Predictions 30 years ago had America’s GDP falling behind Japan’s and Germany’s. Those predictions proved to be dramatically wrong because they failed to take into account America’s ingrained entrepreneurial spirit. That drive led to innovations that re-ignited the economy, not just in the U.S., but around the globe.
Much of the innovative technology that is now poised to reassert America as the leader in job creation is what Harvard’s Clayton Christenson calls “disruptive,” because of the way it supplants existing models and solutions with more productive ones that tend to be dismissed by incumbents in the earliest stages.
One reason these technologies are often dismissed is the perception that the more productive technology will cause a net loss of jobs across the economy. This fear sprang up at the dawn of the Industrial Revolution as new machines were able to outpace the physical labor of humans. Many saw what they believed was the potential for technology to make humans obsolete. However, as history has shown, this is not what happened.
As the application of steam power increased throughout industry, more human workers were actually needed, not fewer. But instead of being needed for their raw physical strength, other uniquely human skills were leveraged, such as locomotion, dexterity, coordination, and perception, as well as the important mental skills of communication, pattern matching, and creativity.For more than 200 years, as technology eliminated old jobs, new ones were created. Even as millions of jobs became automated, there were more Americans holding jobs at the end of each decade leading up to the end of the 20th century.1
One industry where this effect can be seen in a profound way is farming. In the early 1900s, half of the American population was employed in farming. Today, farming has become incredibly efficient, leading to the U.S. being a huge exporter of food ? and yet now, just 3 percent of all jobs are in farming.
However, on the plus side, a massive food industry has grown up involving processing plants, distribution centers, transportation, and grocery stores. For each of these entities, there are sales and marketing departments, accounting functions, and a variety of other support services. There is also a large industry that employs workers to manufacture, sell, and service the mechanical devices that replaced the farm workers.
So, although it’s easy to look into the future and see technology replacing greater numbers of jobs by doing them more cheaply than humans, history has shown that in the long run, technology has driven job creation ? and there’s no reason to believe this principle won’t hold true in the future of “smart machines.” In fact, for those in North America and the EU, information technology will provide a decisive edge.
The rise of smart machines will happen quite naturally, requiring no grand plan or Congressional act or mandate. In fact, the less the government intercedes, the quicker and smoother the transition. The ability for companies and individuals to become more efficient, more productive, and save money will drive the adoption of more and more smart devices that leverage our growing information infrastructure.
At the heart of this change is Moore’s Law, which observes that processing price-performance continues to double every 18 months. As processing power escalates, what used to be science fiction is now common everyday fact. Great strides in computers and devices are being made not in lifetimes, but in mere years.
The advance of processing power is following an exponential path; however, the first part of the curve, the part we have experienced so far, has been relatively flat and linear. But, we are now entering the part of the curve that begins to race upward at a tremendous rate. The implication is that we will begin to see jaw-dropping applications as the result of incredible processing power in small objects. Virtually every task, job, and industry will be affected.
Countries that learn to harness this coming wave will be the ones that see tremendous economic growth and job creation. This capitalizing on new ideas and better, more productive ways of working are at the core of the American experience.
For an idea of how smart machines will be used to advance our economy, we turn to the world of chess.
In 1997, a $10 million specialized supercomputer called Deep Blue played the world’s most brilliant human chess master, Garry Kasparov. The machine won ? a first for the machines of the world. As machines grew more powerful and their wins became routine, a new category in the arena of chess competition was formed, which allowed any combination of people and machines to compete. Suddenly, the best chess player was a team of humans paired with computers.
The instructive lesson comes from one of these recent freestyle matches where it wasn’t the best human players nor the most powerful computers that won. Rather, a pair of amateur American chess players using three computers were able to use their skill at manipulating and “coaching” their computers to counteract the superior chess understanding of their grandmaster opponents who had greater computational power, as well. In the end, their better process was superior to an inferior process.
Applying this to the business world, smart machines won’t simply replace people; instead, effective strategies will have people and machines working together.2 Rather than racing against machines, people will race with them. This pattern will be true throughout the economy, in medicine, law, finance, retailing, manufacturing, and even scientific discovery.
