How to Win in the Age of Digital Transformation (Hint: Be Willing to Change)

 

Alec Ross, Author of NY Times Bestseller: “The Industries of the Future”.

Alec Ross is one of America’s leading experts on innovation, the author of the New York Times bestseller: The Industries of the Future, and one of the notable digital leaders driving the conversation about technology and the future of work.

Ross speaks to audiences around the world about digital trends and the future of the global economy. And he has helped numerous entrepreneurs, investors and government leaders navigate the challenges of disruptive change.

In this timely conversation, Ross gives us an inspiring and sober look at the promise and perils of modern artificial intelligence, the weaponization of code, and the economic, political, legal, and social factors that will profoundly shape industry, jobs and society now and in the future

This must-read interview highlights the public policy and corporate-social responsibility considerations that will separate winners from losers in the digital future.

As always, there’s plenty of ground to cover. So, let’s get after it.

Appian: Welcome to Digital Trailblazers. You’ve written a lot about the challenges of navigating the promise and perils of digital transformation. One of the things you warn about in your book is that our children aren’t being prepared for tomorrow’s economy. What did you mean by that?

Ross: So, I think generally we’re doing too little to prepare today’s young people for tomorrow’s world—in part because we’re effectively delivering the same education that we were delivering after World War II.

But the entire world has transitioned from a predominantly industrial-based economy to a knowledge-based economy. And our education system simply doesn’t reflect that.

Mapping Education to Future Jobs

If you look at states and societies that have made the transition, you see them adapting more effectively than what’s happening in the U.S. So, I’d really start with education.  I really think that we need to make sure that the outputs of our educational system maps to the inputs of where future jobs will be. And it’s not the same kind of education that was delivered in the classrooms back in the 1940s, 50s and 60s.

Appian: So, what steps should we be taking to upgrade our education system?

Ross: This isn’t overly complicated. First of all, in a world where artificial intelligence is enabling labor substitution that isn’t merely manual and routine, but increasingly cognitive and non-routine, we need to drive interdisciplinary learning that simply doesn’t exist in most K-12 education systems.

We also have to make sure that our non-college educated workers are getting the kinds of apprenticeships and technical training they need for the jobs of the future. We ought not to have an economy where you have lots of knowledge workers doing very high-end work, lots of people working at minimum wage jobs, and then a very thin middle.

So, in our education system, we should be taking steps right now to address what’s turning into a significant labor gap in terms of technical skills and trades.

Data Fuels the Digital Economy

Appian: As you think about the future, what trends do you see shaping work and jobs? And what will the industries of the future look like?

Ross: So, first of all, I’d do some overall framing and say that land was the raw material of the agricultural age. Iron was the raw material of the industrial age. Data is the raw material of today’s and tomorrow’s economy. The people who controlled land during the agricultural age, had the power. During the industrial age, the people who controlled the factories and access to natural resources had the power.

In the digital economy, the people who control the data or do the best job of harvesting it, will create the businesses and industries of the future. So, I think the raw material of the economy has changed, which informs overall trends in business and the economy.

Appian: So, how does the importance of data manifest itself?

Ross: Well, first, I’d look at the degree to which we have a data-rich economy, and our ability to harvest meaning from that data. I do a lot of work with Johns Hopkins University, and they’re associated with the life sciences.

And what’s interesting to me when I think about what’s next in the life sciences, is that it has less to do with innovation in surgery, and less to do with what humans are doing, and more to do with what machines are doing for humans.

Appian: Is that what excites you about the advances we’re seeing in genomics?

Ross: I’m thinking specifically about genomics. Our ability to harvest data from the 20,000 to 25,000 genes in our bodies is remarkable. And similarly, whether it’s agriculture, mining, transportation, I think the shift into business models where data is the raw material, I think that that is the most powerful trend to watch.

Appian: Speaking of trends, in “The Industries of the Future” you talk about the technologies and industries that will drive the next stage of globalization. What’s the biggest takeaway for business and IT leaders?

AI Makes Human Attributes More Valuable

Ross: There are a couple. First, I’d say that the future offers both promise and peril. And my view of the future is not Utopian. It’s not that the world is going to be Star Trek. But it’s also not dystopian—the world is not going to be Mad Max either.

The next 10 years are going to offer promise and peril. And how you navigate that will determine whether you’re going to be in better or worse shape in 10 years. That’s thing one.

Thing two is, that in a world of increasingly powerful artificial intelligence—machine learning and robotics—the attributes that make us most human will grow ever more important.

Appian: Can you give examples of the kinds of attributes you’re talking about?

Ross: So, skills that don’t lend themselves to automation will become increasingly important in the workplace. This includes emotional intelligence. We also have to cultivate creativity and some of the collaborative skills that you can’t outsource or code as zeros and ones.

The third thing I’d point to is that innovation is not just going to come from one or two hot spots. Much of the world’s wealth that’s been created in the last 10 years has come from a small area in California called Silicon Valley, and from a spot up in Washington state that’s home to Amazon and Microsoft.

The Innovation Hot Spots of the Future

Appian: How will that change in the future? Where will the new innovation hot spots be in the future?

Ross: When we think about the industries of the future, I think that there will be 10 to 12 alpha cities—these will be metropolitan areas around the world where there will be substantial amounts of innovation, commercialization and the job and wealth creation that goes with that.

