One of the authors of this article built a speech recognition engine in the early 1990s. It was built on a special purpose digital signal processor, in a lab that was especially dedicated to this project. The engine required two days of training, could recognize a single voice and had a vocabulary of close to 50 words. It was close to state-of-the-art at that time.

Cut to the present. All smartphones today have the ability to recognize speech. No special hardware is needed. Training needs are minimal—the technology works straight out of the box and can be trained to recognize anybody’s voice. And the vocabulary is infinite.

The phenomenon that enabled this rapid change is the advancement in processing power, storage and communication. Computing speed is doubling every year, as per Moore’s law, which predicted an exponential growth in the number of transistors in integrated circuits within processors. Similar stories of transformation can be told about storage and communication. Today’s technology road maps have gone beyond the classical Moore’s law with the advent of distributed computing, rapid development of smart devices packed with sensors and the Internet of things.

While we have seen a lot of technology transformations over the last 20 years, what is even more fascinating is the expectation that the next two decades will see technology innovations being rolled out at a faster pace than ever before. Technological change will continue to be exponential. Noted inventor and futurist Ray Kurzweil argues that there is even an exponential growth in the rate of exponential growth! What this means is that in the 21st century, we won’t see a 100 years of technological progress. We will see 20,000 years of progress at today’s rate.

FIVE BIG TECHNOLOGY THEMES FOR THE FUTURE

While there are many technological advancements taking place all around us, we think five big themes will play a very important role in defining the next 20 years.

Gene is the new Byte: In the grand scheme of things, we are all very similar. In fact, 99.9% of our genes are identical. It’s the last 0.1% that makes all the difference! In April 2003, the human genome was completely mapped for the first time. The rate of reduction in the cost to sequence a person’s genome has outpaced even Moore’s law, from $10 million in 2008 to just $1,000 today. Going forward, this cost is likely to continue dropping and in the near future, we would be able get our complete genome mapped and stored in USB drives or on the cloud for a mere $100. This will open the doors to fantastic possibilities for preventive healthcare and personalized medical treatment. Genome mapping has large implications for agriculture as well, with possibilities like the development of more productive and disease resistant crops, or the creation of diet plans tailored to suit our respective heredities!

Disruptions in energy: The end of energy as we know is near. Advancements in technology have reduced the cost of solar energy to 45 cents a watt from $100 a watt in 1970. Interestingly, during this period, other forms of energy have seen a 16-fold increase in price. The average cost of solar panels fell by 75% between 2009 and 2014, and is expected to decline by another 25% by 2018. Solar power tariffs are expected to reach grid parity in India in 2018, and then go below that level. Battery technology is advancing rapidly to help store this energy. Polymer and hybrid-flow battery technology being developed currently will increase energy density, increasing the storage capacity of a given physical space. It is likely that in the near future, many of us will be able to generate, store and use clean solar energy right off our rooftops, at a cost cheaper than buying electricity from the grid. With smart micro-grids, one will even be able to sell excess energy back, creating a truly distributed energy network.

Advancements in material science: In Star Trek, the science fiction television show, the crew on-board starships used food “replicators" to synthesize any meal they wanted while travelling through space. This surreal concept is now inching towards reality. 3D printers have come a long way since the 1980s, and are soon going to be affordable enough for educational and residential usage. Nanomaterials with unique optical, electronic and mechanical properties are driving the next generation of consumer electronics, filtration systems and biomedical treatment. Similarly, advances in biodegradable plastics augur well for environmentally friendly packaging in the future.

Ubiquitous digital connectivity: Ubiquitous digital connectivity has been elusive so far although it has been widely talked about by policymakers and technologists. But it is inevitable. Digital access will become more and more affordable as prices reduce. Consumers will increasingly bracket digital connectivity among needs as basic as “roti, kapda and makaan" (bread, clothes and home), and will allocate a larger share of wallet for it. Digital governance platforms will help governments significantly improve the distribution of subsidy programmes targeted at people with limited means and lastly, corporates that stand to benefit heavily from a burgeoning consumer class may make the economic trade-offs differently.

