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Digital Transformation vs Jobs

    A quick map of the correlations among Digital Transformation, Automation and Knowledge Society. My chicken scratch…

I characterise the Digital Transformation as the shift from the Economy of Scarcity, based on atoms, to the Economy of Abundance, based on bits. This shift is crucial since out of that there are a few consequences that have implications on jobs, companies, education:

  • in the economy of abundance the value is no longer driven by the demand-offer rule. I buy music from a store not because of the intrinsic value of that song (I could get the same song for free from YouTube -yes I know it wouldn’t be legal nor fair but I would be the only one in the world having such concerns…) but because of the convenience of getting it from the store (ease of download, certainty that the quality is as it should be, no viruses hidden somewhere..);
  • in the economy of abundance the transaction cost is low, hence on the one hand it decreases the dominant position of an incumbent and on the other hand it creates opportunities to smaller players to enter the market. In turns, this creates more competition and more innovations shortening the life cycle of products and services;
  • as transaction cost decreases, efficiency increases -the two go hand in hand- and jobs are lost, but since more players pop up new jobs are also created (unfortunately they are usually not enough to compensate for the loss). Additionally, companies undergoing the Digital Transformation are also in need for changing parts of their processes and activities, creating new jobs;
  • new activities and new jobs usually involve new skills and competences.

Flanking the Digital Transformation are the ongoing Automation and the evolution of the Knowledge Society.

The Automation started some thirty years ago and has resulted in jobs decrease in manufacturing, as industrial robots took the place of blue collar workers. Although it is still going on, the general consensus is that most of its effects have already been taken place. This does not mean that no more job is at risk, we are now in the first new wave of automation fuelled by Artificial Intelligence and Big Data and two more and on the horizon (augmentation and autonomous systems) but they are going to affect new categories of workers (hitting white collars as well). Automation has clearly killed many jobs but is has also created new ones (e.g. to take care of the robots), requiring new skills.

The Knowledge Society is in full swing fuelled by the amazing increase in the production, transmission and ease of access. Knowledge, like bits, is immaterial, however transmitting knowledge takes a lot of time (learning is not easy) and duplication is never perfect (which is a plus, since in some cases learning means expanding the received knowledge into something greater). The Knowledge Society did not shift from the Economy of Scarcity to the one of the Abundance. However, the explosion of knowledge has created, and even more so in the future, a growing difficulty in increasing one’s knowledge. The knowledge has grown to such a magnitude that it is no longer possible to a person to acquire it all, nor economically sustainable for a company, or an individual, to acquire knowledge beyond what is needed in the short term.

A few more thoughts on this in the next post.

About Roberto Saracco

Roberto Saracco fell in love with technology and its implications long time ago. His background is in math and computer science. Until April 2017 he led the EIT Digital Italian Node and then was head of the Industrial Doctoral School of EIT Digital up to September 2018. Previously, up to December 2011 he was the Director of the Telecom Italia Future Centre in Venice, looking at the interplay of technology evolution, economics and society. At the turn of the century he led a World Bank-Infodev project to stimulate entrepreneurship in Latin America. He is a senior member of IEEE where he leads the Industry Advisory Board within the Future Directions Committee and co-chairs the Digital Reality Initiative. He teaches a Master course on Technology Forecasting and Market impact at the University of Trento. He has published over 100 papers in journals and magazines and 14 books.