Proximity – What It Means For The World And For Your Career, With Rob Wolcott

Our world is getting smaller in a big way. J.R. Lowry and Rob Wolcott, the Co-founder and Chair of The World Innovation Network and author of Proximity, How Coming Breakthroughs in Just-in-Time Transform Business, Society, and Daily Life, delve into the transformative concept of proximity in digital technologies. They discuss how this ability to shrink and localize capabilities will impact industries from manufacturing to healthcare, exploring both the potential benefits and downsides like environmental concerns and the need for new regulations. Join them as they envision a future where proximity reshapes business models and societal norms, driven by technological advancements and changing consumer demands.

Check out the full series of “Career Sessions, Career Lessons” podcasts here or visit pathwise.io/podcast/. A full written transcript of this episode is also available at https://pathwise.io/podcasts/rob-wolcott/.

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Proximity – What It Means For The World And For Your Career, With Rob Wolcott

Co-founder And Chair Of The World Innovation Network (TWIN Global)

Introduction

In this episode, my guest is Rob Wolcott. Rob is a Cofounder and Chair of the World Innovation Network and he teaches at the Booth School of Business at the University of Chicago, as well as at the Kellogg School of Management at Northwestern University. He is also the author of several books, including his new book, Proximity: How Coming Breakthroughs in Just-in-Time Transform Business, Society, and Daily Life, which we will cover in-depth in our discussion. Rob, welcome. Thanks for joining me on the show.

Thanks. It’s great to be with you.

Book Overview

I appreciate your time as well. Let’s get right to it. You have a new book, Proximity, as I mentioned in the intro. Give us an overview.

To go back a few years, in 2014, I was at my 800th tech conference. You’ve probably been to a lot of tech conferences too. It’s probably the 164th person who presented the Moore’s Law slide. You might remember that one, ever-present. I was thinking, “The first ten times it was interesting.” After a while, you don’t need to see that again. I thought we must be able to do better. We must be able to look under the hood of digital technologies and figure out what’s fundamentally different about digital compared to the past.

If we can do that, we can discern what the future might look like. That was the genesis of what became Proximity. What do I mean? When you look across all sorts of digital technologies, it could be rooftop solar even or 3D printing. It doesn’t feel digital but they’re digitally enabled, AI and mobile apps. Everything digital. What we realize is they allow us to compress all sorts of capabilities in smaller packages and distribute them all over the economy ever closer to each moment in time and space.

This is proximity. Therefore, digital technologies push the production and provision of value, product services, and experiences ever closer to the moment of actual demand in time and space. What we’re not saying is a little better supply chain management. That’s wonderful. What we’re saying is setting up business models and technology platforms to encourage us to procrastinate and to wait as long as possible before adding any value until you have an actual customer ready to buy. That’s proximity. It’s where every industry is going the rest of our careers.

Certainly, we’ve been seeing this going on for some time. I’m curious, you and a co-author wrote the book. How did the two of you come together for the book?

It was COVID. COVID serendipity. Kaihan and I had known each other for a while. He emailed me and said, “Would you do an online webinar thing for all my members?” He has a group called the Outthinker Strategy Network and I said, “I’d love to.” It’s a great network. Great group. I’m sitting at home like everybody else. He had a series of about a dozen different sessions.

The one that I presented was about proximity. He came back to me a few days later and said, “The number one word that resonated the whole day in these programs was proximity. I think there’s something big here.” We agreed at that moment that we were going to write this book together. That’s when we started working together. One of the things I love about Kaihan is I look at a lot of different worlds, industries, and businesses, but also the arts and government.

Kaihan has a deep focus on strategy levels in corporations and established companies. He brings a very enterprise-relevant practical lens. Sometimes, I can fly off into the stratosphere and end up on Mars and there’s nobody there. Kaihan was able to bring me back to ground level and we ended up with a much better product. It’s been great working with him.

I talked to a number of people who’ve co-written books and for everybody, the process is different. Some divide up chapters and sections. Some write together but it strikes me as probably ten times as hard as writing a book yourself.

In some ways, but on the other hand, I find it keeps me honest and motivated. I’ve got deadlines and it’s not just my own deadline. Somebody else has trusted me to hit those deadlines. I love doing things collaboratively. I love achieving things with other people.

Key Trends Driving The Proximity Movement

On the flip side of what I said, you’ve got the one plus one can equal more than two. You get a benefit out of bouncing ideas off of each other. In many cases, it works out fine and everybody is happy. Anyway, diving into the book. You make the point that there are four key trends that are driving the proximity movement now. You acknowledge that it’s not necessarily a new thing but, as you say in the books, the sharp edge of the curve.

