2019 to be the Year of the Industry Disrupters
Montrose Development Advisors.
Disruption of existing markets capitalizing on new technology and changing consumer behavior will be a major economic development trend in 2019. Disruptors change an existing industry. They create jobs and often destroy jobs but they succeed if they add value to a customer experience for a price that is usually lower. Disruptors may also be small start-up companies or giant companies that still remember when they were a start-up. Disruptors in large part create or use technology to change markets. Disruptors are often tied to the use of technology to automate a process.
Disruptors are often tied to automation and Artificial Intelligence in the information technology world. Recent advances in machine learning, robotics and artificial intelligence are driving major changes in the economic marketplace all of which impact a region’s economic development strategy. More importantly, automation is expanding beyond manufacturing into the service and financial services sector which dominates the US economy.
- 16 M job retail industry is beginning a technology overall as machines begin to replace workers- Wendy’s recently purchased a 1000 kiosks that are replacing workers taking and processing food orders in their restaurants and the pay-off for this investment is only expected to take three years;
- McKinsey estimates 25% of the current jobs in the American insurance market will be gone in 10 years due to Artificial Intelligence transforming the insurance industry’s back office and changing consumer behaviors driven by more e-commerce and less in person purchases;
- Digital banking will have a dramatic impact on the job of bank teller and other positions in financial services;
- McKinsey estimates about 36 % of the health care industry has the technical potential for automation but only 30% of a registered nurse’s daily activities could be automated, compared with 13 percent of a dental hygienist’s daily activities;
- Smart Traffic management applications are reducing wait times, energy use, and emissions by as much as 25 % in some places; and
- the Bureau of Labor Statistics believes that employment of computer and information technology occupations is projected to grow 13 percent from 2016 to 2026, faster than the average for all occupations with a median annual wage of $84,580- more than double the American average wage.
Examples of successful industry disruptors abound. Root Insurance is a Columbus, Ohio based company that is leading the technology revolution in the insurance industry. Root Insurance sets rates based primarily on actual driving behavior, using variables that drivers control to give fair and accurate auto insurance rates. To join Root, customers download Root’s iOS or Android app and drive for two to three weeks. Root in 2018 announced their decision to locate nearly 500 jobs in Columbus over three years for one of the state’s largest economic expansion projects
Pillar Technology Group, LLC is a computer software developer focused on disruptive technology and is a leader in the AV industry. Pillar is enjoying explosive growth based in Columbus, Ohio but with offices in Ann Arbor, Michigan, Des Moines, Iowa and Palo Alto, California with plans for expansion projects across the U.S. Pillar Technology is planning an autonomous vehicle lab and was recently purchased by Accenture with plans to expand Pillar’s Forge office concept across the United States in the hopes of disrupting additional industries.
Ford Motor Company announced a billion dollar investment in Pittsburgh’s Argo AI. Born out of the Carnegie Mellon National Robotics Engineering Center, which has been a global leader in autonomous vehicle research, Argo AI leaders are formerly with the self-driving car teams of Google and Uber, respectively. Ford intends to develop autonomous vehicles by 2021 through this Pittsburgh based innovative partnership.
The growth and success of traditional manufacturing, financial services and other industries will not go away in 2019 but keep an eye out for established or start-up companies disrupting established industries being invaded by new technology and changing consumer behavior.
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