The world’s economy is developing at staggering speed. From the beginning of the Industrial Revolution around 1700, Britain took 154 years to double economic output per person, and it did so with a population (at the start) of nine million people. The United States achieved the same feat in 53 years, with a population (at the start) of ten million people.
By Richard Dobbs and Vivian Hunt
China and India have done it in only 12 and 16 years respectively, each with about 100 times as many people. Put another way, the emerging economies are industrialising at about 3,000 times the speed and scale of Britain’s Industrial Revolution. 1
An array of factors is contributing to this transformation, including demographic change, education, urbanisation, market-based economic reform and changing attitudes towards women. But technological transformation has also played a major role. New agricultural techniques have massively increased farm productivity and freed workers to move to cities, further boosting productivity. Medical advances have increased longevity. Transport and communications technology have integrated emerging economies into the larger Western-dominated global economy, in the process shifting the centre of economic gravity south- and eastwards. The rise of the Internet has dramatically lowered the cost of communication and information.
The last few years have seen a lively debate between writers who believe that recent technological breakthroughs – in particular the Internet – are not proving as beneficial as early ones (at least in the West), and those who take the contrary view. Advocates of the former point out that living standards have not risen, over the last decade or so, in the way they did across earlier decades. The latter argue that it often takes a generation or two before technological innovation results in increased productivity – or simply that our measurement frameworks are failing to capture the true benefits of recent technological progress.
It took 150 years to go from the creation of the telephone in the 1870s to the web in the early 1990s, but only fifteen years to move from the first websites to the first smart phones.
But whichever view we take, there seems little doubt that technology will continue to destroy and create our world anew over the coming decades – and it’s hard to believe that all these innovations won’t continue to increase productivity in the medium to long term. Indeed, the rate at which scientific and technical breakthroughs are occurring appears to have quickened. It took 500 years to move from the invention of the printing press to the invention of the computer printer, and just thirty to move from the computer printer to 3D printing. It took 150 years to go from the creation of the telephone in the 1870s to the web in the early 1990s, but only fifteen years to move from the first websites to the first smart phones.
Likewise the rate at which new technologies are adopted is also accelerating. It was thirty eight years before the radio reached 50 million people but only three years for the Internet to reach the same number, and just nine months in the case of Twitter. It took the Human Genome Project thirteen years and US$2.7 billion to sequence a human genome. Today, it can be done in a few hours and for a few thousand dollars.
In a recent report for McKinsey Global Institute, we identified 12 technologies that are likely to have particularly profound impacts on our economy and society between now and 2025.
This ‘disruptive dozen’ broadly falls into four groups. The first – made up of ‘next generation genomics’ and ‘advanced materials’ – will produce new types of entities, both biological and material, including genetically manipulated plants, and super-performing nanomaterials. The second group – comprising energy storage, advanced oil and gas recovery and renewables – will revolutionise the way we produce and store energy, making it both cheaper and less polluting. The third group – made up of advanced robotics, autonomous vehicles and 3D printing – will issue in new intelligent, agile and dexterous machines. The final group of disruptive technologies – new information and communications technologies – will further intensify the reach of the Internet, resulting in faster, still more useful programmes and devices, and an explosion in intelligent objects and infrastructure.
Digitisation is the common thread running through many of these disruptive technologies. It slashes to nearly zero the cost of discovering, transacting and sharing information. In the process, it creates a deluge of information, opening up new opportunities around the analysis and use of ‘big data’.
The likely technological advances we have identified will no doubt cause further economic transformations at least as profound as those we have seen in recent times, and some individuals, cities, nations and regions will lose out – just think of the way the UK’s Northern cities suffered from the decline of the coal and manufacturing industries, or the way Detroit has struggled as its motor industries collapsed. Or observe the way Uber and similar services are threatening traditional cab and taxi businesses. (Since its launch in 2009, Uber has expanded into more than 230 cities in fifty countries – it has more than 7,000 drivers in London alone.) Some of the new inventions will pose environmental challenges – a growing Internet means increased electricity demand. Some will put further pressure on over-stretched infrastructure – self-drive cars could lead to more vehicles on our roads. Some will provide criminals and terrorist organisations with powerful tools – businesses and countries could become increasingly vulnerable to cyber attacks. Still others will raise difficult ethical dilemmas – genomic advances could allow us to create new species or improve the ‘design’ of human beings.
