Disruptive Technologies, Part II - Healthcare

A small detour before kicking off the commentary on the disruptive technologies paper.

While some disruptive technologies have healthcare benefits, many wonder why there isn't more commentary on the coming healthcare-specific revolutionary and disruptive technologies. From what I've gathered from those who study breakthroughs in healthcare, there are two primary reasons: rarity and predictability.

Although there are always ubiquitous predictions of dramatic potential benefits of healthcare advancements, rarely do medical breakthroughs actually have far-reaching significant effects in the short-to-medium term. Medical breakthroughs rarely occur and are difficult to foresee. While there have been a few breakthroughs in medicine that dramatically improved human health, the majority of the benefits from these discoveries occurred slowly. For example, benefits from vaccines took over 100 years to make a significant global impact. Many only consider one health advancement to fall into the "high broad based impact in the near-term" category: penicillin.

Penicillin's direct impact was miraculous and significant. It had an immediate impact on infection mortality rates, and was one of the three critical elements (together with water and vaccines) that took down the three leading causes of death and led to falling infant and childbirth mortality rates. Surgery in the modern sense suddenly became possible. This opened a new world of transplants, cancer treatments, and heart disease mitigation. Antibiotics truly were one of those advances that "changed everything."

I prefer to look at the future on a marginal basis. What is the current path of events, and how can one push that path in a different direction? In the current path, antibiotic resistance appears likely and with grave consequences. (See this excellent post which links to another excellent post which links to other posts which link to an excellent book which...) A disruption to our current path would be finding a way to contain antibiotic resistance or discovering an antibiotic in which few resistances would develop. However, the probability of this at the moment is, sadly, remote. That leaves us to hoping that antibiotic resistance either a) develops very slowly, or b) the resistant genes are more aggressively selected against in the bacteria universe when not in full-blown infection mode. Nonetheless, even though I have my critical hat on right now, I'd never be so much a fool as to completely short humanity. As the severity of the problem increases, more human ingenuity will be dedicated to fight against it with a race to the finish. In the long game, the smart money is on mankind.

Disruptive Technologies, Part I - The Technology that Truly Matters

Upon reviewing McKinsey Quarterly's top ten articles of 2013, I was not surprised that what topped the list was the 130-page comprehensive study on the disruptive technologies that will change the world between 2014 and 2025. For those not willing to invest the time, the executive summary is very well done. In the next few posts we will walk through some key sections of the report, discuss impacts and likelihood, and reassess some areas left out by the authors. Although I believe existing data and probabilities of breakthroughs point us in another direction than the authors suggest, the framework used to identify these disruptive technologies is very solid. The authors define a technology that truly matters is one that has:
- a high rate of technological change
- broad scope of impact
- large economic value
- and substantial disruption potential

The framework is simple and complete. However, I often see those in technology circles short-change the second item listed. A broad scope of impact technological change has the potential to impact changes of an order of magnitude in the lives of those impacted and the overall economy. For example, take the printing press. Gutenberg did not "invent" the printing press or even movable type, but what he did do was invent the mass production of interchangeable movable type. Suddenly, anyone could learn to print, and they could do so at a relatively low cost. This breakthrough, coupled with other advancements in raw paper materials, resulted in the cost of a book dropping by an order of magnitude. Inexpensive books meant cheaper distribution of knowledge, mass distribution of religious texts, and the ability for individuals to publish facts and opinions. Drastically decreasing the per unit cost of this one form of communication had an order of magnitude impact across the economies and societies of Europe and eventually the rest of the world. Forecasting economic value and disruption can be difficult when assessing a technology. Many at the time underestimated the disruption and value of mass production of movable type because the printing element of the economy was relatively small. However, it was arguably one of the greatest small steps of mankind. The same can be argued regarding the initial developments in steam power, the agronomy revolution, semiconductors, and the internet. I will argue, at the end of this series of posts, that the same can be said for autonomous vehicles, inexpensive water desalinization, energy storage, bio/chemical terrorism, and customized education. Most of these areas overlap in some aspects of the McKinsey Global Initiative (MGI) report, but I'll add a few more details as to why they could be emphasized differently or viewed in a different light than that presented.

