The McKinsey Technology Council – a global group of over 100 scientists, entrepreneurs, researchers and business leaders – has released its second annual Technology Trends Outlook. By assessing metrics on innovation, interest, investment and adoption, the council prioritized 40 technologies and grouped them into 14 leading trends.
Applied AI again received the highest score for innovation in the report after last year. Sustainability, meanwhile, has become a major catalyst for technology around the world, with clean energy and sustainable consumption attracting the highest investments from private equity and venture capital firms. And five new trends have been added to this year’s edition: industrialization of machine learning, Web3, immersive reality technologies, the future of mobility and the future of space.
In this post, McKinsey Senior Partner Lareina Yee, Expert Partner Roger Roberts, and McKinsey Global Institute Partner Michael Chui share their thoughts on what the results could mean for leaders over the next few years.
A number of tech trend reports are published each year. What’s unique about this one?
Larina: It provides a bird’s-eye view of the full spectrum of technology trends, from the bio-revolution to advanced connectivity and space exploration. It also shows how all of these trends mesh together so leaders can understand the opportunities they are creating.
For example, the metaverse is not a single trend, but encompasses cloud computing, advanced connectivity, applied AI, as well as immersive reality technologies and Web3, all enabling the creation of truly new experiences and modes of interaction. This means that creativity – how these technologies can be used together – can now be the “limiting” resource, more than just processing power, storage or network bandwidth.
What surprised you most about the results?
Roger: One thing that I think is underestimated is the potential in next generation software development, the tools and skills that will enable software developers to write, develop and test code better and faster and therefore innovate in much shorter time frames . That has enormous power. So if I were to look at which of these trends people should be pushing faster and harder, this would be one. I also think that over the next year or two we will see much more clarity about the potential impact of quantum computing, which has moved from science to engineering and will really scale in certain use cases.
Michael: I’m excited about the huge leap forward that the industrialization of machine learning (a form of AI) itself has made in the past year, going from pilot to production scale for real business use. Machine learning has an incredible variety of applications and creates value in multiple sectors. Some examples are predicting when customers are at risk of churning and discontinuing service, identifying potential financial fraud more accurately, and ensuring autonomous vehicles can safely navigate the streets of our cities.
What should business leaders take away from this technology report?
Roger: When a company can better understand the technologies with the greatest momentum — by which we mean research, venture funding, and use case development — it can identify those it needs to respond to over the next few years and those it can take on an attitude of watchful waiting.
In practice, this means thinking, “What technical corners am I going to take here and then what corners am I going to try to turn?” And by “driving” I mean using external R&D and talent to advance my business. On the “bend” side, executives would say, “I use my own technical skills to think about how we can customize something to suit our needs or build something unique on top of these platforms.” Here, the combination of creativity, design, Tech and data science are coming together at the forefront to build a new consumer experience or launch that new business.
Larina: Companies also need to think about how these technology initiatives might shape their ecosystem’s partnerships or alliances. We know that companies with stronger networks of relationships are better positioned to thrive in the world being reinvented by these technologies.
How will this research affect McKinsey’s work with its clients?
Larina: We share the findings and work with industries to consider how specific trends can best help organizations achieve sustainable and inclusive growth. Some examples of this include: identifying opportunities for consumer brands to develop beauty products with biodegradable ingredients; Exploring the ways advanced connectivity can expand health and education services for more inclusive access; and explore how immersive technology can deepen training and product support so manufacturers can work together to improve customer and employee experiences.
Any predictions for next year?
Michael: From year to year, the names of the trends will not change so much. But the level of investment, the way it is applied, the pace of the transition from science to engineering to practice will change. I would love to see companies use engineering and also use their talents in creativity, design and organizational change to combine and apply these technologies in new and unexpected ways.
Roger: I want to emphasize that not only what the technology trends are, but also how fast they are moving is really extraordinary. We have seen this during the pandemic with the unprecedented pace of mRNA vaccine development and deployment. This happened at a speed that many experienced people would not have thought possible. It shows that there are a range of actors – governmental, environmental, technological – converging to accelerate technological change on many dimensions. Leaders need to prepare for this pace.