ABOUT THE SPEAKER
Marco Annunziata - Economist
The Chief Economist at General Electric, Marco Annunziata is a financial virtuoso with a passion for technology.

Why you should listen

Marco Annunziata is the Chief Economist of General Electric, responsible for the global economic analysis that guides GE’s business strategy. A member of the European Central Bank's Shadow Council and of the European Council of Economists, Annunziata has been featured on Bloomberg, CNBC, and in The Financial Times and The Wall Street Journal.

Annunziata arrived at GE in 2011 with a long track record in the financial sector, previously working at Unicredit, Deutsche Bank and the International Monetary Fund, where he researched emerging markets and the Eurozone. Annunziata confesses that he is "childishly proud" of his first book, The Economics of the Financial Crisis (Palgrave MacMillan, 2011). The book traces the global fiscal crisis back to a failure of common sense, in which so many of us played a part, and offers guidance for learning the right lessons from the outcomes.

More profile about the speaker
Marco Annunziata | Speaker | TED.com
TED@BCG San Francisco

Marco Annunziata: Welcome to the age of the industrial internet

Filmed:
1,509,709 views

Everyone's talking about the "Internet of Things," but what exactly does that mean for our future? In this thoughtful talk, economist Marco Annunziata looks at how technology is transforming the industrial sector, creating machines that can see, feel, sense and react -- so they can be operated far more efficiently. Think: airplane parts that send an alert when they need to be serviced, or wind turbines that communicate with one another to generate more electricity. It's a future with exciting implications for us all.
- Economist
The Chief Economist at General Electric, Marco Annunziata is a financial virtuoso with a passion for technology. Full bio

Double-click the English transcript below to play the video.

