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Oil is now roughly at $50/barrel.  Incredible.  I am wondering what Clayton Christensen and Michael Porter think?  I am not an energy industry expert, but it would seem to me that OPEC and other market competitors such as Venezuela and Russia are losing to the new fracking entrants.  My understanding is that a couple years ago fracking was not economically feasible at ~$70 barrel, and the technology really needed sustained prices over $100/barrel.

What boggles my mind is that those market participants that could manage the price (e.g. OPEC) allowed the price of oil to stay high long enough that the technology investment required for fracking became feasible – ie you could make a profit, even with the high upfront costs associated with a new technology.  I don’t know what the Moore’s law equivalent is for the oil industry, but you have to assume it would kick in, and apparently it did.  So, now, the fracking technology has quickly evolved and profits can be made at $50/barrel.  This feels to me like not only a great economics business case – what not to do when you are the lead dogs in a market – but the socio-political impact will be globally disruptive as well.  This is an amazing moment in our history, and technology is again playing a disruptor with far reaching implications.

Our industry – communications and collaboration – feels more like the facilitator of a disruption, rather than being a disruptor itself.  You could say that social, communications and collaboration technologies facilitated global events like the Arab Spring, but have these technologies changed the globe the way that fracking technologies are changing the face of the oil industry and the socio-political landscape globally?  There was a great book written on this topic a couple years ago called “The Great Stagnation” by Tyler Cowen wherein the author argues that very little of our era’s technological achievements have had substantial economic benefits. A few people got very rich, but other than that, the technologies have not changed with world on the scale of previous achievements like the Wright brothers for example.  I tend to think he was right.  But maybe we are experiencing something different now in the oil industry.  I am curious what you think about technology implications on a global scale?  Have we had any that have had direct global economic benefit since 1970?  The Internet?  Yes (Though Tyler Cowen might disagree).  Is that the only one over the last 50 years?

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Posted in CMO Blog, Collaboration, New Way To Work, Technology
2 comments on “The Facilitator of Disruption
  1. Frank Fender says:

    Thoughtful insights, Bill. I agree with your internet assertion. I would think Intel’s introduction of the microprocessor in November of 1971 and the ensuing proliferation of personal and mobile computing devices, would also be analogous to the Wright brother’s contribution.

  2. Stefan Nueesch says:

    Interesting thoughts, Bill, especially for the debate whether disruptive innovation does or not produce a significant impact on the socio-economic landscape.
    I tend to claim that certain technologies definitely create a transformational impact and facilitate benefits which had not been imaginable in the past. In this context, it is worthwhile to consider differences depending on the evolution of the respective socio-economic environment: as an example, technologies centered around mobility have a massive impact in emerging countries with limited existing infrastructure. Take the example of M-PESA for mobile payments in Kenya – it facilitates access to economic transactions for individuals and SMEs which otherwise would be excluded from certain type of business, read for background on the Economist: http://www.economist.com/blogs/economist-explains/2013/05/economist-explains-18

    Thus, while some think that innovation creates wealth just for a small elite (e.g. successful start-up owners), innovation when seen as an enabler allowing market access for new economic actors may be considered as a lever for reducing inequality. Who is interested to learn more about these aspects might want to read this recent book review by Walter D. Valdivia: http://www.brookings.edu/blogs/techtank/posts/2015/01/5-innovation-outcomes