The knee of the curve.

The pandemic, you’ve talked about that, how you came together with Kaihan, and back to the move that we were talking about before we started recording, geopolitical tensions, climate risks, and humanity’s race to space. I’ve given a very quick fly-by, but give us a little bit more color on how each of those is relevant in driving this now.

You’re right that proximity isn’t new in the sense that we’ve always wanted it. Even before we could speak, hominids wanted what they wanted and where they wanted it and we couldn’t do much. The Industrial Revolution started to open up more opportunities to get what people wanted, whenever they wanted it.

We had to use industrial-age technologies. That has driven us to a global supply chain where things, and by the way, proximity relate to not just physical products but also digital goods and experiences. Nonetheless, the industrial age allowed us to provide whatever people wanted and wherever they wanted it, but we had to do so by producing it thousands of miles away in highly efficient plants, putting it on ships, having an inventory, and doing demand planning. That’s all great, but what we can do now are things we could never have done before.

That’s where digital technologies come in. Because they enable so many capabilities closer to each moment, time, and space, that allows us to shift where we produce our value into smaller packages. To give you a physical product example. We now have a global supply chain optimized for scale manufacturing at a distance. The larger my plant, the lower my costs. Over the rest of our careers, this model will be ripped apart.

Now, we’ll start to see mid-sized plants closer to demand. The networks of mid-sized plants. You’re seeing this with reshoring, for instance. This is being catalyzed. It’s not the only reason, but it’s being catalyzed by geopolitical risks and climate challenges. Think of the issues in the Red Sea, for instance, and the cost of moving things thousands of miles. That’s catalyzing interest in proximity. Also, we’re able to do things when we’re more proximate and much more responsible.

We’re able to respond to shifting consumer needs and customer needs and be more customized. Proximity will allow us to break trade-offs between customization and efficiency. Trade-offs that we’ve dealt with since the Industrial Revolution. That production of products, but also the provision of them. Provision in the book means having the right product in retail. We mean service, sales, and support. Those can happen closer to the moment of demand.

Imagine a system where you’ve got a thousand customer service agents sitting around waiting for your phone call. As opposed to a system where you have one AI, a large language model warring away in the background waiting for anybody to call. I’m exaggerating, but that’s the direction things are going. That means you’ll be able to sit there, wait, and respond to more complex requests automatically. This is where everything is going.

Geopolitics has catalyzed interest in it. To me, one of the scariest examples is the fact that the world is supplied with semiconductors to a large extent by a phenomenal company in Taiwan. That company has done herculean things over the past 40 years. It’s a risk for the whole global supply chain, including for the Chinese, by the way. It’s a risk that something happens there.

There’s naturally a lot of interest too as we’re seeing build production capacity in the US, in Europe, and more in Japan. I’m all for it. What would be a fool there will be to just copy the same plant in China and put it in the US. Instead, we can have far more plant automation. We can optimize smaller-scale plants closer to demand around the world. That’s across all product categories. Eventually, we’ll be able to have our own 3D printer at home.

Right now we can, but it doesn’t make that much interest. In the next 5, 10, or 20 years, it’ll be able to make things we want, where and when we want it. That means you’ll have a 3D printer sitting there doing absolutely nothing. Waiting for you to say, “I want a fork,” and it’ll print a fork. Only one. Not millions of copies in a plant somewhere in China but one fork where you need it. You think about how it makes us more resilient against climate change issues and climate events around the world. If we do it right, it is a solution to sustainability. We can talk more about that if you like.

We’ll talk more about that. You mentioned this in passing earlier, but I don’t want to brush past it too quickly. You talk about the proximity of production and provision. Depending on the industry application, some of those are easier to accomplish than others. Some things are easily produced, but not easily delivered, and vice versa. It will be interesting to see how some of the concepts that you talk about in the book play out in a real-world situation.

We talked about semiconductors and TSMC, the company you were referencing that produces all those chips in Taiwan. It certainly gives much of the world a huge interest in the security of Taiwan. Wafer fabrication, which is a fundamental part of producing semiconductors is something that’s a very big and expensive plant to build. Some of these things are going to run into challenges in terms of the feasibility of making them work, and power. You talked about solar panels on your rooftop. That’s great. That capability didn’t exist. We’re going to need a way to produce semiconductors in a 3D printer.

By the way, there are companies already working on that. They’re not capable of doing what NVIDIA does with their GPUs, but what happens with technology gets better and where there’s value, it migrates.

Is this where we quote Moore’s Law?

By the way, I’m a huge fan of Moore’s Law. It’s just that for a decade, everybody used that slide.