Historic disruptive technologies have impacted most if not all of the following areas: transportation, communication, water and sewage, agriculture, energy, and manufacturing productivity. Inexpensive movable type, steam power, the agronomy revolution, semiconductors, and the internet can put a check next to most if not all those categories. Many of the technologies listed in the MGI report meet this criteria, but the potential scope of the different technologies presented vary significantly.

We are, however, talking about the future, and it does tend to have its own agenda. Although we might not have fusion to power our flying cars, we can still assess these likely impacts, and the MGI report is a perfect starting point kicking off an analysis.

Operating in a Country with an Adverse Business Climate? Remember that Nimble is Relative!

Non-value added activities are a part of every company, especially large ones. As lean six-sigma has become a part of nearly every major company, “master black belts” have begun a seek-and-destroy mission against non-value added activities. Unfortunately, many non-value added activities are still required to continue operations. However, what many do not realize is that non-value added activities can differ significantly depending on the region, country, culture, industry, etc.

 Tax code complexity and legal compliance vary greatly by nation. Security concerns make non-value added activities in one country a significant value-added activity in another. Selective government enforcement of contracts and laws rewards otherwise overly cautious behaviors. Facilitation payments may be tempting to keep processes from getting bogged down. Labor laws or work rules can restrict what employees would otherwise be willing and capable of doing, coerce a company into using unskilled labor, and consume management’s time with proper forms and filings. Once these different areas start stacking on top of the other, the non-value added elements of “normal” processes can reach staggering proportions.

There are three “successful” outcomes for a firm in this extra burdensome situation described above. 1) Remain small enough that non-compliance is not an issue. 2) Perform the best you can given the constraints in place. 3) Regulatory capture of those responsible for compliance. Assuming that you want to keep growing, option 1 is not viable. Also, either for moral or Foreign Corrupt Practices Act reasons, let’s assume option 3 is not viable. However, knowing of these two different options is important because it gives you an idea of the competition you will be up against.

“Doing the best you can” does not sound appealing. However, the one-eyed man, the tallest pygmy, and the sprinting sloth can all be champions given the right environment. “Nimble and dexterous” is a relative description, not an absolute one. Additionally, doing the best you can is the best strategy of the three options above because small players can never reach economies of scale and large players engaging in unethical practices encourage a stagnant and corrupt culture.

From my experience, I have learned three key lessons on how to succeed in this situation: Start Now, Recognize Reality, and Be Positive.

1) Recognize Reality – Before you build, sit down to count the cost. Recognizing “critical paths” of implementation is an essential consideration in the creation of a successful strategy. Beginning with the end in mind is essential, but the complex process of tracing it to action today means your dreams must be based in reality. Do not assume that the pieces will automatically fall into place, even if you have an excellent team put together. Is doubling your footprint in the country in 18 months a key part of your strategy? Know exactly what resources will be required, such as government applications, the average speed of negotiations, inspections, public infrastructure evaluation, etc. Once the critical paths are identified, then the route can be traced between the vision and the present.

2) Start Now – The easiest way to turn a boat is to start early and make adjustments along the way. Although counterintuitive, being nimble in a difficult environment requires far more advanced planning and accountability than many would initially believe or are accustomed to. Strategy cannot be made up on the fly or simply copied and pasted from a different environment. Once a successful strategy is identified and committed to, successfully implementing this strategy will have many more moving parts than you may think. A combination of execution and control by a very limited number of people, with buy-in and input from a much larger range of individuals is usually the best combination.

3) Be Positive – Yes, I know that sounds like utter feel goodery, but it works. Let yourself laugh at the insanity, then take a breath and get to work. Many managers are unable to get past this and remain eternal pessimists. Unless these people are your lawyers, drop them. Do not fall in the trap. Watch yourself and watch your team. Proactivity can heal a thousand cuts, but reactivity and negativity will put your company into a coma. The rule with my team is, “Always have at least one potential solution when presenting .” This one rule has preserved all of our sanity, as we never go to someone else exasperated. The bleeding stops, and we can move forward.

Yes, there will be deadweight you may not be accustomed to and every day may seem like a slow motion 100 meter dash, but everyone else is racing with moon shoes too and victory tastes just as sweet.