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Andrew McAfee, Bell Labs, Brian Solis, digital, Disruptive Technology, Erik Brynjolfsson, Facebook, innovation, Jon Gertner, LinkedIn, manufacturing, Neal Stephenson, R&D, Reid Hoffman, social media, Stagnation, technology, Techonomy, The Boston Consultancy Group, Tyler Cowen

Can today’s Disruptive Technologies help us ‘Get the Big Stuff Done’?

As the recession and rising unemployment continues to bite, many economists and analysts are banking on new technologies to help kick-start the global economy out of recession. One of the world’s leading management consultancy firms The Boston Consulting Group, for example, recently predicted that the value of the web economy in G20 countries will nearly double by 2016, growing from US$2.3tn to US$4.2tn.

However, others in the industry are less optimistic about the impact that new technology is having on the global economy. Speaking at the Oxford Union debate in late 2011, Reid Hoffman, the founder of the business-related social networking site LinkedIn, said that if new technology had done one thing, it had led to more unemployment – and these unemployment figures will get a lot worse over the next few years as things become even more automated. It is a myth, he argues, to think that the IT industry and new technology will save the economy.

When the Boston Consulting Group’s predictions are examined more closely it does seem that Hoffman has a point. While at first sight their predictions look impressive, their forecasted figures are still just a fraction of the global economy. And while $US2.3tn is larger than the economies of Italy or Brazil, it is still a mere 4.1% of the total size of all G20 economies. Even in one of the stronger newly emerging economies like India, the employment figures within the IT industry only make up 0.2% of India’s total population.

Over the past few months, there has been an increase in the discussion around the role of Disruptive Technology and the impact it is having on traditional industries, particularly in the advanced economies. Disruptive Technology is defined as the innovations that emerge without expectation to introduce a new market and value network at the expense of an existing market and value network.  According to Brian Solis, principal analyst at Altimeter group, Disruptive Technology is the bearer of tremendous opportunity but is equally a harbinger of obsolescence.

As more and more things become automated there is a growing fear that modern Disruptive Technologies are making manual workers’ skills obsolete. In their new e-book, Race Against the Machine, MIT Sloan School of Management professors Erik Brynjolfsson and Andrew McAfee look at the impact of today’s Disruptive Technologies on jobs and the economy. They argue that technology is making America more innovative, productive and richer but this new wealth, innovation and productivity is being spread unequally. For them, the inequalities thrown up as a consequence of today’s Disruptive Technologies are deeply worrying, particularly its inability to produce more jobs for the ‘less well educated’ workforce.

Others argue that the impact of Disruptive Technology is overstated and that innovation is actually moving at too slow a pace. Tyler Cowen, for example, argues in his new book, The Great Stagnation: How America Ate All The Low-Hanging Fruit of Modern History, Got Sick, and Will (Eventually) Feel Better, that economic development and technological innovation have reached a plateau, and unfortunately America is only now just realising it. Cowen believes that the US has been living off its low-hanging fruit – free land, the technological breakthroughs during the period from 1880 to 1940 and access to smart, uneducated kids – for at least three hundred years and now that fruit is mostly gone. The preconditions that gave rise to rapid growth and incredible prosperity over the last couple of centuries have now exhausted their dividends. In short, the U.S. has picked all the low-hanging technological fruit and has now entered an age of stagnating innovation.

Brynjofsson and Cowen have been battling out this question in public debates over the last few months, most recently in the Techonomy debate on ‘Can technology be society’s economic engine?’ So is innovation moving too fast as Brynjolfsson and McAfee argue or is Cowen right to say that innovations and technological advancements are moving at too slow a pace? In a way both sides are right – up to a point. New technology is replacing many production processes and making obsolete the traditional skills of many workers. But there is nothing new about the concept of Disruptive Technology. Throughout history advances in technology and innovations have always swept aside the old ways of doing things. The introduction of new technology destroyed jobs but, in the past, it has also created new ones. The problem today is that, in the US and other advanced economies, the old industries are being destroyed but are not being replaced by new productive industries that can create new value and meaningful employment.

What’s also different today is that what is considered as Disruptive Technology has become so narrow in scope. In his forthcoming book The Idea Factory: Bell Labs and the Great Age of American Innovation, the New York Times writer, Jon Gertner questions our current understanding of Disruptive Technology. He argues that we now use the term innovation to describe almost anything. It can describe a smartphone application or a social media tool, or it can describe the transistor or the blueprint for a cell-phone system. But the differences are immense.

