Darwinian insights on innovation and competition

Peter Nichol
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Darwinian insights on innovation and competition

Variation, selection and competition are the challenges of navigating today’s digital ecosystem of value. Identify the struggle between individuals and competitors to discover tomorrow’s game-changers. Innovation is the modern struggle for existence. Will your organization survive?

Consumers buy your products, services and interactions for reliability. Partners sought your alignment for greater stability. Employees joined your company for predictable results. Disruptive innovation can be identified when best practices no longer produce predictable results. Our modern knowledge-intensive economy depends on organizational capabilities. Is your organization having trouble identifying why the margin is eroding? Disruption in disguise may be the answer.

Struggle for existence

Charles Darwin’s The Origin of Species is unquestionably one of the greatest works in human intellectual history. In this seminal book, Darwin develops the argument of why the theory of special selection is incorrect and why the theory of natural selection is more favorable. Eventually, reputable scientists arrived to acknowledge that evolution, the transformation of species over time, had in fact occurred. Darwin elaborated that variance is not an anomaly but rather an inevitable result of orchestrated processes. Causes of variability and the difficulty in distinguishing between varieties and species were not only challenges for Darwin. Today, a complex ecosystem of offerings makes the identification of value-based innovations difficult to delineate in markets with multiple offerings.

Buried under the struggle for existence, many innovators incorrectly assume that natural selection requires competition among individuals. Darwin defines this struggle not between individuals as competitors but in a metaphorical sense where predation, parasitism or environmental conditions dictate a new struggle. Natural selection eliminates competition. All modern innovation organizations should pay attention to lessons of selection in the struggle for existence — a modern struggle for variability through innovation and predictable results. Industries are looking less to their neighbors and more toward unrelated industries for innovation insights. You’re not competing with your business neighbor.

Natural selection redefining the rules

Industry leaders are searching to discover tomorrow’s game-changers. Will a new technology improve efficiency? Is the current business model changing? How do we compete tomorrow in this explosive sharing economy? There are multiple methods to ensure corporate survival. The accepted method favors players that evolve and adapt. The winners define new rules and establish new games.

This year will unlock opportunities — ones that were not afforded last year. The dawning of the new year also will bring challenges previously unseen. Start with these questions before you set your organizational agenda.

  1. Is your organization creating and capturing value?
  2. Does your organization not only find the right strategies but make good decisions when selecting future strategies?
  3. Is your organization in competition or cooperation? For example, is your organization building walls for the competition or establishing relationships with unlikely allies?
  4. Are you playing an old game, or are you redefining a new game?
  5. Has your organization clearly identified complimentors (the situation in which customers and suppliers play symmetric roles)?

Natural selection may preserve favorable variations and reject injurious variations. Like the natural selection of animals, all inferior businesses are not immediately destroyed; they evolve out of existence. Darwin suggested that natural selection is “the daily and hourly scrutinizing, throughout the world, [of] every variation, even the slightest, rejecting that which is bad, preserving and adding up all that is good.” Isn’t this happening in business — every hour of every day? The change we experience in business is natural selection. Consider the value your organization adds, as environmental conditions change. Is your organization evolving out of existence?

The evolution of disruption

Several mistletoe plants growing on the same branch of a host tree may struggle for existence. It might be truer that the struggle for existence is not against the thousands of seeds of the same kind, or against other fruit-bearing plants, but against any attempt to devour the seeds and thus prevent dissemination. Disruption is not an event; it’s evolution, a transformation of convenience. Aspects of your business are transforming as did cloud computing, consumerism and mobile — focus beyond the seeds of your company and observe the broader struggle for existence.

The innovation duel: game theory and product launch timing

Peter Nichol
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The innovation duel: game theory and product launch timing

Game theory has consumed innovation. The duel of innovation depends on timing, and timing depends on how you play the game. Take control of your game and play with new strategy in the new year.

Old west cowboys personalized the concept of honor. In a refined society, the art of politeness demanded the withdrawal from overt acts of violence. The solution? The western duel. Where do you stand? When do you start? What are the rules? The code of honor of a duel and the code of innovation have remarkable similarities. Let’s explore a few.

Game theory

Game theory is the study of strategy decisions. Understanding the other player’s perspective is central to game theory. Dueling swordsmen, dueling gunfighters and dueling innovators all have common ground. A strategy decision faces them all: to lead or not to lead?

Bonanza (1959-1973), The Rifleman (1958-1963) and Gunsmoke (1955-1975) rank right up there with the best TV westerns of all time.  We followed the adventures of Ben Cartwright on the ranch in Bonanza. We felt the struggle of Lucas McCain as he raised a son while battling the wild west of New Mexico in The Rifleman. And of course, Marshal Matt Dillon kept his eye on lawlessness in Dodge City with the help of saloon proprietor Miss Kitty Russell and Doc Adams in Gunsmoke.

Each of those great westerns had one element in common with modern innovation — the duel.

The swords of the 17th and 18th centuries were quickly replaced by pistols throughout the late 18th century and into the 19th century. Mainly practiced in early modern Europe, duels did make an appearance in the United States. Duels were not necessarily fought to eliminate the other person, but rather to restore honor by demonstrating a willingness to risk one’s life for something. Between 1798 and the American Civil War, the U.S. Navy lost two-thirds as many officers in duels as it did in combat at sea. Dueling was a big problem.

Fortunately, duels are no longer required to become a leader of the country, as was the case for Andrew Jackson in his bid to become the seventh president of the United States. Surprisingly, the game theory of a duel and a product launch are similar in many ways. When Andrew Jackson had to duel against Charles Dickinson, what was his strategy? How did Jackson determine when to fire? Dickinson was a famous duelist and a known marksman. Jackson determined to let Dickinson fire first, hoping that his aim might be spoiled by his quickness. Dickinson did fire first, hitting Jackson. Jackson carefully took aim and hit Dickinson in the chest, inflicting wounds that later caused Dickinson’s death. In 1832, the distance of a duel was 35 to 45 feet and both contenders were stationary. However, stagnation is not a characteristic of innovation — innovation is in motion. Playing the game of innovation revolves around timing.

The duel of innovation

In the Art of Strategy, Avinash Dixit and Barry Nalebuff explain the game theory of “The Safer Duel.” They explore how to plan a strategy for a duel.

Let’s reframe the topic of this discussion from dueling pistols to dueling innovators, because you probably don’t need a strategy for planning a duel but it would be useful to understand when to launch a product, a service or an interaction. If you launch too early, you’ll miss the market. Launch too late and the competition will eat you. When do you pull the trigger on your launch?

