"Productivity growth, however it occurs, has a disruptive side to it. In the short-term, most things that contribute to productivity growth are very painful"
Federal Reserve Bank
Not too long ago I found myself at a business conference that concerned itself with big new ideas.
Needless to say, most of the topics were very "futuristic" and included ideas such as healthcare, artificial intelligence, self-driving vehicles, satellite broadband, and resource sharing. Many of the thoughts involved the term commonly known as "disruptive technology" or sometime also known as "disruptive innovation".
The idea behind disruptive technology is that there becomes a completely new way of doing something that totally replaces the old way of doing something in a relatively short time period.
An example of this might be compact discs replacing vinyl records only for compact discs to be replaced by digital downloads a short time later.
Although music was still purchased by listeners, it no longer required a traditional retailer to provide the medium to the listener. A listener could hear a song being played, use their smart phone to immediately identify the song, and then download a copy of the song to their listening device... all before the song was over.
There are hundreds of examples where a disruptive technology has conspired to displace a company or entire industry.
Wikipedia and Google effectively have killed the encyclopedia business.
The telephone replaced the telegraph...
Television effectively replaced radio...
Electronic calculators replaced slide rules...
LEDs replaced light bulbs...
Digital photography replaced film...
Desktop computers replaced secretaries (in the traditional sense I suppose... although there are plenty of assistants still employed).
The progressive company who successfully discovers and markets the new disruptive technology is rewarded handsomely as the spoils of business are stripped from one company and given to another.
Although the changing of the guard may be good for some... it can also be equally devastating for others.
Thousands of people were quickly thrown out of work when the automobile replaced the horse and buggy... but where they lost their job, perhaps as a blacksmith... they quickly gained employment on the assembly line constructing new cars. It was different work... but it was still work.
After tens of thousands of years, disruptive technology turned the nomadic hunters and gathers into farmers and stationary civilizations arose.
After a few thousand years, new technologies helped to bring technology such as tractors, to the fields and with it, displaced farm workers. These former farm workers then moved to the cities to work in manufacturing factories producing inexpensive goods.
After a hundred years, new disruptive technologies in communications and transportation allowed factories to be set-up in other places around the world where labor was less expensive and raw materials were more plentiful... so people then found themselves exiled from the manufacturing sectors and became employed in the service industries.
Each time a disruptive technology caused jobs in one area to evaporate; new jobs were created in other areas of the economy.
Today, however, there are new forces taking root that threaten to topple our economic systems and models.
In only 65 years since 1950, the population of the world has grown from 2.3 billion people to 7.2 billion people.
At the same time, technology has significantly raised productivity among workers meaning that it now takes a lot less workers to produce more and more output.
So how will all of these new people contribute to our global society when it takes so many less people to do the work?
Shifting back to the conference, I heard about a new idea that could dramatically change the world in so many different ways... both good and no so good (depending on your perspective).
The speaker in front of our group spoke about a potential new breakthrough in cancer treatment.
I should rephrase that... he didn’t talk about cancer treatment... he talked about a new technology that will produce a new cancer vaccine that cures and prevents cancer.
The same way Jonas Salk, in 1955, developed a vaccine to successfully eradicate polio.
Prior to developing the vaccine, polio was epidemic, killing or paralyzing tens of thousands of children and adults each year. The chart below shows the number of polio cases reported in the United States each decade:
Thanks to the great work of Jonas Salk, and the others who helped to refine the vaccine, polio is no longer a threat to us or our children.
Now imagine for a moment if a reliable vaccine for cancer was developed in the next 5-10 years.
What would the world look like?
In 2014 in the U.S. alone, there were 1,658,370 new cancer cases and deaths relating to cancer according to American Cancer Society.
The World Health Organization (WHO) estimates that there were 8.2 million worldwide deaths related to cancer in 2012 along with 14 million new cancer cases.
In the previous 30 years, $90B has been spent on cancer research and treatment in the United States... more than heart disease, AIDS, Alzheimer’s, mental health, and strokes combined.
There are currently 260 non-profit organizations somehow involved with cancer research or treatment with a combined annual budget of $2.6B.
The National Cancer Institute (NCI), which is part of the National Institute of Health (NIH), has an annual budget of nearly $5B funded exclusively by U.S. federal government.
Cancer treatment and research is a really BIG business that employees hundreds of thousands of doctors, researchers, technicians and staff.
There are hospitals, clinics, and research centers devoted just to cancer.
As I sat there listening to the speaker talk about the distinct possibility that a vaccine could be introduced within the next 10 years that would essentially eliminate all forms of cancer, I couldn’t help but think about all those individuals who have devoted their entire lives to researching and treating this deadly disease.
What does the future hold in stake for them and what will they would now do with their lives?
These people aren’t farm workers... they aren’t factory workers...
They are highly trained individuals who have invested so much in themselves and their cause... and will now be thrown to the streets...
Hospitals and research facilities with large staffs will be shuttered...
Non-profit agencies will no longer have a cause to fund-raise for...
What will all of these people and organizations now do?
The thoughts of this medical Armageddon raced through my mind as I tried to intently to listen to the speaker before me...
Would the medical establishment allow such a vaccine, if it became a reality, to actually enter into the marketplace knowing that it would cause so much economic and collateral damage?
Would those who spent their entire lives trying to find a cure try to discredit the vaccine (like so many did in the 1950’s against the polio vaccine) in order to save their own livelihoods or would they be euphoric to see their own dreams become a reality and rally behind this new lifesaver?
Are they willing to sacrifice the economic good of tens of thousands to save the lives of tens of millions?
I believe that the pendulum could swing either way...
Personally, I’m not of the opinion that a cancer vaccine is within our reach over the course of the next 5-10 years... but I could be very wrong...
...and this is what makes living life in today’s world so very interesting...
Thank you for your support of OptiFuse where we know that we only have a job until there is some other better way developed to provide circuit protection.
Jim Kalb President
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Website - www.optifuse.com
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