The Age of Innovation

On Friday, I had the pleasure of presenting to Tech Mahindra’s Innovation Day event at Georgia State.    In preparing for this meeting, I researched the massive change that has occurred in technology over the past 25 years – in hopes to shed some insight on what I think will be the future for innovation. My conclusion: everything is now aligned for disruption in every industry. Nearly all of the traditional barriers have been eliminated. Disruption and innovation are inevitable now, and your company will likely be innovating and changing your industry—or a competitor will do it for you!

I advised CEOs and CIOs to totally rethink their mindsets around IT. In the past, all innovation involved large capital outlays, and obvious limits existed on creating value with existing technologies.  Let’s look at the traditional barriers one by one:

Storage: Being able to glean actionable information from customer buying habits, machine data, website analytics, social media data, or other large datasets has either been impossible in the past or incredibly expensive for all but the largest, most sophisticated companies.

In my presentation, I showed that the cost of data storage has plummeted over the past 25 years. I gave the example of trying to store all 20 million songs on Spotify on internal spinning disk drives for a hypothetical big data project. To do so in 1990 would have cost in excess of $1 billion. Obviously, no startup could have possibly afforded that kind of disk capacity. Today, with a Terabyte of disk costing under $50, the same capacity could be achieved for around $1,000. Disk storage is now 1,000,000 times cheaper in only 25 years! It is also incredibly smaller and faster, and it utilizes a fraction of the power of 1990-era storage systems.

Chart courtesy of www.mkomo.com

Compute: Even if you had found an extra $1 billion lying around in 1990 to store all this data, it would have been equally expensive to buy the compute power to do any kind of analysis of this huge dataset.    However, compute cycles are also a million times cheaper than in 1990! I have lived through this enormous change, but it is hard to comprehend the incredible gains we have made on computer performance. Similar to storage, $1 billion of compute power in 1990 would cost only $1,000 today.

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Access: Of course, smart phones did not exist 25 years ago. Assuming your hypothetical startup project analyzing all this data got off the ground, very few people on Earth could have accessed your information in 1990. People either lacked the devices, data transfer speeds were not up to the task, or access was too expensive. Internet speeds continue to improve exponentially, and costs continue to drop. Furthermore, over a billion smartphones were shipped in 2014!  Your music application today could be accessed by over a billion people for pennies per person.

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Speed:  In order to launch this hypothetical business in 1990, it would have taken years to set up the data centers, storage, computers, and other infrastructure to support your venture – assuming you could come up with about $3 billion in cash. Today, a scalable, elastic infrastructure can be set up nearly instantaneously in the cloud, with nearly $0 invested in initial capital outlays. Launching this hypothetical mobile app for song analysis could be done in a fraction of the time.

Risk:  Finally, innovation has incredibly less risk than 25 years ago, or even 5 years ago. Costs continue to drop nearly 50% per year, while speeds and capacities double every 1-2 years. This compounding effect has also occurred with risk. The risk of a startup has also decreased nearly 50% per year, if you define risk in terms of the amount of startup capital required for a product launch. Where a new product launch might have cost millions of dollars a few years ago, the same launch today might be accomplished for a few thousand dollars. This phenomenon now allows an unprecedented amount of experimentation and innovation. The cost of failure has been reduced to nearly zero.

In 2015, all the rules are now different. CIOs and CEOs have an incredible opportunity to launch new solutions, analyze customer data, increase efficiencies, and improve products – all at a fraction of the cost of previous attempts.

It was exciting to talk to students who saw their opportunity to change the world – maybe more so than the CEOs and CIOs, who are too busy figuring out how to keep all those expensive machines running.   Exciting times are ahead of us!

 

 

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