Survival in an age of digital disruption

In this series, we asked speakers at the Milken Institute Global Conference to answer: How does one build a meaningful life in the age of technological disruption? Join the conversation by writing your own article here and including #MIGlobal.

There’s no shortage of examples of digital disruption. Advances in digital technology in recent years have upended the entire global business landscape – just over half of the names of the companies on the Fortune 500 have disappeared since the year 2000, and this pace will not only continue, but accelerate dramatically.[1] 

By now, most companies and even countries have come to the realization that they both have major opportunities, but are also vulnerable to digital disruption, and rightfully so. The economic benefits for those who take advantage of this opportunity are becoming increasingly apparent: it’s estimated that digitization could generate USD $19 trillion in economic value over the next decade.[2]    

This is the greatest technology transformation in history, and it’s only just beginning. Here are the three leadership priorities for ensuring continued survival in the Digital Age:

Replicate “Silicon-Valley” innovation on a global scale: It’s no surprise that executives and entrepreneurs regularly travel to Silicon Valley from around the world to learn the secrets of its success. Perhaps never before has one place created so much innovation in such a short period of time.

In reality, what happened in Silicon Valley could happen anywhere. There’s no reason why other regions can’t harness the same key elements that are found in the Silicon Valley ecosystem, specifically its culture of constant reinvention and disruption, to create similar innovation ecosystems of their own.

As a result of forward-looking strategies to advance digital innovation, we’re beginning to see other tech hubs emerge around the world that could one day rival Silicon Valley. Nowhere is this more apparent than in France, which thanks to government programs like “La French Tech” to help technology startups gain momentum and visibility, now leads Europe for the number of venture-capital funding rounds.[3] Similarly, new startup hubs are also cropping up in the U.S., such as in Austin, Tex., which is now home to the highest rate of new entrepreneurs in the country thanks to government incentives, a strong talent base and a culture that thrives off of creativity and innovation.[4]

Empower the workforce for jobs of tomorrow: While digital technology will create unprecedented economic opportunities around the world, at the current trajectory, most people won’t be ready to take advantage of the new jobs being created. McKinsey estimates that by 2020, there will be a shortage of 40 million high-skilled workers and 45 medium-skilled workers globally.[5] Left unaddressed, we can expect the inequality gap between workers to widen, especially as the use of artificial intelligence and advanced robotics becomes more prevalent. Some experts predict that as many as 47 percent of jobs could be automated over the next two decades.[6]  

While technology will replace many of today’s jobs, new opportunities for the workforce will emerge. For example, in financial services, while many analyst jobs will be replaced by AI software that can predict where the market is headed, new jobs will be created in areas like financial technology, which is poised for robust growth in years to come. 

To prevent future displacement, businesses and government leaders need to come together to invest in areas where jobs will be and close the skills gap. To do this, we’ll need to refocus education on STEM fields to prepare our future workforce for where the market is headed, not where it is today. Likewise, we’ll also need to invest in retraining programs for the current workforce to ensure they have the skills necessary to compete in the future. We’re seeing incredible results from countries that have prioritized reskilling citizens, such as in Denmark where workers enjoy a high degree of employment mobility because the country allocates funds for two weeks of certified skills training per year for adults.

Accept that there is no entitlement: Digitization is one of the world’s greatest economic equalizers. Today, anyone with access to the internet can compete. The average seller on eBay does business in seven countries. With digitization, anyone, from a small eBay seller to a massive retailer, can innovate and has the potential to disrupt the competition. In this environment of constant change, we can no longer rely on the strategies that have previously worked. There is no entitlement for countries or companies that have led in the past: the future will be defined by those who disrupt themselves, their businesses and the world.

I learned firsthand how quickly today’s leaders can become tomorrow’s causalities working in Boston in the late 1980s, when Route 128 was America’s leading tech hub. Home to minicomputer brands like Wang, DEC, Data General and Prime, the area had the best access to venture capital, Harvard, MIT and research centers like Bell Labs. However, they focused on competing with each other and completely missed the market transition to PCs and the internet. As a result, the center of gravity shifted to Silicon Valley.

These kinds of disruptions can and will happen again at an increasing, almost exponential pace, but by taking the right next steps, leaders can use digital disruption to their advantage and reap its extraordinary potential.   

[1] https://www.weforum.org/agenda/2016/01/digital-disruption-has-only-just-begun/

[2] https://www.cisco.com/c/dam/en_us/services/portfolio/consulting-services/documents/consulting-services-capturing-ioe-value-aag.pdf

[3] https://blog.dealroom.co/wp-content/uploads/2017/03/TechNation.pdf

[4] https://www.cnbc.com/2016/08/11/austin-is-top-place-for-startups-in-america-not-silicon-valley.html

[5] The world at work: Jobs, pay, and skills for 3.5 billion people, McKinsey Global Institute

[6] https://www.economist.com/news/special-report/21700758-will-smarter-machines-cause-mass-unemployment-automation-and-anxiety