“Technology Driving Economics”
A Conversation with John Hagel III, Director and Co-Chair, Deloitte Center for Edge Innovation; and Ira Kalish, Director of Global Economics, Deloitte Research; hosted by David Willis, Senior Foreign Correspondent, BBC
Ira Kalish: IT revolution of the past 30 yrs accelerated our ability to grow and has enabled us to improve living conditions around the world.
Willis: This is a jobless revolution. Where’s the advantage?
IK: It frees up resources for our further use. The role of technology is not to create jobs, but to cut costs and enhance our standard of living.
John Hagel: There’s another side to tech that people don’t focus on as much. At the same time, it creates opportunity, it creates a growing pressure on all of us, that reduce barriers to entry and barriers to movement. We are under increasing pressure in businesses; from a customer viewpoint thats great, but it decreases the return on assets (by 75%) in the last 50%
Topple rates are also increasing at a dramatic rate. Leading companies on the S&P500 have only a 15 year lifetime.
IK: Everything is a commodity because everything is so accessible, and prices and margins are driven down. The differentiation in business world is a fight of marketing and branding.
JH: Digital tech enhances connectivity, which combined with intensified competition, makes for cascades of disruption. For extreme events, which become more and more frequent because minor issues can cause more and more havoc. We need to build controls for that so that minute incidents dont set off catastrophic events.
DW: It was inevitable, that speed would increase. So now, we just have to find ways around it.
IK: Tech enables to move quickly, but our humna nature hasn’t changed. Therefore, people engaging in herd behavior cna act much more quickly and without thought.
China is stealing IP, but in the long run that’s not what drives an economy. China’s been successful because theyve been able to move large groups of people from farm to factories. China has invested in useless things — investment is 50% of GDP and they’re not getting what they need. Not growing as fast as other Asian countries have in their growth phases. Building to keep people busy, but huge buildings and malls are empty. Migration from farms is slowing. Economy will grow more slowly in the next decade. They’re a poor country and we’re a weak country.
JH: I would not be complacent about China. Some companies are designing institutional innovation engines, which are huge engines for growth and feeding specialized talent into the Chinese market.
DW: What about FB and Google? How are they adding?
JH: There is a convergence of factors that are allowing us to do incredible things we wouldnt have been able to before, but for large established companies, this creates a huge challenge, because companies can come and out fo the woodwork and scale in ways they never would have before.
IK: There is a supply-demand imbalance in education. We’ve decelerated the development of skills. But there’s also a big increase in wages for highly skilled workers and a big decrease in unskilled worker wages. In the next 10 years, we’ll see more social tension as the gap widens between the rich and the poor. The solution is better education and more immigration of skilled people.
JH: If you took talent development seriously, how would you redesign the workplace to become a place of education. EG. LiveOps: focuses on call center ops without a call center. Created a tech infrastructure that connects people who have to work from home thorugh a virtual call center. They now have 20,000 employees, whose talent they rapidly develop through tech feedback mechanisms, coaching systems and online discussion forums. We need to be taking tech and focusing it on talent developmetn.
DW: When something becomes abundant, it also becomes cheap.
IK: This has both positive and negative impacts. In the business world, you have to be sharper, faster more innovative. Every successful strategy eventually fails, so that if you don’t continually innovate, you’ll “lose margin and eventually lose everything.”
Drivers of economic growth: biotech, innovation. China won’t take over bcause they don’t encourage free thinking, innovation.
JH: Impact of tech on global economy: The idea that IT makes location irrelevant is wrong. Location is becoming more and more important — mass movement of people into urban areas. Urbanization is accelerating, dense urban populations will learn faster surrounded by other people with thoughts, ideas. Serendipity — chances of unexpected encounter will occur much more likely in a city.
IK” It’s no accident that we’re in CA. Shanghai U ranks 500 top universities. 17 are in the US; 6 are in CA. Not necessarily CA natives, but talent drawn from all over the world, which has to do with the attitudes we’ve created. Free-flowing info. At the end of the day you have to have lunch. Rub shoulders, humnaize with others.
DW: Where is the tech future?
JH: Tech is making smart things smarter, dumb things smarter and living things much more robust.” All of these will have an impact on our future. We will all be increasingly stressed, increased pressure– we will burn out unless we develop our talents much more quickly than we have in the past. Increasingly, we must integrate passion with our work. Disengaged worker will not develop talent as quickly as an impassioned worker.