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The Next Wave of Innovation: Navigating Our Rapidly Changing World
When Alec Ross was growing up in West Virginia, his hometown was built on coal and chemicals. Union Carbide employed thousands, and the economy was stable. But as globalization accelerated, everything changed. While his hometown faced economic decline, other regions thrived. India's poverty rate dropped from 60% to 22%, China lifted 600 million people out of poverty, and knowledge economy hubs like Silicon Valley generated trillions in wealth.
This stark contrast between winners and losers in globalization's first wave sets the stage for what's coming next. The industries of the future-robotics, genomics, cryptocurrency, cybersecurity, and big data-will transform our world even more dramatically than the internet did. And unlike previous waves of innovation that lifted billions from poverty, this next wave will challenge middle classes globally while bringing frontier economies into the mainstream.
As Hillary Clinton's Senior Advisor for Innovation at the State Department, Ross traveled over half a million miles witnessing next-generation technologies worldwide. His insights reveal not just which technologies will reshape our future, but how nations, businesses, and individuals can position themselves to benefit rather than be left behind in this next great economic transformation.
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The Robot Revolution: From Manufacturing to Caregiving
Japan faces a critical demographic challenge with the world's longest-living population and largest elderly demographic. By 2050, 39% of Japanese citizens will be 65 or older, creating an enormous need for eldercare. With a projected shortfall of 2.5 million eldercare nurses by 2025, Japan has turned to robotics for solutions.
Companies like Toyota have developed humanoid robots like Robina, modeled after The Jetsons' Rosie, capable of communicating through words and gestures while performing household tasks. Honda's ASIMO can interpret human emotions and assist elderly patients. The Japanese government is heavily investing in eldercare robotics, granting $24.6 million to companies in 2013 and subsidizing R&D costs. Despite questions about emotional connection, Japan's aging population necessitates these innovations, which will likely spread globally as other nations face similar demographic shifts.
The global robotics landscape is dominated by the "big five"-Japan, China, the United States, South Korea, and Germany-which account for 70% of total robot sales. This advantage will likely accelerate as these countries incorporate next-generation robotics into society, creating high-paying jobs and wealth similar to what happened with network equipment makers during the internet boom.
What's remarkable about today's robotics revolution is how it's encroaching on service sector jobs once thought to be exclusively human domains. Two key developments drive this shift: improvements in modeling "belief space"-mathematical frameworks that allow robots to understand environments-and cloud robotics, which connects robots to vast troves of shared experience data. Before cloud connectivity, robots had limited access to data, but now they can incorporate the experiences of every other robot of their kind, learning at an accelerated rate.
Driverless cars exemplify this transformation. Google has emerged as a surprising frontrunner, developing cars equipped with radar, cameras, light detection systems, and advanced GPS. Sebastian Thrun, founder of Google's Car Project, was personally motivated after losing his best friend to a car accident, aiming to eliminate the 1.3 million annual worldwide traffic deaths caused by human error. Beyond safety improvements, this technology threatens to displace millions of professional drivers-including 2.5 million truck, taxi, and bus drivers in the US alone.
In medicine, surgical robots are transforming healthcare with innovations like Johnson & Johnson's SEDASYS system for colonoscopy sedation at just $150 per procedure (versus $600-$2,000 for traditional anesthesiologist services). Beyond cost savings, robots enable new medical possibilities-from targeted cancer treatment to 3D-printed customized implants. Educational applications include the VGo robot that allows homebound students to attend school remotely and Aldebaran's NAO robot that serves as a teaching assistant, particularly helping students with autism.
As robot production costs decline, they become increasingly competitive with even the lowest-paid human workers. Foxconn exemplifies this shift-in 2011, chairman Terry Gou announced plans to purchase 1 million robots to work alongside his 1 million human employees. Oxford University research suggests 47% of American jobs face high risk of computerization within two decades, with another 19% at medium risk. The impact will vary by country, favoring nations that develop and export robotics while threatening those dependent on cheap manufacturing labor.
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Decoding Life: The Genomics Revolution
The genomics revolution represents the next trillion-dollar industry, built not on digital code but on our own genetic code. When oncologist Lukas Wartman faced acute lymphoblastic leukemia for a third time with virtually no chance of survival, his colleagues at Washington University sequenced both his DNA and RNA to identify the specific genetic mutation driving his cancer. This unprecedented approach revealed an overproduction of the protein FLT3, which they successfully targeted with Sutent, a kidney cancer drug repurposed for his unique case. Four years later, Wartman remains cancer-free-a testament to genomics' life-saving potential.