You don’t need to see the slide in a conference.

It drove me nuts. To make it tangible, the difference between production and provision, and I’m glad you pointed that out. Kaihan and I decided to make that distinction because they operate very differently. Producing a product, service, or experience is often very different than selling it, supporting it, providing it, and servicing it. I’ll use an example that we all understand well. Netflix, video streaming.

If you think about video streaming today, it’s already proximate in provision. You can watch any video you want, anywhere, and anytime on any device. Whether that’s good or not is another issue, but people want what we want and you can do it. It’s essentially 100% proximate right now, but the production of that content usually still happens months in advance. Maybe in some years decades ago because they’re using recorded content.

For new material, it takes us a matter of months or even years to get that content done in the can ready to go, edited, and on the streaming service. We’re seeing the early stages of AI starting to create clunky videos, somewhat less clunky videos, and somewhat more compelling videos, even films and whole stories. The pace of that evolution, especially this past year and a half has been astonishing. If you’re paying attention, you see some of these movie trailers people have invented that were 100% created by AI and by the way, aren’t for a movie at all. It’s just for fun or nefarious purposes. Who knows?

Imagine where that’ll be in 5 years or 10 years. What does that mean? These AI and virtual production capabilities bring us closer to the point where entertainment content can be created closer to demand. Eventually, customized for each of us at the moment, what is Rob interested in seeing or experiencing right now based on his mood, interests, the questions he’s asking, and how he’s responding to things? Some of the entertainment content will be created, produced, and provided co-terminus colocated. That’s where we’re going in the next few decades.

Rob Wolcott: These AI and virtual production capabilities bring us ever closer to creating entertainment content that directly meets audience demand.

That’s an interesting example because the barriers have already been broken down in terms of proximate delivery and proximate provision. The question is how far will the technology be able to go in the creative process? Do we move to a world where we have infinite content potential? Not in theory over the course of human history and infinite content. You could have infinite content on your desktop, laptop, or mobile device. That will be a massive shift for the whole creator part of our industry.

The reality is we already have way too much now way more than any one of us could consume or use or get value from. There are around eight billion of us. We all have slightly different interests. It’s without question that where this stuff is going in the next couple of decades is to greater customization and response in the moment to whatever individual or group of people, what their objectives are, or what they’re seeking, which is, by the way, both good and bad.

One of the things I’m proud of in the book is that Kaihan and I worked hard not only to talk about the exciting, fun, and amazing things that are already happening and coming but also to say that there are going to be some downsides to this. How are we going to navigate through some of these capabilities and opportunities we’ve never had before, even as a species?

I do want to get to some of those consequences in a little bit, perhaps. Coming back to the trends, you talked about the pandemic a little bit, the geopolitical tensions, and the climate. We didn’t talk so much about space. For me, that was an a-ha in reading the book. As you say in the book, in space, everything needs to be proximate.

Once that ship is launched, you need to be able to figure out how to sustain life to deal with whatever consequences are thrown at you with whatever you’ve got on board or wherever you happen to land that spacecraft. It will certainly be a precursor to our ability to go further into space and to push the boundaries of space travel.

I’m glad you brought it up. I have to agree with you. That idea of space and proximity didn’t occur to me at first until I reached out to a friend we talked about in the book, Dorit DoNoviel. Dorit is a Professor of Space Health at Baylor in Texas. By the way, that’s a real title, Professor of Space Health. How about that for a cool job? Dorit runs the grant program for NASA for research and space health. I was talking to her about this concept of proximity. She cut me off and said, “Do you know what, Rob? It occurred to me. Everything we’re investing in to help humans live effectively in space is to drive proximity.”

It didn’t occur to me before, but that’s what it is. If you’re on a spaceship for nine months to Mars, all you got is on that ship. Anything and everything you want, need, or might need, a medical emergency, for instance, you can’t call Amazon because you forgot something, at least not yet. That’ll come. I’m sure that’ll come eventually.

She said, “Every dollar, euro, yen, and renminbi that is being spent on understanding how to get humans into space is being spent to develop technologies and capabilities to drive proximity.” Some of those will naturally cascade back to Earth to support what we want to do here on Earth. Space is one of the two horizons of the 21st Century for humanity. The other one is virtual reality. We’ve never been to either one of those places, but we will this century. They’re both completely proximate.

There are some principles that you described that underpin proximity. We’ve talked about the moment of use, production, and provisions. Talk about some of the others, data and analytics, sensing systems, and real-time learning. I won’t read the complete list. You probably know it, but it’d be good to get your color on how those threads weave themselves through some of the proximate examples that you cover in the book.

