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We’re in the era of ‘connected energy,’ and everything is set to change in pretty dramatic fashion.

That will be the essence of my message when I speak to several hundred energy and water utility executives when I keynote the annual SAP Utilities conference in Huntington Beach, California. It’s great to spend some time with SAP again — I did about a dozen keynotes for them from 2003 to 2007, back in my “What I Learned From Frogs In Texas” days!


The session description reads:

“The future belongs to those who are fast! That’s the mantra of futurist Jim Carroll — and no where has this become a reality faster than in the world of utilities. There is no doubt that the next phase of the world of energy involves the convergence of a variety of trends, each of which is significant on their own, but combined, provide an opportunity for massive disruption — and opportunity. The era of massive hyper-connectivity at an industrial, commercial and residential level as a result of the acceleration of the Internet of things. The rapid advancement of energy science, particularly with battery storage, alternative energy sources and other leading edge technologies. Business model disruption through the fast arrival of technologies that support personal and local energy energy microgrids through backyard wind, solar, biomass and other forms of energy generation. New demand and infrastructure requirements arising from such significant trends as smart cities, self-driving cars and intelligent highway infrastructure. And then there are simple light poles — which are now becoming ‘fitbits for cities’ with embedded environmental sensors, car-charging technologies, Wi-Fi hotspot capability and traffic management technologies! But wait — there’s more! At M.I.T. they are even in the midst of research as to how to grow solar cells from plants! That’s why no less than the Edison Energy Institute has stated that going forward, ““The threats posed to the electric utility industry from disruptive forces, particularly distributed resources, have serious long-term implications for the traditional electric utility business model and investor opportunities.”

The challenges and opportunity in the energy sector are real, and it’s captured pretty accurately in that summary. Need a hint of what is going on? Simply take a look at what is happening with battery storage technology.

Quite simply, we are in a situation in which a centuries old business model – the centralized production of power, distributed one-way through a relatively unintelligent system — is set to change in so many ways.

I’ve spoken at numerous energy conferences through the years, including the global Accenture Energy & Utilities Industry conference. Just a few months ago, I spoke privately to the nuclear division of one of the countries largest energy utilities, literally with 20 nuclear engineers in the room. And a few years back, I was engaged by the CEO of PG&E to do a video on what happens if grassroots power production and micro-grids lead to the disruption of the industry.

 

Stay tuned: I’m sure I’ll have a lot to post, including an overview of why light poles are a harbinger of what’s to come with our connected future!

I spent the morning yesterday with the Board of Directors of a multi-billion dollar credit union, taking a good hard look at the trends sweeping the financial services space. They know that disruption is real, and that it is happening now.

And disruption is everywhere: every business, and every industry is  being redefined at blinding speed by technology, globalization, the rapid emergence of new competitors, new forms of collaborative global R&D, and countless other challenges.


The speed with which these changes occur are now being increasingly driven by he arrival of a younger, more entrepreneurial generation; a group that seems determined to change the world to reflect their ideas and concept of opportunity. They’ve grown up networked, wired, and are collaborative in ways that no previous generation seems to be.

And therein lies the challenge.

Most organizations are bound up in traditions, process, certain defined ways of doing things — rules — that have helped them succeed in the past. Over time, they have developed a corporate culture which might have worked at the slower paced world of the past — but now has them on the sick-bed, suffering from an organizational sclerosis that clogs up their ability to try to do anything new.

Those very things which worked for them in the past might be the anchors that could now hold them back as the future rushes at them with ever increasing speed.

They are being challenged in a fundamental way by those who think big, and by some really big, transformative trends.

How to cope with accelerating change?  Think big, start small and scale fast!

I’m doing many keynotes in which I outline the major trends and opportunities that come from “thinking big, starting small, and scaling fast,” by addressing some of the fundamental changes that are underway.

1. Entire industries are going “upside down”

One thing you need to know is this: entire industries are being flipped on their back by some pretty big trends.

Consider the world of health care. Essentially, today, it’s a system in which we fix people after they become sick. You come down with some type of medical condition; your doctor does a diagnosis, and a form of treatment is put in place. That’s overly simplifying things, but essentially that is how it works.