00:13
Einstein said that
0
1057
1440
00:14
"I never think about the future —
it comes soon enough."
1
2497
3457
00:17
And he was right, of course.
2
5954
1701
00:19
So today, I'm here to ask you to think of
3
7655
2544
00:22
how the future is happening now.
4
10199
2860
00:25
Over the past 200 years, the world has experienced
5
13059
2763
00:27
two major waves of innovation.
6
15822
1930
00:29
First, the Industrial Revolution
7
17752
2229
00:31
brought us machines and factories, railways,
8
19981
2521
00:34
electricity, air travel,
9
22502
2330
00:36
and our lives have never been the same.
10
24832
2320
00:39
Then the Internet revolution
11
27152
2426
00:41
brought us computing power, data networks,
12
29578
3233
00:44
unprecedented access
13
32811
2335
00:47
to information and communication,
14
35146
2353
00:49
and our lives have never been the same.
15
37499
3275
00:52
Now we are experiencing
16
40774
1613
00:54
another metamorphic change:
17
42387
1764
00:56
the industrial Internet.
18
44151
2187
00:58
It brings together intelligent machines,
19
46338
2975
01:01
advanced analytics,
20
49313
1540
01:02
and the creativity of people at work.
21
50853
2366
01:05
It's the marriage of minds and machines.
22
53219
3200
01:08
And our lives will never be the same.
23
56419
2556
01:10
In my current role, I see up close
24
58975
2993
01:13
how technology is beginning to transform
25
61968
2833
01:16
industrial sectors that play a huge role
26
64801
2531
01:19
in our economy and in our lives:
27
67332
2393
01:21
energy, aviation, transportation, health care.
28
69725
4687
01:26
For an economist, this is highly unusual,
29
74412
2291
01:28
and it's extremely exciting,
30
76703
1539
01:30
because this is a transformation
31
78242
1889
01:32
as powerful as the Industrial Revolution and more,
32
80131
4022
01:36
and before the Industrial Revolution,
33
84153
1459
01:37
there was no economic growth to speak of.
34
85612
2950
01:40
So what is this industrial Internet?
35
88562
3355
01:43
Industrial machines are being equipped
36
91917
1863
01:45
with a growing number of electronic sensors
37
93780
2260
01:48
that allow them to see, hear, feel
38
96040
3449
01:51
a lot more than ever before,
39
99489
1706
01:53
generating prodigious amounts of data.
40
101195
3071
01:56
Increasingly sophisticated analytics
41
104266
1967
01:58
then sift through the data,
42
106233
1841
02:00
providing insights that allow us
43
108074
2756
02:02
to operate the machines in entirely new ways,
44
110830
3034
02:05
a lot more efficiently.
45
113864
1906
02:07
And not just individual machines,
46
115770
1989
02:09
but fleets of locomotives, airplanes,
47
117759
2785
02:12
entire systems like power grids, hospitals.
48
120544
3172
02:15
It is asset optimization and system optimization.
49
123716
4226
02:19
Of course, electronic sensors
50
127942
2010
02:21
have been around for some time,
51
129952
1705
02:23
but something has changed:
52
131657
1912
02:25
a sharp decline in the cost of sensors
53
133569
2851
02:28
and, thanks to advances in cloud computing,
54
136420
2477
02:30
a rapid decrease in the cost of storing
55
138897
3016
02:33
and processing data.
56
141913
2367
02:36
So we are moving to a world
57
144280
1710
02:37
where the machines we work with
58
145990
1793
02:39
are not just intelligent; they are brilliant.
59
147783
4241
02:44
They are self-aware, they are predictive,
60
152024
2758
02:46
reactive and social.
61
154782
3359
02:50
It's jet engines, locomotives, gas turbines,
62
158141
3958
02:54
medical devices, communicating seamlessly
63
162099
2781
02:56
with each other and with us.
64
164880
2325
02:59
It's a world where information itself
65
167205
2004
03:01
becomes intelligent and comes to us
66
169209
2187
03:03
automatically when we need it
67
171396
1929
03:05
without having to look for it.
68
173325
3198
03:08
We are beginning to deploy
69
176523
1527
03:10
throughout the industrial system
70
178050
2455
03:12
embedded virtualization,
71
180505
2045
03:14
multi-core processor technology,
72
182550
2202
03:16
advanced cloud-based communications,
73
184752
3440
03:20
a new software-defined machine infrastructure
74
188192
2742
03:22
which allows machine functionality
75
190934
2744
03:25
to become virtualized in software,
76
193678
2574
03:28
decoupling machine software from hardware,
77
196252
3162
03:31
and allowing us to remotely and automatically
78
199414
3607
03:35
monitor, manage and upgrade industrial assets.
79
203021
5324
03:40
Why does any of this matter at all?
80
208345
3134
03:43
Well first of all, it's already allowing us
81
211479
2471
03:45
