Creative-Destruction-652

Working with many early stage inventors, I often have the privilege of seeing some truly remarkable inventions and innovations. A few days ago I was shown a technology that snugly fits into that remarkable category, one that has the potential to radically transform the way cars and other vehicles are powered. In fact, vehicles using this power source will never need to stop and refuel.

I’m not at liberty to explain this technology in detail, but using this power source to fuel what is otherwise an electric vehicle, these cars will have 70% fewer moving parts – no ignition, gas tank, oil filter, catalytic converter, or muffler – and in this case, a highly efficient, non-traditional battery that will outlive the life of the rest of the car.

The best part is that it emits as close to zero pollution as we may ever hope to get.

After seeing this stunning new technology I had to take a step back and assess its true potential. It provides tremendous advantages on every front. Easy to manufacture, simple to understand, while being less expensive to build and operate, it has the potential to operate virtually maintenance free for decades.

On the surface it sounds too good to be true, but rest assured, it does exist. It offers a breakthrough tantamount to nuclear fusion.

However this is not a column about this particular technology. Rather, it’s about disruption, and whether or not a startup like this can ever hope to dislodge the existing power-brokers in the oil, gas, and automotive industries.

The mass produced Ford Model T automobile.

Disruptive Innovations

The term ‘disruptive technologies’ was coined by Clayton M. Christensen and introduced in his 1995 article “Disruptive Technologies: Catching the Wave”.

A disruptive technology is an innovation that helps create a new market and eventually goes on to disrupt an existing market by displacing an earlier one.

As Christensen explains, the automobile was a revolutionary technological innovation, but it was not, in itself, a disruptive innovation. Early automobiles were expensive luxury items that did not disrupt the market for horse-drawn vehicles. The market for transportation essentially remained intact until the debut of the lower priced Ford Model T in 1908. The mass-produced automobile became the disruptive innovation, because it changed the transportation market. The automobile, by itself, was not.

Nervous CEOs

We have seen many examples of industries that have had the rug pulled out from under them recently, and virtually every CEO and industry executive has their sensory radar tuned to sniff out anything that may seem even remotely disruptive.

With technology advancing on nearly every front, the nervousness that CEOs now feel is quickly turning to heightened paranoia.

Maximum Freud

In 1972, I was young engineering student at South Dakota State University in Brookings, SD. One of the first courses I was required to take was a short-course on slide rules. For those of you who don’t know what a slide rule is – first came the abacus, then came the slide rule, and then came the calculator.

This was a time when the real “cool geeks” on campus walked around proudly displaying their black carrying case for their slide rule that was attached to their belt.

Early calculators were first showing their face around 1970, but in 1972 they were still pretty expensive. I remember arguing with my teacher about whether or not the slide rule course was necessary and his dismissive response was that “all engineers need to know how to use a slide rule.”

Of course his short sighted thinking couldn’t have been further from the truth. Even though I took the course and passed it with flying colors, I’ve never used a slide rule to do engineering work (or any kind of work for that matter).

Engineers at Hewlett Packard and Texas Instruments who were working on next generation calculators at the time would have laughed at my teacher’s assertion that slide rules were always going to be the centerpiece of an engineer’s tool kit.

Clearly this period of time was the end of an era. It was the end of the slide rule era and the beginning of the calculator era.

As a society we haven’t been a part of ending  too many eras, but we are on the verge of experiencing the disappearance of many societal norms in the near future.

So I sketched out the simple diagram below showing the end of one era and the beginning of another. The point where the two eras overlapped caught my attention. This time period was important to isolate because of the disruptive nature that a collision of business forces creates.

For this reason I came up with the name “Maximum Freud” to describe it. Yes, it’s a rather wacky name, but it makes sense.

Maximum Freud is a period of extreme chaos, but also a period of extreme opportunity. When technologies approach a Maximum Freud cycle,  industry players spend a lot of time on the Freudian Couch to understand what’s going on.

But here’s the most important part to remember: All technologies end.

Each and every technology that we use today will eventually go away and be replaced by something else. Every technology will approach its own period of Maximum Freud. So from the standpoint of making bold predictions, the impending demise of even our most foundational technologies will happen over time.