There will also be 30 to 40 Beta metros—places that may not have the highest concentration of corporate headquarters, but nevertheless will be part of global supply chains, and where there will also be high concentrations of knowledge workers working in the industries of the future.

Appian: So, it sounds like you’re pretty optimistic about the future.

Ross: I’d say that I’m more optimistic than pessimistic about the future. I think the future is going to be better than the past. I’m 46 years of age. When I was born, the mean life expectancy, globally, was 57 years of age. Today, it’s 72. And I think the slope on that graph is likely to continue. If I live into my 80s, life expectancy could get up into the 90s.

So, the trend is that people are going to live longer lives. They’ll also live healthier lives.  They will be more active later in life. Our ability to access knowledge will become ever easier. I do think things, net-net, are going to be positive, but well short of utopian.

Appian: What about the acceleration of change? How will the speed of disruption impact life in the future?

Ross: It will take away the predictability of: “I’ve got a college degree, so I can go work at company X for 30 years utilizing these skills.” That kind of security I think is gone, and it’s not coming back. So, the future is promise and peril—not Star Trek, but it’s also not Mad Max.

Labor Automation Boosts Worker Productivity

Appian: To pick up on that point, what do you make of the conflict between automation and labor, and the cynics who mostly see a future where human labor is displaced by technology and machines?

Ross: I have a nuanced view of it. Technology has always substituted labor. And it tends not to happen evenly over time. There are spikes. And most of the automation of labor is a net positive. Pretty much every process that is dominantly manual and routine, has been substituted by technology. And I think this is a good thing, because it pushes us into more productive forms of labor.

Appian: What about the human impacts of automation? How do you see that playing out in the long term?

Ross: Humans are not as easy to update as software. You can’t plug us into the wall, turn on the Wi-Fi, and in an hour our operating system is upgraded. That’s not the way we work. It’s much more difficult for us to adapt.

I think that you have to be willing to take the long view and say: “Over decades this is going to be good for all of us. The pain of job displacement in the short term is real. So, it all depends on your perspective and your time frame.

But the fact that human labor has gone from being dull, dreary and dangerous and to being more productive and more cognitive is not a bad thing.

Get Comfortable with Change

Appian: Which brings me to topic of digital transformation. It’s a hot topic, but it means different things to different people. How would you define digital transformation for non-tech, senior execs?

Ross: To me it’s all about a very powerful set of tools that weren’t available to people 20 years ago, tools that enable us to work better, faster and cheaper.  My father was a real estate lawyer in Hurricane, West Virginia. And he spent most of his life writing the same darn words on a yellow legal pad. When that was no longer necessary, he just couldn’t adapt. He just couldn’t wrap his mind around: “I don’t need to write things out with a blue pen on a yellow note pad like I’ve been doing for the last 30 years.”

Digital transformation takes those thousands of hours that my father wasted writing things down; and does it in seconds or minutes, and the quality and accuracy is better. So, digital transformation is about making sure that humans aren’t doing rote work, and that they’re doing work that is cognitive and creative instead.

Appian: What are the biggest barriers to digital transformation?

Ross: I think it’s culture and being conditioned to doing things the same way. Again, I think about my father in West Virginia. You know, he didn’t adapt culturally.  He wouldn’t change his behavior. And so, I think the institutions and individuals that have the hardest time with digital transformation are those who just aren’t comfortable with change, or don’t trust that it will lead to a better life and a more productive way to work.

So, at the end of the day, it’s human behavior and culture that restricts and restrains digital transformation more than anything else.

 

Genomics: The Next Trillion-Dollar Industry

Appian: Earlier, you talked about education and the human side of digital transformation. From a strategic standpoint, what are some of the tough decisions we’re going to have to make on the public policy side of the digital transformation equation?

Ross: I would point to two things. The first is education. Are we willing to transition from education systems that are products of the industrial age to education systems that are products of the information age? If we aren’t willing to make that transition, and also improve technical education for people who don’t go to college, then large numbers of people will get left behind.

The second thing I would point to is the safety net. There are some people who can’t or won’t adapt. And the question is, what do we do for them? Our safety net is in place to keep people from abject poverty. There will be some people who just can’t adapt. So, the question is what should we be doing for the people who get left behind, in an increasingly globalized, AI-driven economy?

Appian: Last question. Tell me about your expectations for 2018 and beyond. What are the top two or three digital trends on your radar?

Ross: Number one, I’m watching the digitization of the life sciences. I think the world’s last trillion-dollar industry was created out of computer code. The world’s next trillion-dollar industry is going to be created out of genetic code.

Beware the Weaponization of Code

We are entering chapter two of the story of genomics. The mashup of digital and life sciences, I think, is going to transform healthcare over time. That’s one of the trends that I’m looking at.  Another trend that I’m look at is the weaponization of code. I think the significance of this ranks right up there with weaponizing fissile material.

The difference is that one requires access to the scarcest of scarce scientific skill and trans-uranium elements.

Creating cyber weapons has a lower barrier to entry. So, while we’ve been speaking about how AI can be used broadly in our labor force and in our business processes, I do think it’s important to think about how bad actors are weaponizing zeros and ones, developing powerful malware, and using these very powerful tools not just to do things better, faster and cheaper but as engines of conflict.

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