Yet that is going to change in a pretty fundamental way with genomic, or DNA based medicine. It takes us into a world in which we can more easily understand what health conditions are you susceptible or at risk for throughout your life. It moves us from a world in which we fix you after you are sick — to one in which we know what you are likely to become sick with, and come up with a course of action before things go wrong. That’s a pretty BIG and pretty fundamental change. I like to say that the system is going “upside down.”

So it is with the automotive and transport industry. One day, most people drove their own cars. One day in the future, cars will do much of the driving on their own. That’s a pretty change — sort of the reverse, or upside-down, from how it use to be.

Or think about education: at one time, most people went to the place where education is delivered. But with the massive explosion of connectivity and new education delivery methods involving technology, an increasing number of people are in a situation where education is delivered to them. That’s upside down too!

You can go through any industry and see similar signs. That’s a lot of opportunity for big change.

2. Moore’s law – everywhere!

Another big trend that is driving a lot of change comes about as technology takes over the rate of change in the industry.

Going forward, every single industry, from health care to agriculture to insurance and banking, will find out that change will start to come at the speed of Moore’s law — a speed of change that is MUCH faster than they are used too. (Remember, Moore’s law explains that roughly, the processing power of a computer chip doubles every 18 months while its cost cuts in half. It provides for the pretty extreme exponential growth curve we see with a lot of consumer and computer technology today.)

Back to health care. We know that genomic medicine is moving us from a world in which we fix people after they are sick – to one where we know what they will likely become sick with as a result of DNA testing. But now kick in the impact of Moore’s law, as Silicon Valley takes over the pace of development of the genomic sequencing machines. It took $3 billion to sequence the first genome, which by 2009 had dropped to $100,000. It’s said that by mid-summer, the cost had dropped to under $10,000, and by the end of the year, $1,000. In just a few years, you’ll be able to go to a local Source by Circuit City and buy a little $5 genomic sequencer – and one day, such a device will cost just a few pennies.

The collapsing cost and increasing sophistication of these machines portends a revolution in the world of health care. Similar trends are occurring elsewhere – in every single industry, we know one thing: that Moore’s law rules!

3. Loss of the control of the pace of innovation

What happens when Moore’s law appears in every industry? Accelerating change, and massive business model disruption as staid, slow moving organizations struggle to keep up with faster paced technology upstarts.

Consider the world of car insurance — we are witnessing a flood of GPS based driver monitoring technologies that measure your speed, acceleration and whether you are stopping at all the stop signs. Show good driving behaviour, and you’ll get a rebate on your insurance. It’s happening in banking, with the the imminent emergence of the digital wallet and the trend in which your cell phone becomes a credit card.

In both cases, large, stodgy, slow insurance companies and banks that move like molasses will have to struggle to fine tune their ability to innovate and keep up : they’re not used to working at the same fast pace as technology companies.

Not only that, while they work to get their innovation agenda on track, they’ll realize with horror that its really hard to compete with companies like Google, PayPal, Facebook, and Apple — all of whom compete at the speed of light.

It should make for lots of fun!

4.  “Follow the leader” business methodologies

We’re also witnessing the more rapid emergence of new ways of doing business, and it’s leading us to a time in which companies have to instantly be able to copy any move by their competition – or risk falling behind.

For example, think about what is going on in retail, with one major trend defining the future: the Apple checkout process. Given what they’ve done, it seems to be all of a sudden, cash registers seemed to become obsolete. And if you take a look around, you’ll notice a trend in which a lot of other retailers are scrambling to duplicate the process, trying to link themselves to the cool Apple cachet.

That’s the new reality in the world of business — pacesetters today can swiftly and suddenly change the pace and structure of an industry, and other competitors have to scramble to keep up.  Consider this scenario: Amazon announces a same day delivery in some major centres. Google and Walmart almost immediately jump on board. And in just a short time, retailers in every major city are going to have be able to play the same game!

Fast format change, instant business model implementation, rapid fire strategic moves. That’s the new reality for business, and it’s the innovators who will adapt.

5. All interaction — all the time!

If there is one other major trend that is defining the world of retail and shopping, take a look at all the big television screens scattered all over the store! We’re entering the era of constant video bombardment in the retail space. How fast is the trend towards constant interaction evolving? Consider the comments by

Ron Boire, the new Chief Marketing Officer for Sears in the US (and former chief executive of Brookstone Inc.): “My focus will really be on creating more and better theatre in the stores.”