Think of two innovative companies that are miles apart but slowing walking toward each other — the duel of innovation. In this example, each company is launching a product (though it could be a service or an interaction) and both companies are capable of launching the product. In this example, each company would wait to launch until its probability of launching effectively is equal to the other company’s chance of a failed launch. The only factor that matters in determining a strategy is the ultimate chance of success. At the ideal inflection point, the probability of a successful launch is a half for the company launching and a half for the company not launching. Logical deduction tells us that survival is best achieved when at a distance (or timing) where the launching company has a half chance of success. Interesting isn’t it? As your new year begins, the survival of your company’s new product offering hangs on the timing of the launch. Too early you’ll miss the market. Too late you’ll be beaten.

Playing to win

While you may not subscribe to the theory of “playing to win,” it’s doubtful you support the theory of “playing to lose.” Game theory can help balance the risks of launching a new product after your competition. Whether you’re playing tic tac toe or planning the next launch of your company’s flagship product — deep down everyone wants to win. Acknowledge that you’re in a duel of innovation.

 

Innovation and emergent strategies for competitive advantage

Peter Nichol
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Innovation and emergent strategies for competitive advantage

It’s easy to overestimate your ability to rapidly build value. Building commercialization strategies helps to ensure sustainable competitive advantages with economic benefits.

Strategies broadly fall into two categories: Corporate strategy, or “where to compete,” and business strategy, or “how to compete.” Often companies trip and fall awkwardly somewhere between where to compete and how. Today, we’ll adjust that trip to more of a fashionable skip.

Innovation strategies are emergent, not planned.

Finding a strategy

Articles that highlight concepts of strategy are plentiful, but there are few that define the boundary between having a strategy and not having one. Donald C. Hambrick and James W. Fredrickson help us identify what a strategy is not. Outsourcing is not a strategy. Being a low-cost provider is not a strategy. Chasing a global footprint is not a strategy. Surprisingly, operational effectiveness is also not a strategy.

Then what is a strategy?

Strategy (n): the art of sustainable value creation to create unique competitive advantages to shape the perimeter of an organization.

Business strategy, operational strategy, marketing strategy and financial strategy all slide into the dirty fishbowl known as strategy. A strategy is about how people throughout an organization should make decisions and allocate resources in order accomplish key objectives. Hambrick and Fredrickson’s five major elements of a strategy, when applied to innovation, make strategy determination straightforward. Ask yourself these questions to determine if you have an innovation strategy:

  1. How is the innovation adding new value to the core ecosystem interaction?
  2. Are we building value rapidly? Are we creating a new value chain, or tapping an existing one?
  3. Is the product, service or interaction unique, or can it be imitated?
  4. How does our innovation provide a sustainable competitive advantage?
  5. Have we established a viable economic model for scale?

While peering into the fishbowl of strategy, it’s worth the time to assess whether your organization has a strategy. Innovation doesn’t have to be planned — it can emerge under a strategy umbrella.

Innovation from an emergent strategy

Henry Mintzberg was the first to come up with the concept of “emergent strategy.” Emergent strategy, also called realized strategy, is not intentional. In an article published in the Stanford Social Innovation Review, John Kania, Mark Kramer and Patty Russell say that emergent strategy gives rise to constantly evolving solutions that are uniquely suited to the time, place and participants involved. Emergent strategies can bend. They can break right off, and reconnect. They are not linear and can reconnect to form unique value-creating economic benefits.

Leaders track external and internal factors impacting shifts of customer behavior. Monitor these we should; they can impact strategy, business models and operational approaches. Emergent strategies acknowledge that oversimplification kills innovation. For example, defining a product aligned to a specific market segment or attempting to create scale on a foundation of underskilled, overworked and unmotivated resources are strategies oversimplified.

Curious if your organization is leveraging emergent innovation strategies? Answer these questions for a quick pulse:

  1. Do you have a mechanism in place to “sense” environmental business model changes?
  2. Are there processes in place for interventions for exogenous events?
  3. Have you established a co-creation approach for the next evolution of the innovation or your interaction experience?
  4. Is innovation predictable, or is the organization adapting and sensing as circumstances change over time — e.g., watching the competitors?
  5. Is the company dependent on decision-making frameworks, or does the decision system dynamic appreciate the human dynamics that can accelerate change?

Looking over your shoulder at competitors and copying innovation approaches will never result in sustainable competitive advantages. New directions are required.

Moving to an emergent model for innovation may be the answer.

First principle thinking for innovation

We could pigeonhole each company into one of eight types of strategies: planned, entrepreneurial, ideological, umbrella, process, unconnected, consensus and imposed. Mintzberg and co-author James Waters did a great job of articulating how strategic choice drives a strategy in a 1985 Strategic Management Journal article titled “Of Strategies, Deliberate and Emergent.” Rarely does an organization purely adopt a single type of strategy. More often, strategy development is a combination or hybrid of multiple types that together in orchestration establish the organization direction and intent.

Have you ever followed someone in a car going to an unfamiliar location? It can be difficult to follow the car. If they bank right hard and make a right, you have to whip your car to the right, while jamming on the breaks to maintain a reasonable distance. What happens if you lose sight of the other vehicle? The simple version of this scenario is when you lose sight of the car and become lost in an area you’re unfamiliar with and you don’t know which side street they went down or how they are getting to that destination. After all, if you knew how to get there, you wouldn’t have been following them. Then you pause and realize you have other options. You can call them and reset their position. They mention they’re waiting at the small café on Gordon Street, and you race over and continue to follow them until you reach the destination.

Following a friend in a car is similar to how businesses imitate the competition. What if you were unable to locate the car and then received a call that said the car was in Massachusetts. You’d likely quickly head to Massachusetts. But then you receive another call and learn that the car is in Florida. You’d then race down to Florida. However, if more and more reports started coming in saying the car was in South Carolina, Tennessee, Texas and Illinois, you’d realize that you can’t get to all those places. Let’s assume that each spotting of the car in this example was your awareness of a competitor’s strategy. For example, if they launched a new product, service or interaction, your organization could imitate it, but you have no idea of their “real” strategy. Chasing innovation doesn’t work.

Sun Tzu, the famous Chinese military strategist, stated 3,000 years ago: “All men can see the tactics whereby I conquer. But what none can see is the strategy out of which great victory is evolved.” When we look at companies, what we observe is where they have been or the level of success of their latest tactic, not the future strategy.

Original ideas are not born from assumptions in the past. They arise from the strategic and calculated alignment of ideas into seemingly abnormal combinations, creating new causes. Leading organizations use first principle thinking to maintain a competitive advantage. These are foundational propositions or assumptions that can’t be deduced from any other proposition or assumption. In short, you can’t just read and connect the lines. There are no lines to connect.

Whether you’re building the corporate innovation capability or driving results for a department, ask these questions to validate you’re using first principles and not imitating:

  1. Does most of your innovation come from inside the organization, and not from merely asking customers what they want?
  2. When a problem arises, is the first thought to apply approaches the organization has already leveraged? Or to deconstruct the problem to determine new causes?
  3. Are new ideas suggested based on successful strategies of the past? Or alternatively, are new ideas deconstructed into the most fundamental components and evaluated for new value potential?
  4. When you ask your leadership team what new strategies should be explored, do you first hear about what your competitors are doing, or do you hear new original ideas?
  5. Can your competitors link together your current tactics to determine your real strategy?

