Learn about long waves to better ride the next one - Part 2
Learn about long waves to better ride the next one - Part 2
May 22, 2023
What will be the up-and-coming hot technologies to drive our economies and prosperity in the coming 2-3 decades? In part 1 of this three-article series, I introduced you to long waves, which are long economic cycles ignited by disruptive innovations based on a few new technologies that drive economic growth for several decades and lead to structural changes in societies. Part 1 first explained the concept of long waves, reported on how they were discovered and popularized, shared how they unfold over four distinct phases, and then introduced the five long waves that we went through during the past 235 years together with the leading-edge technologies that drove them and the major infrastructure upgrades that supported the diffusion of these disruptive innovations.
In today’s second part of this three-article series, I give you an outlook on the Sixth Wave, and the likely leading-edge technologies (and some of their applications) forecast to drive it. We will also look at changes in the infrastructure and regulatory framework that are likely to emerge and explore how the Sixth Wave might impact society.
So what is the Sixth Wave of innovation?
The Sixth Wave describes the next long cycle of economic growth that will be driven by a new set of leading-edge technologies and related disruptive innovations. The Sixth Wave has already gestated over the past decade, and many long-wave theorists predict it to unfold over the next 2.5 to 3 decades (2020 to 2045-50).
In their book The Sixth Wave, James Bradford Moody and Bianca Nogrady explain that each wave has an underlying rationale that provides the game plan for riding the wave. In the Fifth Wave, this overriding idea was to reduce transaction costs related to a product or service by applying computing technology to it and playing on a networking effect (utility for an individual user grows with the overall number of users).
So what might be the overriding concept of the Sixth Wave? Moody & Nogrady predict the next long cycle of innovation to be “a revolution that will see our world transformed from one heavily addicted to the consumption of resources, to a world in which resource-efficiency is the name of the game.”
This shift from quantitative to qualitative growth will emerge as a solution to the multitude of problems created by the industrial revolution’s exploitation of natural resources, such as the climate crisis (=global warming of the atmosphere due to human-made CO2 emissions) and the sustainability challenge (we need two and soon three equivalents of Planet Earth to sustainably provide for all the resources we consume in a year). And it will also require a mix of new technologies that go beyond those that merely ride on the concept of sustainability and also include those that lead to a shift in humanity’s collective consciousness coupled with a natural progression of the last wave’s technologies.
What are likely to be the lead technologies driving of the Sixth Wave?
Cleantech: In line with their view of the underlying value driver of the Sixth Wave (=enhancing resource efficiency and reducing the true cost of making an object), Moody & Nogrady expect clean technologies (cleantech) to become a dominant sector of the following long cycle. Thereby, cleantech innovators might focus on developing cleaner transportation means (clean cars, trucks, bikes, airplanes, hyperloop trains, etc.), cleaner energy solutions (such as solar, wind, geothermic, and hydro), green chemistry, cleaner environment solutions (waste reduction, recycling, reduction; CO2-absorbents, landfill mining. among many others). The most progressive cleantech ventures will take on and —in the medium- to long run— might replace established incumbents in “dirty old industries” (automotive, oil and gas, chemical, transportation). To avoid the fate of “creative destruction “(Schumpeter, 1940), many long-established corporations will need to “clean up” and creatively transform their value offerings, business models, leadership paradigms, and cultures.
Digital tech: Most companies, organizations, and countries have already realized the need for the digital transformation of their business models and economies, so digital tech is widely acknowledged as yet another major driver of the Sixth Wave. Digitalization and digital transformation can be viewed as an extension (or prolongation) of the Fifth Wave-technologies (information and communication technology, the Internet, digital and social networks). In their Digital Transformation Initiative, the World Economic Forum identified in 2018 a range of digital technologies that experts expect to drive the Sixth Wave in the digital tech space, such as artificial intelligence (AI), machine learning, big data analytics, the cloud, the Internet of Things (IoT), 3D printing, robots and drones, and autonomous vehicles. Other technologies in the digital space that are gaining traction or that authors discuss include financial technologies (fintech, including digital currencies and blockchain technology), and the Internet of Services, among others.