You mentioned the moment of use production. That idea is how do we have production or provision capabilities ready anywhere and anytime? In some industries and contexts, you’ll say, “We can’t do that and we won’t be able to do that for a decade or maybe more.” Fine, but you’re going to find more situations where you can do it. As business leaders, investors, and policymakers, we need to have the foresight to recognize that this is the direction things are going, and then to know what we’re looking for because then we’ll see the opportunities to do this.

One of the ways we achieve moment-of-use production or provision is to figure out how to compress capabilities into smaller packages. The easy example and we use often in the book is the 3D printing machine. You can’t print a car yet. That’ll come. Electric vehicles eventually, we will be able to 3D print. Not in the near future, but people are working on it.

3D printing is becoming better for more things. In their annual report for 2022, Ford Motor Company reported they produced over 200,000 automotive parts via 3D printing. This isn’t just supply in the factory or just for fun. These are actual automotive parts. It’s going to get better and better. That’s an example of compressing capability into a small package.

Another great example for all of us is AI access on a mobile device. We can already access ChatGPT or Quad or any of these things if we’re connected to the cloud. You might have noticed in late April, Apple announced that they were going to be compressing this capability of the large language model into something they call an Efficient Language Model or an ELM. The book was finished. The manuscript was finished in January. It’s all done at the printer.

In the book, we talk about large language models, but we also talk about small language models and SLMs. It might not surprise you to know the difference between a small language model and Apple’s Efficient Language Model. Nothing. Apple just decided they needed their own name for stuff. Apple always does that. What are they doing? They’re taking the large language model, which you can access anywhere in the cloud but they’re carving out part of it for more specific purposes.

They’re crushing them into a smaller package and putting it on a mobile device. In some cases, in the not-distant future, if you need access to that AI capability and you’re not connected to the network, you can still access it because it resides on your mobile device. That’s an example of Apple driving proximity closer to each moment of demand, compressing systems into smaller pieces.

Another one that is important of the principles you talked about is having more data and insight across the entire not just value chain but the entire ecosystem within which you’re operating. You might be producing Coca-Cola, but it turns out that what’s going on in box site supply to make aluminum cans might affect your bottlers and your canning operations, which might affect your end consumers, vendors, and grocery stores. Having that breadth of visibility allows us then to produce more closer to the moment of actual demand.

Rob Wolcott: Having that breadth of visibility allows us to produce closer to the moment of actual demand.

I drink a lot of Diet Coke. I would love to have a Diet Coke dispenser at home. It is possible to put those things in a small container. We can make soda water. There are all sorts of devices that do that already, but it’s also a great example of why it doesn’t happen. It’s because of the bottlers. You’re coming up against one of these consequences that we started to talk about earlier, which is that there’s a part of the industry you completely disintermediate if you allow people to produce Coca-Cola from filtered water at home that they carbonate and inject the flavor package into it.

Soda stream or something like that.

They’re doing this in every restaurant. They sell them the syrup but they don’t do it in the home market, even though they could, just because it creates a massive channel conflict for them.

That’s where it’s important to look at what is it possible to do, how that relates to the existing paradigms or the existing platforms and business models, and what change needs to happen to enable this shift to occur. History is pretty clear though. Over the longer term, what humans want is going to ultimately win the day. What’s cheaper, better, faster, more responsive, and more customized ultimately is going to win the day. As you say, there’s always a difference between what we can do and what is currently enabled in the economy. This gives us a sense of where things are going to go.

Sticking with this example. The value of Coca-Cola is in the brand and the distribution. If you take the distribution out, then it’s in the brand. If I don’t care what brand of cola that I drink, I’ll just go get an off-brand version that I can make at home.

That’s true, although, we know that most people don’t do that. Most people have built a relationship with Coke or Pepsi or take your pick. They also have a certain taste preference that they think is important to them. There are lots of factors involved here but I’ll give you an example from that same space that shows how evolution can happen. It is the Coca-Cola freestyle machine.

That’s the thing where you’re at the restaurant and you push a button. You get some Cherry Coke, diet Coke, or Sprite. It all comes together into your own formula. That not only took the technology, which by the way was supported by a team out of MIT. It also took some negotiation with the existing supply chain to make that work and they made it work. Eventually, this stuff wins out. Incidentally, the technology in the freestyle machine is also the same technology and they work with the same team that led to on-demand pharmaceuticals, which is an example we use in the book about producing pharmaceutical drugs from raw materials wherever and whenever you need them, on demand.

Certainly, in places where you don’t have a pharmacy up at this corner or in the center of your town or whatever. That could be massively life-changing for populations that are remote and rural, your ability to produce certain kinds of drugs.