The likely technological advances we have identified will no doubt cause further economic transformations at least as profound as those we have seen in recent times, and some individuals, cities, nations and regions will lose out.
But if these new technologies bring challenges, they also bring opportunities. And they bring particular opportunities for cities. First, many of these new technologies have obvious urban applications. Cities and their citizens have, for instance, most to gain from the development of smart transport solutions, low-emission vehicles or quick and clean construction techniques.
At the same time, cities can be particularly effective at developing and adapting new technologies. The pressures faced by most large cities create an imperative to invent and experiment. And cities appear to find it easier to innovate than national governments do – their politics are more pragmatic and their scale makes innovation easier. 2
Cities, moreover, developed and survive through trade. As a result cities are naturally cosmopolitan, and so are quick to learn from each other’s innovations and improve on them. 3 Just look at the way municipal bike-sharing schemes and 311-style telephone help-lines have spread from city to city. Increasingly, cities are laboratories for smart, tech-savvy inventions.
The power of many disruptive technologies is already being used to transform cities. The increasing use of sensors and digital devices in physical objects and machinery – the Internet of Things – is enabling the birth of ‘smart’ urban infrastructure. For example, smart grids and sensors in water and sewage systems can help avoid system breakdowns and can reduce leaks by half. Smart transport systems can use sensors to monitor transport flows to avoid congestion and traffic delays. In Mumbai, traffic control that adapts to traffic conditions has cut the average journey time by 12 per cent. London’s congestion-pricing scheme has reduced bus delays by 50 per cent and increased the average speed of all traffic by 31 per cent.
In the States, Cleveland and Cincinnati supply households with rubbish and recycling bins equipped with radio-frequency identification (RFID) tags. These allow dustmen and recyclers to see whether residents are putting out garbage and recycling on the designated days. As a result, Cleveland eliminated 10 pickup routes and cut operating costs by 13 per cent. McKinsey believes that the total potential economic impact from traffic applications, smart waste handling and smart water systems in urban areas could total US$100–300 billion per year by 2025. 4
Transport for London shared its data to encourage new apps such as BusIT London, which suggests the best bus route for any journey, given the user’s current location.
Some urban innovation uses new technologies to find new purposes for existing urban kit. Telekom Austria has converted hundreds of disused phone booths in Vienna into electric car charging stations where drivers can pay for fuel with a text message. In New York City, a partnership between Cisco and 24/7 has recycled 250 of the city’s unused phone boxes into interactive information touch screens. 5
Cities often lead the way in the analysis and use of big data. Transport for London shared its data to encourage new apps such as BusIT London, which suggests the best bus route for any journey, given the user’s current location. Next Bus provides real-time bus information in several cities in the United States and Canada. The San Francisco Municipal Transportation Agency collaborated with tech companies and parking-meter providers to develop SFPark, a parking solution that combines new meters with sensors, mobile apps and dynamic pricing to reduce congestion and parking delays. 6
New technology is enabling cities to find new ways of interacting with their citizens and drawing on their knowledge and expertise. Boston, for instance, has put in place a programme called Speed Bump, which crowd sources information on potholes and adverse road conditions to speed up maintenance and improve traffic flows. 7 San Francisco’s Urban EcoMap is an Internet-based tool that provides citizens with information on carbon emissions from transportation, energy, and waste, organised by zip code, which helps citizens to make sustainability part of their everyday decision-making.
The scope for urban technological invention seems boundless. If London succeeds in supporting and promoting it, this will not only help make a better and more prosperous London: it will add to the pool of solutions available to cities everywhere.