Disruption and System Change

COMMENTARY

By Veikko Välilä

Helsinki, Finland       

Theory

First, a few words about the theory of disruption. Let’s start with a definition: ‘A disruption happens when new products and services create a new market and, in the process, significantly weaken, transform or destroy existing product categories, markets or industries.’ The key words are ’create’ and ‘destroy’.

Fig. 1: Source RethinkX.com

This is the so-called X-Curve of Disruption. We can see that typically the old system starts to decline slowly and then with an accelerating speed as it reaches the tipping point. The new system grows following an S-curve and the old system collapses at the same time. Typically, the technology adoption lifecycle is exponential, and not linear. Whole business sectors may be disrupted as a result.

World Energy Supply

If we look at the world total energy supply by source, still more than 80% of all energy comes from different fossil fuels. But the share of solar and wind power is growing very rapidly. Why is that?

Fig. 2: Source OurWorldinData.org

The price of electricity from the solar and wind power has declined enormously during the last ten years. Today both solar and wind energy provide the lowest cost of electricity. And both of those energy forms are limitless. Lower cost of energy provides a higher living standard. So far, our high living standard has been based on fossil fuels: coal, oil and natural gas. But in the future, this will be done by the solar and wind energy and the new battery technology.

RethinkX, an American think tank, claim that the cost of combined solar, wind and battery systems will decrease by 2030, even further by another 70%. This makes disruption of the existing energy supplies inevitable. We are already today beyond the tipping point, and the bulk of disruption will unfold rapidly over the next decade. This means that new investments in coal, gas, or nuclear power are already financially unviable. The existing coal, gas and nuclear assets will be stranded at the end of this decade.

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Editor’s note: This article represents the contents of a keynote speech by the author at the 2ⁿᵈ World Project Management Forum (WPMF) 2020, 14 – 16 December 2020, New Delhi, India

How to cite this article: Valila, V. (2021). Disruption and System Change, Keynote Speech at 2^nd World Project Management Forum, New Delhi, India, December 2020; published as Commentary, PM World Journal, Vol. X, Issue I, January. Available online at https://pmworldlibrary.net/wp-content/uploads/2021/01/pmwj101-Jan2021-Valila-disruption-and-system-change-commentary.pdf

About the Author

Veikko Välilä

Past President, Project Management Finland
Past President, Chair, IPMA
Helsinki, Finland

Veikko Välilä has more than 35 years’ experience in project risk management, gained in employment with Kone Corporation, Industrial Mutual, Ministry of Trade and Industry, Hansa Industrial Insurance B.V., If P&C Insurance Co. Ltd, Marsh & McLennan Inc., International Project Management Association (IPMA), Aon Finland Ltd, Fennovoima Ltd, Legal Lounge Ltd and Howden Finland Ltd.

Veikko has provided consulting and risk management services for a number of large corporations in the areas of power generation (including thermal and nuclear power), pulp & paper industry, high tech companies and large infrastructure projects (including harbor, metro, airport, rail- and motorway projects).

Veikko has served in a diplomatic position as a Scientific and Industrial Commissioner of Finland. He established a new operation based in Hong Kong and created more than 50 new industrial and scientific co-operation projects between Finnish and Chinese & South-East Asian enterprises and institutions.

Veikko has participated in starting up new and successful businesses, such as Soredex, a high-tech medical X-ray company, and Hansa Industrial Insurance, an insurance underwriting operation in the City of London. During his career he has lived in 5 countries and worked in more than 50 countries.

Veikko Välilä has served the International Project Management Association (IPMA) as the President and Chair of the Executive Board, and thereafter as the Secretary General of the organisation. IPMA is a global federation of over 70 national project management associations (www.ipma.world).

He is a co-founder of the Climate Leadership Coalition, the largest non-profit climate business network in Europe, created in Finland in 2018.  He can be contacted at veikko.valila@gmail.com.