reported that 80% of their sales staff claimed to have higher productivity levels and a better lifestyle.

Trend 4: Growing the ‘Internet of Things’. Business models are changing as many ubiquitous devices, from refrigerators to cars, become connected to the internet and transmit information. So for example, the pricing of car insurance can now be calculated on the base of the risk of driving behaviour, rather than on the driver’s demographic characteristics.

Trend 5: Experimentation and big data. Leveraging large data-sets about user and consumer preferences is enabling organizations to refine their products and services in new ways — in a mode of permanent lab experimentation.

Trend 6: Wiring for a sustainable world. Here’s a fact: The electricity produced to power the world’s data centers generates greenhouse gases on the scale of countries like Argentina and the Netherlands. And while technology can also create a massive efficiency in energy consumption (through e.g. smart meters and smart grids), the greening of the IT revolution is, and will continue to be, a major innovation challenge.

Trend 7: Imagining anything as a service. Asset owners are starting to create services for what have been traditionally sold as products. In B2B environments, this allows both companies and consumers to purchase units of a service and to account for them as a variable cost instead of undertaking large capital investments, freeing them of the hassles of buying and maintaining a product. Think Zipcar or cloud computing.

Trend 8: The age of the multisided business model. The “freemium” business model, like Flickr, Pandora and Skype, is creating a new set of opportunities. Because those paying for the service benefit from a larger community of users, the greater the number of free users there is, the more valuable the service becomes for those who are paying.

Trend 9: Innovating from the bottom of the pyramid. Disruptive business models ‘arise when when technology combines with extreme market conditions, such as customer demand for very low price points, poor infrastructure, hard-to-access suppliers, and low-cost curves for talent.’ One example is the M-Pesa banking service provided by the African telcom provider, Safaricom, which overcomes the difficulty that banking institutions have to reach poor people in distant areas, by allowing users to sell airtime minutes as if it was virtual cash.

Trend 10: Producing public good on the grid. With critical sustainability challenges hitting governments around the world, particularly in cities (where over 70% of the world’s population is likely to be living in by 2050), technology is enabling a new way for governments to organize solutions. From the smart coordination of the transport system, to smart metering of electricity, to smart sensors to control water use and quality. These solutions are helping authorities and communities re-imagine the way public goods are (co)created