What Will Replace The Tech Economy?

By Stan Davis and Christopher Meyer

We didn't realize we were no longer living in an industrial economy for about 20 years, from the early 1950s to the early '70s. When we finally figured out the old economy had exited, we didn't know what to call the new one. Postindustrial? Service? Shopping and gathering? Information won the title.

Get ready for deja vu all over again. Like everything else, all economies have beginnings and endings, and we can already see the end of this one a few decades hence. Economies end not because they peter out but because a challenger supplants them. That's what will happen around a quarter-century from now.

Hunting-and-gathering economies ruled for hundreds of thousands of years before they were overshadowed by agrarian economies, which ruled for about 10,000 years. Next came the industrial ones. The first began in Britain in the 1760s, and the first to finish started unwinding in the U.S. in the early 1950s. We're halfway through the information economy, and from start to finish, it will last 75 to 80 years, ending in the late 2020s. Then get ready for the next one: the bioeconomy.

Life cycles for people and plants, for businesses, industries, economies and entire civilizations have four distinct quarters: gestation, growth, maturity and decline. The Internet is the main event of the information economy's mature quarter, the last phase of it being marked by the widespread use of cheap chips and wireless technology that will let everything connect to everything else. Life cycles overlap. So the information economy will mature in the years ahead as the bioeconomy completes its gestation and finally takes off into its growth quarter during the 2020s.

The bioeconomy opened for business in 1953, when Francis Crick and James Watson identified the double-helix structure of DNA. The bioeconomy has been in its first quarter ever since, and completion and publication of the decoded human genome marks the end of this gestation period.

We're heading into the second, or growth, quarter, when hot new industries appear, much as semiconductors and software did in the second quarter of the info economy. Thus biotech will pave the way for the bioec era. During the next two decades, organic biotech will overlap with inorganic silicon infotech and inorganic composite materials and nanotechnologies.

During the overlap of infotech and biotech, we will be digitizing many biological processes. Up until now, four kinds of information dominate: numbers, words, sounds and images. But information comes in many other forms, such as smell, taste, touch, imagination and intuition. The problem is that our technologies for smell, taste and other new information forms aren't yet developed enough to make them commercially viable. By the 2020s, they will be.

Smell, for example, perhaps the most primal of senses, is being digitized the way sight and sound have been. The basics of what makes a smell can be captured molecularly and expressed digitally on a chip at a reasonable price. Companies like DigiScents of Oakland, Calif., and Ambryx of La Jolla, Calif., have already developed digital odors. Cyrano Sciences of Pasadena, Calif., is developing medical-diagnostics technology that can "smell" diseases.

Imagine sending a greeting card that incorporates the smell of flowers with a written and graphic message. By the 2020s, digital movies will have their own distinctive smell prints. (You can watch Haley Joel Osment in a remake of The Beach and smell the coconut oil!) Why stop there? How does a bank smell, and how does Chase smell different from Citigroup? How about retailers? This is only a tiny example of what will come.

More fundamentally, the first four industries to be infused by the bioec era will be pharmaceuticals, health care, agriculture and food. Best known are the dozens of bioengineered drugs already on the market. Most of these save lives by treating existing problems. One of the biggest shifts for biotech in the decades to come, then, will be the way it transforms the health-care paradigm from treatment to prediction and prevention. Health care today is really sick care. The sick-care business model made money by filling hospital beds. Currently, we're in the managed-care model. It is transitional, lasting one to two decades. Here, you make money by emptying beds. In the bioeconomy, health care will work on a preventive model, making money by helping people avoid having to enter a hospital in the first place.

Basic needs are met in every economy by using the latest technologies available. In the bioec of the 2020s, the farm will be a super-bioengineered place with multimillion-dollar manufacturing plants instead of fields.

Today bioengineered milk, meat and produce are already on our supermarket shelves. Numerous varieties of corn are biogenetically altered--albeit not without challenge. One study showed that pollen from some strains of altered corn killed the larva of the monarch butterfly. Fears of Frankenfoods have caused enough of a furor to disrupt Monsanto's life-sciences strategy and help topple its CEO. Such incidents will certainly multiply.

Beyond 2025, when we move into the mature bioec, the effects and applications of biotech will spread into sectors seemingly unrelated to biology. In the 1950s and '60s it was difficult to comprehend that computers would change every industry--from manufacturing to hotels to insurance--just as it is now tough to see how biotech will alter nonbiological businesses. By the third quarter of the next economy, somewhere in the mid-century, bio applications will seep into many of the nooks and crannies of our nonbiological lives.

Problems will spread as much as benefits do. Each era produces its own dark side. The industrial era was accompanied by pollution and environmental degradation. The major problem of the information age is privacy. In the bioeconomy, the issue will be ethics. Cloning, bioengineered foods, eugenics, genetic patenting and certainty about inherited diseases are just a few of the many developments that are already creating a storm. And the storm will intensify in the U.S.

All this will make baby boomers a unique generation. They will be the first in history to span three distinct economies. Born at the end of the industrial period, they will spend their entire careers in the information age and will end their days watching their grandchildren negotiate the bioeconomy.

Generation Xers, born after 1964, will be different. During their working years, they will experience two major economic shifts: first, from the crunching to the connecting halves of this information economy and, second, from a microwave-based connected universe to the cell-based world of biologic and bionomics. Those of you in Gen Y may have to go through three!

However long you will spend in it, the bioeconomy is the next one to be born, and, of all economies past, present and future, it will exert an impact that will make the infoeconomy look like the runt of the litter.

Stan Davis and Christopher Meyer are the co-authors of Future Wealth and Blur. Davis is senior research fellow and Meyer the director of the Ernst & Young Center for Business Innovation in Cambridge, Mass.