We have had two industrial revolutions, but we have never had a service sector productivity revolution. We badly need one. The assets we use are poorly utilized and the services often provided today are expensive and poorly organized.
The internet of things offers us hope - a way to connect, organize and manage the massive complexity of real world interactions. The opportunity here is every bit as large as the first industrial revolution, but to make it happen, we need a secure, scalable technology infrastructure. In the Blockchain, the core technology of Bitcoin, we finally have that.
How AI, OpenAI, and ChatGPT impact business and software.
Bitcoin, The Blockchain & The Next Big Productivity Revolution
1. Bitcoin, The Blockchain & The
Next Big Productivity Revolution
Sao Paulo, Brazil
December 2015
2. An evolving perspective on how the Bitcoin, the blockchain
and the Internet of Things will create substantial ROI.
2
Notes for SlideShare Viewers:
This is the slide deck from my 2 December presentation to the Harvard Business Review’s Sao Paulo
innovation meeting. For those who have seen some of my prior writing and presentations on Bitcoin, the
Blockchain, and the Internet of Things, you will know I am very focused on the opportunity around driving
increased utilization of personal and enterprise assets.
In my recent clients work at EY, however, I have seen more and more opportunity in a second space that I
had included in my previous assessment of IoT potential, the opportunity to decrease cycle times and raise
productivity in service industries.
The service sector, now much larger than manufacturing in employment and GDP has never had a “Henry
Ford” moment, when productivity surged by 90% in a short period of time. Increasingly, I think that time is
now. And the driver will be the integration of people, devices, with business processes and markets.
Paul Brody
Americas Technology Sector Strategy Leader
Sao Paulo, Brazil
2 December 2015
3. The Next Big Productivity Revolution
3
Looking Backwards
The Productivity Revolution
Required Ingredients
Dawn of A New Era
4. The Next Big Productivity Revolution
4
Looking Backwards
The Productivity Revolution
Required Ingredients
Dawn of a New Era
5. Those who cannot remember
the past are condemned to
repeat it.
George Santayana
7. There’s nothing new about cycles of innovation and
disruption
7
Hours of Labor Per 100lbs
of Cotton Processing
0
500
1,000
1,500
2,000
1780 1790 1795 1825
8. There’s nothing new about cycles of innovation and
disruption
8
Hours of Labor Per 100lbs
of Cotton Processing
0
500
1,000
1,500
2,000
1780 1790 1795 1825
British Textile Imports & Exports
Value, £000, 1697 Prices
0
10,000
20,000
30,000
40,000
1784 1794 1804 1814 1824 1834 1844 1854
Imports from India to Britian
Exports from Britian to World
9. Henry Ford drove a second industrial revolution but putting
the model T on a moving production line
9
0
3.5
7
10.5
14
1907 1914
Assembly Time for Model T,
Before & After Moving
Production Line Introduced
Hours required for Model T Assembly
90% Reduction in time required for
assembly of a completed Model T
10. Global economic output corresponds closely with industrial
output and the two big industrial revolutions
10
Between AD 0 and Ad 1700, GDP per capita was about $400 1990 dollars. No change.
Starting in 1820, GDP started doubling every 35-50 years.
- Average growth 1850-1900 was 1.4%
- Average growth 1900-1950 was 2.0%
- Average growth 1950-2000 was 3.8%
Since the 1970s, however, growth GDP per capita in the mature industrial countries has
slowed down and most of the global economic growth has come from the industrialization of
China and other emerging markets.
Shift To Services.
Manufacturing = Productivity
11. Productivity is the problem that each industrial revolution
has solved. But we have never had a service revolution.
11
UK Total Factor Productivity,1990-2012
UK Office of National Statistics, SoftMachines Blog
Service productivity growth is much lower
than manufacturing productivity growth.
Information & Communications
productivity growth is high, but it is a
relatively small component of the total
economy.
12. The Next Big Productivity Revolution
12
Looking Backwards
The Productivity Revolution
The Big Opportunity
Dawn of a New Era
14. Productivity in the service sector is a complex problem that
many have historically thought was not fixable
14
Can we improve the productivity of a
string quartet?
Get rid of some of the players? Then it’s
not a quartet.
Have them play faster? Then it’s not
Mozart.
