Irving Wladawsky-Berger

Why “The Techlash” Is a Threat to Growth and Progress

A few months ago, the Information Technology and Innovation Foundation (ITIF) published A Policymaker’s Guide to the “Techlash” - What It Is and Why It’s a Threat to Growth and Progress.  “Does information technology (IT) solve problems and make our lives easier, allowing us to do more with less?,” asks the ITIF report.  “Or does it introduce additional complexity to our lives, isolate us from each other, threaten privacy, destroy jobs, and generate an array of other harms?”

It wasn’t all that long ago that digital technologies and Big Tech were largely seen as catalysts for positive change: the Internet had become a global platform for collaborative innovation; social media was a liberating force, helping democratic uprisings like the Arab Spring; and the smartphone was transforming the lives of people all over the world.

But, the 2010s saw the emergence of what’s come to be called the techlash.  The Oxford English Dictionary (OED) defines techlash as “a strong and widespread negative reaction to the growing power and influence of large technology companies, particularly those based in Silicon Valley.”  The term seems to have originated in a November, 2013 article in The Economist, which said that tech elites are turning out to be some of the most ruthless capitalists around, and “will join bankers and oilmen in public demonology.”  By 2018, techlash was one of eight shortlisted entries for OED Word of the Year.

Even When Plans Are Useless, Planning Is Indispensable

“As scientists race to develop a cure for the coronavirus, businesses are trying to assess the impact of the outbreak on their own enterprises,” wrote MIT professor Yossi Sheffi in a February 18 article in the Wall Street Journal.  “Just as scientists are confronting an unknown enemy, corporate executives are largely working blind because the coronavirus could cause supply-chain disruptions that are unlike anything we have seen in the past 70 years.”

Sheffi is Director of the MIT Center for Transportation and Logistics.  He’s written extensively on the critical need for resilience in global enterprises and their supply chains, - including The Power of Resilience and The Resilient Enterprise, - so they can better react to major unexpected events.  Covid-19 is the kind of massively disruptive event he had in mind when he wrote those books.

While learning from historical precedents is always a good idea, recent supply chain disruptions - the 2003 outbreak of SARS in Asia, the 2011 Fukushima nuclear disaster, or the 2011 Thailand floods, - were very different from our current pandemic.  Those events were much more localized, lasted a relatively short time, and they mostly impacted supply, not demand.  The impact of Covid-19 is much bigger, affecting consumer demand as well as supply chains all over the world, and likely to last quite a bit longer.  “Today’s supply chains are global and more complex than they were in 2003,” with factories all over the world affected by lockdowns and quarantines.  Apple, for example, works with suppliers in 43 countries.

What History Tells Us About the Accelerating AI Revolution

A few weeks before our lives were turned upside down by Covid-19, I read Technology at Work v4.0, the fourth report in the Technology at Work Series developed by Citigroup in collaboration with Oxford University.  The report includes an excellent chapter on What History Tells Us About the Coming AI Revolution by Oxford professor Carl Benedikt Frey based on his 2019 book The Technology Trap.

Recent AI advances have “sparked much excitement…  yet despite this, most ordinary people don’t feel particularly optimistic about the future,” wrote Frey.  For example, a 2017 Pew Research survey found that three quarters of Americans expressed serious concerns about AI and automation, and just over a third believe that their children will be better off financially than they were.

But, in fact, serious concerns about the impact of technology are part of a historical pattern.  “Many of the trends we see today, such as the disappearance of middle-income jobs, stagnant wages and growing inequality were also features of the Industrial Revolution, which began in Britain around 1750.  This was a period of unprecedented technological change but also one of turbulent social and political change.”

An Increasingly Digital “New Normal”

About a dozen years ago, I attended a conference where I was interviewed on stage by then WSJ technology columnist Walter Mossberg.  He started out by asking me about IBM’s near-death experience in the early 1990s, and the subsequent technical and cultural transformation that made it possible for IBM to reinvent itself and survive, while many other IT companies didn’t make it.  In particular, we discussed whether a successful company transformation must be preceded by the kind of major crisis IBM went through.  When it comes to humans, the ancient Greeks certainly thought so, as reflected in their tragedies.

Transformative change is very difficult for established companies.  Over the years, they’ve amassed valuable assets and extensive organizations.  Already consumed with managing their existing operations, they may look at transformative change as more of a threat or distraction than an opportunity, - unless they’re in dire straits and have no other choice, as was the case with IBM.

A serious crisis is an opportunity for companies to focus on the actions needed to survive in a fast changing environment.  As Rahm Emanuel famously said in a 2008 interview with the WSJ: “You never want a serious crisis to go to waste.”  In that spirit, how should companies take advantage of the Covid-19 crisis, - arguably the biggest shock the world has experienced since WWII, - to accelerate their journey toward what most everyone agrees will be an increasingly digital future?

The Urgent Need to Strengthen the Nation’s Resilience

Following World War II and the onset of the Cold War with the Soviet Union, the US undertook a series of measures to strengthen the resilience of the country.  These included a significant expansion of government support for scientific research in universities and R&D labs, leading to product innovations from the private sector and better weapons from the defense industry, which contributed to making the US the most prosperous and secure nation in the world.

Another important measure was the expansion of educational opportunities, like the GI Bill which offered the nation’s 16 million WWII veterans payments of tuition and living expenses to attend high school, college or vocational/technical schools.  By 1956, over 2.2 million had used the GI Bill to attend college or university, and 5.8 million had used it for some kind of job training program.

In the 1950s the government enacted the National Interstate and Defense Highways Act, which led to the construction of over 48,000 miles of the Interstate Highway System at a total price estimated at over $500 billion, - the largest public work in America .  The Act had a dual purpose: facilitating the economic growth of the country as well as supporting the country’s defense during a conventional or nuclear war should it be necessary.

And, last but far from least, in the late 1960s the government launched ARPANET, the digital infrastructure that eventually became the Internet.  ARPANET was supported by the Department of Defense to significantly enhance the resilience of the country following a nuclear attack by enabling computers to communicate with each other using a flexible packet-switching digital network.

But, this post-war focus on resilience has significantly waned over the past few decades.  Let me explain.