Solving complex problems? Emergent strategies address complex problems. If you first hear about what the competitors are doing, it’s probable that you’re following that car, waiting for a call that will never come. Build a team that can create new ideas that are not necessarily linked to what was done in the past. Emergent innovation isn’t linear.

Explaining the 21st Century Cures Act: tackling the challenge of healthcare interoperability

Peter Nichol
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Explaining the 21st Century Cures Act: tackling the challenge of healthcare interoperability

New advances in medicine happen daily. But despite spending billions of dollars, we haven’t been able to connect the network of healthcare providers in the United States. The 21st Century Cures Act may help.

The 21st Century Cures Act, or H.R. 6, reauthorizes the National Institutes of Health (NIH) and provides other funding to the agency through FY 2020. We are walking away from disease treatments and actively searching for cures — methods to resolve the root problem. New efforts rip off the band-aids of temporary relief to unmasking problems. Lifesaving and life-improving therapies have the potential to transform our quest for faster cures.

Genesis of the bill

To accelerate the discovery, development and delivery of 21st-century cures is the bill’s goal. Said another way, the goal of this bill is to save lives.

The 21st Century Cures Act, introduced by Rep. Fred Upton (R-Michigan), was overwhelmingly passed by the House. Here’s a timeline of its journey to the president’s desk:

  • May 19, 2015: Rep. Fred Upton introduces bill.
  • Nov. 30, 2016: The House passes the bill.
  • Dec. 7, 2016: The Senate passes the bill.
  • Dec. 13, 2016: President Barack Obama signs it into law.

The act has three pillars: discovery, development and the delivery of cures.

1. Discovery ensures that the NIH is provided with a total of $4.8 billion in new funding. This monetary injection includes $1.5 billion to advance the Precision Medicine Initiative to drive research into genetic, lifestyle and environment variations of disease plus $1.8 billion to fuel Vice President Joe Biden’s Cancer Moonshot initiative and support the BRAIN (Brain Research Through Advancing Innovative Neurotechnologies) initiative to improve our understanding of diseases like Alzheimer’s.

2. Development addresses the fact that while advancements of human genome mapping have been impressive, translating this into FDA-approved treatments has proved difficult. Modernizing clinical trials (analyzing the safety and efficacy of data), utilization of biomarkers (to assess how a therapy is working), and empowering the FDA to utilize flexible approaches to reviewing medical devices. This section also provides the FDA with $500 million for regulatory modernization to retain the best and brightest scientists, doctors and engineers.

3. Delivery helps to put newly tested and approved drugs into the hands of patients, at the right time. Interoperability of electronic health records systems for a seamless patient experience is the essence of delivery. Patients need access to their complete health profile (longitudinal medical record) to fully realize the benefits of a learning healthcare system. Rounding out the bill is healthcare provider education to empower seniors with the latest medical technology.

Interoperability

The bill is lengthy: It has 25 sections and runs to 996-pages. The Energy and Commerce Committee of the House of Representatives published a helpful section summary that carved out the intent while omitting the exact letter of the bill. Our discussion will concentrate on interoperability covered under “Title IV: Delivery” where interoperability is addressed in multiple sections:

  • Sec. 4001. Assisting Doctors and Hospitals in Improving Quality of Care for Patients: encourages certification of health information technology for specialty providers.
  • Sec. 4002. Transparent Reporting on Usability, Security, and Functionality: Calls for the creation of reporting system to gather information about electronic health record (EHR) usability and interoperability.
  • Sec. 4003. Interoperability: Supports the creation of a digital healthcare directory (a voluntary model framework and common agreement) to facilitate exchange and requires the HHS to defer to the private sector on health IT standards development.
  • Sec. 4004. Information Blocking: Grants the HHS Office of the Inspector General authority to assign penalties for practices that block the sharing of electronic health records.
  • Sec. 4005. Leveraging Electronic Health Records to Improve Patient Care: Encourages the exchange of health information between registries and EHR systems.
  • Sec. 4006. Empowering Patients and Improving Patient Access to their Electronic Health Information: Certification of patient-centered electronic medical records and promotion of health information exchanges to promote patient access.
  • Sec. 4007. GAO Study on Patient Matching: GAO study of methods for securely matching patient records to the correct patient.
  • Sec. 4008. GAO Study on Patient Access to Health Information: Authorizes the GAO to review barriers to access, healthcare complications and patient methods for requesting their health information.
  • Sec. 4009. Streamlining Transfers Used for Educational Purposes: Physicians are now exempt from reporting income received for the purpose of speaking or preparing materials for educational presentations on medical topics.
  • Sec. 4010. Improving Medicare Local Coverage Determinations: Decisions by a medicare administrative contractor (MAC) about whether to cover a particular service must be public on the website.
  • Sec. 4011. Medicare Pharmaceutical and Technology Ombudsman: Establishment of a new role to address problems relating to coverage of new and life-saving technologies.
  • Sec. 4012. Medicare Site-of-Service Price Transparency: Requires the public availability on a website of Medicare services for estimates of items and services and beneficiary liability (cost to the beneficiary).
  • Sec. 4013. Telehealth Services in Medicare: Establishes a bipartisan working group focusing on telemedicine to explore improvements for dually eligible conditions (Medicare, Medicaid and chronic conditions) that might improve with telehealth.

A future connected

The Energy and Commerce Committee published a useful fact sheet reviewing the bill’s goals of helping patients through biomedical innovation. The progressive pace of scientific advancements must get better at translating discoveries into cures for patients. H.R. 6 champions the quest for faster cures by doing the following:

  1. Removing barriers to increased research collaboration.
  2. Incorporating the patient perspective into the drug development and regulatory review process.
  3. Measuring success and identifying diseases earlier through personalized medicine.
  4. Modernizing clinical trials.
  5. Removing regulatory uncertainty for the development of new medical apps.
  6. Providing new incentives for the development of drugs for rare diseases.
  7. Helping the entire biomedical ecosystem coordinate more efficiently to find faster cures.
  8. Investing in 21st-century science and next-generation investigators.
  9. Helping to keep and create jobs in the United States.
  10. Reducing the deficit by over $500 million.

Feb. 17, 2017, will mark nine years since the $35 billion HITECH Act (Health Information Technology for Economic and Clinical Health Act) was passed. What has HITECH accomplished? It’s accepted that adoption of electronic health records is more prolific and that market competition dynamics have improved. Sharing of patient lab results, radiology reports and summary of care records on average improved 48.5 percent since HITECH passed.

