Overall, I see three areas that are driving innovation:
What is interesting about all these areas is that they are constraining to the environment, which I think will actually benefit innovation. Invention literally comes out of the mother of necessity as people and organizations look to delivering more for less. It is human ingenuity that responds to these challenges in a way that will drive the global innovation space.
Healthcare costs continue to expand at an alarming rate. This is a result of high costs in services, difficulty accessing primary care, confusing and inefficient administration, and disparities in care because of income, education level, race, or ethnicity. Focusing on these four challenges will deliver improvements, particularly when the financial and access to care barriers are removed through technology and supporting the changes in the ACA that work. These changes will come in the form of making insurance more accessible, simplifying access to primary care and modernizing payment approaches.
These areas for innovation are critical and will have spin-off benefits in terms of telemedicine, data science and opening the market up to more competitive players. We are already seeing this with companies like Walgreens, who recently announced a partnership with Microsoft to explore new healthcare delivery models (a counter-move to Amazon’s healthcare partnership with JP Morgan-Chase and Berkshire Hathaway). Well before this partnership, the CIO of Walgreens allowed me to visit the Walgreens concept store in Chicago, back in 2012, where I was able to see their vision being proven out. It dawned on me that the new approaches were being pursued with healthcare innovation, particularly with the use of technology and new business models. What I witnessed in Chicago was Walgreens taking the innovative step of moving their pharmacist to the front of the shop and supporting them with their own EMR – this combined with healthier food options and primary care access, meant that Walgreens can realistically provide the continuum of care in areas that are essentially food deserts and lack accessibility to primary care for peoples wellbeing.
Overall, I am optimistic about the opportunities in this space, because others are now entering the market to drive change. We will see companies like Amazon and others become participants in the space, especially where they can use their capabilities around payments, optimized services and accessibility to markets to drive down costs. We will also see new medical enhancements for pain management come through with the expansion of marijuana companies and making access to medical marijuana easier. Data will drive more insights around the provision of care and the management of disease throughout our regions, which will become increasingly important as we struggle with issues like anti-microbial stewardship, the potential for global spread of diseases.
The simple truth is that the regulators are now awakened to the fact that they need to get ahead of the technology companies to ensure there are appropriate oversight and protections in place for the individuals. Privacy is at the heart of the regulatory drive, which is perhaps the smartest thing that governments can support, even though it goes against their Big Brother tendencies. The only way to bring the big technology companies to heel is to put the power of privacy back into the hands of the individual and enforce this with punitive consequences. Leaders gathered in Davos would seem to agree that privacy should be treated as a human right.
GDPR is an overarching set of rules that are already being copied or adopted in other countries around the world. Although onerous on business to make the changes, it will lead to significant improvements in transparency and uses of individual data that will lead to improved services and benefits to us all. We will be able to trust the information that is being captured, which arguably is the most important element in support of using e-commerce in our lives. In much the same way that open markets work, where people are willing to trade billions of dollars on a daily basis because they trust the systems supporting these transactions, we will see more services and tools being adopted by individuals who feel that they can own the experience that their digital footprint leaves within these applications.
My one concern within this area is the emergence of governments looking at global taxation on internet services that occur outside of their national boundaries. The UK is now exploring this as a real option to tax FANGs on their revenues earned inside of the country, even though this may be repatriated to the other countries. This overreach will have an unintended consequence, where the internet players will just reduce their exposure to these countries with the impact that we will end up creating a global digital divide that will result in some economies losing the benefits of accessible technology through the browser and the benefits that this can have on productivity and consumer services.
We are about to enter a new phase in the financial cycle. We are going to see a tightening of liquidity in the market through interest rate increases, especially now that inflation has entered the landscape. There are other trends that are materializing as a result of our economic changes, with some being very good and others that are somewhat puzzling.
Let’s start with the puzzling. In a tightening labor market, we are seeing a generation (the millennials) of males not participating in this opportunity. They are, for a better phrase, being picky and staying out of the market until they get the role they want or acknowledgment for what they believe they are worth. It is mind-boggling that this thinking has crept into the minds of these young men because opportunity traditionally comes from participating in the market and seeking it. Sitting on the sidelines provides you with no access or experience that will enable you to grab the opportunity.
However, the upside of this change is that we will see more women benefit from their absence and I think this will be a boon for STEM-related fields as we bring in more diverse opinions. This will lead to innovations that will be similar to the improvements in the early days of computing when it was generally women who were the programmers in the emerging industry. My hope is that we will benefit from their participation in the STEM field, which will lead to a new perspective that will drive innovation with different outcomes impact our society.
The tightening labor market will also increase the demand for automation across industries, particularly in the more traditionally low-end labor markets around fast food restaurants and service industries. We are already seeing this in our supermarkets (Amazon and other self-service checkouts), banking and delivery services. The bigger consumer markets are very much covered with Uber, Airbnb and Amazon. But I think we will see changes with the expansion of the gig economy that will drive innovation in supporting services and automation, which will be smaller in scope and focus.
It is interesting to see that the opportunities for innovation really do come back to necessity around individual drivers with respect to health, privacy and finance. The question remains on how much the regulatory environment will guide or not guide, as the case may be, the innovation in service to these trends. The one thing we can rest assured in is that human ingenuity will prevail to deliver solutions to the market, regardless of the constraints. In fact, the constraints may well be the creator of the demand that innovators will serve.
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