Society and business in the 21st Century
The latest Decoding the New Economy video is an interview with wine photographer Charles O’Rear.
Charles was on tour with Microsoft to promote the end of Windows XP, it was his photo of a Napa Valley hillside that became the background feature the system’s default ‘Bliss’ theme.
The interview is a long ranging discussion on how photojournalism has changed over the last four decades along with the evolution of both the art and science of photography itself.
Few industries are going to be untouched by the disruptions of the next decade and that’s going to present challenges for all of us.
Last October, ahead of the company’s Orlando Symposium, Gartner Research Director Kenneth Brant released a paper looking at the effects of technology on the workplace.
“Most business and thought leaders underestimate the potential of smart machines to take over millions of middle-class jobs in the coming decades,” Brant wrote. “Job destruction will happen at a faster pace, with machine-driven job elimination overwhelming the market’s ability to create valuable new ones.”
Brant’s view about middle class jobs is a sobering thought, many of the corporate ‘knowledge worker’ positions can be easily replaced by computers to make the decisions now being made by armies of mid level managers, bean counters and clerks.
Indeed the whole concept of ‘knowledge worker’ that was fashionable in the 1980s and early 90s in describing the post-industrial workforce of nations like the US, Britain and Australia is undermined by the rise of powerful computers and well crafted algorithms to do the jobs unemployed steel workers and seamstresses were going to do.
Twenty years later and the ‘knowledge workers’ had morphed into the ‘creative class’ and it appears the computers are coming for them, too.
Personally, I subscribe to the view in the medium to long term new jobs in new industries will evolve – a view shared by economists like GE’s chief economist, Marco Annunziata.
Over the next decade however there’s no doubt we’ll be seeing great disruption to established industries and the hostility to Google buses in San Francisco may be just an early taste of a greater antagonism to the technology community in general.
For managers, the problems are more complex; while their own departments, corporate power bases and even their own jobs are at risk, they are going to have to find ways to incorporate these changes into their own business. Gartner warns CIOs in its briefing paper;
The impact will be such that firms that have not begun to develop programs and policies for a “digital workforce” by 2015 will not perform in the top quartile for productivity and operating profit margin improvement in their industry by 2020. As a direct result, the careers of CIOs who do not begin to champion digital workforce initiatives with their peers in the C-suite by 2015 will be cut short by 2023.
Few industries are going to be untouched by the disruptions of the next decade and the resultant job losses are going to present challenges for all of us.
“How do we move to an exponential approach to innovation” asks John Hagel, Director of Deloitte’s Centre for the Edge in the latest Decoding the New Economy video.
The Centre For The Edge is Deloitte’s Silicon Valley based think tank that identifies and explores emerging opportunities related to big shifts that are not yet on the senior management agenda.
John tells us how the cycles of change and innovation have varied over the last thirty years in the industry; “the biggest thing for me is that nothing is stabilising. I often go back into history and look at things like electricity, the steam engine and the telephone – all hugely disruptive to business practices.”
“But the interesting pattern is they all had a burst of innovation and then a levelling off,” says John . “You could stabilise and figure out how to use all this technology.”
“With digital technology there is no stabilisation.”
That lack of stabilisation leads to what John has termed ‘exponential innovation‘ where he sees business and education being rapidly transformed as technology upends established practices and methods.
Healthcare, financial services and “any industry that has a high degree of information content ” are the sectors currently facing the greatest challenges in John’s view.
John sees the solution for businesses and managers in looking at the current era not as a time of technology innovation but of institutional innovation. That institutions, like companies, have to reinvent how they are organised.
Reinventing well established companies or centuries old bureaucracies is a massive challenge, but if John Hagel’s view is right then that radical change to institutions is what is going to be needed to face a rapidly changing society.
Bank image by Ben Earwicker, Garrison Photography of Boise, ID through sxc.hu
BT Futurologist Nicola Millard on being a futurologist and the future of the workplace, the open plan office and customer service.
“I think my job title is a little bit misleading,” says Nicola Millard of her role as BT’s Customer Service Futurologist. “Most people would imagine futurologists have a crystal ball that works and maybe talking about twenty to twenty five years out about a future where intelligent robots have taken over the world.”
“My horizon tends to be a bit shorter,” Nicola explains. “My time tends to start in about three weeks time and tends to extend to five years, so I’m more of an industrial futurologist and CEOs tend not think beyond the next three weeks.” “I guess more of a ‘soonologist’ than a futurologist.”
Nicola was talking to the Decoding The New Economy YouTube channel at BT’s London Demonstration centre where the time frame is somewhat more than the next three weeks as the company shows off the technology and product lines it believes are going to change the communication industry.
For BT and Nicola, much of the near future is focused in how consumer and workplace behaviour is being changed by IT and communications technology.
Nicola sees an interesting relationship between technology and people – technology can radically change peoples’ behaviour but it also can amplify existing behaviours. “It can certainly influence the way we work, rest and play, in the ways we approach the office and how we consume,” says Nicola.
