Ward Ault's Profile

It will be interesting to see how Ford continues to develop its business model as technological disruption continues to influence the transportation industry. With increasing urbanization worldwide, I would expect the number of vehicles globally to decrease as autonomous taxi-services become more prevalent and, in tandem with other methods of transportation, the requirement for a car diminishes. However, I do wonder how the adaptation of such technology will be offset in parts of the world where personal transportation is a must (e.g., much of the United States outside of densely populated areas). I also wonder how Ford’s operating model will shift as electric vehicles become more prevalent and interconnected with the Internet of Things across the power, infrastructure, and home/commercial landscape. Ford and other large automotive companies do have a large role to play in the future of transportation as demand continues to increase. However, they may need to revise their approach in a more holistic way and even find methods of making the entire transportation value chain work together more efficiently (e.g., car, plane, train, etc.) with the increasingly scarce resources needed to power those vehicles.

Companies such as Schlumberger must continue to leverage technological innovation to reduce operating cost. As oil becomes more scarce in our world, the cost to access it will become increasingly more expensive and, with current technology, uneconomic. Projects such as the Canadian Oil Sands require a break-even point (in price per barrel) ranging from $65-$70 to $90-$100 and higher. Furthermore, as renewable capacity continues to grow, fossil fuel based costs will be increasingly unappealing to consumers. After all, who wants to pay for energy when the marginal cost of an additional unit of solar power (once installed) is zero? According to McKinsey, the oil and gas sector could “reduce capital expenditures by up to 20 percent; it could cut operating costs in upstream by 3 to 5 percent and by about half that in downstream” by leveraging digital technologies. [2] To accomplish this objective, they identified three main categories for the application of digital technologies:

• Operations of the future (e.g., enhanced monitoring and maintenance)
• Increased reservoir limits (e.g., 4-D seismic imaging in tandem with 3-D imaging typically increases the recovery rate by as much at 40%)
• Digital-enabled marketing and distribution (e.g., better understand customer habits to optimize pricing models and better manager supply changes)

As the globalized world continues to develop, energy demand will continue to rise dramatically and, despite the introduction of clean energy, oil & gas will have a significant role to place in powering (affordable) worldwide growth.

[1] Tony Seba, “Clean Disruption” (Silicon Valley, California: Clean Planet Ventures, 2014), p. 176.
[2] Harsh Choudhry, Azam Mohammad, Khoon Tee Tan, and Richard Ward, “The Next Frontier for Digital Technologies in Oil and Gas,” McKinsey & Company Online, August 2016, [http://www.mckinsey.com/industries/oil-and-gas/our-insights/the-next-frontier-for-digital-technologies-in-oil-and-gas], accessed November 19, 2016.
[3] Ibid.

Correction: The third sentence should read “Within North American cities, roads and parking lots…”

Your idea of “global gridlock” resonates with me as I vividly recall 100 miles of bumper to bumper traffic driving from Los Angeles to Orange County the day before Thanksgiving in 2013. I think digital solutions such as FastPark represent a movement in the right direction as we create “intelligent” infrastructure that contributes to a more efficient transportation network. Within North America cities, roads, and parking lots alone take up approximately 30-60% of the total surface.[1] Furthermore, at any given time, 95% of highways are not being used due to factors such as lack of traffic, high surface area cars need to travel, and required safety space for avoiding accidents.[2] As autonomous technology develops, platforms like FastPark should continue to innovate to create a complementary value proposition (e.g., smart roadways) that enhances the self-driving experience and improves traffic flow in urban and rural areas. FastPark could also investigate wireless recharging technologies for parked vehicles that allow the transfer of electric power to/from the grid while electric vehicles (perhaps solar) are parked. I am excited at the potential we have for improvements in resource efficiency as the smart grid, home, and transportation network all align.

[1] Tony Seba, “Clean Disruption” (Silicon Valley, California: Clean Planet Ventures, 2014), p. 137.

[2] Ibid, p. 138.

While I agree that Nest has the potential to create value for energy companies through its data, the current business model for Investor Owned Utilities (IOUs), which maintain ~68% market share, will rapidly need to evolve to make use of this data.[1] At a high level, the business model for these companies usually makes money by either selling more power at lower rates or by selling less power, but at higher rates (called “decoupling”) to avoid reduced revenue. Under either version, a platform like Nest which enhances grid efficiency will reduce revenue potential for IOUs, and I’m wondering how welcoming IOUs have been at partnering with Nest (or similar platforms).[2] With that being said, utility companies need to innovate and figure out how to use this data to manage the grid in an efficient and sustainable manner. I’m also hoping initiatives like “Works With Nest” helps the unify the currently state and regionally focused electric grid on a national level. As we move into a future with renewable energy created through distributed generation, such measures could help reallocate excess energy from one region to another (e.g., Mojave Desert to Southern California) without needing to leverage fossil fuel baseload plants to produce energy when renewables cannot.