AI and robotics revolution: Artificial intelligence (AI) is already a reality today with Google Search, Siri and IBM Watson being some examples. Today’s AI tools excel at complex analytics. In 2016, AI mastered Go, widely considered the most difficult strategy game. However, it struggles with cognitive tasks that a two-year-old can do—for example, knowing the difference between the pictures of a cat and a dog. Genetic algorithms being developed today will strengthen AI’s cognitive reasoning capabilities. Limitations on raw computational power will soon be overcome, powering AI tools to do what human brains can. Meanwhile, rapid advances in robotics, such as the development of bio-hybrid robots built using living tissue, are starting to take shape. We are on the cusp of an explosion in AI and robotics, which could make androids a reality in the near future.

The interplay between these technology megatrends has the potential to significantly change the world as we know it today. Imagine solar energy-powered 3D printers being airlifted to disaster zones to provide food to people trapped there. Or, a mother in Salem, Tamil Nadu, getting her son’s genome mapped, and later getting on a video conference with a New York-based doctor to seek allergy treatment options.

Fundamental paradigm shifts driven by accelerating technology

Change in technology fundamentally shifts the production possibility frontier. Every time we hit the law of diminishing returns, newer technology provides a breakthrough. In addition to fundamental shifts in the cost curve—which are a given—technology expands the gamut of “the possible" by significantly altering core trade-offs. Let us look at three conventional business and economic trade-offs, which are getting busted:

Two-way real-time interactions versus one-way outreach: In the past, businesses could either focus on “rich" information tailored to a niche market or reach out to a larger market that sacrificed “richness" for the additional “reach". However, today, two-way, real-time communication with rich and relevant content has become a reality. Digital technology enables access to global platforms for buying and selling, marketing and financing from anywhere. Advanced analytics, combined with mobile technology, is allowing companies to target each consumer individually, across their entire client base. For example, if it is raining, your regular coffee shop can tempt you to brave the weather and visit it by offering you a promotional scheme on your favourite drink, through an app on your smartphone.

Supply and demand mismatch: With the shift towards elimination of bespoke hardware, and value migrating to software, it is possible today to match supply with demand almost perfectly. Increased access and connectivity via technology is driving a revolution in the sharing economy as well. Sharing is not new to us. The barter system has been in place for centuries, long before money was invented. Today, we are not only sharing digital information, we are also sharing physical things like homes and vehicles with each other, using digital market places.

Scale versus cost: Technology is not only rapidly reducing servicing costs, it is also increasingly enabling businesses to move to an “opex" spend model, from the erstwhile “capex" heavy approach. This is helping expand firms’ reach to new consumers at a faster rate than ever before. For example, consumers with very low deposits can be served economically in an “opex" spend model, telecom base stations no longer need minimum efficient scale, retail distribution can be customized economically at a micro-market level, and 3D printing can significantly change manufacturing scale.

SPECIFIC IMPLICATIONS OF ACCELERATING TECHNOLOGY FOR INDIA

Radical innovation with next-generation technology architecture:

The Internet has served as the main platform for disruption across industries. Its architecture is decentralized, modular and “stacked". Lower down the stack, the focus is on scale and efficient utilization, for example, server capacity. Higher up the stack, however, the focus is on content related to user needs and innovation. This stack-based architecture eliminates the trade-off between efficiency and innovation, as higher-layer innovators can rent scale from lower-level platform providers to conduct experiments at lower costs. This is already a reality in our lives. Case in point, Uber, which uses a stacked architecture comprising GPS, Google Maps, electronic payments and connected smartphones—none of which it owns—to offer a disruptive and consumer-friendly transportation solution.