15. The reality is that productivity in the service sector is much
more challenging than a factory, but not less addressable
15
Scheduling
Concert Hall Utilization
Ticket Sales
Facility Maintenance
Actual time playing, very small
16. We believe there are two big opportunities areas where a
revolution in productivity can occur
16
Asset Utilization
Cycle Time Compression
17. We believe there are two big opportunities areas where a
revolution in productivity can occur
17
Asset Utilization
Cycle Time Compression
18. 18
Asset Utilization, Select Consumer & Industrial Examples
0%
25%
50%
75%
100%
D
ishw
asher
C
ar
O
ffice
M
R
I
Taxi
Airplane
60%
50%
25%
20%
4%4%
Real world utilization of assets is much lower than we
realize
19. Companies like Uber are using analytics and mobile
technology to create real-time digital markets
19
➡ Buyers and sellers
can all see each
other in a single UI
➡ Analytics show
where demand is
high and premium
pricing is in effect
20. AirBnB, Unikey, and a group of service providers have
worked together to speed up the sharing of apartments
20
➡ Unikey smart digital locks are now available and
can be connected directly to the AirBnB online
market
➡ Renters can rent an apartment and AirBnB will
automatically give them a unique code for the
door valid only on the days when they are renting
➡ Renters can unlock the door with their
smartphones
➡ Cleaners get a separate door code
21. All these productivity solutions have a common foundation:
the increasing connectivity of people & devices
21
• What data is
being generated
by assets?
Granular ability to understand assets will quickly shift towards a desire to
take action on how they are used
Instrument Optimize Monetize
Sensor networks
Asset
Management
Asset
Markets
• How are my
assets being
used?
• How can I get
maximum value
from my assets?
We expect every physical asset may
participate in many different marketplaces
The Internet of Things will become an
Economy of Things
Rental / Leasing
Insurance
Utilities
Sensor Data
22. The return on investment that comes from asset utilization
is much bigger than other “connected device” services
22
Case Examples: ROI on Smart Sensor Use Cases
$0
$1,000
$2,000
$3,000
$4,000
Maintenance Energy Asset Rental
Tag Cost
Return
Maintenance • 5% annual chance of mechanical problem
• Average truck roll costs $100, 1.5 per repair
• Smart systems eliminate some repairs and
reduce average truck rolls total to 1.0/repair
• $25 tag cost on BOM, 10% annual ROI
Energy • $250 for a smart thermostat at home
• Average of $141/year in savings reported for
Nest thermostat users
• 56% annual ROI on average
Asset
Rental
• $350 annual cost for installing and managing
connected tag on GetAround.com
• $325/month average earnings for cars
available on GetAround ($40/day average,
about 9 days average rentals/month)
• >1,100% annual ROI
23. The second big opportunity is for us to decrease the cycle
time required to complete work
23
Asset Utilization
Cycle Time Compression
24. When it comes to services and cycle time reduction, the
scope for opportunity is just as large
24 Source: Ford history, Wikipedia
Assembling A State of The Art
Modern Automobile
40 Hours
Renovating & Updating A Home
Bathroom
4 Months
25. To achieve a cycle time revolution, Henry Ford brought
precision, order, and speed into manufacturing
25
Standardized
Process
Standardized
Components
Synchronized
Resources
•Too many variants
to easily apply in
services & sites
•Every site and
location is unique to
some degree
•Impossible to find &
coordinate all the
people & equipment
26. Pervasive IoT combined with process orchestration
software makes cycle time compression possible
26
Standardized
Process
Standardized
Components
Synchronized
Resources
•Apply process
orchestration software to
managed variants
•Always be able to find the
right tools & resources
•Respond instantly to
variations & surprises
•Impossible to find &
coordinate all the people &
equipment
27. Many every-day business processes take much longer in
practice than in theory
27
Illustrative Example
Identify Broken
Part
Open Trouble
Ticket & Order
Spare
Install Spare
Test & Certify
Update
15 Minutes 24 Hours 30 Minutes
<25 Hours
Identify Broken
Part
Open Trouble
Ticket & Order
Spare
Install Spare
Test & Certify
Update
3 Days. Noticed but not
documented for several days.
24 hours 5 Days. Testing & Installation Tools Missing When Engineer
Arrived. Forced to Reschedule.
9 Days
Theoretical Cycle Times:
Real-World Experience:
To make asset-light strategies work, companies need to squeeze big performance gains from existing assets, cutting the difference between real-world
performance and theoretical minimums. The results can be better utilization of existing assets even as they age and require more maintenance.