Creative Destruction isn’t always pretty.

Our Morale Obligation for Creative Destruction

Taking this discussion of disruptive technologies a few steps further, a growing number of people feel it is our moral obligation to disrupt, even destroy, existing businesses and industries.

This argument focuses on the growing societal debt we are incurring. With the growing debt created by our financial institutions and the rapid depletion of our natural resources, we are mortgaging the future of not only our children, but also many generations to come.

A huge undercurrent of social unrest is brewing, filled with righteous anger, and a growing awareness of corporate misdeeds, waiting for the right opportunity to take action. When this prime opportunity comes along, they intend to vote with their pocketbooks and take action with technology.

This is a generation that is not shy about their intentions. They intend to declare war on the past.

Unfortunately, the Best Technology Rarely Wins

Even with the viral nature of the Internet, rapid communications, and a brewing caldron of social unrest, it is extremely difficult to disrupt an existing industry.

Existing industries have an employee base, investors, vendors, customers, and users that may consist of millions of people. These are people who are comfortable enough with where they are today and have formed a natural resistance to change.

This change-resistant population creates a formidable inertia to maintain the status quo. For this reason, even holy-grail technologies like superconductors, cures for cancer, anti-gravity, or human teleportation will go through a somewhat lengthy adoption curve.

In addition to natural resistance, we also see aggressive tactics used to bolster a company’s current position. Welcome to the world of so called free enterprise.

Much like a messy political campaign, well-established companies resort to a number of “dark side” business practices to keep an upstart at bay:

  • Discredit the technology
  • Discredit the company
  • Pose counter-claims
  • Use credible people to “say it ain’t so”
  • Distract people from the truth
  • Discredit or dislodge the founders
  • Use legal maneuvers to keep them tied up in court for decades

The startup company I referred to above is currently looking for a CEO to help guide their efforts and steer clear of these “dark side” pitfalls. They are looking for someone who has guided a rapid, high-growth company from zero to a billion dollar industry. Only a handful of these wunderkind currently exist and if an added criteria is that this person has to have done this in the power industry, the number of viable candidates drops to zero.

Up till now, no one has been able to dislodge the existing power structure of the power industry. It is entrenched, ingrained and the infrastructure is in place.  But how long will can they hang on to this dominance in the future when companies start thinking outside of the existing lines of power?

When will some new technology become the silver bullet that causes the industry giants to collapse?

The bigger they are the harder they fall!

Giants are Falling

Twenty years ago it seemed inconceivable that any of the major newspaper companies  could fail, yet that is exactly what happened.

In a similar fashion, book publishing, big tobacco, major retailers, the auto industry, and the Yellow Pages have all been severely wounded by a new breed of visionaries.

Thinking about it though, is the big differentiator the technology or the people driving it?

If Steve Jobs had never lived, would we still have the iPhone and iPad today? Similarly, if Walt Disney, George Lucas, and Pete Diamandis had all taken jobs on Wall Street instead of living their lives as true innovators, would we still have Disneyland, Star Wars, and the X-Prize Foundation today?

To put it more succinctly, if the visionary never existed, would we still have the industry?

Certainly, if Edison hadn’t invented the light bulb, someone else would have. In many cases, inventors have lost out on a patent because of mere minutes separating the timestamp on a patent. So the invention was destined to happen regardless of whose name showed up on the patent, right?

Not so fast.

The systems we create help define the kind of people who will naturally rise to the top. And these leaders of innovation have decidedly different approaches for making things work.

So who’s next?

The most entrenched industries today are what I call “the big eight” – banking and financial services, big pharma, healthcare, higher education, insurance, telecom, oil and gas, and the power industry. The number of laws and systems used to bolster their position make them far more difficult to disrupt.

However, difficult does not equate to impossible. Over the next 20 years every one of these industries will inevitably see the rising tide of disruption reach their doorsteps.

In fact, society now feels it has a morale obligation to disrupt each of these industries.

Niche Markets to Start

Even with a massive wall of change-resistant inertia, a disruptive new technology can find a lucrative niche to begin with.