We are going to see a linking of this ‘in-store theatre’ with our mobile devices and our social networking relationships. Our Facebook app for a store brand (or the fact we’ve ‘liked’ the brand) will know we’re in the store, causing a a customized commercial to run, offering us a personalized product promotion with a  hefty discount. This type of scenario will be here faster than you think!

6. Products reinvented

Smart entrepreneurs have long realized something that few others have clued into : the future of products is all about enhancement through intelligence and connectivity. Nail those two aspects, and you suddenly sell an old product at significantly higher new prices.

Consider the NEST Learning Thermostat. It’s design is uber-cutting edge, and was in fact dreamed up by one of the key designers of the iPad. It looks cool, it’s smart, connected, and there’s an App for that! Then there is a Phillips Hue Smart LED Lightbulb, a $69 light bulb that is uber-smart, connected, and can be controlled from your mobile device. Both are sold at the Apple store!

Or take a look at the Whitings Wi-Fi Body Scale. Splash a bit of design onto the concept of a home weigh scale, build it with connectivity, link it to some cool online graphs and you’ve got a device that will take your daily weight, BMI and body-fat-mass tracking into a real motivational tool.  Where is it sold? Why, at the Apple store too!

Do you notice a trend here?

7. Careers reinvented

For those who that the post-2008 North American recovery from the recession was slow, here’s an open secret: there was a significant economic recovery underway for quite some time, as companies in every sector ranging from manufacturing to agriculture worked hard to reinvent themselves. It just didn’t involve a lot of new jobs, because the knowledge required to do a new job in today’s economy is pretty complex. We’ve moved quickly from the economy of menial, brute force jobs to new careers that require a lot of high level skill. The trend has been underway for a long, long time.

Consider the North American manufacturing sector, a true renaissance industry if there ever was one! Smart engineers at a wide variety of manufacturing organizations have transformed process to such a degree, and involved the use of such sophisticated robotic technology, that the economic recovery in this sector involves workers who have to master a lot of new knowledge. One client observed of their manufacturing staff: “The education level of our workforce has increased so much….The machinists in this industry do trigonometry in their heads.”

Similar skills transitions are underway in a wide variety of other industries….

8. The Rise of the Small over Incumbents

We are living in the era that involves the end of incumbency. Companies aren’t assured that they will own the marketplace and industry they operate within because of past success ; they’ll have to continually re-prove themselves through innovation.

Consider Square, the small little device that lets your iPhone become a credit card. What a fascinating little concept that has such big potential for disruption. And it’s a case where once again, small little upstarts are causing turmoil, disruption and competitive challenge in larger industries — and often times, the incumbents are too slow to react.

Anyone who has ever tried to get a Merchant Account from Visa, MasterCard or American Express in order to accept credit cards knows that it is likely trying to pull teeth from a pen – many folks just give up in exasperation. Square, on the other hand, will send you this little device for free (or you can pick one up at the Apple Store.) Link it to your bank account, and you’re in business.

So while credit card companies have been trying to figure out the complexities of the future of their industry, a small little company comes along and just does something magical! No complexities, no challenges, no problems.

* * * *
There are people who are making big bold bets, big bold decisions, who are going to change the world and who are going to do things differently.” That phrase was from my opening keynote for the Accenture International Utilities and Energy Conference in San Francisco some years back.

It’s a good sentiment, and is a good way to think about the idea of ‘thinking big.’

Last week, I was the opening keynote speaker for a small insurance industry group — and had senior executives of quite a few major property & casualty and life insurance companies in the room.

As always, I undertook an extensive amount of detailed research on the latest status of innovation within the industry. In addition, I looked back on my research and interview notes for previous keynotes for CEOs and other executives for the largest insurance companies in the world.

(Last December, I was the opening keynote for the annual Insurance Executive Conference in New York City; in the room was the CEO for Transamerica Life, among others; this is typical of many talks I’ve done within the industry over the course of 20 years)

"Kicking off Executive Leadership Council meeting with our friends @GAMAIntl  & keynote @jimcarroll in Amelia Island"

@IntellectSEEC – “Kicking off Executive Leadership Council meeting with our friends @GAMAIntl & keynote @jimcarroll in Amelia Island”

Let’s face it: the trends are real. The industry will be disrupted by tech companies. Existing brokerage and distribution networks will be obliterated as more people buy insurance direct. Predictive analytics will shift the industry away from actuarial based historical assessment to real-time coverage. Policy niches, micro-insurance and just-in-time insurance will drive an increasing number of revenue models. The Internet of Things (iOt) and healthcare connectivity will provide for massive market and business model disruption. I could go on for hours!