That’s true, but it’s even more profound than that. I didn’t know this until doing research for the book. I can’t speak for the UK, but in the United States, we have generic drug shortages at hospitals and clinics all over the country all the time and I mean like Johns Hopkins, involving one of the top institutions in the country. Part of the reason is they’re all made overseas. This is not a political statement. It’s a reality.

All of our generics are made in China and India. We have very little control over that. It creates a public health risk. Now, enter this on-demand pharmaceutical system that was developed with a grant from DARPA, the Defense Advanced Research Projects Agency. The founder and the original idea behind it was Dr. Jeffrey Ling, who’s one of my great heroes. He was a medical doctor in the Army. They kept running out of drugs in the war zone and he said, “There’s got to be a better way. These things are made of carbon, hydrogen, and oxygen. If I had the right equipment, I could make it myself,” and they did. That’s what on-demand is.

To give you an example of how profound this is, they have had their first commercial implementation since we finished the book. In January, they turned on a system in Tupelo, Mississippi. This is at a health system that’s chronically underserved and low-income community. They were always having stockouts for critical drugs. On-demand in the FDA and the health system chose six injectable drugs as a trial. Since they’ve turned down this equipment in Tupelo, they’ve had zero stockouts of those six drugs. They have no shortages at all. It’s the first time in the history of this health system. This will be true across the whole country eventually.

Think about the shelf life of drugs. Ciprofloxacin, the antibiotic has about a three-year shelf life. That means, every three years you have to throw all your pills out and make new ones. What’s the shelf life of what’s in this equipment? Which is, there are APIs, but set that aside. Basically, carbon, hydrogen, and oxygen. What’s the shelf life of carbon? It’s forever. When you start to do the math, it’s not only the public health responsiveness and lower risk. It’s also the efficiency. The proximate production of pharmaceuticals is far beyond our current system. This is where we see the world is going.

Let’s talk a little bit about sensing systems as well. As I was reading the book, one of the examples that brought back to me from business school and this goes back 30 years, is Caterpillar building diagnostic equipment into the tractors so that when it would sense a part was about to fail, it would send an order back to the factory, and ship the part down to wherever in the world that tractor happened to be.

Predictive analytics.

We’ve come a long way since then, but that’s an important construct here as well that enables some of the things you talk about.

Predictive analytics, as you said, has been around for some time. It’s getting better and in some cases, impressively effective. When you add to this the ability to shift to the production of those replacement parts closer to that moment and not even the part until you need it. Think about the old model. I do my predictive analytics. I do my math, and my demand planning, and I say, “To make sure that my production facility doesn’t have any stock-outs doesn’t go down, I need X number of these replacement parts on hand, just in case.”

That means you have to make those replacement parts at lots of different factories all over the world, put them in inventory, and hold them there with all those holding costs. With an approximate system, we can increasingly make more of those replacement parts through 3D printing. This means you don’t have anything there except a printing machine with some polymers and some metals in it. It sits there and waits for you to need one part. Couple that with predictive, and you have an enormous increase in efficiency.

It is taking the concept certainly further than what I described from my 30-year-old business school example and that ability. To me, 3D printing, as it continues to develop, will be such a foundational part of our day-to-day life. The ability to produce things that you otherwise would have to go to the store for or to create things that otherwise couldn’t have been created. It’s amazing. The technology is a good technology. It’s still very expensive, but you could easily envision that I’m going down to the corner 3D printing shop because I printed myself a set of twelve dinner plates that I need.

You make a great point about that. What we have to do is think about the way the model will change as a result of the capability. A lot of people will look at these kinds of new capabilities and say, “It’s not economical. We’ve proven it doesn’t work.” Maybe it doesn’t work now, or maybe it doesn’t work with the model as it’s currently defined but 5 years, 10 years, or 15 years, the one thing we do know is it’s going to get better. It’s going to get a lot better. If we take that as an assumption, and we should, then we can start to envision where things will be.

I’ll give you an example from a different space, which is food. Lots of talk about vertical farming, controlled environment, and agriculture. It’s called CEA. People are very excited about this. Other people have shown so far that it’s not economical yet in a lot of cases. The main reason it’s not economical in many environments is the availability of dependable, sustainable, and cheap power, energy, and electricity.

As we have distributed or proximate power, we’ll have more proximate agriculture. We have a specific example in the book. In December of 2022, I was in Dubai to speak in Sharjah and then also to do some research and interview people for the book. I had the opportunity to visit Bustanica. Bustanica is the largest vertical farm in operation now in the world. It’s a few miles from the Dubai airport.

