The authors begin with this statement:
They base that statement on their experience as long-time consultants to various industries in their roles in the McKinsey organization. They came to realize that new technologies and new business models could lead to enormous gains in efficiency that could balance or even diminish concerns about overuse of resources as the population continues to grow.
They illuminate the challenge ahead for the business community—and the world—in this manner.
"To accommodate all these people urbanizing, industrializing, and moving into the middle class, China alone will build two and a half cities the population of Chicago every year for the foreseeable future. India will build one Chicago each year….Think of the amount of concrete, iron and steel in a bridge or skyscraper; the amount of copper in a power grid and the energy required to power the cranes, bulldozers, and other machines that build it—and multiply those amounts by tens of thousands."
This increase in demand for resources comes at a time when commodity prices have already begun to climb due to supply issues. The authors point out that commodity prices were flat or decreased during two previous industrial revolutions (mechanization: 1770-1840, and urbanization: 1880-1920), but since the latter decades of the twentieth century they have begun to rise. What is needed now, to accommodate the future needs, is a third industrial revolution, a "Resource Revolution."
The authors claim that such a revolution has already begun. Their goal is to demonstrate that much more can be done to minimize resource demands across the economy. To get to a state where the world actually lives within its resources will require a revolution in which old business models are supplanted with new, more efficient ones. The business opportunity lies in succeeding in this resource-limited world.
The authors discuss several sectors of the economy and demonstrate that much more can be done to increase the efficiency of resource usage. Their discussion of the automobile industry provides an example of what they mean by a "revolution."
The resource revolution in auto manufacture will come from the inevitable transition to electric cars and the spread of advanced fabrication techniques that will minimize wastage of materials. Tesla technology is used as the example of where the industry must go.
Electric cars also deliver efficiencies in design and maintenance.
Tesla has an effective range of about 200 miles. Today it costs about $20,000 to provide the battery power required for that range. With current technology, Tesla is developing a midsize passenger vehicle that is expected to sell for about $35,000. The authors extrapolate advances in battery technology and suggest that what costs $20,000 now could be available for as little as $5000 by the end of the decade. This would make electric vehicles even more price-competitive
with gas-powered autos.
Numerous advances in manufacturing are possible that would diminish resource requirements. Manufacturers are beginning to factor recycling into the design of vehicles already. New techniques such as 3d printing are becoming more widely available for part manufacture. This method would essentially eliminate waste of material by only using precisely the amount needed for the design.
While much can be done to minimize the resource requirements to produce an automobile, the biggest waste is associated with the inefficient use of the vehicle. If transportation is to be provided to those additional 2.5 billion people, it can’t be done using the ownership model that is now in place. Fewer automobiles per person will have to be built, and they will have to be used more efficiently.
This traditional model of automobile usage is beginning to seem obsolete to some.
Even the car manufacturers are getting into the car-sharing business.
One of the major difficulties associated with efficient use of automobiles arises because they are driven by humans prone to errors and irregular driving habits. This is the source of numerous accidents and inefficient use of highways. The car companies are already including features that avoid collisions and reduce accidents, but the greatest opportunity to eliminate them could come from the introduction of driverless cars.
Consider Google’s progress:
Google has demonstrated that a driverless car can negotiate streets filled with human drivers. What might be gained if all the cars were driverless and all were able to communicate with each other and with traffic controls and monitors under some sort of master program? If such a system was feasible, accidents would essentially disappear; we would use our roads more efficiently; and we would need fewer traffic lanes.
What is most striking about the authors’ view of the auto industry of the future is the amount of "creative destruction" required to bring it about. Manufacturers would produce many fewer vehicles. The authors suggest they would recast themselves as "transportation companies" and adopt an entirely new business model that would be based not on selling the vehicle, but on leasing it.
Fewer cars produced means fewer workers making cars. An electric car fleet requiring almost no maintenance means that the vast array of auto parts manufacturers and suppliers would shrink considerably. No accidents means no need for auto insurance as we now know it, fewer lawyers, few, if any, repair shops, and less demand for hospitals and physicians. Traffic violations would no longer exist so law enforcement people could concentrate on more serious issues. And, of course, driverless cars would eliminate the need for drivers.
This scenario provides an example of where technology can take us and how it can provide society benefits, but at the expense of jobs. While some new positions would be created by the new developments, it is hard to see anything but a continued contraction of employment opportunities. Such is the future we seem to face.