[1] Jeff Tarbert, “Public Power’s Business Model: A Primer,” American Public Power Association, [http://www.publicpower.org/files/Media/PP Business Model-Tarbert.pdf], accessed November 19, 2016, p. 6.

[2] Katie Fehrenbacher, “Nest Shutting Data Service MyEnergy,” Fortune Online, March 1, 2016, [http://fortune.com/2016/03/01/nest-shuttering-data-service-myenergy/], accessed November 19, 2016.

Great write-up with an appropriately titled article! As we drive into the future, current economic growth prospects look less optimistic than those seen in the past century. Consequently, as we transition out of our current long-term debt cycle into a new period of growth, we will increasingly need to rely on productivity improvements to drive progress in our standard of living. Cognitive computing represents a huge leap forward in this area, and it sounds like Fortive will harness this innovative technology to enhance capability within diversified industrials. However, as you mentioned, I am concerned about the impact of such enhancements on the current workforce. I’d like to think that humans and machines will complement each other and that people will take on more of a “problem solving” role as their jobs evolve.[1] The only fear I have is that my vision relies on the assumption that machines do not attain the ability to infer meaning from data and make decisions based on that evaluation. Looking back at our IBM Watson case, this assumption may not necessarily hold. With an ever growing population and shrinking pool of jobs, I hope we find a solution that does not leave our workforce behind.

[1] Antonietta Grasso, “Will Machines Replace Us or Work With Us?”, Wired Online, [https://www.wired.com/insights/2015/01/will-machines-replace-us-or-work-with-us/], accessed November 18, 2016.

This post had addressed a significant and often overlooked issue – water scarcity. In fact, it is projected that 52% of the world’s population will be living in a water-stressed and water-scarce area by 2050.[1] Not a great outlook for developing economies across the globe. However, companies like Air Products and Chemicals are taking much-needed steps to reduce water consumption among industrial companies worldwide, especially in BRIICS.[2] Much of global water demand stems from these countries where high levels of water wastage are prevalent, and attention must be given to curb excessive water use.[3] However, all blame cannot be given to emerging markets. If you look at the United States, the Ogallala Aquifer, which lies under eight states from South Dakota to Texas and sustains America’s “breadbasket,” may run dry in the next 50 years, a significant loss that would have costly consequences across the country.[4] Across the globe, we must look for more efficient ways to use water (e.g., vertical agriculture, a transition away from water-intensive energy sources, etc.) and prevent a looming crisis that could drive massive instability.

[1] Rabih Abouchakra, Mona Hammami Hijazi, and Ibrahim Al Mannaee, “Looking Ahead: The 50 Trends that Matter,” (Bloomington, Indiana: Xlibris, 2016), p. 252.
[2] Brazil, Russia, India, Indonesia, China, and South Africa.
[3] Rabih Abouchakra, Mona Hammami Hijazi, and Ibrahim Al Mannaee, “Looking Ahead: The 50 Trends that Matter,” (Bloomington, Indiana: Xlibris, 2016), p. 253.
[4] Alan Bejerga, “The Great Plains’ Looming Water Crisis,” Bloomberg Businessweek, July 2, 2015, [http://www.bloomberg.com/news/articles/2015-07-02/great-plains-water-crisis-aquifer-s-depletion-threatens-farmland], accessed November 6, 2016.

I found your points regarding the increased competition for resources in the Arctic in tandem with Russia’s increased production of icebreakers very interesting. In fact, Russia recently presented a revised claim of this Arctic territory to the United Nations where it sought “the seabed beyond the 200-mile zone along the entire Russian polar sector including the zone under the North Pole.”[1] Here Russia cited the United Nations Convention on the Law of the Sea (UNCLOS) which, by your argument, could present an interesting conundrum for the United States if it does indeed ratify the UNCLOS.[2] Currently, the Navy and Marine Corps team cannot field enough ships to fulfill its tasked mission properly. With only 31 amphibious assault ships, the Navy maintains seven fewer ships than is required to meet global operational requirements.[3] Furthermore, the current operational tempo of the Navy is unsustainable, and it cannot meet national security mandates with its current strategy.[4] I think your argument does have some merit, and we do need to figure out how to meet American naval power projection goals in the short-term, but the United States needs to reduce its reliance on fossil fuels and lead the transition to renewable energy supplemented by fission-based (and hopefully one day fusion-based) nuclear power. This movement would reduce global resource pressure and help calm international tensions as nations seek to attain dominance over finite resources.

