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By: Krisztina Holly

An exciting convergence is happening between the physical and digital worlds. New innovations, from robotics and new materials to logistics and sustainability, are impacting our industries and our lives.

The past year gave us a sneak peek of big innovations on the horizon. Yet, the most disruptive tech trend of 2018 isn’t a technology, it’s a company. Amazon isn’t just changing our shopping habits, it’s disrupting entire industries, influencing the design of cities, and impacting our social lives. It threatens parts of our economy while creating new opportunities that make local manufacturing more important than ever.

Innovations of 2017

From a technology perspective, 2017 didn’t disappoint. SpaceX demonstrated their premise of reusability to make regular access to space economically feasible. Scientists edited the genes of a human embryo using CRISPR-Cas9. MIT researchers created the first superlight porous material from graphene, and the US Navy 3D printed their first component for use inside an aircraft.

Autonomy is finally here–for specialized applications, anyway. Autonomous truck company Embark came out of stealth and started shipping refrigerators regularly from Texas to a distribution center in Southern California. Uber announced flying car service in Los Angeles by 2020, and automotive micro-factory Divergent 3D (listen) raised $90M to use digital fabrication to manufacture small fleets of autonomous vehicles.

Artificial intelligence won big, too. Humanoid robot Sophia was granted citizenship in Saudi Arabia and Google’s Deep Mind AI taught itself to walk last summer. (However, in another study, DeepMind still had difficulties understanding Homer Simpson’s actions. D’OH!) 2017 was the year of the smart voice device, and the Echo Dot was the top-selling product last holiday season on Amazon across all categories.

DAQRI’s lightweight Smart Glasses are now ready for prime time, even if MagicLeap isn’t quite ready quite yet. Even Snap Inc–the pioneer of ephemeral, digital interactions–became a hardware company with its Spectacles, drones, and merchandise. (Unfortunately for the company, however, hundreds of thousands of those Spectacles are still sitting as extra inventory in warehouses.)

The Deal of the Year 

Despite all of the amazing technological innovations last year, however, the most notable technology news item in 2017 in my opinion wasn’t an innovation at all, but far more prosaic: Amazon’s acquisition of Whole Foods . The deal rocked the business community for many reasons, but mostly for its symbolism and what it forebodes for the future.

The most obvious impact of Amazon is how consumers have radically changed our expectations around cost and convenience, wanting nearly instant access to products as though we were turning on a faucet or flipping a light switch. Companies feel more intense pressure than ever to innovate quickly and accommodate our insatiable need for instant gratification.

Many retailers have been struggling to survive what some have called the Great Retail Meltdown of 2017. While others have pointed out this is just a market correction, Amazon’s vast data collection and analytics capabilities not only enable them to deliver convenience, but consumer and pricing intelligence that many claim is used to undercut brands and retailers.

But Amazon’s influence goes well beyond commerce.

The Grand Disruption

To deliver on their on-demand promise, Amazon has been pioneering new frontiers of logistics and automation. As of last January, Amazon had 45,000 robots, and added another 75,000 more in 2017. This not only means they are implementing automation at a rapid pace, but they are at the forefront of learning how to integrate their workforce with automation. This trend will likely lead to a new discipline of management and organizational behavior.

Other impacts of Amazon’s wide-ranging business model are less direct but no less subtle: the shift away from traditional brick and mortar and our easy access to digital entertainment is causing consumers to stay home. Developers are rethinking the purpose of shopping malls, the role of theaters, and the retail experience.

Shopping from home and instant delivery also mean that local warehousing space will become more important and new industrialists have reason to reimagine transportation systems. Governments have been clamoring with incentives and grand proposals to become the location for Amazon’s second headquarters. Whether you love them or hate them, Amazon is changing the face of business, society and our cities.

The Opportunity

Given these trends, it might seem like a challenging time for new products and retailers to face these trends. But other technology shifts are creating opportunities that might make today one of the best times for starting a new venture.

Technologies like Instagram and direct-to-consumer business models are disintermediating retail, enabling emerging brands to get noticed without the traditional gatekeepers. But it does take effort to keep up. Shrewd founders have been experimenting with branding, pricing, and new online retail models. Some high growth consumer goods like SmartyPants Vitamins have been incredibly successful at leveraging Amazon in the early stages (listen here).

It has become more compelling than ever for entrepreneurs and influencers to create physical products, and founders of tech companies–such as those I’ve interviewed on The Art of Manufacturing podcast like Iconery (jewelry) and Lumi (packaging) and Plethora (machining)–help creatives without prior experience turn their dreams into reality. New platforms make it easier to scale. And Amazon Web Services, ironically, empowers a vast number of new ventures to get off the ground. Just like doorstep delivery, web services have become like a utility, to be turned on and off based on a business’ needs.

Because brand story, innovation, and time to market have become key in this rapidly changing environment, I predict that local manufacturing will play an ever-critical role in 2018 and beyond. The high costs of doing business in cities will be balanced by their access to talent, diverse markets and the cross-pollination of ideas.

One promising winner might be Los Angeles. It’s a little known fact that L.A. is already the largest center of manufacturing in the country. Being a center of aerospace, design, transportation, food, fashion, logistics, and Hollywood, the city could be poised to be at the center of this resurgence.

The key for any region to thrive is to build on the innovation advantages of manufacturing locally. We must leverage sustainability to drive down cost, and learn how to train the workforce and blend it with automation. Businesses who either pioneer the technology trends or adapt quickly will be the winners.

And those flying cars might finally become a reality after all.

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