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Tempering the Enthusiasm About a Digital Economy: A Counterpoint

By Andrea Di Maio | October 08, 2013 | 1 Comment

Gartner events

The convergence of consumer, enterprise and operational technologies; the pervasiveness of connected devices among people and objects; the confluence of mobile, cloud, social and big data; emerging digital strategies in major corporation and governments. All these signals and trends  justify the strongly held belief that the digital economy era we are entering in will be a period of unprecedented change and limitless opportunities, where entire industries will be transformed, their boundaries will be blurred, new jobs will be created and the economy will return to grow fueled by digital information.

The technology industry for one is an early witness of the level of change that is coming. During his opening keynote at the Gartner US Symposium in Orlando, Peter Sondergaard highlighted how some of the key players and technologies in today’s’ market were not even on the radar screen a few years ago, and reminded that enterprise in all industry may find themselves facing competitors that are simply unimaginable today.

Government organizations, consulting firms, university professors forecast trillions of dollars coming from the digital economy, and this is creating huge expectations in economies that are either just coming back to growth or still struggling with flat or receding GDPs. Most likely their predictions will ultimately come true, but I am not entirely sure many have reflected about at what cost.

Jobs will certainly be created, but how many  will be destroyed? Massive automation of manual as well as increasingly knowledge-intensive tasks on an unprecedented scale, from truck drivers to police officers, from bank tellers to workers in publishing companies, from workers in the entertainment in industry to travel agent, from consultants to teachers, will create inevitable social tensions even in the most stable societies and best developed economies. The effectiveness of existing welfare and lifelong learning mechanisms will be questioned by the sheer number of people who will not have the right skills for new jobs and by the simple truth that computers will be replacing humans at a pace and on a scale that only science fiction work had originally suggested.

Similarly to how accelerated  technology evolution makes today’s technology legacy in a matter of a few years, so entire generations of workers, experts, skilled people will find themselves in urgent need of changing their skill set and reinventing their career path. In the last couple of decades we have seen disruptions to economies and specific jobs coming from globalization and the rising economies in the East and the South of the world, where lower costs and greater scale have proven unbeatable for many traditional jobs. No wonder that automotive workers in the US or tile producers in Italy or toy manufacturers in the UK have seen their jobs taken away. While entire jurisdictions still struggle with how to compensate for these losses and have invested on new programs to stimulate local entrepreneurship, it is quite possible that the skills that are being developed are either already dated or will be so soon. The accelerated pace of change driven by the digitalization of all industries may send shock waves through high-unemployment regions, leading some of their welfare safety nets beyond the breaking point. New generations of students that have applied for schools and faculties that were expected to give them better chances to find a job may struggle even before getting the degree they have been working for.

At the same time, new opportunities will arise, but in ways and in places that we cannot anticipate. Whether seed money or other positive actions that many governments are taking to encourage startups will have any impact is hard to say. Whether new school curricula aimed at earlier, hands-on experience will give young people a better chance to succeed remains to be seen.

However, if we accept that there will be uncertainty, if we accept that the actual shape of the digital economy is hard to predict, then the only skill that really matters is our ability to embrace change. But, oddly enough, this may call for different measures than those we see today. As far as education, is it really more important to have an early experience in an industry that is about to disappear, or should our kids actually spend time studying more theoretical subjects, even philosophy, ancient Latin or basic maths, to be better thinkers rather than quicker doers? As far as government subsidies, should they be directed at sustaining defunct industries or should they help accelerate their death and even preempt their economies from depending too much from those? As far as welfare or health care, should individuals be more rewarded for how much their employer pays for them or for how much they individually contribute to their economy and society?

I appreciate these are fundamental questions that do not ask for a mundane answer, nor am I qualified to suggest any solution. The purpose of this post is just to help reflect on what “digutal transformation” may actually imply. We tend to look at the half (or even three-quarter) full glass of digitalization, but we may be denying that it will take our economies, our societies, our families and ourselves in places that are more difficult to predict and tougher to live in than we actually think.

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1 Comment

  • Bala says:

    Interesting Post!.

    Wrote about the cascading effects this digital adoption would have on the society sometime ago.