When the two-wheeled Segway came onto the scene in December 2001 with much fanfare, the upstart company was quickly confronted with a wall of resistance that would keep them in the novelty product category until they were able to find viable niche markets selling to police departments, security companies, and golf courses.

Today, even though they remain a tiny segment of the transportation industry, they are a profitable company.

Going back to the tiny startup mentioned above that is threatening to disrupt the entire auto industry, they too will initially need to search for niche markets that are accessible, profitable and open to change.

Here are a few that might fit in that category:

  • Electric RVs – For an industry that epitomizes the squandering of natural resources and is highly susceptible to volatile gas prices, any new innovation that would cause operational costs to plummet would be welcomed with open arms and create an industry renaissance.
  • Electric Mail and Delivery Trucks – Vehicles that spend their day negotiating through stop and go city traffic to deliver mail, pizza, and other supplies are also a prime target for this technology.
  • Electric Boats – Traveling across the water in a loud and noisy, highly polluting boat is already an unwelcome intrusion to the tranquil nature of open water. Adding a silent, pollution free alternative would be quickly embraced by the industry.

This is but a short list of possibilities, where many more are likely to exist.

Final Thoughts

Regardless of your thinking, whether disruptive technology is more about declaring war on our past, simply a golden opportunity for the moment, or part of our larger quest for creating a better future, we have a morale obligation to disrupt the status quo.

In much the same way our legacy systems create an ongoing toll on society, the inefficiencies of our past, and the excessive cost of doing business that they represent, keep us anchored to a former life we desperately need to escape.

Will the technology I talked about at the beginning of this article, with its massively disruptive potential for reforming the entire power industry, ever see the light of day? The short answer is yes.

It certainly won’t happen as quickly as it needs to from an ecological standpoint, but from an economical, industry-disrupting, old-jobs-destroying-new-jobs-creating standpoint, it may happen too quickly for the world to properly shift gears. Therein lies the dilemma.

In the mean time, I’ll be rooting for the little guys.

By Futurist Thomas Frey

Author of “Communicating with the Future” – the book that changes everything

30 Responses to “Creating a ‘Ripple in the Force’ of the Power Industry”

Comments List

  1. <a href='http://www.trainingforeducators.org;' rel='external nofollow' class='url'>Herb Rubenstein</a>

    Tom has written an excellent article about disruptive technologies. One of the reasons why some disruptive technologies take so long to get off the ground is that the ones proposing the disruptive technologies do not understand all or enough of the elements they are disrupting to present to society a clear picture of how their technology helps many more people than it hurts. Facebook with a no cost model takes on inertia in our ability as humans to communicate with each other. It wins because there was no entrenched interest against it, just thousands of years of inertia in finding a way for everyone to communicate instantly with each other all over the world. In the car example, there are many countries that do not have entrenched automobile or oil or gas interests and such a car could prosper there immediately. In India, TATA will soon be coming out with the $2,000 electric car. The market for ideas is global and to paraphrase what Michael Dell said in the last century - 96% of our future customers live outside of the US. The new JOBS Act could be a game changer for the car company making crowdfunding legal everywhere in the US and making raising money easier in every respect. Thanks to Tom for this great article. As futurists, and as a CEO, we have to paint the picture of the future resulting from our products before we can expect people to buy the product, because they are actually buying the painting and not the product. Herb Rubenstein
  2. Lee Curkendall

    As long as "disruptive" technologies make sense, they will always take hold. Cars had no trouble wiping out the horse and buggy, calculators had no trouble making the slide rule disappear and VOIP (or some other technology) will easily make traditional land-line phones obsolete. Oil companies, like any company, are in the business of making a return on their invested capital. If they can make a better return with a different energy source, they'll most certainly do that. Yes, there's always a natural (or unnatural) tendency to resist change, even when it makes sense -- e.g., the stage coach companies when the railroad came along or hand weavers when the loom was invented -- but effective new technologies will always replace their earlier, less effective, counterparts. And it doesn't matter if it's the "little guy" or the big guys who invent and introduce it... if it's more effective than the old technology, I'm rooting for it!
  3. <a href='http://www.hallingblog.com' rel='external nofollow' class='url'>Dale B Halling</a>

