2015: The Year of Changing Leadership

Every business era has a leading industry, a ruling industry, and a fading industry.

It’s clear that for our time – for the rest of my life anyway – the leading industry will be computing and the fading industry will be energy. The rising industry will likely be biosciences, including everything from prosthetics to genetic engineering.

When an industry leads, it is given not just enormous economic power but political power as well. This was true for railroads in the 1870s, for utilities in the 1910s, for manufacturing in the 1940s, and for oil in the 1970s. It will be true for technology going forward.

While the energy companies seized their power greedily, as an asset, and have hung onto it just as greedily, threatening the very foundations of the republic and the planet’s ability to sustain human life in the process, the technology industries have been reluctant to come forward. But circumstances are conspiring, as they did with oil in the 1970s, to make this necessary.

Google, for instance, can no longer move forward absent politics. It is threatened on every side by governments seeking to either rein in or channel the enormous power of search, defining what can be found (or not found). It is also being directly attacked by other industries, specifically the copyright and telecomm/cable  industries, because its rise is making much of what they do obsolete.

The company has now passed Goldman Sachs  as the largest contributor to political campaigns, and in 2014 gave mostly to Democrats. Its lobbying budget now stands at $13.7 million. The issues on which it’s lobbying, however, are fairly naïve, focused on self-interest in areas like HB-1 Visas, patent and copyright law.

This is going to change. It has to. Because Google is so deeply involved in global questions of political power, policymakers are increasingly turning to it, rather than Google turning to them. Google, and other big technology outfits like Amazon, Microsoft and Apple, need an overarching political vision that will drive their decision-making. Otherwise they’re going to be crushed by their political adversaries on the one hand and by government on the other.

My guess is they will start to find, and articulate, this vision during the coming year. They will do this because they need running room, they need room to grow, and they don’t have it now. They have nearly exhausted their niche, absent political power, and increasingly the areas where they want to go – like transportation – are also controlled by politicians. The most important person in America, going into 2015, is Larry Page.

The coming year will also be a year of breakthroughs on the energy front. The good news about the present oil bust is that it provides a pause, and a new goal, for green industries, a moment similar to what the mid-1970s brought to technology in general. The price-performance of “traditional” technologies – polysilicon and rare earth solar panels – is nearing its limits, just as was true with mainframe technologies then. Fast progress depends on creating new industries around things like graphene, organic panels, and building integrated photovoltaics. These will create the equivalent of PC industries for solar technology. This will be the year such solutions start moving out of labs, into the market. Much of it will be small-scale, but personal computing was also being done on a small scale in 1975.

Technology is going to become more integrated with public policy because we’re moving from a time of market-driven change to one of systems-driven change. Jet planes are systems. Factories are systems. Road networks are systems. Hospitals are systems. This is where the Internet of Things, which I dubbed “the World of Always-On” a decade ago, has begun making its inroads. Consumer solutions in these areas must come from the top-down, because they must be based on standards, and you need the full offering in order to gain the full value.

Universities are also systems, and it is here where I expect to see the greatest ferment. The “baby boom echo” is busting, and the number of easy marks entering these systems is declining. Schools that specialize in the education process, defining knowledge and conferring degrees, are going to face enormous pressure as technology moves deeper into the niche. Meanwhile research centers, on which the economic health of cities depend, are going to grow in power, and it will be those that interface best with business that will do best.  Yes, the rich get richer – Stanford, MIT, Harvard, Michigan and Georgia Tech.

Vast gulfs are being opened up in the distribution of wealth, not just in places where they’re expected, like Wall Street, but in new, unexpected places, like university campuses. The power of a school like my alma mater, Rice, means they can pick-and-choose among the very best for their graduate programs, and treat those people harshly, to the benefit of a few star professors, who commercialize what they discover, and the academy, which reaps the financial windfalls.

This is a trend that cannot continue. It underlies most of the social tension felt through the Obama era. Conservatives believe they can double-down on the stupid, or trick people into blaming everything on “the other” – however they choose to define it. Don’t blame you, don’t blame me, the trouble is that guy behind the tree, when it’s really the guy doing the pointing who is spinning everyone else.

This rebellion can move to either the Far Left or the Far Right, but the interests of business – in this case the high-tech businesses that are being forced to take power in their own self-interest – are going to call the tune. And in the end, their self-interest says that tune will be called in favor of stability.

My feeling is this will, over time, validate the Obama Thesis of Consensus, and create a new majority coalition in favor of measured, positive change, with all radical movements sidelined. Those who are loudest, those most apocalyptic, those who are most absolutist, have had their day during the time of crisis. As the crisis recedes, their voices will be sidelined.