The 21st Century Cures Act amends the HITECH Act by requiring providers of healthcare services to establish goals, strategies and recommendations by Dec. 13, 2017. Acknowledgment that patient-focused drug development is required is a positive start to finding better cures in 2017.

How to create a blue ocean strategy for healthcare with blockchain

Peter Nichol
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How to create a blue ocean strategy for healthcare with blockchain

Increased commoditization drives leaders to search for uncontested markets with the desire to make the competition irrelevant. Blockchain is creating blue oceans — industries that are not in existence today.

Blockchain can be used for organizational differentiation, by creating new market spaces with unique organizational positions leading to strategic advantages over time. We’ll explore how blockchain can unlock new blue ocean strategies for healthcare.

First, briefly what are blockchains?

In 2008, in response to the global financial crisis of 2007-08, Satoshi Nakamoto wrote a paper titled “Bitcoin: A Peer-to-Peer Electronic Cash System.” The paper suggested that “trusted third parties” could be eliminated from financial transactions using blockchain technologies. Blockchain makes it possible, for the first time in history, to remove — or disintermediate — the middleman from business transactions, and by doing so improves the value of existing products, services and interactions.

Value innovation for healthcare

The book Blue Ocean Strategy, by W. Chan Kim and Renée Mauborgne, introduces the term value innovation, focused on making the competition irrelevant through the creation of new leaps in value. Value innovation is uncovered when companies align innovation with utility, price and cost positions. The result has the potential to create uncontested market spaces, or “blue oceans.”

The authors of Blue Ocean Strategy evaluated 108 companies and found that 86 were product line extensions that accounted for 62 percent of total revenues and 39 percent of total profits. In contrast, the other 14 percent of companies, focused on blue ocean strategies and accounted for 38 percent of total revenues and 61 percent of total profits. Blue ocean strategies pay off. They can also pay off for healthcare. Blue Ocean Strategy was first published in 2005. However, this discussion will also include the more recently expanded 2015 edition.

Creating blue oceans

Using the framework for building a compelling blue ocean strategy, we will apply the Blue Ocean Strategy Canvas to healthcare across three areas:

  1. Where the competition is investing.
  2. Factors on which the industry currently competes on products, services and interactions.
  3. What patients receive for a standard market offering.

Through this visual diagnostic, I’ll present a graphical picture showing the strategy canvas for the as-is state of primary care, the healthcare industry, and the future state of healthcare with a twist. Based on this as-is state, we’ll extend this strategy canvas to show the future state in value-based blockchain world.

Strategy canvas for healthcare

The action framework initially helps to define the as-is state foundation for building a blue ocean strategy. It also provides clarity on where competitors are investing today and how patients receive (or don’t receive) value from healthcare providers. Let’s brainstorm the factors upon which the healthcare industry completes and invests. Using these levers may also increase efficiency and tune performance.

Hospital perspective

  1. Cost per procedure: Is the procedure costing more or less compared to other similar procedures?
  2. Clinical labor costs: What is the clinical cost per discharge?
  3. Administrative labor costs: What is the overall nonclinical cost per discharge?
  4. A/R days due to coding: How long does it take to code and submit a claim?
  5. Claims denial rate: Are claims rejected for inaccurate information?
  6. Readmission rate: Does the patient come back for the same reason as the initial visit?
  7. Inventory loss due to expiration: Is waste impacting operational margins?
  8. Outlier average length of stay: Is quality impacting reimbursement?
  9. Patient satisfaction: Is treatment quality impacting brand?
  10. Brand: Is the brand of the provider known?
  11. Compliance risk: Is the documentation trail neat?
  12. Appeals: Is clinical and nonclinical information accessible for legal appeals?

Patient perspective

  1. Price transparency: Does the patient understand the value for the cost?
  2. Price flexibility: Does the patient have price alternatives?
  3. Out-of-pocket costs: How much will this cost the patient?
  4. Appointment availability: Is the doctor available?
  5. Time with physicians: Does the patient have time to ask questions?
  6. Patient satisfaction: Is treatment quality impacting brand?
  7. Waiting time at the provider: Is the patient waiting?
  8. Most insurance accepted: Is the patient covered?

The 2016 Healthcare Primary Care As-Is Strategy Canvas provides an impressive view. This chart offers a graphical illustration where primary care is leading and where it’s lagging, observed from the perspective of the patient and the hospital.

Healthcare Primary Care As-Is

Broadening the scope to include specialty care, nursing care, and primary care offers new insights into how patients and hospitals define value.

Healthcare Strategy Canvas

The four actions framework     

Value innovation is not the same as technology innovation. Ultimately a technology to attract the masses must make consumers’ — or, in our case, patients’ — lives, more convenient, more straightforward or more fun.

The four actions framework works to break the trade-off between differentiation and low cost. Red oceans strategies focus on either differentiation or low cost, whereas blue ocean strategies concentrate on both. Let’s review the four actions briefly.

  1. Eliminate: Remove factors from industry standards.
  2. Reduce: Move factors below industry standards.
  3. Create: Generate factors new to industry standard.
  4. Raise: Move factors above industry standards.

This exercise helps to identify where to remove waste, reduce redundant processes, discover new value and amplify embryonic value. Focusing only on primary care, where could we refocus our energy?

Eliminate

  • None

Reduce

  • Waiting time at the provider
  • Administrative labor costs
  • A/R days due to coding
  • Claims denial rate
  • Compliance risk

Create

  • Truth, not trust
  • Appointment flexibility

Raise

  • Price flexibility

Creating a blue ocean strategy for healthcare is less about what patients need and more about what patients don’t need. It’s about eliminating waste and removing what is not necessary or required for a healthcare interaction. 

By filtering our chart to only include primary care, we can model where value can be extended and renewed — exploring blue oceans.

Healthcare Future State

Blockchain and blue ocean strategies

Healthcare is riddled with challenges and non-value-add processes. How can blockchain add value? The goal is adding value innovation, not technologyinnovation; we saw how that worked out for Motorola. Apple appears to be doing fine with the iPhone selling more than 230 million units that accounted for 66 percent of it FY 2015 revenues, $233.7 billion.

While value innovation is not the same as a technology innovation, technology innovation does have a value that can enable the discovery of blue ocean strategies. Using our healthcare strategy canvas and the four actions framework, we can identify areas ripe for blue ocean strategies that can benefit from blockchain technologies.