    Tom, Excellent article. I agree we have a moral duty to support disruptive technologies. However, it is an urban myth that inventors have lost out on patents by mere minutes. Until the law changes in 2013, (and then it will be true that inventors could miss out by mere minutes- thanks to large , entrenched industry and gov't), we have always been a First to Invent country. Therefore when you filed your patent was not the critical date- but the date when you invented it. I don't think it is a foregone conclusion that without Edison's invention of the light bulb someone else would have eventually invented the exact same thing. Inventors require a certain environment in order to thrive and in cultures that do not provide that environment, technological progress is almost non-existent.
    • admin

      Dale, Even with our "first to invent" policies, we still hear stories about inventors filing on or near the same date. In most cases, where the patent isn't monetized, its a moot point. But people like to embellish the stories. So thanks for clearing this up. You're also probably right about Edison. We may have had a radically different form of light that happened much later if it hadn't been for him. Thomas Frey
  4. Charles Sorensson

    Dr. Frey Another great article... Bring on disruption! As to the resistance to change, I wonder if we cannot find parallels to the pace of evolution over time. I believe current thinking leans towards the "Punctuated Equilibrium" view, where accumulated small changes suddenly reach a tipping point, rather like the dam breaking and the flood changing the lay of the land. There can also be rather odd (asymmetrical?) information spread, e.g. keeping new technologies under wraps. Certainly the average retail investor is the last to know! Again, this could contribute to a tipping-point event. I wish it was easier to find information on disruptive technologies as they were emerging...
  5. <a href='http://www.engagingchange.com' rel='external nofollow' class='url'>Michael Cushman</a>

    Hi Tom Another good article. Thanks. As for "creative destruction", it was first applied to the disruptive role of innovation, especially technology, in economics and markets by "The Great" Joseph Schumpeter. http://en.wikipedia.org/wiki/Innovation_economics. He used the term "creative destruction" in this context in his most popular book, "Capitalism, Socialism and Democracy" published in 1942. Sometimes this field of economics is called evolutionary economics or the theory of Innovation Economics. Since this is an entire field of study in economics, with several Nobel Prize winners, I don't think it's accurate to attributing the term "disruptive technologies" or the concept to Clayton M. Christensen in 1995. FYI, the actual term "creative destruction" first appeared in the Communist Manifesto in 1848. The underlying concept was the same, but applied not to entrepreneurial forces, but to the self-destructive tendencies of pure capitalism that would then give rise to Marxian economics. (That was really big thinking, the rise and fall of entire economic systems and to think of this level of change as "creative destruction".) Schumpeter studied Marxian economics and redefined the term to describe how technical innovations can kill off entire industries as well as create temporary monopolies. He was an intellectual force of his time at Harvard and many great thinkers who knew him attribute their own success to being exposed to Schumpeter keen mind. And he was a character. "Schumpeter claimed that he had set himself three goals in life: to be the greatest economist in the world, to be the best horseman in all of Austria and the greatest lover in all of Vienna. He said he had reached two of his goals, but he never said which two,although he is reported to have said that there were too many fine horsemen in Austria for him to succeed in all his aspirations!" Bring on the creative disruption.
    • admin

      Michael, Thanks for filling me in. I used a couple a couple different phrases interchangeably - "disruptive innovation" and "creative destruction." Since they mean slightly different things, I should have just picked one phrase and stuck with it. When I searched on the background for "disruptive technologies," Christiansen's name was attributed to it, but there may have been other uses prior to his time. Thanks for adding to the conversation. Thomas Frey
  6. <a href='http://www.EcoVElectric.com' rel='external nofollow' class='url'>Richard Marks</a>

    I would like to know more about your claim for infinite energy that requires little to produce. I am open minded and do understand the large number of people who claim to know how to capture the energy in Earths' magnetic field, which is really magic to begin with. Tesla started this back a while ago. This would be very disruptive to say the least. What makes you guy different?
    • admin