“Behaviour changes are really fascinating when we give people people access to technologies that give them more choice and more information than ever before. It untethers us. All of these thing present opportunities to change that way we do stuff.”
Technology has also untethered the office, says Nicola. “In the old days we had to go to the office at nine o’clock in the morning and leave at five in the afternoon. We didn’t have any other options – we had a desk, we had big technology and we had masses of paper.”
“That’s all changed.” Workplaces have always struggled with collaboration and Nicola sees the open plan office as being a 1970s attempt to get workers to talk and work with each other rather than hiding behind closed doors. “By forcing people into open plan we hoped that by breathing the same air they would start to collaborate.”
“Now we collaborate with people that aren’t necessarily in the same place as us. The office itself has become a collaboration tool,” Nicola says. “We’re seeing the evolution of the office.”
Today’s technology tools and remote working have changed the role of the workplace with the office becoming a place for workers to collaborate and work together, however that nature of work has changed.
With improved connectivity the home office and mobile workers have come into their own with BT having around ten percent of their workforce operating from their residences and the company finds they achieve around a twenty percent improvement in productivity from those staff.
However home working isn’t for everyone. “I’m a terrible home worker,” Nicola says. “I tend to go mad so if I want to collaborate I go to the office but I want to work quietly I go to the coffice’, which is generally a third place outside the office or home.”
“There’s only four things I need to work; good coffee, good cake – these first two are non-negotiable – good connectivity and then I need company. Not necessary office type company but just a buzz.“
Today’s buzz extends to shopping, the shops are fuller on a Saturday afternoon than they have ever been before. The showrooming phenomenon – where customers use their smartphones to check prices and proudcts while in the shop – allows retailers to enhance their sales strategy as the same available to shoppers can also be used by sales assistants.
“Shopping is sometimes a contact sport,” Nicola observes. “the fact we are comparing and contrasting, the fact we are challenging the physical shop. Waving our mobile phone on the shopfloor.” “Retailers for a long time resisted showrooming, they split their online and physical spaces. We’re now seeing those physical lines blurring.”
Nicola sees the biggest challenge facing business in the near future being agility – as cloud services expand, it’s easier for companies to scale which places pressure on many incumbent businesses.
Big Data also presents opportunities, “there’s always been big data, we’ve always had too much data, the analytics tools have changed.” For great challenge though for business is change and this is what will focus executive attention in the near future. “Businesses tend to be built to last rather than for change.”
“eBay is a shark in ocean, Alibaba is a crocodile in the Yangtze” film maker Porter Erisman quotes the founder of Alibaba, Jack Ma, in comparing the two online trading sites.
In promoting his film Crocodile in the Yangtze, Porter spoke to Decoding the New Economy about the rise of the global Chinese internet giant.
A key part in Alibaba’s success is taking on eBay on it’s own turf, “if you’re David fighting Goliath you can’t play by the big guy’s rules,” Porter says.
This is exactly what the Chinese company did when eBay entered their market and today Alibaba and it’s subsidiary Taobao have sales exceeding eBay’s and Amazon’s.
“Back in about 2003 Jack Ma came to me and told me about a secret project to overtake eBay,” Porter says. “When we looked at them they looked like a Goliath, they’d never really been beaten in a market they’d entered first and they had a huge war chest with a $150 million committed to the China market.”
It turned out that eBay weren’t as powerful as they appeared, something other entrepreneurs have discovered when giants like Google have entered their markets.
Like many rapidly developing countries, China is leapfrogging various stages of development that Western economies went through with the retail industry and e-commerce being two examples.
“Some people say cellphones will leapfrog landlines, actually the same is due with entire systems,” says Porter. “In China coming from so many years of a command economy there wasn’t a very developed retail culture or even a consumer culture.”
“Taobao came along at a time when all of that was still in the early phases of development and the company basically leapfrogged that whole phase of building out shopfronts and building logistics.”
“E-commerce in China is revolutionary while in the US, or Australia, it is evolutionary.” Porter says.
Porter quotes Jack Ma as saying “e-commerce in the US would be a dessert, in China it is the main course.”
As companies like Lenovo computers, Hauwei telecommunications or Haier whitegoods have discovered, Chinese businesses face challenges when expanding overseas. Porter sees this as a matter of time and scale.
“Like Japan in the 1970s and 80s there’s a whole wave of companies that have started going global. China’s such a big market that there’s a lot of companies that get big and develop scale before going international.”
“I’d say the biggest challenge in the beginning is cultural,” states Porter. “China’s at a disadvantage because information and the media are so controlled that’s sometimes a rude awaking when a company goes global like a Hauwei and then faces a bunch of political issues it doesn’t understand.”
“One of the reasons I made the film,” Porter says. “I wanted entrepreneurs in China to see it and understand these are the issues Alibaba faced when they went global and hopefully you can learn from some of those successes and mistakes.”