  1. Waiting time at the provider (reduce): Complex registration processes, repetitive registration processes create patient and provider friction. Using blockchain distributed patient registries (ledger) can reduce patient intake time.
  2. Administrative labor costs (reduce): Less paperwork to fill out at the provider location, results in less administrative staff required to process the paperwork; therefore, reducing overhead costs.
  3. A/R days due to coding (reduce): Providers will update health events in a blockchain type ledger that will enable other healthcare delivery entities (payers, third-party healthcare providers, labs) to access the same information reducing cycle time for coding and recoding due to errors.
  4. Claims denial rate (reduce): A distributed healthcare system registry (ledger) could house claims, decreasing errors due to manual entry or rekey errors.
  5. Compliance risk (reduce): Transparency of claim activity and the universal health event registry (ledger) will allow auditors to swim through claims from the beginning to the end, decreasing compliance risk and cost.
  6. Truth, not trust (create): We trust third parties, such as hospitals and urgent care facilities, to protect patient records. Tomorrow, a distributed patient registry (ledger) may house patient and claim information, improving transparency for claim processing and payment.
  7. Appointment availability (create): When an appointment is needed, a patient calls a provider and attempts to schedule one. There are typically several back-and-forth interactions before a date and time are set. Why? Often multiple services area required — for example, an annual physical that also requires lab work. A universal health appointment registry (ledger) could help align hundreds of schedules without requiring any single health care delivery system to own the health appointment registry (ledger).
  8. Price flexibility (raise): With the blockchain distributed patient registries (ledger), claims information would be available from providers through a distributed network. Do you wonder what the average price for a procedure is in your town, for your age, or at a few specific provider locations? That question can be answered.

Repetitive registration processes and the requirement for multiple signatures on duplicate forms is a waste of time for patients and providers. We need blue ocean strategies in healthcare — discovering uncontested market spaces from a blockchain mindset.

 

Peter B. Nichol, empowers organizations to think different for different results. You can follow Peter on Twitter or his personal blog Leaders Need Pancakes or CIO.com. Peter can be reached at pnichol [dot] spamarrest.com.

Healthcare colored with blockchain’s open-source foundation

Peter Nichol
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Healthcare colored with blockchain’s open-source foundation

Self-sovereignty and identity anonymity hold the code to unlock the potential for blockchain to change patient health. The architecture of the internet has changed forever.

Technological change forces economic growth. Technology extends the science of discovery and produces artifacts used in everyday life. It’s the small technical discoveries that make larger scientific endeavors possible. It’s also these seemingly unrelated breakthroughs that make their way into our daily lives.

Apparently, insignificant discoveries become significant

In the 1960s, NASA conducted an extensive test program to investigate the effects of pavement texture on wet runways. The goal was to better understand braking performance and reduce the incidences of aircraft hydroplaning. The result of years of technical scientific studies was that, in 1967, grooving of pavement became an accepted technique for improving the safety of commercial runways.

One of the first runways to feature safety grooving was the Kennedy Space Center’s landing strip. However, the applications of this technique extended well beyond NASA facilities. According to the Space Foundation, safety grooving was later included on such potentially hazardous surfaces as interstate highway curves and overpasses; pedestrian walkways, ramps and steps; playgrounds; railroad station platforms; swimming pool decks; cattle holding pens; and slick working areas in industrial sites such as refineries, meat-packing plants and food processing facilities.

If you asked a cattle rancher in 1970 if his work would be affected by NASA’s research on braking patterns exploring ground vertical load, instantaneous tire ground friction coefficient or free-rolling wheel angular velocity, the answer would probably have been an emphatic “not a chance.” Likewise, if you had told the workers on a road crew in 1970 that they’d be spending many years of their lives adding grooves to the surfaces of existing highways, bridges, and exit ramps, their response would have been less than welcoming. It would have been impossible to convince these professionals of the coming changes.

The impact of technology on daily life starts with scientific and technological discoveries that initially appear isolated or narrow in context. But we know better.

5 MIT projects to watch

The MIT Internet Trust Consortium, established in 2007, focuses on developing interoperable technologies around identity, trust and data. The consortium’s mission is to develop open-source components for the Internet’s emerging personal data ecosystem in which people, organizations, and computers can manage access to their data more efficiently and equitably. The goal is to build emerging personal data ecosystems for individuals and organizations. That ideological desire fits in nicely with the growth of blockchain technologies.

Currently, there are five cutting-edge MIT projects that could change the future of the internet: MIT ChainAnchor, (permissioned blockchains), Project Enigma (autonomous control of personal data), OpenPDS2.0 (a personal metadata management framework), DataHub (a platform with the ability collaboratively analyze data) and Distributed User Managed Access Systems (DUMAS) (a protocol for authorizing and accessing online personal data).

The white papers for each project are interesting to read. When thinking in a healthcare mindset, it’s easy to think of their applications to health and wellness. Here are links to the project white papers:

MIT ChainAnchor

The proposed permissioned blockchain system is in contrast to the permissionless and public blockchains in Bitcoin. The system addresses identity and access control within shared permissioned blockchains, providing anonymous but verifiable identities for entities on the blockchain.

When applied to healthcare ChainAnchor could, for example, enable participants of a medical study to maintain their privacy by allowing them to use a verifiable anonymous identity when contributing (executing transactions on the blockchains).

Project Enigma

Enigma is a peer-to-peer network that allows users to share their data with cryptographic privacy guarantees. The decentralized computational platform enables “privacy by design.” The white paper says that, for example, “a group of people can provide access to their salary, and together compute the average wage of the group. Each participant learns their relative position in the group, but learns nothing about other members’ salaries.” Sharing information today is irreversible; once shared a user is unable to take that data back. With Enigma, data access is reversible and controllable. Only the original data owners have access to raw data.

In the context of healthcare, patients could share information regarding personal genomics linked to disease registries and clinical treatments aligned to healthcare outcomes, knowing that their original data was not shared.

OpenPDS2.0

OpenPDS introduces SafeAnswers, an innovative way to protect metadata (application, document, file or embedded) at an individual level. As the white paper explains, SafeAnswers, “allows services to ask questions whose answers are calculated against the metadata instead of trying to anonymize individuals’ metadata.” SafeAnswers gives individuals the ability to share their personal metadata safely through a question-and-answer system. Previous mechanisms for storing personal metadata (cloud storage systems and personal data repositories), don’t offer data aggregation mechanisms. The challenge is that once access is enabled, the data is broadly accessible. SafeAnswers reduces the dimensionality of the metadata before it leaves the safe environment, therefore ensuring the privacy of data.

Healthcare metadata examples could include patient account number, patient first and last name, and date of admission. Healthcare research could benefit from using aggregated metadata from patients without sharing the raw data. Research entities would send questions to an individual’s personal data store (PDS). This PDS would respond with an answer. Today, if metadata information was provided to researchers or accessed from a phone application, the patient could disable (uninstall) the app but wouldn’t know what information was shared. With the SafeAnswers system, a patient potentially would use their PDS URL to provide access to the health app. All of the patient’s metadata, therefore, could be tracked and recorded — visible to the patient. Later the patient could access metadata the application was using to create patient inferences. Also, the patient could permanently remove the metadata the application was consuming by either limiting or permanently restricting future access. No trusted third party. No entity to monitor access. Anonymously shared data.