The genomics revolution began in earnest in 1995 with the first sequencing of a living organism's genome, followed by the human genome's completion in 2003 at a cost of $2.7 billion. Since then, sequencing costs have plummeted "a million-fold," enabling commercialization and explosive market growth. Stanford's Ronald Davis compares genomics today to e-commerce in 1994-poised for extraordinary expansion.
Johns Hopkins researchers Bert Vogelstein and Luis Diaz exemplify this potential with their "liquid biopsy" technique, which can detect cancer from minute amounts of tumor DNA in blood samples-finding tumors at just 1% the size detectable by MRI and often before symptoms appear. For cancers like ovarian, early detection dramatically changes survival rates-from 95% cure rates at stage 1 to just 5% at stage 4.
Scientists are now applying genomic approaches to understand, diagnose and treat neurological and psychiatric conditions. Researchers like Ray DePaulo at Johns Hopkins and Eric Lander at the Broad Institute are mapping the genes relevant to psychiatric disorders, though these present greater challenges than single-gene conditions. Despite this complexity, progress has been rapid-Lander notes they've identified about 100 genes involved in schizophrenia in just the past few years.
Despite genomics' tremendous promise, scientists acknowledge its darker potential. As genomic technology advances, it could enable the creation of "designer babies" by revealing a fetus's complete genetic profile-from disease risks and physical attributes to behavioral tendencies and intellectual aptitudes. This information becomes available just ten weeks after conception, raising profound ethical questions.
Some entrepreneurs view even cutting-edge academic genomics research as unimaginative. Craig Venter exemplifies this audacious approach. His company Synthetic Genomics is engineering pigs with human-compatible organs for transplantation, initially focusing on lungs. If successful, xenotransplantation could make organ shortages obsolete. Even more ambitious is Human Longevity, Inc. (HLI), which uses genetic data to combat aging itself.
America's leadership in genomics stems from three critical factors: exceptional scientists, abundant academic research funding, and robust venture capital markets that commercialize breakthroughs. However, this dominance isn't guaranteed. While the Human Genome Project was primarily an American achievement, China contributed through the Beijing Genomic Institute. In the fifteen years since, China has transformed into a genomics powerhouse. BGI now operates more sequencing machines than the entire United States and is discussing potentially sequencing nearly every Chinese child's genome.
While cutting-edge genomic breakthroughs initially benefit wealthy societies, mobile technology is democratizing healthcare access worldwide. With six billion people having mobile phones (more than have toilets), these devices are becoming crucial healthcare tools in developing regions. Mobile health applications enable diagnosis, disease monitoring, expert assistance for community workers, and health education in underserved areas.
Genomics today resembles the internet in 1994-we're at the beginning of a revolution that will transform healthcare more profoundly than any 20th-century innovation. We will live longer but face more complex choices as we gain unprecedented insights into our biological makeup and potential futures.
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Digital Currency: Transforming Money and Markets
Money is transforming from physical currency to digital code, revolutionizing how we conduct transactions. What was once tangible-wallets filled with cash and coins named for their physical weight-is becoming virtual. The evolution from cash to credit cards to ATMs to mobile payments represents a fundamental shift in how we exchange value, with phones increasingly replacing wallets entirely.
Jack Dorsey's Square exemplifies this revolution in payment processing. Square emerged from a simple problem: Dorsey's partner Jim McKelvey lost a $2,000 sale because he couldn't accept American Express. Their solution allows anyone with a mobile device to process payments without the complex fee structures and middlemen of traditional credit card processing. By reducing friction in transactions, Square empowers small businesses and local economies.
The potential for digital payment systems extends far beyond wealthy nations. Even in the Democratic Republic of Congo, site of the deadliest conflict since World War II, mobile technology is creating economic possibilities. Despite the collapse of the Congolese state and conventional banking system, mobile phones have become pervasive tools for commerce. In the Mugunga refugee camp near Goma-where 72,000 people live in makeshift shelters amid devastating poverty-mobile phones serve not just for communication but as payment systems for people without bank accounts.
The sharing economy represents another dimension of coded markets. Companies like Airbnb and Uber have expanded far beyond their humble origins to become multibillion-dollar enterprises with ambitions to dominate entire sectors of the economy. These coded markets simultaneously concentrate and disperse economic activity. They disperse by enabling individual sellers, but concentrate by funneling all transactions through California or Chinese platforms.