28. A few companies are starting to demonstrate they can
tightly integrate process & operations, however
28
Delta Airlines Has The Oldest Fleet of the US
Majors, But The Best Operational Performance
Average Fleet Age
In Years
Air Carrier Delays,
Last 12 Months
0
5
9
14
18
DL UA AA WN
0%
2%
4%
6%
8%
DL UA AA WN
Air carrier delays exclude air traffic, security and weather and late arrival of incoming aircraft. Source is transtats.com
29. The Next Big Productivity Revolution
29
Looking Backwards
The Productivity Revolution
Required Ingredients
Dawn of a New Era
30. You can see the computer
age everywhere but in the
productivity statistics.
Robert Solow
31. To enable the next big productivity revolution, we have one
required ingredient, we need two more
31
Connected
People
Connected
Devices
Digital Process &
Markets
A smartphone already lives in
nearly every pocket.
Our assets and tools need to be
raise to the smart-phone level
Secure, open, reliable software to
build & operate digital services
32. The good news: thanks to smartphones, we are at the point
where smart devices are cheap and everywhere
32
33. It’s now cheaper to make things smart than it is to make
them stupid.
33
Powerful System on Chip costs are dropping so quickly, they are
converging with traditional embedded chip costs:
Non-Recurring Engineering Cost for
Customized Embedded Chips
Shift to SOC with software
customization here
Illustrative: As SOCs drop in price, customization will shift to software, not hardware
Time + + + +
Embedded Unit Cost
Average Embedded Cost
Average SOC Cost
At higher end of the market, this shift has
already started:
These high powered SOC chips can run the full
technology stack - they are servers in their own
right, no need for a data center any more.
Apple Lightning HDMI Adapter
• Full ARM SoC with
over 256MB of RAM
• Boots OS X Core
when plugged in
• Conducts software
conversion of MPEG
to HDMI in real time
34. The computing power in every-day things is already more
than everything in every data center.
34
Global Installed Base of Computing Devices
Millions of Units in 2015
1
10
100
1,000
10,000
AWS Servers PCs SmartPhones
2,222
890
5.6
Global Installed Base of Computing Storage
Estimated Petabytes in 2014-5
1
100
10,000
1,000,000
Dropbox Facebook Microsoft AWS PC Storage
890,000
900
300300
40
Installed base and company data center sizes are estimates based on limited public information. PC & Smartphone shipments from
statistia.com. Storage data estimated assuming 1TB per PC.
35. To build a global network of billions of devices and people
collaborating together, we need an entirely new approach
35
Secure
Efficient
Open
Commercial
36. Alongside the revolution in hardware, a revolution in
software is brewing at the same time: BitCoin
36
What bitcoin does is nothing special. How bitcoin works is revolutionary.
37. BitCoin is the re-invention of the most basic workload in the
world of modern computing: transaction processing.
37
The Block Chain
CICS in 1966
38. Though the results look similar to other systems, the way
that BitCoin works is profoundly different
38
Distributed processing
Every node in the network checks the
work of other notes.
Transactions are confirmed by a kind
of digital majority vote.
39. Though the results look similar to other systems, the way
that BitCoin works is profoundly different
39
Synchronized Records
Every participant in the network
keeps a copy of all the transactions.
Transactions are secured by
encryption to prevent tampering.
Distributed processing
40. Though the results look similar to other systems, the way
that BitCoin works is profoundly different
40
Distributed processing
Synchronized Records
Smart Information
Transactions can be sent with rules
attached - small programs that
govern when and how money is
delivered.
41. BitCoin may the single most secure piece of information
technology ever created
41
Secure
Efficient
Open
Commercial
Resilient and reliable.
Using the resources already there.
Open source, transparent.
Designed for commerce.
42. The core functionality of BitCoin, known as the BlockChain
is now being re-purposed into all kinds of applications.
42
Application Development Environments
Marketplace Infrastructure
Systems of Record
Distributed Social Networks
43. The Internet of Things
43
Looking Backwards
The Productivity Revolution
The Big Opportunity
Dawn of a New Era
44. The future is already here,
it’s just not evenly distributed.
William Gibson
45. Productivity revolutions are disruptive. Capturing this value
will be very very challenging. Five final thoughts.
45
Capacity
Our understanding of
capacity is still very limited
Market Makers
The first company to get it right
seems to lead the market
Growth
Industry Growth Is Not The
Same As Profitability
Innovation
Simplicity seems to be the
key to speeding up adoption
Consumers
Where Consumers Lead,
Enterprises Follow