Discoveries that transform society

The DataHub project and the Distributed User Managed Access Systems (DUMAS) projects offer additional pieces to solve the challenge of exchanging information while maintaining identity anonymity. Maybe they can apply to healthcare – if we’re creative.

Highly technical advances have shaped the social economy for centuries. The creation of the sickle, a handheld agricultural tool with a curved blade typically used for harvesting grain crops, had a profound impact on the Neolithic Revolutions (Agricultural Revolution). Who would have imagined when it was invented (18000 to 8000 B.C.) that the sickle would form the basis for modern kitchen knives with serrated edges.

Small, seemingly insignificant discoveries transform societies. How blockchain technologies will affect people on a daily basis is awaiting to be discovered. When blockchain applications enhance our lives, they may become as commonplace as highway safety grooving.

Universities must build innovators in new ways

Peter Nichol
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Universities must build innovators in new ways

The future doesn’t care how you became an expert. The experts of tomorrow will learn differently.

Whether you’ve completed your undergraduate 15-years ago or are comfortable with a newly minted Ph.D., how you will learn is changing. The experts of tomorrow will learn differently.

Massachusetts Institute of Technology, Stanford University, Harvard University, and the University of Washington are the world’s most innovative universities according to Times Higher Education. Reuters agrees, they all fall into the Reuters Top 100 World’s Most Innovative Universities. But there’s a secret. Technology is changing how all students learn and how every school inspires and grows students. Whether a student is just starting the undergrad journey or a Ph.D. going back for some refresher classes, thinking creatively and driving disruptive ideas is at the heart of many university programs.

Let’s explore how experts are created and technological impact to learning.

OpenCourseWare

MIT OpenCourseWare (MIT OCW) is an initiative of the Massachusetts Institute of Technology (MIT) to put all of the educational materials from its undergraduate- and graduate-level courses online, freely and openly available to anyone, anywhere. 

edX hosts MITx. MITx courses (more commonly MIT MOOCs) embody the inventiveness, openness, rigor and quality that are hallmarks of MIT, and many use materials developed for MIT residential courses in the Institute’s five schools and 33 academic disciplines.

Open courses are a trend across academic institutions that is rapidly growing. What will become the differentiator when courses are free to access? Universities need to innovate.

Nanodegrees

The on-demand economy is affecting education with collaboration based approaches, to learning through communities. The Khan Academy offers the ability to learn anything. For free. Gibbon, allows people to share knowledge by creating playlists with the best stuff from the web, and they recently joined degreed. Degreed’s vision is that the future doesn’t care how you became and expert. Skillshare, allows students to learn a new skill each day and learn creative skills in just 15 minutes with bite-sized lessons. And Udacity already has nanodegree programs in data science, machine learning, and Android, iOS.

Many nanodegree programs incorporate the idea of digital badges. Specialization becomes more important after a general framework of the broader subject has been established.

Digital badges

Specialization brings us to digital badges. A digital badge is a validated indicator of accomplishment, skill, quality, or interest that can be earned in many learning environments. Open digital badging makes it easy for anyone to issue, earn, and display badges across the web, through an infrastructure that uses shared and open technical standards. Community-based learning might not be profitable for everyone. Do digital badges threaten the higher-education monopoly on credentials?

The on-demand economy is uniting communities – communities that learn together. The Humanities, Arts, Science, and Technology Alliance and Collaboratory (HASTAC) is an alliance of more than 14,000 humanists, artists, social scientists, scientists, and technologists working together to transform the future of learning. They concentrate on three areas: scholarship programs, learning competitions, and publication projects. This global community shares ideas.

OpenBadges enables students to get recognition for skills they have learned anywhere. Open Badges allows students to verify skills, interests and achievements through credible organizations. And because the system is based on an open standard, students can combine multiple badges from different issuers to tell the complete story of your achievements – both online and off.

Technology is changing not only how we learn, but how we process knowledge and the methods used to develop tomorrow’s innovators.

Creating experts

What is your profession today? Within what field do you consider yourself an expert?

Think for a minute about your personal path to becoming an expert. It could have been through traditional undergraduate and possibly graduate studies, augmented with work experience. That would work.

However, knowledge could have come from mentoring or non-traditional avenues such as a co-op experience (diversifying experience with school), Thiel Fellowship (Peter Thiel, co-founder of PayPal created a two-year program to build now, what a traditional education won’t teach), taking a gap year (a year off, to accelerate learning similar the specialization of a nanodegree), you may have enrolled in Massive Open Online Courses (MOOC), or one of the many alternatives. Those approaches also work.

Navigating knowledge

Imagine you’re in the office and are responsible for establishing your company’s new strategic direction. A rampant business model threats to disrupt your organization. This new business model shift has the potential to weave through the organization’s entire operational model and hooks into sophisticated technology ecosystems spanning dozens of geographic locations. The CEO introduces you to an expert in platform dynamics. This new leader is your peer to tackle this blue-chip, mega-program. This recent addition to the leadership team understands two-sided markets, multi-sided markets, and has studied extensively their effect on global competition taking a macroeconomic view. After working with this person for three months, you’re impressed with their vision and knowledge of how to apply innovation to dynamic business models.

Ask yourself a question: Do you care how they became an expert? Most executives don’t care, and like myself will rate leaders on the merits of their knowledge not where they acquired it. Universities and higher-education institutions need to ideate on their role in the collaborative economy and how students become experts. 

The experts of tomorrow will learn differently.

If I only had 5 minutes to explain blockchain

Peter Nichol
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If I only had 5 minutes to explain blockchain

Are you struggling to understand how blockchain works, why blockchains are secure or why blockchain technologies will transform the world? Here’s a five-minute answer to all those questions.

As a leader in your organization, you have a duty to your organization to understand why blockchain technology will transform the economy.

Why was blockchain started?

The bursting of the U.S. housing bubble underpinned the global financial crisis of 2007-08 and caused the value of securities linked to the U.S. real estate to nosedive. Easy access to subprime loans and the overvaluation of bundled subprime mortgages all leaned on the theory that housing prices would continue to climb.

Ultimately, the Financial Crisis Inquiry Commission determined the entire financial crisis was avoidable and caused by widespread failures in financial regulation and supervision. There were many reasons for the financial crisis, including subprime lending, the growth of the housing bubble and easy credit conditions. The world believed that “trusted third parties” such as banks and financial institutions were dependable. Unfortunately, the global financial crisis proved intermediaries are fallible. The crisis resulted in evictions, foreclosures and extended unemployment; it was considered the worst financial crisis since the Great Depression.

In response to this horrible global financial upheaval, in 2008, Satoshi Nakamoto wrote a paper titled, “Bitcoin: A Peer-to-Peer Electronic Cash System.” The paper suggested that “trusted third parties” could be eliminated from financial transactions.

What’s Bitcoin and how does it relate to blockchain?

