Irving Wladawsky-Berger

The Third Wave of the Digital Economy - Promises and Challenges

“The next wave of digital innovation is coming.  Countries can welcome it, prepare for it, and ride it to new heights of innovation and prosperity, or they can ignore the changing tide and miss the wave,” writes Robert Atkinson in The Task Ahead of Us.  Atkinson is founder and president of the Information Technology and Innovation Foundation (ITIF), a think tank focused on science and technology policy.

We’re now entering the third wave of the digital economy, says Atkinson.  The first was based on personal computing, the Internet, Web 1.0, and e-commerce.  The second brought us Web 2.0, big data, smartphones and cloud computing.  The emerging third wave promises to be significantly more connected, - including higher bandwidth and a wide variety of devices; more automated, - with more work being done by machines while integrating the physical and digital worlds; and more intelligent, - leveraging huge volumes of data and advanced algorithms to help us understand and deal with our increasingly complex world.

“Building and adopting the new connected, automated, and intelligent technology system will lead to enormous benefits globally, not least of which will be robust rates of productivity growth and improvements in living standards.  Moreover, these technologies will help address pressing global challenges related to the environment, public health, and transportation, among others.”

We’re in the early stages of this third wave.  5G, IoT, robotics, AI and other promising technologies are being embraced by early marketplace adopters, but their full-scale impact is still 5 to 10 years away.  We’re in a period not unlike the late 1980s, when it was clear that IT was on the brink of a major transition, but the Internet revolution didn’t arrive until the mid-1990s.

The Top Ten Emerging Technologies of 2018

For the past several years, the World Economic Forum (WEF) has published an annual list of the Top Ten Emerging Technologies that would be potentially disruptive over the next three to five years while also providing significant benefits to economies and societies.  Starting in 2017, the Top Ten list has been chosen in collaboration with Scientific American and published in an issue of the magazine.

The Top Ten Emerging Technologies 2018 was released in September, 2018.  The final list was selected by a steering group of experts from an initial list with more than 50 submissions.  Here are the 10 technologies comprising the 2018 list, along with the reasons cited in the report for their selection:

What Might Work Look Like in 2030?

A number of recent studies have taken a close look at the the future of work over the next 10 to 15 years.  For example, a December, 2017 report by McKinsey examined which jobs will likely be displaced by automation through 2030, as well as which jobs are likely to be created over the same period, based on data from 46 countries.

McKinsey’s overall conclusion was that a growing technology-based economy will create a significant number of new occupations which will more than offset declines in occupations displaced by automation.  However, “while there may be enough work to maintain full employment to 2030 under most scenarios, the transitions will be very challenging - matching or even exceeding the scale of shifts out of agriculture and manufacturing we have seen in the past.”

Another report, The Changing Nature of Work, - published by the World Bank in October, 2018, - concluded that our problem is not that there won’t be enough work in the future.  The key problem is that, in many countries, the workforce isn’t prepared for a fast unfolding future. Neglecting investments in human capital, - i.e., the sum total of a population’s health, skills, knowledge, and experience, - will dramatically weaken a country’s competitiveness.

Let me now discuss Eight Futures of Work Scenarios and their Implications, a white paper published in January, 2018 by the World Economic Forum (WEF) in collaboration with the Boston Consulting Group (BCG).  The paper considered eight distinct scenarios on what work might be like by 2030, based on different combinations of three of the most impactful and uncertain variables affecting the future of work: the rate of technological change; the evolution of learning in the workforce; and the magnitude of talent mobility across geographies.

AI and our Social Interactions

I recently wrote about the event I attended on February 28 to celebrate the launch of MIT’s Schwarzman College of Computing.  This new interdisciplinary College is MIT’s response to the rise of artificial intelligence, - a profoundly powerful technology that will likely reshape our economy, society and personal lives in the decades to come.  But, attaining AI’s broad potential will require not only a continuing slew of technological innovations, but equally important research on the challenges our society must get ready for, including ethical issues, workplace disruptions, and human interactions.

The event included keynotes and panels on a wide variety of topics. One of the talks I found most interesting was Rethinking Friction in Digital Culture by Sherry Turkle, MIT Professor of the Social Studies of Science and Technology.

In her many writings and seminars, - including her 2011 best-seller Alone Together, -  Professor Turkle has long been warning about the impact of technology on our social interactions.  “Most of us here today were introduced to the idea of friction free as a really good thing,” she said at the start of her keynote.  “It’s an aesthetic of engineering efficiency, so why shouldn’t it be a really good thing?”  This idea that technical things should be friction free and smooth easily bleeds into other domains. “Efficiency becomes aspirational - in politics, in business, in education, and in our thinking about relationships.”

She cited a few examples of the kinds of friction free interactions she’s come across in her research on technology and social relationships.  People of all ages have told her that they prefer to text rather than talk, - even when interacting with a colleague in the next cubicle or office.  People have said to her that they prefer to text their spouse rather than have a face-to-face conversation.  Friction free, she explained, “is usually tied up with a hope for greater efficiency and less vulnerability.”

Globalization in Transition

I recently read two interesting reports on the state of globalization in 2019, one by The Economist, the second by the McKinsey Global Institute.  They both agree on the facts, - globalization and global trade have been undergoing considerable changes since the 2008 global financial crisis.  But, they differ in their explanations of the reasons for the changes.

“The golden age of globalisation, in 1990-2010, was something to behold,” notes The Economist in its overview article, The steam has gone out of globalization.  “Commerce soared as the cost of shifting goods in ships and planes fell, phone calls got cheaper, tariffs were cut and the financial system liberalised.”

But now, we’ve transitioned to a so-called Slobalisation era.  “Globalisation has slowed from light speed to a snail’s pace in the past decade for several reasons.  The cost of moving goods has stopped falling.  Multinational firms have found that global sprawl burns money and that local rivals often eat them alive.  Activity is shifting towards services, which are harder to sell across borders: scissors can be exported in 20ft-containers, hair stylists cannot.  And Chinese manufacturing has become more self-reliant, so needs to import fewer parts.”  Finally, we have the well-publicized trade wars and tariffs of the past two years.  All in all, the “rules of commerce are being rewritten around the world.”