Technology and digital have long been near the top of the CEO’s strategic agenda. But often today, technology is the business strategy.
In the past few years, astonishing advances in data availability and computational power have been laying a foundation for the rapid development and convergence of a number of new technologies that will upend almost every industry. We can see robots writing their own software or running “lights out” factories. Biomachines helping to restore sight to the blind and movement to the paralyzed. The implications for corporations are broad, to say the least.
To help leaders understand this noisy and shifting landscape, we assembled a coalition of experts to form McKinsey’s Technology Council. It includes 60+ members—scientists, engineers, investors, entrepreneurs, and others from external technology organizations and institutions, along with a dozen of our engineering, data science, and integrative consulting colleagues.
“We believe the technology disruption over the next few years will be equal to the industrial revolution,” says Nicolaus Henke, senior partner emeritus who leads the council. “We need to be on top of these trends for ourselves and our clients so they can identify the innovations that will radically transform their businesses. What better way to do this than to collaborate with the world’s leading technologists?”
The first research output of this effort has just been published. The Tech Trends Index identifies the 10 technology trends most relevant to creating a competitive advantage and to evaluate in terms of investments. “While they may not be the coolest or newest,” explains Ivan Ostojic, a partner who led the work, “they should matter the most to business leaders.”
As part of the research, the council examined more than 80 fundamental technologies, grouped into ~40 tech clusters, to identify the 10 major trends. Each tech cluster is ranked based on the breadth of impact, maturity, and a “momentum score,” which measures how quickly they are maturing.
The momentum score is comprised of factors such as venture capital investment, number of patent filings, number of use cases across industries, level of attention in science and business media, and technology maturity. Comparing composite momentum scores with factors such as applicability to an industry and tech maturity will help executives determine how much disruption a trend is likely to cause and when it will have business implications.
A leader can look across the ten trends—for example, distributed infrastructure or next-generation computing—and identify the two or three most relevant to his or her industry. The report details the underlying technologies for each, including current applications, future potential use cases, and their timelines.
For example, if quantum computing is high in terms of how it will apply to an industry and lower on technical maturity, with a lower momentum score, what does this mean for an executive? He or she will have to look at how a technology will change the fundamentals of their industry. In chemicals and pharmaceuticals R&D, quantum computing will recreate the process of inventing new molecules within the next five to ten years, so a leader will have to invest in this new technology sooner rather than later.
On the other hand, in both the financial services and entertainment industries, Software 2.0, in which neural networks write code instead of programmers, is already significantly accelerating model design and deployment today.
“The research forms the basis for eye-opening discussions with leaders about the risks and opportunities of technology for their business,” says Kate Smaje, a senior partner who leads McKinsey Digital. “Leaders will need to quickly determine the combined impact of these trends on their companies, industries and value chains or risk being late on the S curve.”
The Tech Trends Index, to be updated annually, will be followed by a cross-industry strategy guide that explains step by step how to develop and integrate emerging technologies into an organization, followed by industry-specific outlooks.
Meanwhile, the council, a firm-wide initiative intended to operate like a technology think tank, will continue its work developing research and conducting experiments with emerging technologies while convening the world’s leading thinkers.
“In our earliest days, leaders from organizations focused on computing and machine learning, from major enterprises to smaller startups, began sharing their findings informally and explored new ways of automating code writing,” recalls Nico. “In fact, it was conversations among the council about the deployment of artificial intelligence (AI) agents at scale that laid the foundation for our AI work in the America’s Cup.”