In Aims of Education (delivered as an address to the Mathematical Association of England, 1916) the English mathematician turned philosopher Alfred North Whitehead (1861-1947) observed, “the University of Cambridge which had done best at teaching mathematics is the one from amongst whose graduates have come more of the English poets, while Oxford which has specialized in humanities, has tended to turn out writers who have attained, on the whole, a high level of mediocrity. I suppose that by the time one has discussed literature with a witty and learned professor, you know what has been achieved and how good it is. You become respectful and begin to wonder who am I to do better?’’
Fast forward to the 21st century and observe that Bill Gates and Mark Zuckerberg both pioneered technological advances but originated, albeit in part, from Harvard rather than MIT. One can punch several holes in the parallel between Whitehead’s astute observation and my tongue-in-cheek reference to the modern dropouts from Harvard who helped to make “the earth will be but one great neighborhood.” (Arthur Compton, New York Times, September 13, 1931).
I mention this comparison as a preface to the discussion of lifestyle technologies. Trials and tribulations of technological growth in the post-internet era, that is, in the past couple decades, are well documented by the bubbles and the troubles associated with the bursting of such bubbles. The next bubble waiting to burst may be anybody’s guess but the bets are accumulating on social networking in the post-IPO phase of the market leader.
The burst of the hypothetical bubble may not be about social networking per sebut about the monetizing prospect of social networking as a medium for advertisers and advertisement. In other words, a saturation point may be reached with respect to advertisers and advertising as the key revenue source of social networking companies. Simply because a billion youngsters (limited purchasing power and an even shorter attention span) may use its “wall” to share with the world when they snog, sneeze or snigger, may not offer a sustainable value proposition. The fall in Facebook access in the US (155 million to 149 million) may not be so slight or subtle. There is no “glue” that holds the user to the unstructured open platform void of utility except for the few years in our lives when (often misguided) we crave for self-expression to solicit recognition from peers, find creativity in faux fashions and substitute camaraderie with cyber-copain. Social networks enables us to masquerade and it may serve us to ‘escape’ but for most well-meaning youth these digressions will have non-asymptotic limits. Selectivity and services are value-additions in social media, eg, connections via LinkedIn. Hence, the race for Skype-esque phone service from Facebook.
According to the 2010 US Bureau of Census, there are about 80 million individuals in the US between the ages of 15-35 and about 40 million over 65 years (more time on their hands for companionship). In the upwardly mobile 15-35 age group, less than 12 million earn above $50,000 per annum while more than 22 million are married and about 7 million claim 3 or more as their household size (occupancy size reflect dependents in household and reduce purchasing power).
Therefore, Moms and Dads, the bread winners who make sure that bread and butter (with jam) are on the table, are not lounging in the virtual social café. They may not have time for a Second Life in between after-school pick up, swim meets or baseball practice. They are neither “app” store customers for Big Ben Tea Timer or Plastic Surgery Simulator or YummySoup nor targets for advertisement unless it is directly relevant to their life and lifestyle. But, they must make time for healthcare, education and transactions required for daily living.
Hence, market growth for most businesses must focus on lifestyle items and transactions of the demographic who can afford the bills. In addition, there is the business of delivering the online lifestyle business services, in other words, the medium. Control of the latter (4G, 802.16m) in emerging economies enables the “gatekeeper” to charge “entry fees” to “allow” the services to reach the customer.
Bill Gates recently urged a select group of about 500 young minds from 77 countries assembled in Lindau (Germany) to imagine, invent and innovate for the poorest people in the world. From the world’s richest man the appeal for services, solutions and social recognition for problems that face the worlds poorest is not only extraordinary philanthropy but a call to leaders who may not have grasped the potential for profit from micro-revenue, nano-payments and economies of scale based entrepreneurial innovation. It is counter-intuitive. It goes against the grain of conventional finance and the P&L ethos relentlessly pounded by venture capitalists and analysts in quest of rapid return on investments or assets (ROI, ROA).
It is reasonable, therefore, to conclude that the emergence of new lines of business and economic growth may not start with $1 billion in annual sales or services revenue. In this context, the significant lesson is one provided by Apple’s Newton PDA, a disruptive innovation which failed to succeed (Case Study in Notes – see link to main article – below) because revenue from Newton was less than 1% of Apple’s revenue in 1994. There are no $1 billion ready markets. Only those companies who may have the imagination, vision and foresight to take big risks may reap the harvest. The future may hold rich rewards for micro-payment based services for the poor.