It’s a partnership between Bustanica and Emirates Airlines. In this facility, they grow leafy greens and herbs and some other things. First of all, the quality of what I tried there is equal to any French farmers’ market. No offense to the French. Second, the lettuce I tried at that facility one day was the same lettuce picked at that facility. It was in my salad the next morning on the flight back to New York. Compare that with the existing model. We grow leafy greens in Spain or North Africa. We put it on a ship. We send it to a warehouse then I have a forlorn salad on my flight.

Compare that to they grow and pick exactly what they need and no more at a plant 3 miles from the airport and I’m eating it the next day. That’s proximity. That will start to proliferate around the world as power becomes sustainably and reliably available at lower cost, and then we’ll be able to eliminate food deserts. We’ll be able to have healthier and fresher meals for people in more parts of the world at a lower and lower cost. That’s how these proximate trends start to cascade across each other and change the world.

Certainly, the proximate PowerPoint that you brought up is foundational to the food application. I suspect that that’s true in a lot of instances. Your ability to get localized power that supports creating a product and delivering a product, whatever the case is, will be a key piece that will keep us in the knee part of the curve in terms of more applications.

It also radically improves resilience and adaptability. An interesting irony is, do you remember Texas a few years ago had that deep freeze? It’d be fair to Texas, that doesn’t happen very often in Texas. It was a big shock. Their power grid couldn’t keep up. An irony of that situation is Texas has some of the most wind power in the country, but they didn’t have the right interconnections with other states to manage the power load.

They also though have a lot of distributed energy resources, rooftops, and solar things like this. The grid wasn’t set up to pull those electrons to the right place at the right time or to do virtual power plants, as we call them in the book, which is something that’s rising. We didn’t invent that. That’s been going on in the power industry for a little while.

With proximate technologies with what we call in the book a hybrid model, having large centralized power production plants complemented by distributed energy resources, like solar and wind, and small scale distributed all over the place. This gives us a much more responsive resilient power system for the country. It also allows us to better navigate what we call the energy transition from hydrocarbons to renewables in the not-distant future.

That example, you could have all the wind power you want. Part of the issue was that power lines were down.

If the right people don’t get what they need, it doesn’t matter that you have it if you can’t get the power when you need it.

It comes to the delivery. The production was there. The provision part didn’t work so well. It struck me as I was going through the book that this is going to have a profound impact on the raw material industries because I’m no longer selling aluminum powder to a canning company that then produces cans for Coca-Cola. I’m producing aluminum powder for somebody’s 3D printer. It seems like that’s going to make those raw material providers potentially much more valuable than they are now because they will be able to disintermediate some of the players in between, coupled with the 3D printer, and able to command more of the rents of the market and more of the profits in the market for themselves.

You’re right, but I want to clarify. It’s going to be the raw materials providers who are ahead of that game that wins. To simplify the point, you can’t just pull iron ore out of the ground, make it steel, and throw it into a 3D printer. You’ve got to understand how the 3D printer systems work today and how they might work in 5 years and 10 years. Prepare the form factors, the characteristics, and the performance characteristics. They need to be able to work within the various platforms.

An example we use in the book, I spent quite a bit of time with Allegheny Technologies in Pittsburgh, ATI. ATI has for years been recognized as the leader in the world for various alloy metals, very high-end. About a dozen years ago, they started investing. It’s a little bit at first because you don’t want to go too big too early. Lots of time, attention, and R&D in the filing objective. How do we become the world’s leader in providing specialty raw materials for additive manufacturing?

That was the frame of their R&D effort and their exploration. That was twelve years ago when they got started. Now, they are a leader in having the right complement of metals in the right form factors to be usable within 3D printing. Their long-range strategy is to say, “We want to stay ahead of this game so that in the future, we own intellectual property.” Whether that’s the formulations or the cartilages if it is a platform system, they want to remain ahead of that. You can’t just keep making your metal and say, “Great. I’m going to throw it into a 3D printer.” There’s a lot of co-development that has to happen along the way.

Ecosystems And Sustainability

Which gets a point of ecosystems, which is one of the things I wanted to talk about. Ecosystem is not a new concept, but this will force you to foundationally rethink what your end-to-end ecosystem looks like.

The most poignant, exciting, and also painful example writ large for people in retail is Amazon. Amazon does not just source things and sell them to you but they also offer platforms for other retailers to sell stuff. Meanwhile, it’s well known that they’re keeping an eye on what’s selling and deciding, “Maybe we should get into that.” It’s the catch-22 for a lot of small retailers because it’s a phenomenal platform that provides everything you need to run your business.

