glosho'14: mckinsey & company - matt rogers
TRANSCRIPT
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How to Capture the Biggest Business
Opportunity in a Century
Resource Revolution
Matt Rogers
Director, McKinsey & Company
#ResourceRev
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Resource Revolution – the Basics
▪ 2.5B people entering the middle class, putting pressure on resources—
companies need to improve resource productivity 3-5% annually to keep up
▪ Combining information technology with industrial technology can drive 10x
productivity improvements on both supply and demand side
▪ This shift in the way we produce and use resources will restructure most
traditional industrial markets and will require a new approach to management
▪ Today’s examples: Oil, Buildings, Autos, Consumer Electronics—each
industry facing a 10x productivity shift today
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Discontinuity: 100x more people, 10x more income, 10x faster
1 billion100 million
UK
1600 1700 1800 1900 2000 2100
$7,500
$6,000
$4,500
$3,000
$1,500
$0
USA
GermanyJapan
South Korea
India
IndiaChina
China
GDP per capita in 1990 US dollars purchasing power parity
Size of bubble = population
Year
3
Concurrent supply challenge: Reserves are getting more expensive
to extract and lower grade
$1,500
$1,000
$500
$0
Costs
2005 U.S. dollarsIndexed units
120
80
40
0
Grades
Average Australian Grade Indexed 100
1844
1960 2011Energy
Labor
%Copper
g/t Silverg/t Gold
% Lead
2010
4
We have seen a steep change in labor productivity, but
not yet in energy or resources
1820 1840 1860 1880 1900 1920 1940 1960 1980 2000 2020
GDP per
hour worked
(labor)
GDP per
ton of oil
equivalent
(resource)
Productivity growth
(multiples of 1820 productivity)
48
36
24
12
0
5
Software
Nanotechnology
Systems
engineering
Biology
Interchangeable
parts
Success requires a new management toolkit
1. Reduce Waste
2. Substitute
3. Circularity
4. Optimize
5. Virtualize
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ACES: from 67 cents/mile today to 10 cents/mile
and universal access
Autonomous
maintenance
& charging
Extend range
Electrified
Autonomous Shared
ConnectedAuto route
Match open trips & 2 minute service
▪ No up
front cost
for
batteries
▪ Use only
size car
you need
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PRIME: Advanced Buildings with Net Zero Energy at 0-5% Premium
More useable
space
Faster to build
Easier to
configure
Moving from R2 to R30
Efficient
Productive Integrated
Modular
Better lighting; comfort; security
▪ Advanced
HVAC
▪ Solar plus
storage
▪ LEDs
plus wifi
makes
DSM
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4D: Restructuring the utility industry
10^6 more
information
intensive
Extend range
Disruptive
Distributed
resourcesDispatched
demand
Digital
network Auto route
Matching supply and demand resources
in real time to keep market balanced
▪ Localized
demand
mgmt
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TECH: Increasing Circularity in Technology Driven Industries
Be
tte
r P
rod
ucts
Better Supply Chains
Efficient
Total
engineeringHolistic end
game
Circular
Supply
Recycling start to finish
Inte
gra
ted
Life
Cycle
ma
na
ge
me
nt
So
ftw
are
up
gra
de
ab
leB
ette
r ma
rke
t stru
ctu
reRisk substituted out
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For Businesses: Use less, GET MORE.
BASICS ALL SUPPLIED IN CONTAINER
EQUIPMENT AS
SERVICE FOR YOU
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Questions for Discussion
▪ Where do you have opportunities to improve performance of the businesses in
your portfolio by taking waste out of the equation?
▪ Where are the opportunities to increase circularity?
▪ What would it take to reduce the risk and improve margins in your businesses
through substitution?
▪ Where are you at risk from being disrupted by optimization and virtualization?
Where can you turn these into advantages?
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Restructuring markets globally:•Transportation•Utilities and Water•Oil and Gas•Mining•Buildings and Construction•Food and Agriculture
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