The global staple sources of new business growth may be similar, at least for the middle-class and lower income households. The verticals are healthcare, education and retail or financial transactions for humdrum living which may include services for energy, personal automobiles and home security. The range and offering of products and services in these verticals will vary depending on the socio-economic sub-categories of the consumer pool. In addition, regional adaptability will influence local market share. A plethora of combinations and panoply of service levels will be necessary which, in turn, requires multiple consumer driven supply networks (CDSN) to work in high jitter scenarios in asynchronous or non-linear modes. It will call for medium of access, pervasive networks, convergence of platforms, location aware ubiquitous computing, in-network processing, near real-time rapid response, agility and continuous intelligent re-optimization which may use a variety of tools including artificial neural network based learning algorithms to adapt rules/sets driving fuzzy logic applications.
In other words, a theory of services may be based on a systems analysis and systems synthesis approach which will integrate the trinity of sense, intelligence and response (SIR).
Profitability may mandate that execution of the SIR paradigm also draws on the classical confluence of risk pooling strategies, delayed differentiation, centralized supply chain collaboration, interoperability standards, QoS metrics and take advantage of the economies of scale. It is not inconceivable that select verticals may explore the virtues of loosely coupled systems or vertical integration to reduce total cost (COGS). Vertical integration to control the medium of delivery for mobile devices (4G, 802.16m) may increase revenue from micro-pay-per-access necessary to deliver near real-time software and analytics as a service (SAAS) or high security personal information exchange (healthcare, finance). In other words, there is an old adage, if you wish to sell cars, help to build the roads (equivalent to information gateways).
In the US alone, healthcare expenditure exceeded $2 trillion per annum in 2007 and rapidly approaching about 20% of GDP. OECD nations with nationalized healthcare spend about half the US (see graphic in main article which you may download from the MIT Library – see link below).
The burden of healthcare is undermining economic growth in industrial nations and cost of healthcare in emerging economies (India, China, Brazil, Indonesia, SE Asia) may disrupt their development plans. It is well nigh impossible to offer any simple solution to curtail costs within the fractured infrastructure which provides healthcare in the US or even the “relatively better” situation of National Health Service in UK.
Overhaul of healthcare systems may [a] limit cost of services, [b] introduce a cap on salaries, [c] restrict use of drugs based on cost versus value, [d] penalize for obesity/smoking/alcoholism and [e] mandate preventative health services including vaccinations. Any logical approach may be unpalatable to special interest groups with deep pockets (health insurance industry). Consequently, politics and media will work at the behest of the insurance industry to peddle the status quo and preserve the march of unreason.
Hopefully a breaking point will arrive to precipitate a catastrophic event. It may acutely polarize public perception, expose the deception of insurance cartels and catalyze political re-organization which may then entertain the virtues of a vertically integrated health service as a national health service for all individuals. An insurance-free national health service may seem like a near-utopian proposition for the US unless it constructively dismantles the hemorrhaging bureaucracy in its health plan (see illustration in main article). It may interest readers to note that some noted experts are also proposing vertical integration of healthcare (http://bit.ly/nZMmnS and www.vimeo.com/26077239).
Agnostic of geography, the rational delivery of healthcare systems may be optimized if outsourced and regulated as a fixed-profit business (most governments may be unable to acquire sufficient discipline in order to manage the healthcare delivery process). Very few businesses in the
world are even capable of contemplating the delivery of a vertically integrated healthcare service (VIHS), albeit partial. A couple names rise to the surface, for example, GE (US) and Tata (India) may have the spectrum of parts and services which may lend itself for implementation if VIHS were to take effect. Whether these or other similar conglomerates are able to execute on an altruistic-fixed-profit-over-cost (AFPOC) system remains to be explored. The latter may depend on volume of service delivered and total health services cost.
If a contractor operated the US health system at 1% AFPOC the profit for the vendor may be $30 billion. Attitude is one barrier to conceiving this modus operandi due to the prevalent perception that altruism and profitability are oxymoronic. $30 billion pa is 20% of the revenue for large conglomerates even if 1% profit may seem low when compared to grocery chains. Kroger and Albertson’s reported net margins of 7.6% and 5.1% (2001-2002) while supermarkets target 6% profitability to claim success.
The principle of VIHS may include the conventional wisdom of supply chain. VIHS must orchestrate:
[a] service supply chain – local GP, doctors, nurses, hospital staff, teaching hospitals, medical students
[b] physical supply chain – beds, BP monitors, IV pumps, pharmaceuticals
[c] financial supply chain – equipment and salaries, payment of services
Vertical integration in health services (VIHS) can be partial, at best. VIHS must be loosely coupled in a manner reflecting the Japanese automobile manufacturing practices about 50 years ago. The key problem with the VIHS concept is the pharmaceutical supply chain. The invention and innovation of new drugs, treatment or surgical equipment cannot be “contained” within any VIHS.