to shift towards preventive,
82
213950
2201
03:48
condition-based maintenance,
83
216151
1878
03:50
which means fixing machines
84
218029
1962
03:51
just before they break,
85
219991
2288
03:54
without wasting time
86
222279
2016
03:56
servicing them on a fixed schedule.
87
224295
2328
03:58
And this, in turn, is pushing us towards
88
226623
3637
04:02
zero unplanned downtime,
89
230260
1855
04:04
which means there will be no more power outages,
90
232115
2865
04:06
no more flight delays.
91
234980
2040
04:09
So let me give you a few examples
92
237020
1644
04:10
of how these brilliant machines work,
93
238664
1879
04:12
and some of the examples may seem trivial,
94
240543
2298
04:14
some are clearly more profound,
95
242841
1996
04:16
but all of them are going to
have a very powerful impact.
96
244837
4125
04:20
Let's start with aviation.
97
248962
1954
04:22
Today, 10 percent of all flights
98
250916
2268
04:25
cancellations and delays
99
253184
2118
04:27
are due to unscheduled maintenance events.
100
255302
2701
04:30
Something goes wrong unexpectedly.
101
258003
2032
04:32
This results in eight billion dollars in costs
102
260035
3196
04:35
for the airline industry globally every year,
103
263231
2412
04:37
not to mention the impact on all of us:
104
265643
2302
04:39
stress, inconvenience,
105
267945
2085
04:42
missed meetings as we sit helplessly
106
270030
2895
04:44
in an airport terminal.
107
272925
1909
04:46
So how can the industrial Internet help here?
108
274834
3418
04:50
We've developed a preventive maintenance system
109
278252
2635
04:52
which can be installed on any aircraft.
110
280887
1990
04:54
It's self-learning and able to predict issues
111
282877
3251
04:58
that a human operator would miss.
112
286128
2956
05:01
The aircraft, while in flight,
113
289084
2354
05:03
will communicate with technicians on the ground.
114
291438
2350
05:05
By the time it lands, they will already know
115
293788
1960
05:07
if anything needs to be serviced.
116
295748
2486
05:10
Just in the U.S., a system like this can prevent
117
298234
3616
05:13
over 60,000 delays and cancellations every year,
118
301850
3707
05:17
helping seven million passengers
119
305557
1962
05:19
get to their destinations on time.
120
307519
2536
05:22
Or take healthcare.
121
310055
1653
05:23
Today, nurses spend an average
122
311708
1731
05:25
of 21 minutes per shift
123
313439
2643
05:28
looking for medical equipment.
124
316082
1693
05:29
That seems trivial, but it's less time spent
125
317775
4383
05:34
caring for patients.
126
322158
2709
05:36
St. Luke's Medical Center in Houston, Texas,
127
324867
2874
05:39
which has deployed industrial Internet technology
128
327741
2927
05:42
to electronically monitor and connect
129
330668
2065
05:44
patients, staff and medical equipment,
130
332733
3199
05:47
has reduced bed turnaround times
131
335932
2310
05:50
by nearly one hour.
132
338242
1735
05:51
If you need surgery, one hour matters.
133
339977
2810
05:54
It means more patients can be treated,
134
342787
2327
05:57
more lives can be saved.
135
345114
1990
05:59
Another medical center, in Washington state,
136
347104
2964
06:02
is piloting an application that allows
137
350068
1888
06:03
medical images from city scanners and MRIs
138
351956
3093
06:07
to be analyzed in the cloud,
139
355049
2115
06:09
developing better analytics
140
357164
2637
06:11
at a lower cost.
141
359801
2561
06:14
Imagine a patient
142
362362
1624
06:15
who has suffered a severe trauma,
143
363986
1434
06:17
and needs the attention of several specialists:
144
365420
2755
06:20
a neurologist, a cardiologist,
145
368175
1809
06:21
an orthopedic surgeon.
146
369984
1611
06:23
If all of them can have instantaneous
and simultaneous access
147
371595
3326
06:26
to scans and images as they are taken,
148
374921
2786
06:29
they will be able to deliver better healthcare faster.
149
377707
4697
06:34
So all of this translates into better health outcomes,
150
382405
3078
06:37
but it can also deliver substantial economic benefits.
151
385483
3440
06:40
Just a one-percent reduction in existing inefficiencies
152
388923
3486
06:44
could yield savings of over 60 billion dollars
153
392409
3506
06:47
to the healthcare industry worldwide,
154
395915
2797
06:50
and that is just a drop in the sea
155
398712
2359
06:53
compared to what we need to do to make healthcare
156
401071
2736
06:55
affordable on a sustainable basis.
157
403807
2421
06:58
Similar advances are happening in energy,
158
406228
2258
07:00
including renewable energy.
159
408486
2470
07:02
Wind farms equipped with new
remote monitorings and diagnostics
160
410966