      Richard, I wish I could tell you more about the technology, but the company is small and has asked to keep everything quiet for now. The device acts as both a power generator and a power storage system. It's being developed by a young physicist, and has garnered the attention of several prominent people. Look for additional announcements this summer as they move into the next stage of testing. Thomas Frey
  7. <a href='http://ie.linkedin.com/in/imeldamcgrattan' rel='external nofollow' class='url'>Imelda McGrattan</a>

    Excellent Tom. The little guy really isn't that little in the bigger context .......
  8. JFT

    Thank you for the great article, If finding one individual to bring this enterprise to success is problematic in this context, reaching out for millions of supporters on social networks like AVAAZ.org and other global/social/environment concern organization could only help. If the whole world knows about it, it won't let these guys down; professionals from all fields may even line-up to help them out.
  9. Spikosauropod

    This is like the technology you described earlier that will alter the power grid. If what you are describing exists, and assuming the inventors have secured a patent, these inventors should go public as soon as possible. Once the cat is out of the bag, there won't be much big companies can do to put it back in. The world is not the same as it was when the Model T came out. Look what happened when a major bank tried to start charging everyone a monthly fee to use their debit cards. Look what happened to SOPA. Information has been democratized. You mentioned the difficulty the Segway had getting off the ground. Honestly, the Segway is a stupid piece of equipment. The moment I saw it, I said to the people next to me that it was worthless. I still believe that today. But the technology you are describing would not get that reaction. People will want it. They will want it yesterday. Your inventors have to get these things out where they are visible…soon!
    • admin

      Thanks Scott, I'm like you, wanting them to instantly tell the world about what they have. However, they are working as fast as they can. The next step will be to build a series of units that can be "road tested" and validated by an impartial third-party testing lab. They are also still working on a well-conceived business plan. I'll try to keep everyone posted on their progress. Thomas Frey
  10. Hisham Hittini

    Ideas of today are facts of tomorrow, dreams of today are facts of tomorrow, why wonder, 25 years ago, I used to carry a computer hard disk with a capacity of 128KB (KB not GB) its cost was alomst 400USD, now with 1/10th of it (i.e. 40USD only) we buy exactly 1,000,000 times that capacity in 2 flashes in a medal!!!!.
  11. <a href='http://ressourcenbasierte-wirtschaft.blogspot.com/' rel='external nofollow' class='url'>Hans</a>

    There are many companies out there that claim they have found the holy grail of energy production - but do they really have what they claim? http://www.defkalion-energy.com/ http://www.terawatt.com/ http://www.steorn.com/ http://www.blacklightpower.com/ Terawatt even has UL and TUV certifications: http://www.terawatt.com/ecm1/index.php?option=com_content&view=article&id=13&Itemid=49 http://www.terawatt.com/ecm1/index.php?option=com_content&view=article&id=14&Itemid=83 http://www.terawatt.com/ecm1/index.php?option=com_content&view=article&id=4&Itemid=48 http://www.terawatt.com/ecm1/index.php?option=com_content&view=article&id=15&Itemid=82 The deeper you dig the crazier it gets. :) What do you think of these companies, Mr. Frey? Disruptive technologies or outright fraud?
  12. Robb Benson

    That sounds like the tech we are using in our home clusters and also the description the inventor calls it transformative not destructive but the company is Vortex Power and Energy vp_e@live.com . the description seems exactly like the info from the patent and in exactly the same applications that they were looking at I would be really surprised if it isn't them as theyare also looking for a CEO. I thought from the first few sentences That was exactly them and yes they are being looked at from a number of people.
  13. <a href='http://none' rel='external nofollow' class='url'>Frederick R. Winn</a>

    "First we will feed the grid, then we will not need the grid" " Instructions for decentralizing, and improving electrical production by re-tooling the coal Industry to build multiple 0% emission turbine power plants" "Sustainability or Self Destruction" "The Steps to Sustainability" Dear Mr. Frey, Understanding the processes that are required to integrate "the Clean Energy Cycle" into the existing destructive or "dirty" energy cycle is key, now and in the immediate future. My R&D associates have been building business plans that work with the oil companies, and L.P.Gas, in order to operate cleaner power production for remote locations.
  14. <a href='http://none' rel='external nofollow' class='url'>Frederick R. Winn</a>

