Revolutionary innovations propelling growth

Innovation is a critical ingredient in any growth recipe. And the biggest growth—both for the innovator and the broader economy—comes from revolutionary innovations. Such breakthroughs don’t only result from new products or services. Some of the most important recent advances have been spurred by new business models, processes, and experiences.  The authors define these four categories of innovation as follows:

1. Product or service innovation: An offering that either is new or improves an existing one
2. Experience innovation: customer touchpoints and interactions that complement and improve offerings
3. Process innovation.  a new approach to developing, manufacturing, distributing, or delivering an offering
4. Business model innovation: changing the value chain, diversifying profit streams, altering the economic model, or evolving the delivery approach of an offering.

What makes an innovation revolutionary? First, it is truly novel, attesting to the innovator’s bold vision and willingness to take risks. Second, it exerts an outsize influence, enabling secondary innovations or spurring societal changes. Third is the size of its impact: The innovation materially and durably shifts the economics of entire markets. Last, that effect extends beyond individual companies to entire ecosystems and even other industries.

While there have been numerous groundbreaking innovations over recent decades, the eight here, at different stages of maturity, are already having an impact—and there’s more to come.

1. Electric Cars.  The shift from fuel to batteries as a means of powering vehicles is transforming numerous industries, from logistics to mining. It has also spawned advances in related fields, such as battery technology and urban transportation, while focusing attention on the importance of emission reduction. Since building electric vehicles (EVs) requires very different capabilities than traditional automotive manufacturing, the car industry has been severely disrupted. New OEMs have reshaped the market with new value chains and financing and aftermarket offerings. Electric vehicles have also accelerated innovation in driver assistance systems and connectivity.  >50,000 number of patents related to electric vehicles (EVs) approved annually, on average, between 2020 and 2024.  2-3x Projected growth in EV demand (including battery, plug-in hybrid, and range extender EVs) between 2024 and 2030.  China leads the biggest economies in the adoption of electric vehicles.
2. GLP-1 Medications.  The introduction of GLP-1 (glucagon-like peptide-1) agonists has been lauded as a public health breakthrough. Developed to treat type 2 diabetes, GLP-1 medications can also help users reduce their weight by 15 to 20 percent. By lowering the need for obesity-related therapies, surgeries, and end-of-life care, the medications have the potential to substantially lower healthcare spending. Their appetite modulation effects may, in turn, materially shift eating habits, affecting the consumer goods and food service industries.  >$100 billion  Projected global sales of GLP-1 (glucagon-like peptide-1) drugs by 2029.  4–5%  Share of US population projected to be taking GLP-1 drugs by 2030.
3. Blockchain.  Blockchains are decentralized digital ledgers that store records across a network, ensuring transparency, immutability, and tamper resistance. By offering a cost-effective, secure way to handle transactions and private data, blockchain technology is transforming industries from healthcare to financial services. Payments, bonds, and securities transacted on blockchain are key uses that are accelerating growth.  $3.5 trillion  Current market value of all “tokenized” assets, up from $280 billion 5 years ago.  $2 trillion  Projected value of “tokenized” real-world assets by 2030, up from ~$100 billion today.
4. Digital marketplaces.  Platform-based digital marketplaces have revolutionized the way that businesses gain scale. Some platform-focused companies, such as Alibaba and Uber Technologies, have become familiar consumer names. Some sector-specific platforms, such as Valve’s Steam for gaming, have established ecosystems extending beyond their industry borders. As the growing number of users and interactions feeds increasing amounts of data, the presence and impact of platforms will accelerate.  7 of 12 Share of largest companies (by global market cap) that are platform based.  >10%  Projected CAGR of digital platforms between 2024 and 2030.
5. CRISPR.  The gene-editing technology and process that won the 2020 Nobel Prize in chemistry is spurring breakthroughs in the biotech and pharmaceutical industries. CRISPR, in combination with genomic and phenotypic data, allows scientists to make targeted changes to genes. Such changes can enable fundamentally new therapies for humans and increase disease resistance and yields of crops. Extending the technology to synthetic biology could transform manufacturing, environmental remediation, and other fields.  >8,000 Number of CRISPR-related patents approved annually between 2020 and 2024—a 17% growth since 2015.  16–20% Projected CAGR in CRISPR market over next 5 years.  CRISPR market size is projected to more than triple in 2034.
6. Transformer models (also called “sequence-to-sequence models”) may not ring bells, but gen AI certainly should. A type of neural network that learns context and meaning, transformer models underpin large language models. These models, in turn, are the foundation of gen AI. The technology is forecast to generate as much as $4.4 trillion in productivity gains, primarily in customer operations, marketing and sales, software engineering, and R&D.  65% Share of survey respondents who report that their organizations are regularly using gen AI.  $356 billion Projected gen AI market size by 2030, up from $63 billion today.
7. Fracking.  The term “fracking,” from “hydraulic fracturing,” describes an unconventional method of extracting oil and natural gas by injecting high-pressure fluid into rock formations. By allowing companies to tap resources previously considered uneconomical, fracking has revolutionized energy production—particularly in the United States, turning the country from an energy importer to an exporter. It has also lowered energy costs around the world while reshaping trade balances.  >10× Increase in volume of unconventional oil and gas production (largely fracking) between 2007 and 2024.  75% Fracking’s share of North America’s total oil and gas production, up from 20% in 2007.
8. Cost-plus Inversion.  The traditional “cost-plus” approach to government contracts, whereby agencies specify requirements, move through prototyping phases, and pay contractors a set percentage above the development and production costs, can lead to long lead times, slow technology adoption, and overruns due to misaligned incentives. In a growing new method, companies are building products and production facilities for offerings that they believe governments will need, which aligns incentives to accelerate innovation and reduce cost. The result has been a venture capital boon for established industries such as defense and energy, a revitalization of industrial bases, tens of thousands of new jobs, and the ability to get capabilities to markets faster.  >$25 billion Value of venture capital raised in defense sector in past 5 years, thanks in large part to cost-plus-inversion model.