Porter’s advice to westerners going into China is to shut up, listen and learn, “don’t assume that just because things are done a certain way in the US or Australia that it’s superior.” The country’s culture and ways of doing business are different to those of North America, Europe or Australia.
“If you look at the way traffic moves in Shanghai it looks crazy. If you drove like that in Sydney it would be a disaster but there’s just different ways of through traffic, getting point A to B.”
“It’s better not to judge, but just step back.”
Regardless of our judgements, China’s move up the value chain means we will see more PRC founded companies going global.
Over the next decade we’re going to see the globalised economy start to take on some recognisably Chinese characteristics.
US manufacturing is undergoing a resurgence, just without the jobs reports the New York Times in its story on the textile mills of South Carolina.
The decline and recovery of US manufacturing is a story of our times – the industrialisation of Asia, trade treaties such as NAFTA and China’s joining the World Trade Organisation all saw Western producers move their operations overseas.
A weakness with that business model are the extended global supply chains as goods spend months on ships following long manufacturing and design lead times, the exact opposite of what modern consumers are looking for.
Coupled with domestic manufacturers’ increased investment in automated systems which makes labour costs a smaller factor and the sums start adding up for making things in the United States.
Unfortunately for the workforce, those automated plants don’t require anywhere near the staff older factories employed and the skills required in today’s mills are substantially different from those needed in those of earlier times.
Most industries are encountering the same change and new technologies make the modern factory very different to that of a few decades ago.
The jobs aren’t going to come back in the numbers that were once employed, as the New York Times story illustrates with the decline in the working population.
Despite the recovery in US manufacturing, today’s industry is very different to what it was last century, something that’s missed by those advocating a return 1950s style government policies to protect jobs in sectors like car manufacturing.
Even if they are successful in rejuvenating local car factories, cotton mills or coal mines, the days of these plants employing tens of thousands of grateful cloth capped workers are over.
Those politicians whose ideology is based on the old model, or businesspeople who want to work in the old ways, are going to find the modern economy very difficult and challenging.
Image of cotton threads on a weaving machine through jbeeby on sxc.hu
One of the phenomenon of Silicon Valley’s development has been the rise of the ‘Google Buses’ – the private services run by the big tech companies to shuttle their workers between home and their workplaces.
The Bay Area’s private bus shuttles are a real time illustration of how regions evolve around industries and economies and how cities and communities are in many ways dynamic, living creatures themselves.
An effect of the Google Buses is that San Fransisco is experiencing a ‘reverse sprawl’ notes Eric Rodenbeck in his Wired Magazine story Mapping Silicon Valley’s Gentrification Problem Through Corporate Shuttle Routes
It’s about more than gentrification as we’ve experienced it thus far: It’s about an entirely reconfigured relationship between density and sprawl, and it’s going to need new maps to help us navigate this landscape.
Driving those buses is instructive as well and Buzzfeed has an interview with an anonymous driver employed by one of the bus companies. The driver’s tale shows the scale of the phenomenon.
This bus holds 52 people and that is 52 cars that are not on the road in one trip, and we have 70 routes in our system. That’s thousands of cars everyday.
Driving cars is fundamental to the American – and Australian – lifestyle. The modern American city developed around the motor car and that mobility is the defining feature of the Twentieth Century.
So maybe the Google Buses are an early part of the redefinition of our cities to meet the the needs of the 21st Century and cars are not the driving factor.
In this vein, Jarrett’s Walker’s Human Transit blog teases out some of the issues behind these developments.
Finally, this joke is on the lords of Silicon Valley itself. The industry that liberated millions from the tyranny of distance remains mired in its own desperately car-dependent world of corporate campuses, where being too-far-to-walk from a Caltrain station — and from anything else of interest — is almost a point of pride. But meanwhile, top employees are rejecting the lifestyle that that location implies.
While I don’t agree with Jarrett’s proposition that the geeks riding these buses want to mingle with strangers given the locations they live – I’d argue they’re attracted to those locations because their peers live there and downtown amenity to good restaurants and bars – he raises a very good point about the mismatch between where the workers and the jobs are.
Jarrett’s point touches on land use zoning and its effects on the evolution of cities. An excellent piece by Alexis Madrigal in The Atlantic tracked Silicon Valley’s iconic techonolgy sites, most of which have been demolished due to the pollution partly caused by zoning requirements for underground tanks.
The issue of zoning is also raised by Rodenbeck who points out that zoning issues with carparks are what has made employee buses more attractive to the giant tech employees.
Zoning different land uses makes sense on one level as no-one wants to live next door to a tannery, heavy metal waste dump or quarry, but there’s a risk with fixed ideas that our cities will become less responsive to economic developments, particularly in an era when people don’t want to, or can’t, dive across town to get to their jobs.
What Silicon Valley’s corporate buses really show is that our cities are evolving around the needs of today, not yesterday. It’s something governments, businesses, investors and communities should keep in mind.
Image of Google shuttle bus stop from David Orban through Flickr