Bitcoin's blockchain technology represents perhaps the most revolutionary development in coded currency. The blockchain creates a public, distributed ledger that records every transaction since Bitcoin's inception. This structure prevents counterfeiting since each coin carries its complete transaction history, and the widely distributed nature of the ledger means any fraudulent coin would be rejected by the network's millions of copies.
Satoshi Nakamoto's breakthrough was solving how to update this decentralized ledger without central authority. The blockchain updates at regular intervals, bundling verified transactions into "blocks" that form a chain. Computers in the network compete to solve complex algorithms that trigger these updates, with the winning computer broadcasting both the solution and the latest block of transactions.
Despite the blockchain's security, the surrounding infrastructure has proven vulnerable. Exchanges like Mt. Gox have been hacked, with investors losing significant sums. In February 2014, hackers exploited a software bug to steal 850,000 bitcoins (worth nearly $500 million) from Mt. Gox, highlighting the persistent security challenges in the cryptocurrency ecosystem.
Bitcoin's early days pitted Silicon Valley innovators against the financial and governmental establishment, with prominent critics emerging from across the political spectrum. Yet establishment attitudes have evolved significantly as blockchain technology gained wider understanding. Larry Summers exemplifies this shift-initially dismissing Bitcoin as unimportant in 2013, by 2015 he joined the advisory board of Bitcoin security company Xapo.
The blockchain's true potential may lie not in Bitcoin as a currency, but as a protocol for trusted transactions-potentially becoming to financial services what HTML was to the web. While Tim Berners-Lee made the internet visible and navigable through HTML, the blockchain could fundamentally transform how we conduct high-value transactions that currently require costly third-party intermediaries.
Looking ahead, most current cryptocurrencies will likely disappear, but the category will endure. The successful cryptocurrency will shed its cryptolibertarian roots, embrace regulatory responsibilities, and abandon anonymity to achieve economic significance. Like 1990s search engines before Google emerged dominant, the blockchain's true potential awaits safer, more user-friendly applications.
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Cybersecurity: The Weaponization of Code
The world has transitioned from the Cold War to a Code War, where computer attacks can threaten critical infrastructure and cause billions in damages. The 2012 Shamoon virus attack against Saudi Aramco, the world's most valuable company worth over $2 trillion, demonstrated this new vulnerability when Iranian-linked hackers infected 30,000 computers (75% of the company's network) and nearly disrupted global oil production.
Today's cyberattacks fall into three main categories: Confidentiality attacks steal secure information, as when hackers breached Target in 2013, compromising 40 million credit cards and 70 million customers' personal data. Availability attacks (denial-of-service) flood networks with requests to render them inoperable. Integrity attacks are more physically destructive, altering or destroying computer code to damage hardware or infrastructure.
The annual cost of cyberattacks now exceeds $400 billion-larger than the GDP of 160 countries. In response, cybersecurity has grown from a $3.5 billion industry in 2000 to a projected $175 billion market by 2020, becoming so critical that corporate boards now require cyber expertise among their directors.
The world's most sophisticated cyber powers-the United States, China, Russia, Israel, Iran, and the United Kingdom-each approach cyberwarfare differently. In 2011, the US formally declared cyber a domain of warfare alongside air, land, sea, and space. China has pursued an aggressive cyberstrategy since the late 1990s, evolving from simple communication disruptions to sophisticated espionage. Their most powerful attacks focus on stealing intellectual property to benefit state-owned enterprises.
As the Internet expands beyond computers to everyday objects, creating the "Internet of Things" (IoT), we're creating unprecedented cybersecurity vulnerabilities. By 2020, wireless connected devices will grow from 16 billion to 40 billion, with Cisco's John Chambers predicting IoT will become a $19 trillion global market. Finnish cybersecurity expert Mikko Hypponen warns that seemingly innocent connected devices can be weaponized: "Why would anybody hack a toaster? Why would anybody hack a fridge? A toaster or a fridge doesn't have a traditional user from which you could steal anything at all, but they do have computing power, and they are online."
Russia demonstrated the integration of cyber and conventional warfare during the 2014 Ukrainian crisis. Before Russian troops physically seized Crimea, Ukrainian networks had already been compromised by the "Ouroboros" malware, which provided surveillance capabilities and established beachheads for future attacks. As physical tensions escalated, so did malicious cyber activity.
Throughout history, societies have developed codes and laws to limit warfare's scope and methods, distinguishing between combatants and non-combatants, battlefield and home front. Cybercombat, however, operates without such established norms. The weaponization of code represents the most significant development in warfare since nuclear weapons, but lacks any widely accepted rules.