4693
07:07
that allow wind turbines to talk to each other
161
415659
2595
07:10
and adjust the pitch of their
blades in a coordinated way,
162
418254
3849
07:14
depending on how the wind is blowing,
163
422103
2119
07:16
can now produce electricity at a cost
164
424222
1976
07:18
of less than five cents per kilowatt/hour.
165
426198
3178
07:21
Ten years ago, that cost was 30 cents,
166
429376
2017
07:23
six times as much.
167
431393
1952
07:25
The list goes on, and it will grow fast,
168
433345
2904
07:28
because industrial data are
now growing exponentially.
169
436249
2701
07:30
By 2020, they will account for over 50 percent
170
438950
2852
07:33
of all digital information.
171
441802
2228
07:36
But this is not just about data, so let me switch gears
172
444030
3179
07:39
and tell you how this is impacting already
173
447209
2841
07:42
the jobs we do every day,
174
450050
1443
07:43
because this new wave of innovation
175
451493
1721
07:45
is bringing about new tools and applications
176
453214
3116
07:48
that will allow us to collaborate
177
456330
2516
07:50
in a smarter and faster way,
178
458846
1570
07:52
making our jobs not just more efficient
179
460416
3133
07:55
but more rewarding.
180
463549
1789
07:57
Imagine a field engineer arriving at the wind farm
181
465338
2904
08:00
with a handheld device telling her
182
468242
1686
08:01
which turbines need servicing.
183
469928
2298
08:04
She already has all the spare parts,
184
472226
1478
08:05
because the problems were diagnosed in advanced.
185
473704
2542
08:08
And if she faces an unexpected issue,
186
476246
2474
08:10
the same handheld device will allow her to
187
478720
2603
08:13
communicate with colleagues at the service center,
188
481323
2508
08:15
let them see what she sees,
189
483831
2100
08:17
transmit data that they can run through diagnostics,
190
485931
2755
08:20
and they can stream videos that will guide her,
191
488686
2297
08:22
step by step, through whatever complex procedure
192
490983
2368
08:25
is needed to get the machines back up and running.
193
493351
2462
08:27
And their interaction gets documented
194
495813
2016
08:29
and stored in a searchable database.
195
497829
4402
08:34
Let's stop and think about this for a minute,
196
502246
1755
08:36
because this is a very important point.
197
504001
1721
08:37
This new wave of innovation is fundamentally
198
505722
2226
08:39
changing the way we work.
199
507948
2470
08:42
And I know that many of you will be concerned
about the impact that innovation might have on jobs.
200
510427
5200
08:47
Unemployment is already high,
201
515627
1497
08:49
and there is always a fear
that innovation will destroy jobs.
202
517124
3236
08:52
And innovation is disruptive.
203
520360
2131
08:54
But let me stress two things here.
204
522491
2453
08:56
First, we've already lived through
205
524944
1931
08:58
mechanization of agriculture,
automation of industry,
206
526875
2763
09:01
and employment has gone up,
207
529638
2025
09:03
because innovation is fundamentally about growth.
208
531663
2293
09:05
It makes products more affordable.
209
533956
1893
09:07
It creates new demand, new jobs.
210
535849
2660
09:10
Second, there is a concern that in the future,
211
538509
2582
09:13
there will only be room for engineers,
212
541091
2156
09:15
data scientists, and other highly-specialized workers.
213
543247
3020
09:18
And believe me, as an economist, I am also scared.
214
546267
3569
09:21
But think about it:
215
549836
1719
09:23
Just as a child can easily figure out
216
551555
2619
09:26
how to operate an iPad,
217
554174
1756
09:27
so a new generation of mobile and intuitive
218
555930
2125
09:30
industrial applications will make life easier
219
558055
2724
09:32
for workers of all skill levels.
220
560779
2419
09:35
The worker of the future will be more like Iron Man
221
563198
3202
09:38
than the Charlie Chaplin of "Modern Times."
222
566400
3126
09:41
And to be sure, new high-skilled jobs will be created:
223
569526
3044
09:44
mechanical digital engineers who understand
224
572570
1876
09:46
both the machines and the data;
225
574446
2132
09:48
managers who understand their industry
226
576578
2283
09:50
and the analytics and can reorganize the business
227
578861
2861
09:53
to take full advantage of the technology.
228
581722
3122
09:56
But now let's take a step back.
229
584844
2316
09:59
Let's look at the big picture.
230
587160
2044
10:01
There are people who argue that today's innovation
231
589204
2423
10:03
is all about social media and silly games,
232
591627
2349
10:05
with nowhere near the transformational power
233
593976
1890