Comparing today’s innovations with those produced by Bell Labs, Gertner believes that in its heyday the research and development giant represented a more encompassing and ambitious approach to innovation than what prevails today. Its staff worked on the incremental improvements necessary for a complex national communications network while simultaneously thinking far ahead, toward the most revolutionary inventions imaginable. The teams at Bell Labs that invented the laser, transistor and solar cell were not seeking profits. They were seeking understanding. Yet in the process they created not only new products but entirely new, and lucrative, industries.

By contrast, most innovations today are focused around personal gadgets and the latest versions of iPads and iPhones. The excitement around Social Media, for example, reveals just how far our expectations about what technology can do have been lowered. It is a sad reflection of the lack of any real innovation in the advanced economies that so much excitement can be generated over something like the Facebook IPO. The largest technology IPO in history is not a technology that can transform nature, provide new sources of energy, or find new cures for illnesses or cancer. As investors pile in to make a quick profit by buying shares in a social network, other areas of innovation that could create real value but involve more risk and have less certainty of success are ignored.

Because of the risk-averse outlook investors are focusing narrowly on ‘nimble start ups’ rather than large-scale technological innovations. While political leaders talk about the need to invest in new innovative technology, these become mere platitudes if no one is prepared to invest in new industries and technologies that can help create new value and mass employment. The global recession does demand radical innovation and actually more Disruptive Technology. But innovation can’t happen without accepting the risk that it might fail and it is this risk of failure that is unacceptable in today’s climate.

Science fiction writer Neal Stephenson makes the point well in his excellent essay, Innovation Starvation, published in the World Policy Journal. He argues that today’s belief in ineluctable certainty is the true innovation-killer of our age. According to Stephenson we are now living in a world where the Big Stuff can never get done. In this environment, the best an audacious manager can do is to develop small improvements to existing systems— trimming fat and eking out the occasional tiny innovation. Any strategy that accepts short-term losses to reach a higher goal will soon be brought to a halt by the demands of a system that celebrates short-term gains and tolerates stagnation, but condemns anything else as failure.

There is now a huge gap between the potential of Disruptive Technology to transform our societies and economies and the reality of wasted opportunities. Technology does indeed have the potential to be society’s economic engine but this potential can only be realised if the current political and cultural fear of risk-taking is addressed. To counter this approach, we need to foster a forward-looking ambition that champions blue sky investment into research and infrastructure. And we need to create a new culture where we are encouraged to take risks and are prepared to invest in the long-term pursuit of fundamental breakthroughs and keystone inventions. Only then can we claim to have truly Disruptive Technologies.

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About Theresa Clifford

I am a senior manager/digital consultant with international agency experience in leading the delivery of holistic customer-centric strategies and digital programmes. I am also a Tutor/Presenter in Digital Marketing for the Marketing Association and a regular writer and speaker on digital trends. If you would like to discuss any aspect of your digital requirements, please feel free to contact me. (e) mstheresaclifford@hotmail (m) +64 21 026 17779

Discussion

One thought on “Can today’s Disruptive Technologies help us ‘Get the Big Stuff Done’?

  1. True, read this, it’ll help you understand more about what’s happening today..

    http://www.clubofrome.at/news/sup2011/dl-12-komiyama.pdf

    There are a lot of useful articles explaining limits and growth in club of rome website..

    Technology won’t solve everything.. .just like electric cars won’t do us any more good than getting rid of oil..
    We consume oil to make electric cars..frankly, we’ve started a bit too late..

    Economic is about supply and demand..supply and demand exist in REAL world, not digital world..

    Web only facilitates the trade, while making transactions of certain goods & information easier & faster..It does not and cannot fullfill supply and demand from reality, the need to eat, shelter, energy.

    IT IS TRUE that some people claim that in the not far future “stuff” could be printed in 3D in reality through the web…(it’s already been done thousands of times)

    I will ask this simple question, without raw material, what can you print?

    No web technology is disruptive technology, it has almost reached point of saturation of innovation..Web only reduces the numbers of job count, doesn’t increase it..web only moves the job away from higher wage countries to lower wage countries.

    It’s true that big technology are receiving investments some where, but it’s in the east, Korea, Japan, China, NOT in US or EU or UK, funny enough isn’t it…wind farm is actually be opposed by some people in UK…

    Posted by nathan | April 17, 2012, 2:23 pm

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