Redesigning Social Contracts, Skills and Jobs
The Digital Transformation is shifting the needs, and values of human contribution to wealth creation in several sectors. It is not the first time such a shift takes place, three centuries ago it was the industrial revolution powered by steam and later on by electricity multiplying human strength and speed with machines, in the last part of the last century it was the computer revolution in process management and the robotic revolution in the assembly lines. Now the shift is fuelled by AI and a deluge of data (read IoT, softwarization, digital content….). The Digital Transformation accelerated over the last three months as the pandemic containment measures forced business and people to produce and live in the cyberspace.
This had, and most likely will have a lasting, impact on Social Contracts, Skills and Jobs as pointed out in the WEF report on “the Great Reset“.
I would say that most of what we are seeing is a “fast-forward” to a future that will have come to pass. In this sense it is not because of the pandemic it is actually because of the Digital Transformation. Nevertheless, the acceleration and the fact that people (and company) had a little saying in the shift that was forced on them creates a different landscape. Besides, as epidemics will fade a way, or at least relent, there will be a choice to go back to the old times or to keep driving the wave of change, considering the shifted landscape as the starting point for a new “normal”. Different Countries are likely to make different choices and within a single Country people and companies will make different choices.
One might argue that since this changing landscape would have come to pass, going back is not wise, since those that will not go back but push forward will be in a stronger competitive position. At the same time, we have seen in the past that leading the wave (of change, innovation, technology and even culture) does not necessarily result in a competitive gain. In many times it is like driving a bulldozer: you open the way to faster vehicles that will be able to take advantage of the road you traced.
Planning for the new world has to take these alternatives into account. The WEF is proposing to look at the following areas when redesigning the Social Contracts, Skills and Jobs:
- Artificial Intelligence and Robotics
As I pointed out in previous posts artificial intelligence has started to permeate our world, our everyday lives. It is no longer the time of “expert systems”, an AI that was there to solve/help in very specific domain and at the same time very visible. You interacted with an Expert System, you knew its boundaries and capability. Today AI is becoming pervasive to the point we no longer notice it. It is embedded in our smart phone, it is part of the “click” when we take a picture, it is behind the steering wheel to adapt our “intention” to the road condition, it is flanking the doctor in understanding the radiography and even creating the image of an RMI pointing to possible problems. It is embedded in a device but it is also spread in the cyberspace and affects the way we interact with it and the answer we receive from it. When I answer the same question voiced by two different people my answers may also be different, in tone, in depth, in substance because I am not a mechanical answering machine. My answer is 50% about the question and 50% about the person and the context in which it is voiced. AI is at this point today and this takes AI into the Social Dimension. It raises issues about trust (can we trust it?), influence. It also raises issues, as it becomes so much more similar to a human being of the substitution of human thinking and brain work with machine thinking and AI work. White collars are flanked by AI, the dividing line between human intelligence and machine intelligence is getting blurred. As we are overwhelmed by knowledge we are also relying more and more in the capability to harvest distributed knowledge. Enterprise and business are looking at AI as a resource, and look at their capability to harvest and generate data as fuel for AI and competitiveness. Robots are also moving from repetitive tasks to understanding the context and the goal. This understanding change their operation, leads to cooperation with other robots and with human workers. The orchestration of human and “intellectual machines” will be a must in the coming years. In a few sectors where the Digital Transformation has succeeded it is the new reality. When accessing digital music more and more there are customised AI based features prompting for music pieces to explore. Soon music can be customised and created to fit individual taste and even educate and elevate those tastes. Watch/listen to music created by AI in the clip.
AI and robotics can no longer be seen as tool to add to an enterprise or to a social interaction. They should become part of the design.
- Digital Economy and new Value Creation
The Digital Economy shift the focus to data. Since data are cheaper than atoms, easier to mass produce and transport at -basically- zero cost their value approaches zero, is a commodity. The value shift for the raw material (data) to the leverage capability on this raw material. The important is what data can tell, what meaning can be extracted, what predication can be made and how we can use those data to influence the world of atoms. All of this is intertwined with the availability of data, today, by far, concentrated in a fist of companies, and the possibility of exploiting them. This latter is strongly connected to regulatory frameworks. Politicians and ethicists have to sit together evaluating societal and economic benefits against a set of human rights and values, knowing that the choice they made have a profound impact on society and business. Personally, I am concerned in seeing that these choices are often made under the pressure derived from “problems” rooted in the past and felt today, rather than in a forward looking perspective to design the future.
- Fourth Industrial Revolution
The already addressed Fourth Industrial Revolution has huge societal implications, as the previous ones had, but this time the transition is quicker. If in Modern Times Chaplin pointed out the difficult coexistence of machines and humans in an industry and society under stress from the Great Depression, in this Current Times we may be faces with a similar crises, both at company and societal/personal level. Millions of people have been plunged into smart working, where the smart is rapidly shifting from being able to do at home the same things one would do at the workplace into a revision of processes that can redesign the whole business, and change the role of human workers and the way they interact with one another and with the company. The interaction with machines that has been forced onto us through the so called IVR -Interactive Voice Response- that I still hate, is getting more and more sophisticated as capability to understand natural language and emotion woven in our voice gets better and better. The goal is to morph the I of Interactive into the I of Intelligent (machine intelligent, that is). The Industry 4.0, an integral part of the Fourth Industrial Revolution, is looking at the co-presence of end users in the value chain, transforming products into services and the use of those services into specification for new products and products upgrade/fine tuning. In the long term, the vision is one of integrating product and user into a single entity. This, again, brings societal issues to the fore.