Human tech: Other long-wave experts such as Leo Nefiodow (2010) predict health-driven innovations as another key driver of the Sixth Wave. I subscribe to this view and sum up all these health- and human-centered technologies under a third Sixth Wave driver: human tech. Human tech will focus on technologies and practices that enhance human performance, efficiency, and well-being. Examples include value offerings such as human augmentation solutions (think of Google glasses), individualized medicine and nutrition, and new drugs curing widespread diseases. It covers disciplines like genomics, biotechnology, and bioelectronics, and I see it also extends to the management domain (under labels such as human capital and conscious capitalism).
The Venn diagram below aims to capture possible tech trends and new industry niches that play on one or more of the aforementioned leading-edge Sixth Wave technologies. The chart emphasizes that digital tech, human-centered tech, and cleantech unfold in unison and intersect with each other. And most likely, it is from those technologies located in the intersections where we can expect the most transformative value differential and the highest growth. As such, new ventures that position themselves in the intersections between two or even all three of these Sixth wave lead technologies are predestined to create the most disruptive gap innovations.
How about nanotechnology?
This is a wild card. After exploring the viability of nanotechnology as a Sixth Wave driver in a book chapter titled Nanotechnology and the Sixth Technological Revolution, Mark Knell concluded that “it is all but impossible to predict what role this technology will play there.” I subscribe to this view and see nanotechnology more as an enabler or accelerator of the other three leading-edge technologies predicted to drive the Sixth Wave (digital tech, human tech, and cleantech).
Some experts like Mark Knell foresee a convergence of the dominant Six Wave technologies unfolding in the coming decades. I subscribe to this view. Hence, I look at the three leading-edge technology spaces of the Sixth Wave in the form of a Venn Diagram (with nanotechnology possibly working as an undercurrent that might support innovations in all other three tech spaces).
What new initiatives in infrastructure and governance are needed to support the Sixth Wave?
In part 1, we discussed that each new Kontratiev-wave goes in line with private and public investments in the necessary infrastructure to give disruptive innovation traction during the installation period and the creation of governance and control systems during the deployment period. In the Sixth Wave, we can similarly expect such supportive infrastructure investments and governance mechanisms to emerge.
For example, in the space of digital currencies and the fintech, we can expect the emergence of new digital infrastructure solutions guaranteeing secure and transparent payment and storage of digital financial assets as well as new regulatory frameworks from central banks to govern digital currencies and integrate these into the global financial system.
The shift from resources exploitation to conscious resources consumption and preservation will require companies to internalize external costs (related to the use of “free” resources such as water or the pollution of the environment). So, it is likely that within the next 20 years, new international governance rules will force businesses to price the true cost of goods (including all so far free resources used for its production and disposal), thus allowing consumers to make more conscious buying choices. Moreover, we will likely see the emergence of an ecological compensation system (such as a CO2-trading system) where polluters have to compensate preservers who look after important natural ecosystems financially. Prior infrastructure investments will support this governance system to measure and monitor the health of natural habitats digitally. For example, Moody & Nogrady predict that the health of rainforest trees will be digitally monitored and tracked via GPS to prevent illegal logging within the coming decades.
Interim conclusion and outlook: Innovation is the calling card of the future
Today, you learned more about the Sixth Wave that will creatively transform businesses and economies in the coming 2.5-3 decades. We explored tech spaces and related potentially disruptive technologies that might drive the next long cycle of progressive change. In the third and final part of this three articles episode coming up in two weeks, we will discuss the question: “So what does this mean for you and your business?” And I will give you some hints on how companies can innovate their value offerings and creatively transform themselves to grow in tune with the spirit of the Sixth Wave. After all, as Peter Drucker, the management guru of the 20th century, once said, “The best way to predict the future is to create it.”
What other applications related to digital tech, human tech, and cleantech (or their intersections) are missing in my chart? And where would you position each of them?
Do you agree with my prediction that Dieter Rams’ maxim “Less but better” is the fitting motto for the Sixth Wave? If not, what other slogan would you suggest?
Are you as fascinated by the cyclical nature of business? My new book The Executive’s Guide to Innovation features a section on the cyclical nature of business (including long cycles).
Are you already future-prone? Thinkergy can help you to creatively transform your business to ride the Sixth Wave. Contact us to tell us more about your organization and your current challenges.