In India, we are witnessing the rising usage of a similar stacked architecture, called the India Stack, in the financial services sector. Jan Dhan Yojana, Aadhaar and mobile phones have created a fundamental layer of customer identification and access, on which multiple digital transactions can be built. This has the potential to solve our financial inclusion problem by eliminating the classical roadblocks of paper-based identity proofs, interaction with a physical bank and the availability of hard cash. The entire stack is an “open" resource, which means anyone can access and leverage it.

A similar open stack architecture is being used by the Goods and Services Tax Network (GSTN) to provide a platform for tax data management and reporting. The platform will provide the “plumbing" to bring together all GSTN stakeholders including taxpayers, banks, and central and state governments to completely transform India’s tax landscape.

This is paradigm shift in technology architecture where innovation happens at the bottom of the stack and is available as a public good at a very low cost to everybody. The implications of this shift are quite profound and if deployed well can be used to address some of our very core socio-economic challenges.

Ability to address India’s chronic challenges:

Healthcare is one of the most complex challenges of our time, with the infrastructure and capital required to fix the problems and reduce the inequity in healthcare access being insufficient so far. Despite making progress over the last decade, India accounts for a disproportionate percentage of global incidences of disease. We have seven doctors for every 10,000 people, which is only half the average global doctor-patient ratio. Large-scale change is never easy, but technology holds extraordinary promise in helping address our healthcare challenges.

By leveraging the technology stack already in place—wide connectivity through mobile phones and high-speed data networks, Aadhaar, digitization of health records—we can significantly improve every element of our health system, from education for prevention, to treatment and management. Big Data and analytics can fundamentally alter healthcare delivery and transform our public health and medical research initiatives through the establishment of national registries. India can become data-rich very rapidly. And a nationwide, connected, many-to-many health information highway with common data standards and interoperability features can just be what the doctor ordered!

A similar approach can also be deployed in critical areas such as education and skilling, and it can fundamentally transform how India teaches and learns.

Enabling organizations to be trailblazers:

Historically, Indian firms have found it hard to address the challenges of low average purchasing power, lack of minimum efficient scale and widespread socio-economic inequity. With the acceleration of technology, these challenges get decimated. Acceleration in technology, coupled with relatively lower legacy investments, gives Indian firms the opportunity to leapfrog their peers to become global trailblazers. Technology makes investments modular, reducing capital outlays and experimentation costs, while increasing speed and agility, which are critical advantages in today’s dynamic macroeconomic environment. There is every reason to believe that the next Alibaba, Amazon, Google, Tesla or Uber can emerge out of India.

GOING FORWARD, WE NEED TO ADDRESS THREE KEY AREAS TO UNLOCK THIS TECHNOLOGY REVOLUTION

1. How do we ensure sufficient investment in infrastructure at the lower level of the stack?

Private returns on infrastructure investments are often substantially lower than the underlying social benefits generated. While benefits accrue to the economy at large through positive externalities, this does not assure returns for the infrastructure investor. Also, when infrastructure investment requires an entirely new generation of expensive technology, such as fibre, 4G or 5G, it can compound market failure. The government, through policy formulation, has a key role to play in encouraging sufficient investment in infrastructure.

2. What changes should be make in our education system to equip our youth for the technology revolution?

There is a need to rethink technology and vocational skills being imparted at higher education institutions. Future jobs will be very different from those in the market today. In addition to solving the existing challenges our education system faces, we need to ensure that it equips our youth with the necessary multidisciplinary skills to meet the needs of tomorrow.

3. How do we drive collaboration across stakeholders to unlock the full potential of technology-enabled transformation?

The government, large corporates, start-ups and NGOs have different strengths and capabilities. There is a need to draw upon the expertise of all these stakeholders, and marrying together their complementary skills. We need the right policies and construct for public-social-private partnerships to make this happen.

In summary, technological change is accelerating at an unprecedented pace and will change the world as we know it. If we get our act right as a nation over the next decade, technology can help us take India back 1,000 years—when we were the most advanced and thriving economy in the world.

Neeraj Aggarwal is managing director, and Rohit Ramesh is partner and director at BCG India.

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