Who will gain, and who will lose in the digital revolution?
The changes we are witnessing today are being driven by the growing use of technology in everyday life. Artificial intelligence (AI) and self-learning machines are already altering the ways decisions are made and information communicated. The process is irreversible and accelerating. In the near future, chatbots will replace people in both B2C and B2B, while blockchain and cryptocurrencies will fundamentally change the world of finance. The Industrial Revolution 4.0 will bring far-reaching automation into manufacturing industries and the supply chains that feed them raw materials, components and even finished products. Services — initially those involving repetitive work — will become the domain of machines and software. Automatons and autonomous machines will replace people. All this will change the way we work, who we work for and how we are compensated. By 2030, the digital revolution will push 75 million to 375 million workers around the world out of their current jobs, according to McKinsey Global Institute estimates. However, while many occupations will disappear from the employment landscape forever, many new professions will take their place. What skills will be in demand in the future? Which groups will gain, and which lose in the technological revolution?
The new digital economy will affect a growing number of people negatively. Machines will learn to perform the same work they’re doing now, only faster, more cheaply, and without mistakes. At the same time, a substantial proportion of employees will benefit. Scores of professionals will become more valued in the labor market, and thus better rewarded. Who will they be? What unique skills will they possess and what will make them treasured in the digital economy? Market observations and McKinsey studies show that the most sought-after employees will be those in the following three categories:
1. Highly-skilled workers
With advances in voice recognition, imaging technologies, Internet of Things (IoT) sensors, and big-data-based support and decision-making, low-skilled jobs are going to be automated. The market will value other skills: abstract thinking and the ability to analyze large amounts of data, drawing conclusions on their basis. The question future job candidates will be asked most often by recruiters is: “Do you know how to work with smart machines?”
Today, many advanced skills are acquired outside of universities; they are developed with experience, as jobholders expand their knowledge of their businesses. But the knowledge gained today will become obsolete within three-to-five years. This is particularly true as AI penetrates ever more industries.
Today’s man-to-machine communication and data exchanges relies on interfaces created five decades ago (keyboards, screens), or at least three decades ago (mouses, trackballs). These interfaces are rapidly aging as virtual reality, augmented reality, voice control and communication are becoming part of our everyday lives. What’s next? Is the human brain going to be connected to a machine through a direct neurological link? Will data banks be planted inside our heads to add to our memory and accelerate our abilities? Will the future belong to human cyborgs who will become ideal and highly-skilled workers? Or, will tomorrow be populated by symbiotic creatures who are part human and part machine, with people contributing their intuitions, emotionality and unpredictability, and machines ensuring rapid data searching, data-set associations and instant analysis? It will take another 10-to-15 years to answer these questions, but only 10 to 15 years. That’s not so long.
2. Global super stars
Rapid data networking and collaboration tools, such as e-mail and video conferencing, have reduced the differences between geographical regions and time zones. At any time, anyone in an organization can work with data, conduct analyses or access knowledge that resides or was created anywhere on earth. A company searching for a programmer, designer or communications expert today is free to pick candidates from around the globe. I have no doubt that this process will become easier even as hiring full-time programmers, renting office space to accommodate them and fitting them out with hardware and furnishings will become increasingly less cost-effective. Instead, companies will recruit globally, hiring and remunerating the best programmers in the world. All companies need to do is to run a general cost-benefit analysis and tie the pay of such professionals to their performance and the lead times they can offer. A quick and simple calculation will show whether a project will make money once the fees such programmers request is paid.
This approach will produce a faster return on investment while allowing the programmers to serve more customers every year. The fact that such experts work remotely will become less difficult or burdensome to the organization. Improved job-sharing technologies will help workers communicate efficiently, share responsibilities and deliver desired outcomes. Increasingly, we will see “super star” specialists outperforming whole teams of less competent employees. As a result, employers will cut costs, improve efficiency and facilitate creativity. Creativity, in fact, is what I think is going to be the key advantage of humans over machines. Yet, it is not entirely clear how we will deal with the social consequences of this process.
3. High-impact owners
I define owners as those who hold capital and are empowered to invest in new technologies – technologies with the potential to advance the digital revolution. These include AI (including machine learning, cognitive computing and deep learning), blockchain (and cryptocurrencies), tools to enable sharing economies, autonomous machines… the Industrial Revolution 4.0. Access to capital will become a tremendous competitive advantage. Prominent economic theories suggest that once resources are divided between capital investment and the labor force (in this scenario, labor has been automated), investment will generate profit roughly proportional to the contribution made. Since digital technologies reduce demand for labor in many sectors, the ultimate return on the ownership of smart machines (which are cheaper than people) will rise.
In today’s economy, venture capital can finance companies such as Instagram, which was sold for billions of dollars when it employed barely 13 people, thereby keeping its human capital costs to an absolute minimum. Have so few workers ever created such huge financial benefits in the global economy? Now that such things are possible, the people with access to capital, who can invest it in new technologies, will benefit the most from the digital revolution.
Even so, high-impact owners will have new challenges due to a serious value-generator that has arrived on the global market: the flexible, informal and low-cost startup. Today, small companies, liberated from rigid management procedures and technologically empowered, are poised to compete successfully against the largest market players by creating innovative products and services. Big corporations are therefore attempting to establish symbiotic relationships with these emerging entities, in which the large company’s capital (which can facilitate development and scale) is supplemented by the fresh perspectives and creativity contributed by startups. Innovative ideas supported by big money are thriving more than at any time in the history of business. Several factors will affect the ongoing success of this process. In choosing investment opportunities, corporate executives will need to be bold and discerning. It may well be that one of the key professions of the future will be a market analyst whose job will be to distinguish between start-ups that will generate profit and those doomed to fail. On the other hand, small innovative business owners will face the dilemma of who to sell their business to and whether big capital will gobble them up or leave them enough leeway to make autonomous decisions.
Mergers today are a different animal. They bring together capital with intellectual value and, often, ideas that still need to be fully crystallized. To engage in such mergers, all participants in this process need to adopt new attitudes, be open-minded and educate themselves. That said, I am convinced this type of capital utilization, combined with the energy and creativity of startups, will drive the global economy in years to come.
Finding your place
I believe that the unprecedented global economic growth of the past six decades, and the tremendous rise of digital technologies will affect the way we live, learn, communicate and work. In my view, the three groups that will enjoy special advantages in the new digital economy are those capable of working creatively with intelligent machines, those who are the best at what they do (the stars in their professions) and those with access to capital.
If, dear reader, you can find a place among any of these groups, your future will be bright. If you cannot, you may have to work a lot harder than before and be more creative to maintain your current professional position. And, even then, your future status may be uncertain.