10:07
of the Industrial Revolution.
234
595866
2079
10:09
They say that all the growth-enhancing innovations
235
597945
2755
10:12
are behind us.
236
600700
1426
10:14
And every time I hear this, I can't help thinking that
237
602126
3314
10:17
even back in the Stone Age,
238
605440
1968
10:19
there must have been a group of cavemen
239
607408
2289
10:21
sitting around a fire one day
240
609697
1879
10:23
looking very grumpy,
241
611576
1526
10:25
and looking disapprovingly
at another group of cavemen
242
613102
2726
10:27
rolling a stone wheel up and down a hill,
243
615828
2169
10:29
and saying to each other,
244
617997
1809
10:31
"Yeah, this wheel thing,
245
619806
2281
10:34
cool toy, sure, but compared to fire,
246
622087
2791
10:36
it will have no impact.
247
624878
2116
10:38
The big discoveries are all behind us."
248
626994
2324
10:41
(Laughter)
249
629318
1887
10:43
This technological revolution
250
631205
1548
10:44
is as inspiring and transformational
251
632753
2528
10:47
as anything we have ever seen.
252
635281
2013
10:49
Human creativity and innovation
have always propelled us forward.
253
637294
3390
10:52
They've created jobs.
254
640684
1447
10:54
They've raised living standards.
255
642131
1389
10:55
They've made our lives
256
643520
1803
10:57
healthier and more rewarding.
257
645323
2060
10:59
And the new wave of innovation
258
647383
1243
11:00
which is beginning to sweep through industry
259
648626
2350
11:02
is no different.
260
650976
1622
11:04
In the U.S. alone, the industrial Internet
261
652598
2016
11:06
could raise average income by 25 to 40 percent
262
654614
3940
11:10
over the next 15 years,
263
658554
1692
11:12
boosting growth to rates we
haven't seen in a long time,
264
660246
2669
11:14
and adding between 10 and 15
trillion dollars to global GDP.
265
662915
3944
11:18
That is the size of the entire U.S. economy today.
266
666859
4253
11:23
But this is not a foregone conclusion.
267
671112
2511
11:25
We are just at the beginning of this transformation,
268
673623
1995
11:27
and there will be barriers to break,
269
675618
1856
11:29
obstacles to overcome.
270
677474
1686
11:31
We will need to invest in the new technologies.
271
679160
2541
11:33
We will need to adapt organizations
and managerial practices.
272
681701
3709
11:37
We will need a robust cybersecurity approach
273
685410
2894
11:40
that protects sensitive information
and intellectual property
274
688304
3743
11:44
and safeguards critical infrastructure
from cyberattacks.
275
692047
3240
11:47
And the education system will need to evolve
276
695287
2237
11:49
to ensure students are equipped with the right skills.
277
697524
3208
11:52
It's not going to be easy,
278
700732
1735
11:54
but it is going to be worth it.
279
702467
2647
11:57
The economic challenges facing us are hard,
280
705114
3548
12:00
but when I walk the factory floor,
281
708662
2096
12:02
and I see how humans and brilliant machines
282
710758
2588
12:05
are becoming interconnected,
283
713346
1718
12:07
and I see the difference this makes
284
715064
2074
12:09
in a hospital, in an airport,
285
717138
2566
12:11
in a power generation plant, I'm not just optimistic,
286
719704
2681
12:14
I'm enthusiastic.
287
722385
1608
12:15
This new technological revolution is upon us.
288
723993
3454
12:19
So think about the future —
it will be here soon enough.
289
727447
3194
12:22
Thank you.
290
730641
2685
12:25
(Applause)
291
733326
4093

▲Back to top

ABOUT THE SPEAKER
Marco Annunziata - Economist
The Chief Economist at General Electric, Marco Annunziata is a financial virtuoso with a passion for technology.

Why you should listen

Marco Annunziata is the Chief Economist of General Electric, responsible for the global economic analysis that guides GE’s business strategy. A member of the European Central Bank's Shadow Council and of the European Council of Economists, Annunziata has been featured on Bloomberg, CNBC, and in The Financial Times and The Wall Street Journal.

Annunziata arrived at GE in 2011 with a long track record in the financial sector, previously working at Unicredit, Deutsche Bank and the International Monetary Fund, where he researched emerging markets and the Eurozone. Annunziata confesses that he is "childishly proud" of his first book, The Economics of the Financial Crisis (Palgrave MacMillan, 2011). The book traces the global fiscal crisis back to a failure of common sense, in which so many of us played a part, and offers guidance for learning the right lessons from the outcomes.

More profile about the speaker
Marco Annunziata | Speaker | TED.com
THE ORIGINAL VIDEO ON TED.COM