To gauge the current thinking within the industry as to “how to deal with what comes next,” my session included some hands-on, live interactive text-message polling.

Right out of the bat, I asked the participants if they felt ready for the massive disruption now underway in the insurance sector.

And the fact is, they are not:

gama1

Having said that, they know that they are in the midst of some pretty significant change — the majority indicated that they believe that the insurance industry will not look anything in 10 years like it looks today.

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The reaction in the room parallels that of a recent Accenture study that I referenced in my keynote:

  • CSO’s at global companies and 94% of CSO’s at insurance companies agree that tech will “rapidly change their industry in 5 years”
  • fewer than 1 in 5 CSOs in insurance believe their companies are prepared
  • fewer than 1 in 10 believe their companies are “high value achievers”

A similar observation was found in a recent PWC study on the insurance industry:

  • “Nine in 10 insurance executives polled by consultant PwC reckon at least part of their business is at risk over the next five years – a greater proportion than in any other area of finance”

Clearly, these executives know that something needs to be done to deal with the potential for business model disruption in the industry. Yet is the industry prepared to deal with it?

Not really:

  • “Fewer than 50 per cent of respondents in the life and general insurance sectors said they would increase IT spending to help them access new customers.” Fintech is booming – but where are 
the insurance tech startups? 
29 September 2015, City AM

Here’s the current problem: there is tremendous potential for complacency to seep into the industry, particularly as Google has pulled back from its’ Google Compare initiative. (This service let people use a Google tool to do comparison shopping for insurance policies from major carriers; the CEO of Google Compare also spoke at the New York event last December).

  • “Google’s initial failure shows technology firms won’t necessarily have “an easy road” to success in the new sector.” Beating Silicon Valley to the Punch; Digitizing Insurance, 11 March 2016

Is the complacency warranted? Not in my view — I think most tech companies, when disrupting an industry and suffer an initial setback, come back in a bigger and more significant way. It’s most likely that when Google, Amazon, Apple and other tech companies  come back in to disrupt insurance, they won’t be working with major carriers to do it!

  • “Expect that when the megatechs enter the insurance space, they will insist on taking control of a much bigger portion of the sales journey, positioning themselves as an alternative end-to-end solution provider, not just a lead generator.” Life Insurance Disruption, Asia Insurance Review, June 2016

Does the insurance industry have the innovation culture necessary to deal with the potential for what comes next? My next poll gave me a pretty stark response — the industry continues to be bound up in some pretty significant organizational sclerosis.

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Is there a way out of this mess? Can the industry fix the clear strategic mismatch which exists?

In my keynote,  I suggested that disruption in such a significant issue that it really needs to be dealt with at the level of the Board; strategy needs to be kicked up a notch; clear responses and actions are warranted.

Quite clearly, specific responsibility needs to be put in place to implement a  disruption-strategy. Back to the Accenture report:

  • “Companies that have put in place chief digital officers and chief innovation officers and who report directly to the CEO tend to have a dedicated focus on technology-focused initiatives …. That’s a sign that they and C-level peers are taking technology-disruption seriously.”

Industry insight also clearly shows that insurance companies must “partner-up” to deal with the fact they simply don’t have the technology expertise to compete with Google, Amazon and others.

  • “an overarching theme …. not least among them insurers .. is that they cannot face technology driven innovation by themselves” – “How to disrupt the high-tech disruptors”
National Underwriter & Health
September 2016

Are many insurance companies following the path to partner up? Sadly, no:

  • “Only 28% of the respondents said they explored partnerships with fintech companies and less than 14% actively participated in ventures or incubator programmes.” Insurance Companies Slow in 
Bridging Fintch Gap, Mint, July 2016

I’ve been providing strategic level guidance to senior executives in the global insurance industry for over 20 years.

The issues, challenges and opportunities are stark. They’re real. They’re not going away.

Will most companies survive? Maybe not. Stay tuned!

CNBC interviewed me a few weeks ago on the question of “trends that could shake up the financial industry.” Over the years, I’ve done thousands of such interviews.

