Will Today’s Digital Transformations Finally Create a New Era of Productivity?

By Nuttapong - 25/07/2017

I recently had a fantastic and wide-ranging conversation with one of the leaders of today’s tech revolution, Marcus Weldon, Nokia CTO and President of Bell Labs. We discussed the future of work, the difficulties of taking AI to the next level, and the leadership challenges we all face in the coming cognitive era. As we wrapped up, he added a twist that still has me spinning: Weldon set a target date for achieving the long-promised, long-awaited, and still missing, corporate productivity gains driven by all our technology. 2028. Says Weldon: “At Bell Labs, we’ve been fascinated by Robert Gordon’s The Rise and Fall of American Growth, and The Second Machine Age by Brynjolfsson and McAfee. They’re both great books, but we felt there was something we could contribute beyond their work. So we’ve written a paper on the Next Era of Productivity. “We’ve quantified when a Digital Age leap in productivity will occur that will resemble the leaps from the previous eras. “The good news is that we will experience a new age of productivity about a decade from now, and it will come from all of today’s advances: AI, robotics, large amounts of data that allow us to better understand our world and our humanity, creating a positive future. “The bad news (if one needs that productivity now), is that this major shift won’t begin until about 2028—2033.” Why 2028—2033? The answer lies within Bell Labs’ technical paper, Will Productivity Growth Return in the New Digital Era? An analysis of of the potential impact on productivity of the fourth industrial revolution — simplified and summarized here. (All quoted text is from that paper, remaining text is my summary.) Failure To Launch… So Far… “The lack of significant improvement in economic productivity over past 30 years despite the rapid advances and growing investments in information and communications technologies, and the digitization and global interconnection of whole industries, has been a topic of much concern and debate among economists and policy makers.” In The Rise and Fall of American Growth, economist Robert Gordon “makes a provocative but persuasive argument that the significant jump in productivity during 1940’s was a one-time event. Gordon argues that the current advances in Information Technology (that define the so-called third Industrial Revolution) pale in social impact compared to ‘Great Inventions’ of the first and second Industrial Revolutions.” What Gordon got right, according to Bell Labs, is that productivity skyrocketed not when companies leveraged new technologies in each of the previous revolutions, but when four basic infrastructures hit their tipping points in revolutionized changes: • Energy (gas, electric) • Health and Sanitation • Transportation • Communication (telegraph, telephone) What Gordon got wrong about the fourth revolution, says Bell Labs, is that he minimized the power of the network. According to Bob Metcalfe (2013), “the power of a network is in proportion to the square of the number of compatible connected devices; which can be simply restated as massively connected technologies massively disrupt.” Bell Labs postulates “that the combination of four physical networked infrastructure technologies – communication, energy, transportation, health and sanitation [plus a fifth, digital production] — are the foundational set of technologies that underpin” the next major leaps in productivity. The Tipping Point of the Five Horsemen Overly simplified — (I’ll refer you to their paper for their quant-heavy analysis) — we haven’t yet reaped the long-promised productivity gains because five crucial infrastructures have yet to reach their Digital Era tipping points. Between 2028—2033… • Digital Energy Networks: Connecting and controlling new power sources, moving them closer to consumption needs and minimizing waste. • Digital Health and Sanitation Networks: Connecting human health systems and moving diagnosis and treatment to the optimum locations. • Digital Transportation Networks: Connecting and moving people and goods autonomously, improving safety and efficiency. • Digital Communication Networks: Connecting people and systems and moving data and knowledge among them. • Digital Production Networks: Creating local industrial ecosystems to produce and deliver contextual physical- digital goods and services with optimized cost performance metrics. …will all be hitting their 50{71efb12dd06b9d897f071a0c9cbd8faf3a5a47af4a76cf07c5f55a70eceae2dd}-or-greater digital network tipping points. For example: Smart meter penetration in households is already approaching 50{71efb12dd06b9d897f071a0c9cbd8faf3a5a47af4a76cf07c5f55a70eceae2dd}, but those meters also need full-on smart-grid networks to truly achieve their next-level efficiencies. Digital health solutions are being rapidly adopted, but are not projected to pass 50{71efb12dd06b9d897f071a0c9cbd8faf3a5a47af4a76cf07c5f55a70eceae2dd} adoption rates until 2030. Cognitive assistants (Alexa, Siri, etc.) will soon leap beyond consumer markets and should hit 50{71efb12dd06b9d897f071a0c9cbd8faf3a5a47af4a76cf07c5f55a70eceae2dd} use in industrial augmented intelligence systems by 2035. Bell Labs closes its paper with standard projection caveats: “We believe the primary importance of this work is that it advances the debate…the potential for future productivity increases in a meaningful way.” But for me, as someone who works on workforce and organizational change, as well as digital transformation, it created an eye-opening Aha. Companies recognize that they’re part of digital and infrastructure ecosystems, yet ignore all that when assessing productivity gains. Want to Speed the Shift? We’ve got to change how we think about productivity. We’ve got to stop treating it as an Industrial Age output from closed systems — corporate systems that get everyone within them to go faster and faster at cheaper and cheaper costs. We’ve got to start seeing it from the Five Horsemen’s integrated infrastructure perspective. We need leaders who completely reframe productivity, viewing it through a fourth revolution perspective. That shift radically alters our relationship with our workforce. We’ve got to shift the unending burden to produce morebetterfaster on human beings, and place it where it belongs — within our integrated infrastructures. We’ve got to free humans to do more of what they do best. Think. Create. Innovate. Disrupt. Care. Be their best. ~Your humble @simpletonbill For more from Bill Jensen on the future of work and simplicity, click his name below. Join the conversation on Twitter with futurists like Bill Jensen by using #NewWayToWork.


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