- Leadership for the Fourth Industrial Revolution
The leadership for the Fourth Industrial Revolution will, as the previous one, be based on Capital, but this time it is most likely to take advantage from an infrastructure capital intensive and a massively distributed capital that need to be harvested and orchestrated and this will occur through a new culture and societal landscape. The Silicon Valley phenomenon of a melting pot of capital, ideas, skills will most likely become delocalised, aggregation will be in the cyberspace and its actualisation will be tied to favourable regulatory conditions where “favourable” not necessarily refers to people’s wellbeing but to business effectiveness. This is a further reason to take all these aspects into account in the Plan for the New World.
- Workforce and Employment
Workforce and employment will continue to be subject to competition and in particular the Digital Transformation expands this competition to the World (your competitor is not necessarily living nearby nor will have to re-locate to take the job) whilst the AI extend this competition to machines. Your knowledge has to be better, in term of effective use, i.e. translating into execution, than the one provided by a machine. The dynamics of needs and solutions push towards a Gig economy style of employment. New ways of Social Protections (see also 7) will have to be invented. The pandemic has led massive lay off, the impact mitigation was different in different Countries but it was even more different in the different forms of employment. In the Gig economy, from a job security point of view, one can say that there is no employment and indeed the millions working in the Gig economy found themselves with no protection whatsoever. They had to rely on community/family back up but in a world where the Gig economy takes the lion’s share it will be more and more difficult to provide community/family based mitigation. New forms of social “contracts” have to be found to ensure resilience in face of crises. This has to be part of the plan for the New World
- Corporate Governance
The business world is evolving on two parallel tracks one seeing (some) big companies getting bigger with an international footprint, a few fading away in relevance and others picking up steam joining the club of the big, the other seeing an ever changing landscape of small companies exploring and inventing new markets leveraging on innovation, including technology. These latter, by far, can only thrive in the ecosystems created by the big ones and using their de-facto standard platforms. What is clear is that the Digital Transformation by decreasing capital investment for services and increasing capital investment for infrastructures accelerate this bi-polar business systems where each track leverage on the other although without explicit contractual agreement/obligation.
Corporal Governance is clearly crucial fro the former and irrelevant for the latter, although it influence the behaviour of the ecosystem and of companies thriving in it.
The WEF has been looking at Corporate Governance emphasising the growing importance in risk management and disruption governance. These, in turns, require a forward looking long term vision and revised mechanisms of governance that can turn the long term vision in short term reaction to a changing environment. Given the size of these companies, Corporate Governance shall interact with Institutions and Governments in terms of sharing vision and pursuing goals meeting societal needs, rather than lobbying to preserve their business.
- Public Finance and Social Protection
The previous point often calls for public private partnership (remember the key role of the big companies in creating infrastructures, something that overlaps with Governments goals). In most situations these requires massive investment over long period of time, hence a context stability for generating ROI. Even in this framework, the reach of these infrastructures will be limited by the capability of the market to generate returns, thus leading to inequalities and amplifying gaps. In these situations the role of public investment is crucial to avoid inequalities and accelerate deployment. A typical example is the deployment of a telecomm fibre infrastructure. Bringing fibre to sparse populated area where demand is low will not make for an acceptable ROI (actually a company would lose money). Hence a public funding stepping in can ensure all citizens can have access to the broadband infrastructure. Wireless connectivity, particularly 4G and now 5G may require lower investment and therefore can be feasible also in low density area, however private companies will obviously prioritise those areas (densely populated) that can generate higher revenues and this leads to a gap that can only be filled through PPP.
In other cases, like data infrastructure, an agreed/regulated framework is required.
- Human Rights, LGBTI Inclusion
Human rights seem to be a no brainer, of course we, in the XXI century, believe in human rights. Once you start looking into the details, and the devil is in the details, you discover that what is considered an inalienable human right here may not be so there, actually it might even be considered unlawful. Think about the different nuance of privacy, even before you consider the political framework. Chinese culture in general sees privacy, keeping a secret, as a non acceptable social behaviour. The well being of the family (Confucian family) of the community of the nation is above the well being of the individual. Quite different from the emphases on the individual rights so dear to Western cultures. Think about creed freedom. This makes sense once you accept a separation between state and religion, something that is often not the case in Islamic countries. I do not want to take a position, just to remark that there are differences in culture leading to different sets of values. LGBTI Inclusion took a long time to be accepted “politically” and “culturally” and it will probably take at lest another generation to become a moot point, which is when we will have really achieved the inclusion. Planning for the New World through the redisign of social contract needs to take all these -difficult- aspects into consideration.
- Civic Participation , Justice and Law
The previous point leads directly into the need to involve people, civic participation, to transform principles into culture, and one that is rooted in the feelings of people. This goes through education, awareness and participation and it takes time. Justice and law are usually reflecting the culture of the past and only slowly evolve to take into account a changing world. Yet, through education and citizens’ participation the evolution can be a bit faster.
In this area the role played by media is crucial. Notice that in the past century media took the upper hand in steering culture evolution, in a way becoming more important/effective than the content (The Medium is the message – Mc Luhan). Now the situation is evolving, in that the media are becoming platforms, no longer channels, and these platforms sustain the rapid creation of cultural ways. Critically, and paradoxically in a way, instead of leading to a pervasive message and culture these platform by creating self contained communities steer towards isolation of communities and created local (platform-wise) distributed (audience-wise) cultures.
- Agile Governance
Because of the rapidity in the changing landscape of demand, both cultural and business, an agile governance becomes a must. As discussed for the Corporate Governance we are facing -will be facing- a bi-polar governance, one coming from the top and another coming from the bottom. The co-existence of the two is the big challenge of the future decades.