This article is a bit of ramble into this topic, but I felt I needed to get something written down so I can share a little in the debate.

There’s been a rise again in the discussion about technologies impact on the economy and in particular on jobs. A number of them successfully explore this subject (e.g. the Technomics series or Disrupted Economics by John Straw). I think that lumping technology into one economic subject makes it difficult to be conclusive about its impact, because it will clearly vary from industry-to-industry. Or were new use of technology creates a completely new economic opportunity (e.g. Uber) it is hard to understand its full impact on the incumbent models or businesses that it’s disrupting. At least not until a after they have become significant in the markets they enter.

If we look at the rise of AI and robotics, people imagine a direct impact on jobs, and rarely see or debate other possible outcomes. However ,if we look at this slightly differently it could be argued that this is likely to create a substantial amount of displacement. Who will make the robots, programme them, iterate them and maintain them? It could well be that a huge amount of new roles are in fact created, possibly more skilled than those that are being displaced. And inversely the economic argument for robots in the first place might well be flawed, at least initially anyway. Equally if we take 3D printers, these are capable of impacting a number of economic models. If we take a simple case currently being explored by Lord Wei, looking to put 3D printers in the back of plumbers cars to print common parts on site. The obvious benefits being parts availability, reduced logistics issues (e.g. driving to suppliers etc.) and problems being solved faster, reducing the impact of plumbing issues. The first fear is the impact this will have on manufacturers, impacting a large number of relatively ‘unskilled’ workers. The flip side of this is similar to the robotics argument, people will need to make, install, programme and maintain the printers, thus displacing or creating roles rather than simply killing them off. The degree of displacement isn’t something I am in a position to calculate in any one of the new technology verticals, but there must be something in this?

“Urban legend has it that Henry Ford famously said: ‘You can have any colour you like as long as it is black,’ illustrating how specialisation was key in assembly production; the more identical copies of the original design that can be made, the cheaper they could become. In a mass customisation economy, you will be able to have any shape, size or colour you like, as long as you are prepared to pay for it.”

Source: iDisrupted

This quote reveals a couple of perspectives on the economic impact this next technology revolution will have. The first is that the ‘customisation economy’ will emerge. Personalisation is rife, but in real tangible product and service outcomes it has never lived up to the hype. The second is that this (at least for an initial period) will come with a price tag. This will have an impact on jobs, large centralised manufacturing businesses, focused on driving low cost through scale efficiencies will have to shift a lot to keep up. And this won’t be easy. From my perspective it does however seem likely we will see some displacement in this shift. And China’s move to a more import based economy is a good sign for its survival in this process, but I’m not so sure about other current export based economies. Especially given most of them suffer with a severe polarisation in wealth. And their governments ability to reap rewards from this is also unlikely, given their relatively poor attempts even in their current economic climates. I’m no economist, but this doesn’t seem to be a picture where the displacement argument will compensate as much, certainly within these countries. However, new opportunities will arise in other places, where the localised customisation process takes place.

To explore this debate further I also feel we need to take a look at one more trend that often gets thrown up as the ‘job killer’, the sharing economy. The idea that we will essentially arrive at a barter model, or simply swap value in some way. If you take simple ideas like https://www.peerby.com, then this does have an impact on people’s likelihood of buying something like a drill. However, whilst mentoring these guys through Techstars I was told a story about how Bosch had already found a new way to participate in the platform, offering discounts to people and even looking at sympathetic rental or borrowing models. Other models like insurance or risk sharing models look to bring people together in order to encourage them to share financial responsibility. This slightly anti-insurer play appears so far to be a bit of a re-positioning by new entrants. And some still look to assess the risk, profile the customer and manage the contributions, making it hard to see how they are in fact different (some ‘profit’ sharing takes place, but the rules and structure of this is unclear in a lot of cases). But focusing on this debate, they do ultimately create new insurers, displacing opportunities rather than killing them off. Similarly this applies to peer-to-peer lenders (e.g. https://www.zopa.com), these models do fundamentally undermine the banking model, and seem to create a better deal by sharing added value with all three parties involved in the transaction. Again though, they create new businesses and new opportunities.

Thinking through this, I am always reminded of Theodore Levitt and his perspective on why train businesses failed when they were once so powerful, and it’s because they thought they were train businesses. And the car came along. If they had of realised they were in fact in the transportation business they would have in fact made the cars themselves. And I think survival and prosperity in this next wave of technology disruption will take a similar mindset – true marketing orientation.

I’ve expressed an optimistic view in these ramblings, and I’m not entirely convinced myself by these arguments, but it is important to look at the other side of this debate perhaps a little more than most are currently.