At the same time, then you’ve got the gorilla there standing next to you. This is partly because they’ve taken a much wider view of what it means to be a retailer. Add to that, their real moneymaker became Amazon web services. That came from serving their own needs internally and then saying, “We should probably be able to serve this capability to other people.” They started serving it externally. They said, “We should be able to make this work for big enterprises as well as small retailers.” It’s evolved from there.

If you look at Amazon, getting back to the title of the book, Proximity, Jeff Bezos founded the company with proximity in mind. He just didn’t call it that. Right from the very beginning, he wasn’t just about selling books. That’s where he got started. He said, “I want to build the world’s biggest retailer that responds to customers anywhere and anytime for anything. We’re going to be maniacally focused on giving customers whatever it is they want.” The performance has shown over so many decades.

It’s certainly been an amazing success story. We’ll get to some of the consequences now. I know you talked about in the book that many of these applications ought to have reduced waste, which is a good thing from a sustainability perspective. Amazon is probably an example where it’s like so many cardboard boxes in delivering whatever you want to your house. I’m curious how society will manage some of the things. As much as we talk about wanting to save the environment and be sustainable, people like their Amazon delivery service and accept the consequences that go with it in terms of the packaging.

There’s so much to what you asked. I’ll offer a few thoughts. First of all, these developments illustrate the power of the demand of consumers and human beings. That is we want what we want, where and when we want it. That’s not changing. Whether we should want it or not, that’s different but we want it. The organizations that can provide it over the long run win.

The unfortunate thing is that sometimes comes at great environmental cost. The last 200 years since the Industrial Revolution have been about providing proximity, but we haven’t been able to do it at a granular level. We had to rely on hydrocarbons and shipping things thousands of miles and all this. The opportunities are shifting. The opportunity to provide what we want, where and when we want it in a sustainable way is becoming far more profoundly better.

We could give lots of examples of that, but let me back up to where we are and provide a counter-example. Shein and Temu are examples of companies that are driving to give people customization where and when they want it and to do it as fast as possible using traditional capabilities like cargo jets. It’s great that you can get your fast fashion, your one item produced at a factory in China and put on a cargo jet and sent to you in North America.

Closing

Again, the environmental cost of that is truly enormous. That’s using 20th-century solutions for 21st-century opportunity. What if we could set up technology systems to provide that level of customization and responsiveness where we don’t have to put anything on a plane from China? As an aside, many in your audience probably know this, but Temu for instance is leveraging a little quirk of the tariffs laws in the United States called de minimis. If a shipment is under $800, it is a different standard. Most of the things they’re shipping into the US have zero tariffs. I will make a little prediction that some time in the next couple of years, this will come to the floor for conversation.

It often happens in these cases when you have these radical changes in things. It takes the law a little while to catch up with.

Understandably so.

You look at the crypto industry. That was a foundational change that upended the way that we think about currency and payments. The regulators are still trying to get fully caught up.

We do want to experiment. We want lots of experimentation. We want people to try things. We want that free-market enterprise mechanism to work. It’s magic but we also need to try and avoid having unfortunate consequences of some of the regulations we have. We also need regulation to protect consumers to some extent. It’s natural that regulation follows. Regulation is chronically behind because it’s hard to regulate something that doesn’t exist yet. You’re not even sure. If you do too much of it, then you slow everything down, and other countries or other people will win.

That’s the balance that a regulator always has to strike. When do you step in and bring some order and control to something that is becoming big enough and potentially carrying negative consequences? We’ve seen lots of examples that usually something bad ends up happening before they step in.

That’s true. On the other hand, and I think I’m not alone in saying this, one of the reasons the United States has such a powerful tech sector compared to say, Europe is that in many ways we haven’t stepped in quite as much. We have allowed more of this experimentation and development to happen to hit the market. Not to say there’s no perfect solution to this. As much as I love Europe, there are enormously interesting and innovative things that come out of many parts of Europe. I’ve spent a lot of time there. The regulatory environment is a very significant constraint for European companies to become tech leaders.

Career Impact

A lot of people being here on the continent proper, but in Europe, certainly feel the same way. Look at the US, India, and China where there’s much more entrepreneurial behavior with a bit of envy. The last question I’ll ask you, given that this is a career-focused show. If I’m thinking about my career and I’m thinking about proximity and the concepts that you cover in the book, other than the AI or whatever coming for your job, how else would you encourage people to think about the way this impacts our careers?