    "First we will feed the grid, then we will not need the grid" " Instructions for decentralizing, and improving electrical production by re-tooling the coal Industry to build multiple 0% emission turbine power plants" "Sustainability or Self Destruction" "The Steps to Sustainability" Dear Mr. Frey, Understanding the processes that are required to integrate "the Clean Energy Cycle" into the existing destructive or "dirty" energy cycle is key, now and in the immediate future. My R&D associates have been building business plans that work with the oil companies, and L.P.Gas, in order to operate cleaner power production for remote locations.
  15. John W. Ratcliff

    @Robb Benson, I did some google searches on 'Vortex Power and Energy' and there really isn't anything out there. Could you email me any links that you have? mailto:jratcliffscarab@gmail.com Thanks, John
  16. John W. Ratcliff

    @Thomas Frey As an earlier poster pointed out, there are a number of 'free energy' technologies in development. Most of them are pretty flaky but LENR appears to be getting closer to reality. NASA has filed a patent on it and released a promotional video. CERN just held a conference on it. There are several scientific theories that appear to explain it ('Widom / Larsen' being the most promising). LENR could truly be a 'Mr. Fusion'; but since it produces heat not electricity not necessarily as appealing. A 'free energy' source that directly produces electricity without heat byproducts would be even more incredible. I know of no technology proposed that can do something like this that do not violate all the known laws of physics or hasn't turned out to be a scam. I'm curious why you have become convinced by this one company versus the many other companies that make similar claims? John
    • admin

      John, Simply stated, the technology is brilliantly simple. They are already surrounding themselves with top industry experts who all believe this is the holy grail. I wish I could say more, but I for one am convinced of the potential. I'll let you know as soon as I can say more. Thomas Frey
  17. uday pasricha

    Hans has listed the companies and Thomas mentions that the big boys will: Discredit the technology Discredit the company Pose counter-claims Use credible people to “say it ain’t so” Distract people from the truth Discredit or dislodge the founders Use legal maneuvers to keep them tied up in court for decades The special interest to day controls status quo but it is ending thanks to this media, and the new big consumers of power are server farms. They have the money and it is likely (and we hope) that companies like Apple/Google who have billions will be the ones to come up with the disruption. We find that in the developing world like india new disruptive technologies do not have a hope as the control of big boys is increasing in these countries as it starts to wane in the developed world. Additionally the innovation will in most cases come from the west in terms of thought process. An indian team of youngsters can insure delivery because of the mindset that is very conducive to "frugal engineering" and in that area very little competition. This is because it is a perceptive attitude based on way of life of constraint and not necessarily a skill. We push india based development to first focus on saving BEFORE and alternative or substituion can be thought of because the special interest will destroy any alternative that can ever fulfil more than 5% of growing demand. We find to save 10%-20% has many options and then one can move upto 50% with hybrid. Alternatives will come from disruptive thinkers who also have the muscle as consumers and hence all eyes or pressure should be on the Apple and Google types to be the new energy pioneers. Their principal advantage besides being consumers themselves is that their mindset and business models are always based on abundance. The energy mindset in the world is only talking about curbing. So we expect the directional innovation to come from the developed world.
  18. John W. Ratcliff

    I've been trying to figure out what technology Thomas could be referring to and so far this one seems the closest. This article describes a 'battery like' solid state energy product that is based on no unique or special physics; just a combination of materials techniques. Could this be the magic power source being referred to? http://pesn.com/2011/07/23/9501875_Number-1_Breakthrough_Solid_State_Generator/
    • admin

      John, This is a very interesting technology, but not the one I mentioned. Keep in mind, the one I've been talking about may not win in the end. Both the caliber and frequency of new power technologies is increasing, and the existing industry is getting very nervous. They should be, because the word "innovation" has never been written into anyone's performance plan in this industry. The company I'm referring to is less than a year old. They have a website, but you can't tell what they do from the website. And the technology has never been written up or mentioned online, except in my articles. Thomas Frey
  19. <a href='http://hans-fleischer.blogspot.com' rel='external nofollow' class='url'>Hans</a>

    Sorry, but I couldn't resist posting this. :) http://www.quentron.com/launch.html

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