Unlike nuclear weapons, which require years of work, billions of dollars, and rare scientific expertise, creating cyber weapons needs only a computer, internet connection, and coding skills. Their development is difficult to trace, and the non-physical nature of cyber conflict has made private companies unwitting combatants.
With the Bureau of Labor Statistics projecting "a huge jump" in demand for information security skills, cybersecurity represents one of the most secure career paths for the next fifty years. Yet amid this industry growth lies a critical gap: everyday citizens and small businesses lack the resources for expensive protection. Security should be a public good administered by government, not merely a private commodity available to those who can afford it.
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Big Data: The New Raw Material
Data has become the fundamental resource of our information age, just as land defined the agricultural era and iron the industrial age. We've reached a remarkable inflection point where today's children grow up constantly connected, tracked, and monitored-a stark contrast to previous generations who grew up completely unreachable. From the moment a child receives their first device, they begin building a lifelong data trail that can be collected, analyzed, and monetized.
Big data will transform language barriers within the next decade, making everyone conversant in dozens of foreign languages. Universal machine translation will accelerate globalization on a massive scale by removing the need for English as business's lingua franca. Machine translation will open previously inaccessible markets like Indonesia with its 700+ languages or Papua New Guinea with 850 languages.
Big data's most profound impact may be solving humanity's oldest challenge: hunger. With 805 million people already food insecure and population growing to 9 billion in 30 years, food production must increase 70% amid climate change and water scarcity. Precision agriculture offers the solution by transforming farming from an experience-based practice to a data-driven science. Sensors throughout fields will gather real-time data on weather, water, nitrogen levels, air quality, and disease. Algorithms will generate precise instructions for farmers about what to do, when, and where-down to each square inch of farmland.
Wall Street has embraced big data with two-thirds of the 7 billion daily US equity trades now executed by algorithms. The next frontier is retail banking through "fintech"-applying big data to modernize obsolete banking infrastructure built in the 1980s and 1990s. Fintech investment has surged from $930 million globally in 2008 to $3 billion in 2013, projected to reach $8 billion by 2018.
Palantir Technologies exemplifies big data's more concerning applications. Named after the all-seeing stones in "Lord of the Rings" and run by eccentric Stanford PhD Alex Karp, Palantir began with the CIA as its sole customer before expanding to the NSA, FBI, and US military. The company specializes in transforming massive, messy data into visualized maps and charts that reveal otherwise invisible patterns.
Digital data's permanence creates unprecedented privacy challenges. The "Good2Go" consent app illustrates this problem perfectly-while promoting responsible sexual behavior, it creates permanent records of users' sexual encounters, sobriety levels, and timing. Privacy concerns extend beyond our digital communications to include educational records, health information, and childhood behaviors. Commercial exploitation is rampant-companies sell lists of rape victims, AIDS patients, and "peer pressure sufferers" to marketers.
Beyond privacy concerns, big data raises deeper questions about human autonomy as algorithms increasingly guide our choices. The fear isn't just machines becoming more human, but humans becoming more machine-like-replacing instinct and spontaneity with algorithmic decision-making. From algorithmically selected outfits for dates to algorithm-matched romantic partners (now responsible for one-third of U.S. marriages), we're ceding more personal choices to opaque systems.
Despite its power, big data has significant limitations. It excels at tasks humans find difficult (continuous calculations) but struggles with uniquely human capabilities like creativity and understanding context. The best approach might be Michael Slaby's "mixing board" concept-balancing quantitative and qualitative experiences rather than relying exclusively on either. Data works best when governed by human judgment, preserving the "soul" that algorithms lack.
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The Geography of Future Markets
While leaders worldwide aspire to "create their own Silicon Valley," it's impossible to replicate Silicon Valley's decades-long head start in Internet businesses. However, positioning for emerging industries remains possible. Success requires specific cultural and labor characteristics that often contradict societal norms and governmental control impulses.
Domain expertise-deep knowledge concentrated in specific regions-explains why Internet companies still emerge predominantly from Silicon Valley despite global competition. For over 20 years, the world's best computer scientists have concentrated there, drawn by education, employment opportunities, investment capital, and a culture that elevates engineers to high social status.
The industries of the future show greater geographic distribution. Genomics clusters around pioneering universities (Boston/Harvard/MIT, Baltimore/Johns Hopkins, Silicon Valley/Stanford/UC) with Beijing rapidly emerging. Cybersecurity expertise concentrates near government centers (Washington, Tel Aviv, London, Moscow) where specialists developed skills in intelligence communities. Robotics leadership exists where electronics and manufacturing already thrive (Japan, South Korea, Germany).
