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With the development of Big Data mining, robotics and artificial intelligence, we are looking at the possibility of machines taking over a number of intellectual tasks, which is leading people to ask complicated questions such as, 'What exactly makes humans special?' This is not just a philosophical question, it is an economic one, because it amounts to asking, 'What is the best division of labour between minds and machines?'
In my view, the economic potential of this new phase has been under-estimated. Once you start making industrial machines and supply chains more intelligent through data and sensors, what you get is a more productive economy, leading to more jobs and economic growth. We will soon have software that helps us predict when and what will go wrong with any piece of equipment, when and where to intervene before an outage occurs, how to plan around it, and eventually, how to eliminate outages or stoppages in production altogether.
On top of having humans learning to leverage the computing power of machines, we are also now leveraging the ability that arises when machines put humans into contact with each other. This will accelerate over the next 20 years, with business and governments exploring strategies for people to cooperate in ways that reward open innovation while safeguarding intellectual property.
Yet another aspect of the current phase of enhanced mind-machine interaction is progress in advanced manufacturing techniques. These techniques allow you – and by you I mean the engineer, the innovator, the thinking brain – to start figuring out completely new products that are 'smart by design'–rather than being smartened by having sensors added on top of them. This is another area where we will see enormous progress over the next 20 years, and the most promising area of impact will be healthcare.
Against this backdrop, earlier this year GE released its bi-annual Global Innovation Barometer (GIB), which explores how business leaders around the world see innovation, and how their views are shaping their strategies. Overall, the latest Barometer indicates much greater optimism regarding innovation than we have seen in the past: some two-thirds of both business executives and the informed public believe that the digital-industrial revolution will have a positive impact on the economy and on society. Optimism is particularly strong in countries where economic growth already benefits from technology – especially those in Asia.
On balance, emerging markets are much more positive and enthusiastic than advanced economies. To me, this makes sense , because digital innovations can help these markets bypass weaknesses in their infrastructure and institutions, enabling them to leapfrog quickly to new technologies. Surprisingly, only a very small share of respondents were worried that the current wave of innovation will have a negative impact on jobs–and this was true not just for business executives (17 per cent), but even more so for the informed public (15 per cent). And 54 per cent of executives/61 per cent of the informed public actually expect to see a positive impact on jobs.
What has made people so optimistic? Here is my theory: first, the economy is actually doing much better than headlines suggest. Global growth is proceeding at a healthy pace, and the United States is back to full employment. Second, digital-industrial innovation is already taking place, and it is not destroying jobs; people see that, and as a result, many of them no longer buy into the techno-phobic narrative.
Following are the top five key takeaways from this year's Global Innovation Barometer.
Minds and machines will increasingly work together; Creativity and problem-solving are the top two skills for the workforce of the future; The ROI on collaborative initiatives between organizations will continue to increase; Emerging markets are significantly more fearless than others in embracing innovation; and There is a call for greater government support to break down barriers to innovation.There was general agreement (90 per cent) among executives and citizens alike that the most innovative companies are not those who launch new products and services–but those who create new markets that did not previously exist. Being disruptive has become the gold standard, and as a result, 81 per cent of executives agreed that 'embracing a start-up ethos' is becoming the new norm.
The 2016 Global Innovation Barometer confirms two things: that the digital-industrial revolution is very real; and that it is well underway. My colleagues and I firmly believe that innovation will create new and better job opportunities, across industries. The workforce, though, will need to go through a significant transformation, because as indicated herein, the jobs of the future will demand well-developed problem-solving abilities and creativity. Education and training need to catch up – and fast.
Marco Annunziata is chief economist and executive director of global market insight at GE, is based in New York. He is the author of The Economics of the Financial Crisis: Lessons and New Threats (Palgrave MacMillan, 2011).
A version of this article appeared in the Fall 2016 issue of Rotman Management, the magazine of the University of Toronto’s Rotman School of Management. Reprinted with permission.