I have one idea for you. It’s an exercise I do with my students at Kellogg and Booth. It’s an exercise I do with corporate leaders when I’m working with them in a facilitating strategy session. It’s an exercise you can do as an individual. I encourage all of us to do it as an individual. Let’s start with a company. Pick a product or service that your company currently sells in the marketplace.

Ask yourself, what is the value that product or service provides to the customers? Not the product or service, not the features and functionality, but the value. Remember, people don’t care about your product or service. They care about the value they get from it. Imagine it’s a decade from now and that value can be produced and provided immediately at the moment in time and space of demand. Don’t let reality get in the way during this exercise. It’s just an exercise.

Rob Wolcott: People don’t care about your product or service. They care about the value they get from it.

Imagine that value, whatever it is, can be produced and provided in the moment of demand in the future. How might the world look? I’m not asking you to come up with an exact way that will happen. I’m saying if that is the case and we can produce and provide at the moment of demand, how might the world look? Work backward from that.

You might start to find that your company has to change dramatically. You might start to find that some players in your ecosystem might not even exist in 10 or 15 years. It might start to give you some ideas as to how to get ahead of the game. The same thing for an individual. Ask yourself, what is the value you’re creating in the world for your company and your clients? What are the reasons they work with you?

I’d add another question to that. What value do you aspire to provide? What value would get you out of bed in the morning, excited to get to work, to work with people, to build stuff, and to create things, whatever they happen to be? What is the value that you bring to other human beings in the world? Reflect on that. The value will still be required. It’ll just be provided in different ways. That will help give you maybe some guideposts or even a North Star for how you evolve the next phases of your career into our approximate world.

The other bit of advice and this is something I’ve lived into my whole career, for good or for bad. I recommend everybody consider their career as a portfolio career. You know this quite well. You’re doing a podcast. You have a lot of other things you do with clients. The traditional model we all know where someone gets a job out of school, works there for 40 years, and retires is pretty darn rare these days. It’s going to be more rare.

Even when you’re working for a great company. I know that when you work for a 100-year-old great company like Lehman Brothers. It’s not like Lehman Brothers will ever go out of business. Sometimes they do. It’s been heartbreaking at times in my career to see people who are all in for their company, all in for that one industry, or that one company, then something happens. Maybe it’s not even their own fault.

Something else happens. They end up out of a job and they’re trying to figure out, “What do I do next?” This is where portfolio optionality comes in. What are the things you’re interested in that are outside your current job? Where are places you can build trusted relationships with people in other industries and other environments? When you’re interested in making a shift or when life throws a shift at you, you have people you can reach out to and have a trusted conversation with. Build a portfolio of trusted relationships. Build a portfolio of credibility in some other spaces. You’re ready if the world changes and when the world changes in a significant way.

There’s a lot in what you just said. I’ll keep us to our time today. Thank you for a conversation filled with a lot of big ideas and certainly a lot of food for thought, whether it’s vertically farmed or not, for people to consider. I appreciate it. It’s quite thought-provoking. I’m curious to see how the book does when it launches.

Thanks so much for your support and interest. Also, the purpose of what you do and help people think very broadly through their careers. It’s even more than a career. It’s how we are spending our limited time on Earth. There’s nothing more important than that question. Thanks for the support you provide people in the world.

Have a good day and thank you again.

Thanks, J.R. It was great talking with you.

—

I want to thank Rob for joining me to discuss his thought-provoking new book, Proximity, and cover some of the concepts in it that are likely to have a dramatic impact on our economy going forward and how we think about our careers as well. If you’d like to think more about your career and take control, visit PathWise.io and become a member. Basic membership is free. You can also sign up for the PathWise newsletter and follow us on LinkedIn, Facebook, Twitter, Instagram, and TikTok. Thanks. Have a great day.

Important Links

• World Innovation Network
• Proximity: How Coming Breakthroughs in Just-in-Time Transform Business, Society, and Daily Life
• https://TwinGlobal.org
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About Rob Wolcott

Rob Wolcott is cofounder and chair of The World Innovation Network (TWIN Global). He teaches at the Booth School of Business, University of Chicago and at the Kellogg School of Management, Northwestern University. He is also the author of several books, including Grow from Within: Mastering Corporate Entrepreneurship and Innovation and his new book, Proximity: How Coming Breakthroughs in Just in Time Transform Business, Society, and Daily Life, which we’ll cover in depth in our discussion. Wolcott is an active venture investor in more than thirty companies, many of which are leading the Proximity revolution.

Rob is also involved with the Himalayan Cataract Project and is a contributor to Forbes. He has a Bachelor’s degree in European and Chinese History and a Master’s and PhD in Industrial Engineering and Innovation Strategy from Northwestern’s McCormick School of Engineering.