Innovation Showdown: Crypto And Meta Vs. Industry 4.0
Digital-industrial innovation can now prove its mettle.
For the last ten years, digital-industrial innovation has been seen as the poor, unglamorous cousin of pure digital innovation. It arrived late to the party. Its applications were developed on factory floors, in what was looked down upon as “old” economy. General Electric
Read “Crypto-nite and Meta Crash: 5 Lessons on Innovation” to learn how the most hyped digital innovation has often served as a cover for old scams and traditional business models – the article assesses the recent travails of crypto (with the FTX collapse) and of tech giants like Meta (former Facebook), as well as their future prospects.
Pure digital innovations were the most hyped. That is not surprising: unconstrained by the laws of physics, they could more easily promise exponential growth and virtually unbounded future returns.
Applications of digital technology to the manufacturing world had to deal with much tighter constraints. Where bits meet atoms, the laws governing atoms must be obeyed (we are not in The Matrix, not yet at least).
Digital-industrial applications did not completely escape the hype, of course, and have triggered their share of disappointments. The reality of self-driving cars, for example, lags far behind the promise of a fully driver-less future — a future that ten years ago might have sounded almost within reach.
But digital industrial innovation has kept making solid advances. Even in those cases where reality has not yet lived up to the hype, look closely and you will see that substantial progress has been made and significant value achieved.
To stay with the example of self-driving vehicles, autonomous trucking is poised to improve supply chain efficiency with coast-to-coast driverless trips supported by a network of hubs for hand-offs to last-mile delivery. This is enabled by innovation in Artificial Intelligence and sensors, but it’s being brought about by entrepreneurs who focused pragmatically on a more predictable environment (long-haul trips on highways) where there is substantial economic value (freight transport) to unlock.
There are many more examples where futuristic innovations have found applications that look a lot less glamorous but that actually work, deliver value and have a market. Basic-looking robots are improving inventory management in large stores, helping restock shelves, and delivering supplies in hotels and hospitals.
AI does not seem quite ready to take over the world, but has already enabled on-demand manufacturing platforms like Xometry and WAZP, improving capacity utilization in industry and making supply chains more resilient. AI is also powering human-machine collaboration systems that make factories smarter.
3D printing and digital manufacturing allow companies to build new products with less waste (just look at Local Motors’ vehicles), while spurring advances in new materials science and in generative design.
Digital-industrial innovations are ramping up and scaling just as the need for a productivity boost has become painfully evident.
Over the last year and a half inflation has surged, putting and end to the illusion that countries could just buy prosperity through more government spending financed by central banks printing money. Interest rates and mortgage rates are rising, individual budgets are being squeezed, debt-laden and cash-strapped governments face the prospect of a likely recession, and the energy crisis squeezes both households and companies. There are no more easy solutions — there never were, or at least the ones we tried were not sustainable, as we are now finding out.
The only way forward is through faster productivity growth; and the only way to accelerate productivity growth is through technology and process innovation in the sectors that power economic growth. We need faster productivity on factory floors, to allow for a stronger economic expansion as well as to sustain employment and reverse the current erosion in real wages. We need to make supply chains more efficient and resilient to lower costs and cushion the impact of future shocks. We need faster progress on energy supply (across a wide range of energy sources, including but not limited to renewables) and energy storage. We need to find new ways to generate prosperity with a lighter environmental footprint. Crypto cannot deliver any of this. The Metaverse can only offer us an escape if reality turns too depressing — or at best provide us with more powerful simulation tools. Digital innovation that scales through the industrial system is the only force that can reboot productivity and economic growth — in fact it has already started doing so.
It’s time for digital-industrial innovation to prove its mettle.
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