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Creative disruption: technological innovation, new inequalities and human security

    • Florence
    • 18 November 2016

          No aspect of life, business or politics is immune to the major technological changes of our time. The speed and scale of transformation is such that breakthrough innovations are affecting everything, from the nature of work to what it means to be human. Zigzagging career paths are now the norm, traditional industries are revolutionized almost overnight, and the political debate is more intense and more polarized than at any other moment in recent history.

          Digitalization has opened the ground for new forms of work organization. The platform economy brings efficiency in matching workers to jobs and tasks, while reducing demand for routine and manual jobs. But unlike the past, new technologies tend to utterly replace labor rather than to complement it. According to a study by Oxford University, 47% of jobs in America are at risk of being substituted by machines over the next five to ten years. This is contributing to the polarization of the labor market, creating few highly-paid jobs at the top and many unstable ones at the bottom.

          Things are changing so fast that the divide between innovators and the rest of society is widening. Only an elite manages to ride the technological wave, while the majority is swamped by it. And the degree of adaptability that is required to survive in this fast-paced environment is such that the number of losers is fated to rise in the future. But the symptoms are already apparent now. Unemployment or underemployment remain stubbornly high in advanced economies, while income and wealth inequality are exploding in the West. Political discontent and populism are the inevitable consequences of these dynamics.

          On the business front, new technologies, from big data, automated robots and artificial intelligence, to 3-D printers, new materials and the Internet of Things, are completely reshaping almost any industry. These innovations make goods cheaper and expands variety for consumers, while making production processes more efficient. Healthcare is particularly well-positioned to benefit from these changes. Biotechnology and digital technologies are coming together, laying down the foundations for implantable devices, the 3D printing of organs, miniaturization or technology-enabled care.

          But adapting to such changes is especially challenging for corporate giants that, unlike agile start-ups, are responsible for the material lives of thousands of workers. Given the complexity of their organizations, mature companies struggle to compete with smaller firms on focus and speed, and mistakenly pursue product standardization to expand the scale of their operations. Since 2000, over half of the companies in the Fortune 500 have either gone bankrupt, been acquired or ceased to exist.

          No radical change can materialize if there is not a receptive environment. Freedom, openness and adaptability are the prerequisites for disruption to happen smoothly, without undermining the stability of the whole system. In order to prevent today’s disruptions from turning into a source of systemic risk, workers, business leaders and policymakers should work together to create these conditions through effective training and educational programs, innovation-friendly regulation and more flexible business models. This way, it will be possible to maximize the creative dimension of today’s technological disruptions, while minimizing their destructive potential.

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