[1] Andrew E. Kramer, “Russia Presents Revised Claim of Arctic Territory to the United Nations,” New York Times, February 9, 2016, [http://www.nytimes.com/2016/02/10/world/europe/russia-to-present-revised-claim-of-arctic-territory-to-the-united-nations.html?_r=0], accessed November 6, 2016.
[2] Ibid.
[3] Christopher Harress, “US Navy Doesn’t Have Enough Ships to Send Marines to Crisis Zone, May Borrow Foreign Vessels: Report,” International Business Times, June 30, 2015 [http:// http://www.ibtimes.com/us-navy-doesnt-have-enough-ships-send-marines-crisis-zones-may-borrow-foreign-vessels-1990659%5D, accessed November 6, 2016.
[4] Sydney J. Freedberg Jr., “More Ships Can’t Save Overworked Navy; Basing Ships Abroad Can: CBSA,” Breaking Defense, November 18, 2015 [http://www.breakingdefense.com/2015/11/more-ships-cant-save-overworked-navy-but-basing-ships-abroad-can-csba/], accessed November 6, 2016.

You hit the nail on the head regarding the threat climate change poses to global instability – I have witnessed it firsthand in Afghanistan. Energy poverty, food shortages, and water scarcity (among other related issues) represent some of the primary drivers that cause social and political instability as well as create an environment ripe for conflict. However, I would argue against your assertion that the Department of Defense should “take the offensive” against climate change. While the Army, Air Force, Navy, and Marine Corps should integrate sustainable practices for a tactical advantage, these institutions are warfighting organizations built for that sole purpose. If the United States truly cares about this issue, they should leverage the other instruments of national power (i.e., diplomatic, informational, and economic) to push a national agenda which addresses climate change. It is a well-known fact that the world population is going to approach 9.2 billion by 2050 and most of this increase will be borne in less develop regions that will suffer the most from the effects of climate change.[1] The military can do little to change this fact, but government policy can help spur the innovative technologies needed to address the issue of resource scarcity and climate change.

[1] Thomas L. Friedman, “Hot, Flat, and Crowded,” (New York: Picador, 2009), p. 65.

In my comment on the post “Tesla Talks Climate Change,” I mentioned my belief in a future where we see solar-powered, electric, and autonomous vehicles taking center stage in the evolution of global transportation. Here you mentioned that “Tesla hopes to control the entire energy sector…automobiles, batteries, and solar,” and I am very optimistic about the future the acquisition of Solar City will provide. In fact, to power every car-mile in America with solar power, we would only need 875 square miles of solar panels whereas it takes 429,000 square miles of land for the oil & gas industry to produce the energy required to achieve the same feat with internal combustion engines.[1] While this energy infrastructure would obviously be more difficult to develop in practice, this example alone shows the vast potential for a solar/electric vehicle combination. However, as it relates to commercial and utility scale solar, you clearly demonstrate a significant limitation in that it cannot produce constant power in the same way an atom-based source can. At least in the near term, fossil-based fuels and fission based nuclear are here to stay. Hopefully, Tesla can help drive the next wave of renewable innovation while we wait for fusion power to be figured out.

[1] Tony Seba, “Clean Disruption” (Silicon Valley, California: Clean Planet Ventures, 2014), p. 112.

I am in complete agreement that the transportation sector represents a huge opportunity for climate change related improvement, and Tesla has taken the industry lead for a transition to electric vehicles. However, one may wonder how Tesla can disrupt the $4 trillion global automotive industry, and Tony Seba provided nine great reasons in his book “Clean Disruption”:[1]

• The electric motor is five times more energy efficient than gasoline-powered motors
• The electric vehicle is ten times cheaper to charge than to fill up an equivalent gasoline powered vehicle
• The electric vehicle is ten times cheaper to maintain
• The electric vehicle will disrupt the gasoline car aftermarket
• The ability to charge wirelessly
• Modular design architecture
• Big data and fast product development
• Solar and electric vehicles are four-hundred times more land efficient
• Electric vehicles can contribute to grid storage and other services

Furthermore, the cost of the electric vehicle is quickly dropping (due in large part to rapidly improving lithium batteries) and the range is quickly rising. I can easily envision a future where Tesla produces a solar-powered, electric, and autonomous vehicle that redefines our image of transportation. I can also imagine the development of Tesla into an energy juggernaut that drives innovation in distributed energy generation, the smart grid, and even precious mineral mining in space (Space-X anyone?).[2] While we face an uncertain and dangerous future (assuming no action), I fully believe the innovation driven by companies such as Tesla will help uncover the opportunity for improved climatic conditions and a better quality of life for people worldwide.

[1] Tony Seba, “Clean Disruption” (Silicon Valley, California: Clean Planet Ventures, 2014), p. 102-113.
[2] Clive Cookson, “Asteroid Mining is Not Science Fiction,” Financial times, February 5, 2016, [https://www.ft.com/content/14b5efce-cb56-11e5-be0b-b7ece4e953a0], accessed November 6, 2016.