'There has always been, and there always will be, an economic cycle," noted the British journalist and politician Nigel Lawson. He is right, and if you're a regular reader of this column, you know that arguably the most overlooked yet influential economic cycles are long.
Interestingly, each new long cycle seems to not only have a new set of leading-edge technologies to drive growth, but also a secret recipe for how to make a new or established business ride the long wave successfully. Let's explore what I believe this secret success formula will be for the Sixth Wave that has just started.
A brief revisit of Long Wave theory: First proposed by the Russian economist Nikolai Kondratiev, Long Wave theory suggests that economies experience long cycles of economic boom and bust sparked by a few leading-edge technologies that rise to dominance over several decades.
Since the start of the Industrial Revolution in the second half of the 18th century, we have seen five long technological cycles, each of which was dominated by a few technologies that rose to prominence to drive economic growth over several decades.
The last long cycle that just ended was the Fifth Wave, which saw the rise of information and communication technologies and the internet.
Now we are in the early phases of the Sixth Wave of Technology Innovation (2020-45), which will be driven by three technology spaces (digital, clean, and human-centred technologies).
What formulas made companies rise to prominence in earlier long waves? The early "industrial age" predominantly played out using a quantitative formula geared towards the mass production of standardised goods to achieve high economies of scale.
Unfolding in the "knowledge and information age", the successful recipe of the Fifth Wave was as follows: "Find the most expensive transaction cost that you can, and apply computing technology to it. Make sure there is a networking component so that the more people who use it, the more useful it becomes." (James Moody & Bianca Nogrady, The Sixth Wave).
Many internet startups turned corporations used this blueprint to scale up their business successfully during the last long cycle.
The secret recipe to Sixth Wave success? Given that the market environment has evolved markedly over the past 30 years, the Sixth Wave is unlikely to continue that pattern and is likely to follow a new, radically different success formula.
QUALITY OVER QUANTITY
I argue the Sixth Wave will unfold against a major perspective shift from primarily quantitative to predominantly qualitative growth. For me, the secret formula to successfully riding the Sixth Wave is best captured by one of the 10 design principles of the well-known German industrial designer Dieter Rams: less but better.
1. Less but better work (higher productivity and efficiency): "Efficiency is doing better what is already being done," noted the management guru Peter Drucker. With new digital technologies such as artificial intelligence and robots in the workplace, it is highly likely work productivity and efficiency will significantly improve in the coming two decades. Productivity is defined as output over time, meaning we will produce more output in a given period or need less time to produce a given output.
What does this mean for knowledge workers? We produce significantly more output (if we keep human inputs and the time constant), or need to work fewer hours for the same output (as we can produce the desired work faster), or companies use fewer knowledge workers to complete the human work input required to produce the desired outputs.
2. Less but better consumption (more mindful consumption): "Buy less, choose well," the British fashion designer Vivienne Westwood recommended. In the next 10 years, I predict we will see a major shift towards more consumers becoming more conscious of their consumption choices. In other words, we use fewer but better products. Better can mean better quality (more functional or durable), or less harmful to humans or the environment.
We already see this in some areas, such as the organic food industry, the vegan food movement, and the rise of electric vehicles. Brands such as Patagonia have built a tribe of loyal fans by contrasting their high product quality and environmental responsibility with those of other fashion brands.
3. Less but better production (higher resource efficiency): In the excellent book The Sixth Wave, Moody and Nogrady highlight that greater resource efficiency is key to the Sixth Wave's sustainable, clean technology space. Coupled with the inclusion of digital technologies such as AI, robots and the Internet of Things, we can also expect significant improvement in production processes: fewer inputs in men, machines and materials; less waste; less downtime; faster lead times; and better outputs.
Picture Toyota's famed lean manufacturing system amplified by the latest digital technologies, and you get an outlook on the future of production.
I presume "less but better" is a fitting prognostic maxim for spotting future technological, economic and social business opportunities to ride the Sixth Waves successfully in the coming 20 years. But what prophet am I? So, forgive me if I am wrong.
Dr Detlef Reis is the Founding Director and Chief Ideator of Thinkergy (www.THINKERGY.com), the creative breakthrough company in Asia. He is also an Adjunct Associate Professor at the Hong Kong Baptist University and an Innovation Advisor at the Institute for Knowledge & Innovation - Southeast Asia (IKI-SEA), Bangkok University. He can be reached at dr.d@thinkergy.com