Is society prepared for technology disruption?

Image result for Is society prepared for technology disruption?Investors would do well to listen to a talk by Tony Seba titled ‘Clean Disruption — Energy & Transportation’. It provides a peek into the future for developments in the fields of energy and transportation, and how these are set to disrupt several industries. Everyone knows that disruptions are coming, but is society prepared for it?

It would seem not. Although a number of useful steps are being taken by this government, far too much still remains to be done. As a nation we are still seeking to rectify legacy issues instead of preparing for the future.

Technology disruption occurs unexpectedly and very fast.

Thanks to factors such as convergence of technologies and business model innovations, there is going to be a lot of disruption in several industries. Sega talks of two, viz, Energy & Transportation.

Improvement in cost

Throughout history, technology disruption has occurred whenever there has been a 10X improvement in cost, thanks to increasing productivity. To illustrate, the $600 iPhone today has the same computing power that a $6-lakh computer had 20 years ago.

The cost of generation of solar power has fallen from $100/unit to 33 cents, which is a factor of 303X. Besides, the cost of solar storage has also come down dramatically. It is forecast that solar generation plus storage would fall to 7 cents/unit. This is less than the cost of transmission for power generated from other sources. So, even if, hypothetically, the cost of generation falls to zero, transmitting the power would be more costly.

If, thanks to storage, the peak demand can be met by a home/factory owner with a storage device, it will make economic sense for people to go off grid.

What, then, would happen to the energy infrastructure already built? The power plants and power grids? Or makers of gensets?

Look at what is coming in the auto industry, thanks to convergence of technologies, declining cost curves and business model innovation.

There are five factors driving the disruption. 1. Batteries — several mega factories are being set up other than by Tesla; these include BYD, a Chinese company, FoxConn, LG, Samsung, and Dyson, among others. (No Indian names); 2. Autonomous vehicles; 3. Ride Hailing — the business model innovation through which Uber, in eight years, booked more rides than the entire taxi industry in the US; 4. Electric vehicles; and 5. Solar energy (mentioned above).

Electric vehicles

The cost for an electric vehicle whose charge lasts 200 miles — a necessity to attract buyers — is the same as for an internal combustion (IC) vehicle. A study by Consumer Reports, (a non-profit organisation that rates and reviews products) states that while it costs $5,000 over five years to run an IC car (gasoline cost), it costs $1,565 for an EV. That’s 10X. That spells disruption.

An IC vehicle has over 2,000 moving parts; an EV has 18. So, maintenance for an IC is, again, 10X that of an EV.

Autonomous vehicles are coming. The cost of technology to make these vehicles is falling sharply.

Is India ready? Even after 70 years of independence our roads are potholed, thanks to corruption. Do we have the traffic discipline? Are we preparing society to obey laws?

No, we are not prepared for the coming disruptions. Good governance entails that government and judiciary should work together to have a just and fair society.