Discontent with VIHS over use of drugs and the “human” face of such displeasure will be PR nightmares. VIHS will best serve those who cannot afford expensive drug treatments or designer therapies. If grocery store shelf-stocking employee John Doe provided by national health service demands post-operative treatment of colon cancer with a drug that costs
$100,000 which may extend his life by a few weeks then VIHS may have to deny such care. The drug may be in a category beyond cost vs value threshold. If the John Doe is Mr Jeff Bezos then the treatment will be paid by the user.
Thus, VIHS may be viewed as a schism between the haves and have-nots. Will it serve as another “third rail” of politics? Is the current alternative any better? Those who can afford buy insurance and those who can afford more buy better insurance. Individuals with pre-conditions are left out in the cold and then we have those who cannot afford to buy insurance, at all. VIHS will serve all individuals based on a gradient contribution of earned income paid as a tax. For the wealthy, treatment beyond VIHS in private clinics may be paid by other insurance schemes.
Haves and have-nots are a fact of life but to minimize the number of have-nots is good business, prudent marketing strategy and an index of ethical corporate responsibility. Therefore, VIHS, albeit in part, is a tangible solution. For the greater good, individuals and families may have to choose, make sacrifices and endure events which they cannot control. It will be devastating for the few who may encounter restrictions and agonize over the lives of their loved ones. The system must search for alternatives and exceptions to alleviate such heartbreak but not at the cost of destabilizing the infrastructural constraints that must be imposed on the design of VIHS if it is expected to serve the masses, especially for the populous nations.
VIHS will be paralyzed without a cap on the cost of drugs and a system to allow or deny FDA approved drugs for treatment. The thorny question of stifling innovation will surely raise its head, justifiably. The task is to ascertain if a drug (for example, Provenge costs $93,000 for a treatment) manufacturer is within reasonable ethical norms to charge astronomical prices. Even if it is logical, can VIHS justify the cost vs the life expectancy of the patient? These are difficult questions with no clear answers or proven template to adjudicate. Also crucial for VIHS is its need to be released from indemnity. The cost of malpractice insurance and the threat of frivolous litigation must be eliminated. The latter will require introspection, vigilance and a deep sense of service (Hippocratic Oath). Elements within each society and the insurance industry will resist and destabilize (USA) such sweeping paradigm shifts. The latter may introduce even more paradoxes in our attempt to understand and respond to the social cry for socialized medicine if society proves its impotence to secure the role of public goods for social welfare.
VIHS must reduce the number of patients who may need resource consuming attentive services and hospital beds (except for emergencies). The domain of preventative medicine must be embedded in the practice of VIHS. It will demand a confluence of technology, remote monitoring of the young and healthy, local GP and nurse practitioners. All in a concerted effort to reduce preventable emergencies and predict courses of action to mitigate health risks, in advance. None of these services exist adequately either in the US or in any other parts of the world, yet. The recent trend to digitize medical information (HIT) is a stepping stone but still far from the ubiquitous sensing systems and intelligent analytics we will need to determine the state of our health before we need healthcare. There may be a myriad of reasons why VIHS may not work. But without VIHS or a similar system, the cost of healthcare will cripple economic growth and development. To provide examples of what may work in the short term we may focus on a few parameters in remote health monitoring to aid preventative medicine. Height and weight, blood glucose and blood pressure data may create a health profile for most individuals including young people. Changes to normal metabolism (baseline) may be easily identified and appropriate action may be prescribed to reduce the possibility of hospitalization or an ambulance ride to the emergency room. For patients with defined problems, remote monitoring and real-time analytics may reduce re-hospitalization.
Acquisition and transmission of the health data from remote monitors requires embedded software as a service and the ubiquitous medium or pervasive network for secure bidirectional exchange of data. Hence, SAAS and the need for the medium of delivery (4G, 802.16m) for businesses who may wish to profit from the emergence of pay-per-use healthcare device based services and subscriptions, as a prelude to VIHS.
Business growth through control of the medium, especially in emerging economies, allows a multitude of SAAS (SaaS) options in other fields, such as, logistics, supply chain, retail, education, energy efficiency, home security, auto insurance, financial transactions, lifestyle interactions and streaming entertainment. Some of these services may be spawned by the internet of things if embedded with ambient intelligence to harvest data from the physical world and transmit via location-aware pervasive networks.
Profitability from IoT in business and security may depend on the scale of operation. Tools similar to GE VeriWise are often used for logistics (US, EU) but growth and ‘scale’ appears to be elsewhere. Cushman & Wakefield reports that the Indian logistics industry is expected to grow at the rate of 15% to 20% pa ($385 billion by 2015). Indian rail network is spread over 70,000 km covering 7,000 stations and moves more than 1 million tons of freight per day. Logistics operation using the Trans-Siberian Railroad may be soon used by China to bridge Beijing to Cape Agulhas via the Strait of Gibraltar. Growth will demand object intelligence to develop the supply-demand network of the future on the African continent.