They just ran the resulting article, “4 Trends Changing the Way You Manage Money.09MonarchBanking1.jpg

A couple of key points:

The article observes:

Last year Accenture, a global consulting firm, released a report that peered into the banking sector’s future. It concluded that by 2020, banks could lose 15 percent of their market share to technology companies.

“Who gains in this market share?” asked the authors of the Accenture report. “Digitally oriented disruptors that are far more agile and innovative—the equivalent of speedboats competing against schooners.”

That certainly fits the key theme I’ve been explaining to many of my clients  since 2009 — that the pace of innovation in every industry is shifting to Silicon Valley.

My part in the interview? Cash is disappearing. As with any trend, I explained my thoughts on the future by viewing the world through the eyes of my sons:

On a recent kayak trip, Jim Carroll asked his 19- and 20-year-old sons if they had any cash that he could use at the store. Instead of handing over a few bills to the Mississauga, Ontario-based futurist and author, they gave him a blank stare. “They told me they don’t use cash, and that’s huge,” he said. “The next generation doesn’t use money at all.”

According to Carroll, in the future every payment, including credit card purchases, money transfers and business bill payments, will likely be done virtually. “We won’t have credit cards in our pockets,” he said. “Every payment will be done through our mobile devices.”

The global mobile wallet market is expected to grow by 35 percent a year between 2012 and 2017, and mobile payment transactions topped $235 billion by the end of last year, according to Gartner Research.

This has implications for credit card companies, banks and other financial institutions that lend money, issue credit cards and wire cash between countries.

I know everyone is talking about mobile payment, but do folks realize where it is really taking us.

I often challenge my clients to think about the long term, substantive trends that are forever changing every industry. I truly believe one day in the future, cash simply won’t exist in the form that we know it today — bills and coins. The question is when; it’s simply a matter of timing.

And as that comes about, there is going to be a tremendous amount of change and disruption occurring. Fianncial organizations have to be relentlessly focused on innovation and the ingestion of new ideas and technologies if they have any hope of coming out the other side in acceptable shape.

 

 

Earlier this year, I was invited to open the Southern Gas Association in Austin, Texas. In the room, I had about 800 of the most senior executives in the natural gas industry in the US, including utilities, distributors, exploration companies, producers and suppliers. It was a pretty heavy duty crowd. This was one of several high profile events I led off in the energy sector — I was the opening keynote, for example, for the 2012 Accenture International Utilities and Energy Conference.

At the close of my talk, I reframed the concept of innovation for the group:

It’s a great little synopsis of how you can rethink the concept of innovation – run, grow and transform the business!

I’ve had the opportunity to be the opening keynote speaker at four major energy conferences in the last two months ; the 2012 Accenture Worldwide International Utilities and Energy Conference in San Francisco; the Southern Gas Association Annual Conference in Austin, Texas, and the 2012 Enercom Conference in Toronto. In addition, last week I opened a leadership meeting for about 200 executives with Noble Energy in Houston, Texas.

So I’ve been speaking on a  pretty extensive basis on trends impacting the global oil and gas industries, as well as utilities. Part of my job at a keynote at such events is to open up the minds of folks to the massive opportunities that are emerging all around us, particularly as we witness an absolutely fascinating acceleration of the science around energy – whether it be oil, gas or renewables.

Here’s a clip in which I’m talking about the fact that at MIT, they are learning how to print solar cells onto paper!

What is occurring in the US right now in terms of advanced discovery techniques – whether with shale gas, horizontal drilling, new subsea mapping technologies or other new discovery, exploration and production techniques is probably one of the most significant trends of this decade. Combine that with the fact that though the economics and politics of clean-tech have challenged the wind, solar and other opportunities, the pace of scientific research and innovation has not slowed down.

What happens when we can print solar cells onto paper? The world speeds up — and the future belongs to those who are fast!

In all likelihood, we are going to see the US enter a period near-complete energy independence within the next few years. Faster than people think!

The implications are pretty significant. I’ll write a blog in the next few weeks with some of the details that I’ve been covering off in these talks.

  • Read the original post about “When Light Stops”  

“There are people who are making big bold bets, big bold decisions, we are going to change the world and we are going to do things differently.” From my opening keynote for the 2012 Accenture International Utilities and Energy Conference last week in San Francisco.

Where do you stand? In a company that is focused on small, incremental nothingness, or one that is set out to change the world?

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