Across industries, new entrants and new business models are disrupting traditional business systems. A plethora of ripe technologies and innovations are readily at hand for both incumbents and fast-moving new entrants to assemble into high-value products, services, and businesses.

We believe the next decade will produce as much change as the previous century did. In less than five years, cognitive computing has advanced from a novelty to a commercialized means for solving problems. In automotive, we see 50 percent or greater reductions in crashes with early application of these technologies for automatic braking and lane-keeping. We see multiple original equipment manufacturers (OEMs) announcing plans for fully autonomous vehicles in the 2020 or 2021 model years.

In health care, we see equipment manufacturers and major hospital systems teaming to develop networks of imaging and monitoring equipment that can assist in diagnosis—promising to bring the capability of the world’s leading physicians to your local clinic.

For companies to thrive in this new environment, they must solve what we call “the clockspeed dilemma.” What is the clockspeed dilemma? Albert Einstein’s theory of relativity makes the point simply enough. Einstein taught us that time is relative.

It certainly is for our clients. Each major industry has developed a legacy clockspeed driven by its capital intensity, new product development costs, brand development investments, and competitive intensity; e.g., a two- to three-year cycle in consumer electronics, a seven-year platform cycle in automotive, and a 20-year-or-longer cycle in commercial aerospace. Now they must also face far faster clockspeeds (and often multiple clockspeeds) from new entrants entering their ecosystems—sensor manufacturers, tech players, and startups. These new players fuel customer demands for products to be repeatedly new and exciting—growing into platforms that rapidly evolve in capability and business model to provide affordable yet profitable access to value.   

Thus, the clockspeed dilemma: the need to serve multiple innovation paces at once. Executives must reconcile these multiple paces of change and manage across multiple worlds moving at multiple speeds. To do so is what successful innovation now means.

KPMG LLP has developed an “Innovation Engine” approach to help our clients solve the clockspeed dilemma. This approach starts with broad ecosystem scans of technology and business model, crashing those against proprietary insights on customers, channels, product, and strategies to develop “unmet needs theses” around which rapid, venture-like experiments can be launched and new lines or businesses scaled.

In “The clockspeed dilemma,” we explore these drivers of change and illustrate our Innovation Engine approach primarily in the context of automotive autonomy and mobility. That said, its core principles apply across many of our client sectors.

For example, in the high-tech sector, clockspeeds are accelerating on top of an already breakneck pace of innovation. More and more tech companies are shifting their value propositions to software, services, data analytics, and artificial intelligence. Rather than waiting for the next technology refresh cycle, tech companies can deliver innovation and incremental value through near real-time customer engagements, enabled by ubiquitous connectivity and cloud-based solutions. The same acceleration is also spreading into telecom and media, as these sectors wrestle with increased digitization and an expanded ecosystem that includes the Internet of Things (IoT) (e.g., connected home, security, health), virtual and augmented reality, and end-user devices, content, and services—all operating at different innovation clockspeeds.

The health-care industry is ripe for disruption, with steadily rising costs, lagging quality, and rapidly expanding amounts of data as well as a rapidly expanding ecosystem. Similar to the automotive industry, a diverse set of companies—from sensor manufacturers and tech giants to retailers, and startups—are entering the health-care space and leveraging expertise in big data, cognitive computing, and behavioral science to enable health-care providers to deliver unique patient insights leading to lower cost, higher quality care, and more personalized patient experience. Incumbents are struggling to keep pace with the far faster clockspeed of these new entrants and are increasingly faced with the difficult choice of whether to try to compete or to join forces with these well-funded new entrants.

Even the notoriously slow-to-evolve energy ecosystem is expanding and experiencing accelerated innovation. The IoT has made its way into the home through an increasing array of “smart” devices (e.g., thermostats, appliances) linking to mobile applications. On a larger scale, smart buildings and smart cities—producing an increasing proportion of renewable energy, offering the ability to offset intermittency through battery storage, and drawing more sparingly on a central grid (itself “smarter” through advances such as devices permitting two-way power flow)—are increasingly a reality. As battery-storage economics continue to improve, transportation will likely continue to shift to electric and electric-hybrid vehicles, further linking and accelerating innovation across not only the automotive and energy industries, but the technology and (digitized) health-care industries as well.  

We are at a unique point in history with a plethora of ripe technologies to be harvested and applied across product and service industries. Tremendous value will be created by those with the prescience to seek it, to ask “what-if,” and to identify high-value applications. Carpe diem (seize the day).

Read the full whitepaper: The Clockspeed Dilemma

WRITTEN BY PRINCIPALS OF KPMG STRATEGY:                                                         THOMAS MAYOR (INDUSTRIAL MANUFACTURING LEAD) AND ANDREW STEINHUBL (ENERGY &  NATURAL RESOURCES LEAD), WITH CONTRIBUTIONS FROM WILLIAM SHEW (LIFE SCIENCES LEAD)  AND PHILIP WONG (TECHNOLOGY, MEDIA & TELECOM)