This coupling of humans and machines will be so powerful because each possesses key strengths the other is lacking. Humans are the strongest where computers are the weakest and vice versa. Computers are, of course, exceedingly fast at raw number-crunching and providing virtually instant answers within predefined domains. Outside those domains, however, they are lost, and if a task requires intuition and creativity, they fail. In contrast, these are realms where humans excel. These differences create a powerful partnership.
The key is tapping into the potential of these partnerships to create jobs. This means going beyond simply having the technology available. As we’ve seen with every innovation in history, the new technologies will migrate across the globe. The sustainable differentiator will be in how they are used. Again, American ingenuity will devise the best new organizational structures, processes, and business models that will unleash the partnership between ever-advancing technology and human skills to create real value.
Already, we see examples of this pairing of abilities paying off.
In the medical field, healthcare workers are partnering with a system called Quick Medical Reference to diagnose diseases. Relying on artificial intelligence, which operates on a type of neural network called a Bayesian network, this system models 600 significant diseases and 4,000 related symptoms.
Other forms of artificial intelligence have greatly improved speech recognition, taking this technology from error-prone to impressively precise. Arduous transcribing of doctors’ dictated notes, for example, is being replaced by efficient, direct-to-document models. Apple’s Siri personal assistant is another example of speech recognition that is powerful enough to improve efficiencies.
IBM’s Watson computer, which beat Jeopardy! champions at their own game, is being refined and augmented to work in health care, financial services, and customer relations. The vision is to have these systems partner with human agents, prompting them with appropriate questions and answers for particular situations.
In some industries, information technology is quickly making fixed hours, fixed locations, and fixed jobs obsolete. The payoff is in the way people can become more efficient and productive. For example, Best Buy has implemented a program called the “Results Only Work Environment,” where workers have the freedom to do their work anytime and anywhere, based solely on their individual needs and preferences. The company has seen an average productivity increase of 35 percent, and a 90 percent decrease in voluntary turnover rates.
Given this trend, consider the following forecasts:
First, companies will succeed at leveraging the human/machine partnership by implementing a set of key principles.3
Specifically:? Processes will be created that combine the speed of computers with human insight. ? Creativity of employees will be encouraged, with technology being used to test their creative ideas. ? New forms of human collaboration and commerce will be enabled by leveraging information technology. ? Human insight will be applied to IT-generated data to further improve effective processes. ? IT will be used to propagate the improved processes that people develop.
Second, since these worker-technology partnerships can evolve in so many ways, success will depend on maximizing the number of creative entrepreneurs.
That means entrepreneurial thinking needs to be encouraged early and often. This can be done through education, starting in the younger grades, and by creating clearinghouses and databases that provide templates for new businesses. Another key step will be the elimination of the many governmental taxes and regulations that create barriers to business creation. Next, our communications and transportation infrastructure needs to be upgraded to maximize network effects. The idea is to maximize the flow of ideas, encourage people to combine insights from different areas into new innovations, and eliminate bottlenecks to collaboration.
Third, in the coming decade, smart machines will create an unprecedented level of creative destruction that will open up a new world of niches for prepared entrepreneurs to populate.
These entrepreneurs will, in fact, play a central role in the cycle of disruption. They will capitalize on the stagnation of median wages and slow job growth to create new business models that will create value by combining mid-skilled workers and cheap, powerful technologies. The possibility for combinations will be endless and the opportunities will be great. Even if technological advances ended today, there would be no shortage of combinations to try. Even now, the possibilities are great for creating new processes and products by reconfiguring the many different applications, machines, tasks, and distribution channels ? and far greater potential still lies ahead.
References List :1. The Futurist, March/April 2012, Vol. 6, No. 2, "Thriving in the Automated Economy," by Erik Brynjolfsson and Andrew McAfee. ⓒ Copyright 2012 by the World Future Society. All rights reserved. http://ebusiness.mit.edu 2. Ibid. 3. MIT Sloan Management Review, Winter 2012, "Winning the Race with Ever-Smarter Machines," by Erik Brynjolfsson and Andrew McAfee. ⓒ Copyright 2012 by Massachusetts Institute of Technology. All rights reserved. http://sloanreview.mit.edu