Bitcoin is a peer-to-peer system for sending payments digitally signed to the entire Bitcoin network. When the “b” is capitalized, “Bitcoin” refers to that network, e.g., “I want to understand how the Bitcoin network operates.” When the “b” is not capitalized, the word “bitcoin” is used to describe a unit of account or currency, e.g., “I sent 1 bitcoin to a friend.” The digital signature is made from public keys (given to anyone for sending assets) and private keys (held by the asset owner).

The public ledger of Bitcoin transactions is called a blockchain. Bitcoin also runs on top of a technology called blockchain. Blockchains are permissionless distributed databases or permissionless public records of transactions in chronological order. Blockchain technology creates a decentralized digital public record of transactions that is secure, anonymous, tamper-proof and unchangeable — a shared single source of truth. Blockchains apply to any industry where information is transferred and roughly fall into the following six classifications:

1. Currency (electronic cash systems without intermediaries).

2. Payment infrastructure (remittance; sending money in payment).

3. Digital assets (exchange of information).

4. Digital identity (IDs for digitally signing to reduce fraud).

5. Verifiable data (verify the authenticity of information or processes).

6. Smart contracts (software programs that execute without trusted third parties).

How blockchains work

For the first time in history, blockchain removes — or disintermediates — the middleman from business transactions and by doing so improves the value of existing products, services, and interactions in the following ways:

Preventing double spending: With blockchain, you can’t spend money more than once. Blockchain presents a solution by ensuring the authenticity of any asset and preventing duplicate expenditures (real estate, medical claim, insurance, medical device, voting ballots, music and government record or payments to program beneficiaries).

Establishing consensus: In this new model, crowds are networks of computers that work together to reach an agreement. Once 51% of the computers in the network agree, “consensus” has been reached and the transaction is recorded in a digital ledger called the blockchain. The blockchain contains an infinite ordered list of transactions. Each computer contains a full copy of the entire blockchain ledger. Therefore, if one computer attempts to submit an invalid transaction, then the computers in the network would not reach consensus (51% agreement) and the transaction would not be added to the blockchain.

There are four principles of blockchains networks.

  1. Distributed: Across all the peers participating in the network. Blockchain is decentralized, and every computer (full node) has a copy of the blockchain.
  2. Public: The actors in a blockchain transaction are hidden, but everyone can see all transactions.
  3. Time-stamped: The dates and times of all transactions are recorded in plain view.
  4. Persistent: Because of consensus and the digital record, blockchain transactions can’t catch fire, be misplaced or get damaged by water.

Steps to create a block (transaction)

Blocks are a record of transactions and chains are a series of connected transactions (blocks).

  1. Create transaction: A miner (computer) creates a block.
  2. Solve the puzzle: A miner (computer) must do mathematical calculations and if correct will receive a “proof of work.”
  3. Receive “proof of work:” If the puzzle is solved — the “proof of work” is a piece of data that is difficult (costly, time-consuming) to produce but easy for others to verify and which satisfies certain requirements. In short, it’s difficult to solve the puzzle but easy to verify it’s solved correctly.
  4. Broadcast “proof of work:” The miner broadcasts its successful proof of work to other miners.
  5. Verification: Other miners verify the “proof of work.”
  6. Publish block: If the miners reach consensus (51% agreement) that the proof the miner presented solved the puzzle, then that transaction is published to the blockchain.

Why are blockchains secure?

With blockchain technologies, truth can also be measured and consumers and producers can prove data is authentic and uncompromised.

To create a new block, block 101, some of the data is used (or a hash is created by an algorithm that turns an arbitrarily large amount of data into a fixed-length random number) from the previous block, block 100. Then to create the new block 102, information from block 101 is used, and so on. Transactions are dependent on the prior transaction. Similar to a light string on a Christmas tree. If a light bulb were pulled from the string (changing a transaction), the miner would have to change every previous transaction ever made in that string. Probabilistically this is almost impossible, as not everyone would reach consensus on the proposed change.

The result is an immutable digital record for every agreed transaction: a single source of truth.

Why blockchain technologies will transform the world

Blockchain technologies will improve trust in industries where information (assets) is transferred, including these:

  1. Accounting (auditing and fraud prevention).
  2. Aerospace (location of parts and chain-of-custody).
  3. Energy (smart metering and decentralized energy grid).
  4. Healthcare (medical devices and health information interoperability).
  5. Finance (remittance and currency exchange).
  6. Real-estate (deeds transfer and speed buying or selling property).
  7. Education (better manage assessments, credentials, transcripts).

Blockchain technologies will change everything — from clothes you wear, the food you eat and even the products you buy.

Peter B. Nichol, empowers organizations to think different for different results. You can follow Peter on Twitter or his blog Leaders Need Pancakes. Peter can be reached at pnichol [dot] spamarrest.com.

How the sharing economy is shaping the future of work in healthcare

Peter Nichol
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How the sharing economy is shaping the future of work in healthcare

How we work, how we earn and the skills required are taking on a shared purpose.

Shifting from hyper-consumption to collaboration consumption has given a renewed belief in the value of reputation, community, and shared access.

Driving force multipliers

How are organizations going to learn? Organizations – both big and small – will need to adapt to new challenges to survive.

  1. Redefinition of social capital: personal, not corporate brands are determining business relationships
  2. Redistribution markets: unwanted or underused goods resold
  3. Collaborative lifestyles: non-product assets such as space, skills, and money are exchanged and traded in new ways
  4. Product service systems: pay to access a product or service without ownership

Redistribution markets, collaborative lifestyles, and product service systems have spurred the rise of consumptive collaboration – new shared reinvested through technology. Traditional sharing, bartering, lending, trading, renting, gifting, and swapping redefined through technology and peer communities bloomed into the sharing economy.

This collaborative economy places value on a combination of reputation, community, and shared access. Underutilized assets and resources are offering alternatives making space for on-demand platforms that reach critical mass based on the efficiency of crowds and the trust of communities.

The competing forces and evolving priorities have created a new world born on the back of business fragmentation feeding off the influence of social environments. Here technology breakthroughs are the norm and resource scarcity is a driver in the global shift of power.

Collaborative Economy

The billion-dollar club

Today every industry is getting involved in the sharing economy. Today companies that make up hospitality (Feastly, LeftoverSwap), transportation (Lyft, Zipcar), consumer goods (Etsy, Poshmark), entertainment (SoundCloud,Pandora), healthcare (MedZed, Heal), logistics (Instacart, Uber Rush) and odd jobs (Fiverr, Upwork) all contribute to form the sharing economy. Given the surge of sharing companies, it might not be surprising that Uber’s valuation of USD $62.5 billion is 2.43 times Southwest Airlines at USD $25.7 billion and T. Rowe’s latest valuation lifts Airbnb’s assessment to USD $25.5 billion at 1.48 times the Marriott International at USD $17.2 billion.

