Tuesday, December 4, 2012

December Excerpt: Creative Disruption by John F. McMullen

Creative Disruption
John F. McMullen

Whether you spend most of your waking hours on Facebook or try to stay as far away from computers as possible, technology has changed the world around you, often “under your radar,” and will continue to do so at a constantly accelerating pace. The way you do things will be affected; jobs will be lost; companies, even industries, will disappear; and new opportunities will open for people with the proper education and skill sets.

Consider a mall, if there was one near you, ten years ago. There might have been a B. Dalton, a Waldenbooks, or a local bookstore; there were probably a few stores that did film processing; there were probably two music stores that sold cassettes and CDs; a travel agent; and a movie rental store. Somewhere near the mall there might have been a stand-alone Border’s bookstore and/or a Tower Records. As you walked between the stores, if you passed someone alone speaking loudly, you would give her/ him a wide berth, thinking there might be some mental or emotional problem looming.

That was ten years ago–now, there are no more bookstores, travel agents, music stores, film-processing centers, or movie rental stores, and we just assume that the person speaking loudly is on a cellphone with a Bluetooth earpiece. How things changed!

These are the only changes that we see but there is much more going on. Technological advancement can threaten our economy and our way of life; at a minimum, it will disrupt businesses as we know them; shift more responsibilities to us, the consumers; and require much different tools from our workforce. It also will require greater understanding of the long-term impact of these advances that our elected officials have at the present or seemingly want to acquire.

I call this ongoing march of technological innovation creative disruption because it is always based on innovation, imagination, and disrupts the existing ways of doing things. Some prefer the term creative destruction because of the impact it has on some jobs and some companies. I choose disruption because it is a more optimistic term that sees opportunities in these changes.

Innovation has allowed businesses to make us “part of the process,” eliminating many jobs as it provides instant service to us.

Every bill that we pay online to our utilities, credit card companies, or mortgages means that we no longer have to address an envelope, stamp it, and mail it. Further, it means that no one at the other end has to open the envelope, check the payment, enter the information into a computer system, and tabulate the checks for a bank deposit.

Every book that we choose to read on a Kindle or a Nook means we can carry it and hundreds of others with it at all times, takes no storage space in our home or office, and usually costs less than a hardcover or paperback version. It also means that the seller requires no inventory, no employees to package and ship to distribution centers or retail bookstores. These stores require fewer retail personnel as they are selling fewer printed books (it also means fewer bookstores).

iTunes is now the largest music store in the world. The downloading of music is the same model as that of books – no inventory and no retail processing.

Even if we prefer the physical feel of merchandise, the ordering online from Amazon, Barnes & Noble, Best Buy, Apple, Dell, etc., once again eliminates the middleman. We call this cutting out of the middle man disintermediation.

We see this disintermediation also in the replacement of many travel agents and realty listings with computer services.

Firms doing business with government agencies and large companies such as Wal-Mart are required to enter bids, invoices, and statements by electronic data interchange, once again moving the input process away from the large entity.

Many supermarkets and box stores now have self-checkout facilities that both speed the shopping process and eliminate retail positions.

We also see more and more replacement of manufacturing jobs through the use of robotics – robots don’t get sick, break for lunch, or make demands and, properly maintained, perform the same task in exactly the same manner all day long. In a New York Times article, “Skilled Work, Without the Worker,” John Markoff wrote, “The use of ‘artificial intelligence’ is not limited to manufacturing but extends also to such areas as automatic security trading (a programming error in such a system recently caused Knight Capital to lose $440 million in a matter of minutes) and analysis of loan applications.”

The impact of technological changes often extends to entire geographical areas. Rochester, New York, for example, is home to Kodak and Xerox, two firms hit hard by changes in technology. It is particularly ironic that Kodak, which invented digital photography, chose to protect its film and chemical processing businesses and did not pursue the digital technology until it was destroyed by it. Similarly, Xerox, which developed many of the important computer technologies (graphic user interface, object-oriented programming, and Ethernet networking), chose to focus on its copier business only to see e-mail and interoffice networking make major dents in that business.

We have just scratched the surface of the technological revolution. Our amount of available information grows exponentially, causing the disruption to also grow exponentially. (See the “Did You Know” videos, starting with the first–http://vimeo. com/2030361.) It is more than the tremendous explosion of information technology that has brought us to where we are now – it is the confluence of developments in many areas. Some students of the revolution use the acronym “GRAIN,” which I have modified slightly to mean: 

G - Genetics
R - Robotics
A - Artificial Intelligence
I - Internet
N - Nanotechnology.
(Note that I inserted “Internet” as the “I”
to replace “Intelligence,” the second half of
“Artificial Intelligence.”)

You can read the rest of the article by picking up the December issue available now. Visit the Empirical website for more information about subscriptions, single issues, and submissions.

No comments:

Post a Comment