Disruption is everywhere

Should we be afraid of the future? And, more important, will we CIOs still have a place in it? We’ve asked ourselves the question a couple of times already – discussing many hours on the role of the CIO in 2020. But, and this hasn’t been discussed before at the CIOforum, our society is changing as well. We’re almost done digitizing and ready to drive future prosperity. The test days of the second machine age are behind us. Are we ready for it? Not just yet, it seems.

The future doesn’t seem too bright, even for IT staff. Translated to our CIO language: the technological transition – cloud for instance – is impacting IT departments. The computer is making decisions for us these days. IBM Watson is now hooked to the internet, possibly ready for knowledge-as-a-service?
CogniToys has marketed a dinosaur toy whose brain is powered by Watson, responding to children playing with it. Will Watson be your one-man-service desk? Imagine the consequences, also for you. As artificial intelligence takes hold, what will it take to be an effective executive, McKinsey wonders.

Evaporating middle class

35% of current professions are at risk.
Digitization and robotics indeed impacts our economy, wages and jobs. ING calculated that 49% of jobs may just as well be automated in the next 20 years. 35% of current professions are at risk. It’s certainly not only about smart anything, but about an evaporating middle class, about social unrest, about a global risk according to the World Economic Forum.
How is this possible? The internet era is thought to create value, no? Perhaps we’re not there yet. ICT/internet is the fifth technology wave since the beginning of the industrial revolution. In every big transformational era, there is an installation phase, when a technology matures and becomes part of our lives, and a golden age where mature technology is driving future prosperity.

The disruptive phase

However, there’s a gap between the two. We call it the ‘disruptive phase’, where mature technology is transforming society at an incredible pace. Today, we’re in the midst of the disruption phase of internet.

Let’s analyze what preceded. After the post-war era and golden sixties came the oil crisis in the seventies. But we also started using computing and later networking in our economy. It was the beginning of the installation phase. Automation went on and at the end of the century, massive financial investments allowed the internet to take off and become part of the economic fabric. At the end of the installation phase financial capital comes in because investors see the opportunity. Alas, overinvestments led to the bubble burst in the dotcom period.

From a historical perspective, financial investments needed to go down around the millennium, and be replaced by production capital. But speculative investments went on and resulted in a global crisis in 2008. Nevertheless, technology is still evolving and driving innovation, in two directions. Within ICT itself, with SMAC and the internet of things for instance, but also within industries.

The hotel sector saw the rise of Airbnb, the taxi sector faces Uber and soon traditional carriers will see its new carrier service Uber-rush. The automotive industry is already embracing car sharing. The collaborative economies are disrupting current business models. They have the ability to scale quickly and exponentially as their expansion risk is minimal with very few assets to capitalize.

Disruption isn’t creating jobs

Now, we should ask ourselves the question: are we creating value or destroying it? Spotify is magnificent but was a disaster for employment in the music industry. In the transition from installation to golden era, innovation needs focus and direction in order to create jobs and value.

What needs to happen? Financial capital needs to be reduced and directed towards production and real economy, and not speculation. Secondly, it needs active government involvement deciding which areas it will choose to innovate in order to create prosperity.

Innovate, but in what direction?

Today, 95% of the world’s capital is speculative and countries like Greece are facing austerity. How are we to breakthrough to the golden age? Internet may be the enabler to create a ‘green economy’ – which is not (only) about being eco-friendly but about sustainability. Both the developed and the developing world will benefit from a sustainable economy, which aims at improved human well-being and social equity. It means both the developed and developing world are driving in the same direction.

Just as Jeremy Rifkin says in his book The Zero Marginal Cost Society, it isn’t solely the information internet that will drive this sustainable economy. We see the same evolution in energy management. Solar panels double in capacity every year. The energy internet with smart tools and smart grids will provide us with green, sustainable energy. Secondly, supply chain internet and 3D-printing may just as well lead to inverted globalization, virtualizing products and producing them wherever you are. It might be the end of global production sites.

We’re at the forefront of a Golden Age, but we might need to go through a technologically induced upheaval to get there. How we deal with the consequences is up to us.