The collaborative economy is here to stay. HBR published a great piece titled, What Customer Want from the Collaborative Economy, that stated, “We now have research to show that companies need to embrace the core innovations of the collaborative economy if they want to thrive in the era of Kickstarter, Uber and TaskRabbit.” Maybe we’ll all be relegated into three simple worlds: Orange (small is beautiful), Green (companies care), or Blue (corporate is king) as suggested by PwC in The future of work: a journey to 2022 report. The future of work will involve companies that innovate around their core values.

The future of work involves learning (Udacity, Chegg), municipal (Musketeer,MuniRent), money (bitcoin, CircleUp), goods (yerdle, shapeways), health and fitness (VINT, Medicast), space (HomeAway, ShareDesk), food (VixEat, Blue Apron), utilities (vandebron, fon), transportation (Ola Share, DriveNow), services (CloudPeeps, Fiverr), logistics (nimber, deliv), and corporate (warpit, TwoGo). The makers, co-creators, crowd funders, peers, and companies that are successful all empower people. The sharing economies are creating partnerships between traditional incumbents and bleeding edge tech companies.

Healthcare plunges into the sharing economy

Healthcare companies are launching a flurry of interaction applications to capture the attention of patients and their loved ones.

  • Ease delivers medical marijuana delivered in minutes or less. Think of a slick decision support tool for medical marijuana. Ease offers a high quality, lab-test menu, with fast and convenient delivery with technology that provides an experience for patients that is safer than the alternatives.
  • Helparound addresses the daily struggle of chronic patients on caregivers. Part of helparound is Diabetes Helpers, is a help network on mobile and desktop where people help each other navigate life with diabetes. People with type 1, type 2 diabetes, gestational diabetes and their caregivers answer each other about the symptoms of diabetes, how to lower their a1c, and learn more about diabetes diet and management.
  • Stat provides on-demand doctors, medical care, medical transport and companionship. Stat is healthcare on-demand and with a simple push of a button, patients can reach a doctor, CNA, HHA, or a medical transport in minutes for themselves or cared for loved ones.
  • Popexpert, gives users an opportunity to learn life and work skills directly from top experts to be happier, healthier, and more productive. From getting fit to staying healthy popexperts, has the latest in life, work, and play.
  • Medicast, is helping hospitals and health systems bring back the house call. This new platform offers care delivery for the on-demand age. Medicast helps hospitals and health systems modernize their care delivery networks with sophisticated, easy-to-use technology that has been designed in collaboration with patients and physicians.

The sharing economy is bringing people together. In our small and beautifully connected world – reputation, community, and shared access matters.

How tech is reshaping work values and goals

Peter Nichol
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How tech is reshaping work values and goals

The fourth Industrial Revolution merges the physical, digital and biological worlds. The need for human connections has never been greater.

Companies can find talent. They just can’t attract it. Fifteen years ago, corporate was king, and bigger was better. Companies such as Bank of America, Qualcomm, Cisco Systems, Intel, Sun Microsystems and Merck were top companies desired for employment. That mindset has evaporated. Today Stryker, Baptist Health South Florida, Workday and Genentech are among the 100 best companies to work for, according to Fortune Magazine.

Small is beautiful

Worker preferences are changing. It’s no longer good enough to tout social responsibility and entice talent with the sparkle of high earnings. Employees want flexibility and inclusion in decisions affecting their future. Companies are fracturing, and disintermediation isn’t only an outside force pressing upon companies, it’s a force creating disruption inside-out. Today’s workers are looking for a corporate family, a group of like-minded individuals that share beliefs and hold similar values. Business is getting personal. Large enterprises aren’t able to complete.

According to the MIT Sloan School of Management, the roles of startups and big business are shifting. In 2016, 15 to 20 percent of MIT graduations join startups. According to Vladimir Bulović, associate dean for innovation and a professor at MIT. Interestingly, 10 years ago only about 1.5 percent joined startups. The primary reason for the swing is that innovation has shifted to smaller companies. These little companies house tight groups of individuals who are committed – the seduction of the modern startup. Low pay, horrible hours, with a slight chance of changing the world. Interested?

Three decades of progress

The influx of freelance and contract workers into corporate America is changing the landscape of work. Job polarization, although a relatively new economic term started with an investment in robotics, removing middle-skills jobs relocating many jobs overseas. The effect of job polarization has resulted in a sharp reduction of middle-class jobs. These jobs are classified as moderate-skill level when compared to low-skill and high-skill jobs. When observing the index of computing over the last thirty years, there have been tremendous advances in computer power, cost per unit, labor cost per unit, cycles per second, and rapid memory.

Compute Power

 

Significant growth in computing power, performance, and productivity growth began in the mid-1940s. Moore’s Law observed in 1965 by Gordon Moore, co-founder of Intel, started a trend that would last for decades. This surge in productivity accelerated during 1969 to 2004 when the price index for computers fell by 23 percent about the GDP price index as presented by the Bureau of Economic Analysis (BEA). The Future of Work in the Age of the Machine, by The Hamilton Project, illustrates the exponential gains in computer buying power between 1980 to 2010.

American Economic Review published, the paper titled, The Growth of Low-Skill Service Jobs and the Polarization of the US Labor Market by David H. Autor and David Dorn. Their hypothesis found that “a critical role for changes in labor specialization, spurred by automation of routine task activities, as a driver of rising employment and wage polarization in the United States and potentially in other countries.” The structure of jobs is changing. Jobs are moving away from middle-skill roles and branching toward low-skill and high-skill roles.

Fourth Industrial Revolution

The future of work is also broader than collaboration technologies. We are on the brink of a new industrial revolution. The first Industrial Revolution was driven by steam and mechanical production equipment in 1784. The second Industrial Revolution was the mass production of electricity and divisions of labor in 1870. The third Industrial Revolution automated production with electronics and information technology in 1969.

What will be the fourth Industrial Revolution? The Internet of Everything (IoE), robotics, sharing economy, cyber-physical systems, nanotechnology, biotechnology, materials science, energy storage and quantum computing all compete for the new title. Whatever it is eventually labeled, the fourth Industrial Revolution merges the physical, digital and biological worlds.

Professor Klaus Schwab was born in Ravensburg, Germany in 1938. He is Founder and Executive Chairman of the World Economic Forum, the International Organization for Public-Private Cooperation. In January 2016, he published The Fourth Industrial Revolution, and steps through impact of the revolution:

  1. Economy: growth, employment, and the nature of work)
  2. Business transformations: consumer expectations, data-enhanced products, collaborative innovation, new operating models
  3. National and global changes: governments, countries-regions-and-cities, international security
  4. Individual disruption: identity, morality, and ethics

The need for human connection and the necessity to manage public and private information has increased in signal strength as this revolution changes society.

With virtually unlimited possibilities business model shifts are occurring across every industry. How we work and communicate is undergoing a profound paradigm shift – asking every member of society to rethink their values and goals.

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