Cities have always been innovation engines. Today, 54% of the world's population lives in cities, with just 100 cities accounting for 30% of the global economy. Cities thrive as innovation incubators because they produce positive spillover effects-allowing ideas, labor, and capital to flow efficiently while enabling talent coordination and market specialization.
The most successful global cities share a culture of openness, even in countries with more closed official policies. Economic openness reduces business friction, while political openness ensures everyone can gather, meet, work and speak without undue censure or discrimination.
Estonia exemplifies the power of openness. Post-independence Estonia was devastated-shops empty, food rationed, severe gas shortages, industrial production dropping 30%. Under 32-year-old historian Mart Laar, elected prime minister in 1992, Estonia embraced radical reforms. First stabilizing the economy by cutting expenses and ending subsidies to state companies, then opening to the global economy by reducing trade tariffs, ending export restrictions, and welcoming foreign investors with equal protections.
When Finland offered Estonia its old analog phone system as the Finns upgraded to digital, Estonia declined-choosing to leapfrog directly to digital networks. Every Estonian school was online by 1998, just four years after the commercial internet's birth and six years after breadlines. In 2000, internet access became a legally enshrined human right. The results: GDP grew 15-fold to over $25,000 per capita-ranking first among former Soviet republics-and Estonia became a global innovation center, producing successes like Skype.
While Estonia opened up, Belarus shut down under Alexander Lukashenko, who has ruled since 1994 as the ultimate control freak. Dissidents are silenced, press tightly controlled, and opposition protesters labeled terrorists. Economically, Lukashenko is a neo-Luddite who simply doesn't understand the modern world. He effectively owns the economy, with most businesses state-controlled and subject to strict administrative oversight. Around 40% of industrial enterprises and over 60% of agricultural firms operate at a loss.
A country's economic success increasingly depends on empowering all its citizens-including women. Nations effectively cutting their workforce in half cannot compete in knowledge economies. According to the World Bank, 93 percent of Middle Eastern and North African countries restrict women's job opportunities, causing American and European investors to pivot toward more progressive regions.
The contrasting roles of women in Chinese and Japanese business reveal the economic impact of gender equality. In China, women received nearly equal factory wages, childcare benefits, and flexible schedules. Today, a quarter of urban Chinese women attend college (outperforming male counterparts), 51 percent of senior management positions are held by women (world's highest), and half the world's wealthiest female billionaires live in China.
Meanwhile, Japan's stagnation correlates with its gender inequality. Despite Japanese women being the world's best educated, 70 percent leave work for at least a decade after having children. Women comprise just 14 percent of university researchers, 19 percent of doctors, and only 1 percent of executive managers. Japan ranks a dismal 104th out of 142 countries in gender equality.
The second critical factor for future economic success is empowering young digital natives. America's willingness to entrust young professionals with authority and investment capital contrasts sharply with Mediterranean Europe, where young professionals wait decades for real authority. It's no coincidence that Google, Facebook, Microsoft and Oracle were all started by twentysomethings in the United States.
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Preparing for Tomorrow's Economy
As we face a future of elder-care robots, cyberattacks against homes, and ubiquitous privacy-eliminating sensors, what skills will our children need to thrive economically?
Multicultural fluency is paramount. Though not everyone can afford extensive travel, today's parents have tools like online language programs that weren't available even a generation ago. Technical fluency is equally important. Former eBay CEO John Donahoe would advise today's youth to "major in computer science or engineering and take Mandarin." Entrepreneur Chamath Palihapitiya believes children need two languages: one traditional and one technical like Python.
Many experts also advocate for liberal arts education and interdisciplinary approaches. Estonia's president notes the critical need for policymakers who understand technology. For those without access to college, free resources like Codeacademy and MIT's Scratch are democratizing programming skills across 150+ countries. Tomorrow's labor market will increasingly pit humans against robots-you'll either tell robots what to do or robots will tell you what to do.
While economic privilege remains important, geography's impact is changing. The advantage of being born in the US or Europe has decreased as frontier markets develop. Sub-Saharan Africa now offers unprecedented opportunities for upward mobility. The countries that will succeed will be those that open up economically, politically, and culturally.
For all 7.2 billion people on earth, our obligation is to extend the opportunities of future industries as widely as possible. Innovation and globalization have already lifted unprecedented numbers from poverty. These changes create new opportunities for businesses, governments, investors, parents, students, and children alike.
