Not so long ago, “computer” used to be a job title for a person who added long rows of numbers.
Now it’s a machine, born from digital technology that is as consciousness changing as electricity and the internal combustion engine.
With no end in sight as to the advances that will come, digital technology is rapidly upending business models, companies, and entire industries. No job is immune to disruption. Every company, every organization, and every person must adapt. These are no ordinary times.
Indeed, I’m convinced we are still in the early stages of a new age, more profound than that of the Industrial Revolution. Now there is a lot of muddy thinking on the shape of things to come, and I am certainly not exempt.
But there are strong indicators that the changes currently brewing will be sweeping, as technology alters the structure of companies and the future of work.
A World Connected
That we all are moving toward a world where everything that we can imagine is literally getting “connected” is becoming more clear. As a result, we will see, heck, we’re already seeing, a restructuring of the traditional relationships between workers, resources, and customers to one another with low transaction costs.
This connectiveness, made possible by digital technologies, is the basis for the gig economy, the platform economy, the networked economy, the sharing economy, the on-demand economy, the peer economy, the bottom-up economy.
I think of it as the next economy, and I have been speaking about it to various groups, including the I-70/75 Development Association in Dayton a few weeks ago.
Despite the roadblocks being erected by governments in this country and around the world, “uberisation” – using computer platforms to facilitate peer to peer transactions between clients and providers of a service – will continue, bypassing the role of the traditional corporations.
Smart companies, of course, will adapt. Walmart, the world’s largest retailer, plans to begin testing last-mile grocery delivery through Uber in Phoenix and Lyft in Denver in the coming weeks.
Last week, I attended an economic development conference for two and half days, and while there were many good topics discussed, there was no virtually no talk on the evolving next economy, the future of work, and how companies like Uber, Airbnb, and countless others operate.
Transform or Fade Away
Too many economic developers — those people charged with aiding and abetting the growth of a local economy — think solely in terms of industrial recruitment, landing that big manufacturing plant, when they should be giving at least some thought to how digital technologies are reshaping business and society.
Can economic developers influence and even grow the next economy in their respective communities? I think so, but only if they adapt. Again, no job is immune. Every organization, be it a company or an economic development organization, will have to transform itself or fade away.
Freelancing in America
Consider for a moment that as of 2015, 53 million Americans work as freelancers. Freelance workers and independent contractors earn 17 percent more per hour than conventional full-time employees.
In the near future, companies plan to hire more freelancers than full-time employees because they can save 30 percent more on payroll.
Well before the term “gig economy” was used, I was a participant in it. In my role as a consultant, I am typically engaged from three to six months to perform a particular task or tasks. That could be a location analysis project for a company or a strategic/action plan for an EDO.
According to Upwork’s 2015 Freelancing in America Research, one in three Americans freelanced in 2014, 60 percent of those freelancers are choosing to do so rather than forced out of necessity.
Geography Does Not Matter
That gives businesses, big and small, greater access to a more flexible and highly available talent pool that is not restricted to a specific geographical area. I have clients that are more than 1,000 miles away from me. It matters not if I take a leadership role and bring value to them.
Again, and this bears repeating, this is made largely possible because of digital technologies — having a computer, having a smartphone, having an assortment of apps and software, having the internet, having an active presence on social media.
Spurred by a new digital machine age, the nature of employment will fundamentally change and that virtual companies will exist that bring specialized teams together to work on projects and then disperse. That’s pretty much describes the business model of my consultancy right now.
Witnessing the End?
Former CISCO CEO John Chambers predicts, “Soon you’ll see huge companies with just two employees – the CEO and the CIO.”
Now that might be a stretch, but then again it might not.
Certainly, I believe that the employing of disruptive digital technologies have played a role in the demise of many companies already, while giving birth to others.
Consider for a moment that the average life span of companies in the Standard and Poor’s 500 has declined from 61 years in 1958 to about 20 years today. If Mr. Chambers is right, and my hunch is that he is, the concept of the modern corporation as we know it today will come to an end in the decades ahead.
Those Left Behind
But here is the scary part, and one that I cannot help but think about – some people will be left behind.
Workers who lack digital skills are increasingly being bypassed by the next economy, and I don’t yet see a broad set of solutions that are addressing that. A community college teaching people welding skills might be well and good for now, but what happens when most of the welding is done by robots?
Recent McKinsey research finds that up to 45 percent of the tasks performed by U.S. workers can be automated by currently existing technologies, and that about 60 percent of occupations could have 30 percent or more of their activities automated.
Many jobs and business processes will be redefined. Our institutions and policies will need to help people acquire new skills and navigate a period of dislocation and transition.
“By 2040, our definitions of ‘work’ and ‘job’ may be very different,” said Bo Cutter, senior fellow and director of the Next American Economy Project at the Roosevelt Institute.
“Changes in the economy could force average workers to become entrepreneurs, making use of new technologies and services to acquire skills and opportunities while taking on more responsibility for their own health care and retirement. But if they can manage the transition, they will be able to find more work even as more jobs become automated.”
In the next economy, people will have to aim for jobs least likely to be overtaken by robots and automation. They will have to commit to a lifetime of updating their skills by taking extra courses in classrooms and online. Lifetime learning and retraining will have to be the norm.
Ironically, a 40-hour job with fixed hours may make it difficult if not impossible to take retraining classes or obtain a new degree or certification, depending on the employer.
A gig economy worker will not have that restricting tether and is in a better position to rearrange his or her calendar to gain new life and occupational skills.
Governments, for their part, need to create a climate where entrepreneurs can flourish, because new ventures create new jobs. There are indicators that entrepreneurship in this country is on the decline, which is not good.
I have merely scratched the surface in this blog entry about the next economy. which will redefine what it means to be an employer, an employee and a customer. Stay tuned as I hope to write and speak more about it.
Just know that a brave new world awaits.
I’ll you down the road.
Postscript: I will be on a long road trip east of the Mississippi in late July and early August and will be available to visit and speak in certain communities. See “Clifftop or Bust!” for more details.
Dean Barber is the president/CEO of Barber Business Advisors, LLC, a location advisory and economic development consulting firm based in Dallas. He can be reached at firstname.lastname@example.org or at 972-890-3733. Mr. Barber is available as a keynote speaker.