Arm-e-Dale: Intelligent City of Tomorrow? Tony Sorensen

Adjunct Professor. UNEWednesday 25 November 2015

Confronting Business Threats and Opportunities in the Second Machine Age

An Die Nachgeborenen, B. Brecht(To those who follow us)

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Quotable Quotes on the Future

"If you don't think about the future, you cannot have one." John Galsworthy (1867-1933), Nobel Prize Winner in Literature

“If the rate of change on the outside exceeds the rate of change on the inside, the end Is near.” Jack Welch (1935-), former CEO General Electric

"Tomorrow, and tomorrow, and tomorrow, creeps in this petty pace from day to day, to the last syllable of recorded time; and all our yesterdays have lighted fools the way to dusty death." William Shakespeare (1564-1616), Macbeth

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The Second Machine Age (2MA) *

We are on the cusp of the Second Machine Age (2MA: Brynjolfsson and McAfee) characterised by: A large array of new technologies The increasing blending / fusion / integration of those

and existing technologies to yield a large range of new commercial products and services, or new production and delivery methods for existing products and services

New lifestyle opportunities and living arrangements

* Aka: Third Industrial Revolution (Rifkin)

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SMA: Technological Soufflé

Enhanced ICT Quantum computing Big data / information storage Robotics / Artificial General

Intelligence New materials (light weight,

high strength, anti-corrosive, good malleability, etc. – graphene and stanene)

Automated construction techniques (look up DIRTT in Calgary)

Human augmentation (wearable ICT, surgical implants as foreseen by Kurzweil)

Smart everything: agriculture, mining, homes, vehicles, cities

New Food (e.g. synthetic meat printed on 3-D printers; chemical cuisine (or Note-by-Note cooking); synthetic milk (whose research conducted by an organisation called muufri); protein from harvesting insects)

Bio-medical (cures for many common diseases; GM advances)

Transport (e.g. drones, driverless cars and trucks, Elon Musk’s vacuum tubes, and aerospace)

Renewable energy generation and especially storage using new battery technologies

E-tailing and e-governance FinTech

14 Domains

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Profound Regional Impacts – to 2040 (1)

The acceleration of economic and social adjustment – perhaps four times faster than in the industrial revolution between c. 1750 and the late 20th century

The demise or drastic remodelling of existing businesses providing goods or services

Loss or substantial revision of perhaps 40% of existing job in 20 years), particularly those that are low skilled and likely to be replaced by robots … but even doctors, lawyers and accountants

The creation of many new businesses and jobs – for burgeoning technology can provide huge opportunities for adaptive and innovative individuals especially if they can snap up first mover advantage

A countervailing rise in a culture of future orientation and willingness to (i) junk past practises and perceptions, (ii) take higher risks, and (iii) expect bigger rewards from innovation

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Profound Regional Impacts – to 2040 (2)

Greater fragmentation of social norms and lifestyles, accompanied by greater social inequality as society rewards skilled people with agile minds and penalises those with poorer skills

Huge advantages for some places and losses for others depending on their capacity to handle rapid change and seize opportunity – according to their mix and quality of human, social, built / constructed, resource, environmental, and financial capitals The old and the new will not necessarily be co-located

Rewards are more likely to flow to individuals and communities with high knowledge, inquiring – creative – imaginative – flexible minds, strong ability to take risks, high networking capacity, well organised business and social support systems, good access to venture capital

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Rising Complexity and Uncertainty Moreover the world we are entering will be made even

more difficult by: The burgeoning complexity of emerging social and economic

systems, especially as globalisation progresses and nation states lose further control of their well-being

Social fragmentation proceeding apace The increasing interconnection between social, cultural,

economic and environmental processes, with circular and cumulative effects that are often exponential rather linear

Poverty of accurate data in a fast-changing world (despite the event of Big Data, which tends to measure the past rather than emergent landscapes)

The cutting in of chaos and tipping-point processes consequent upon complexity

The increasing riskiness of forecasting even over the medium term – the accuracy of detailed long-term forecasts in such an environment is likely to be very low

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Surviving Uncertain Technological Worlds

Survival requires the pinnacle of adaptive and innovative capacity – among businesses especially, but across all dimensions of society: government, social and community groups, local institutions of one kind or another, and even individuals

Rapid change is more likely to be handled successfully where: All parties are creatively involved and have strong future

orientation (rather than longing for a receding past with all its comfortable traditions)

There is willingness to debate and prioritise future options (Taleb’s Optionality)

There is active, but civil, dissent and conflict of ideas (there is little future in group-think – Florida, Jacobs)

Local society has a culture of imagination and creativity coupled with considerable experience in successful risk taking

There’s a good supply of risk / venture capital

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Governments Have a Role

All tiers of government can help regions in varying degrees: Supply of good quality infrastructure – transport, schools

and hospitals, libraries and cultural facilities, telecommunications (e.g. high speed internet), etc.

Leadership in ushering in a culture of future orientation Delivering business advisory services to a limited extent Husbanding amenity – e.g. environmental and recreational

services

And, in Australia, various grants commissions help realise USOs & CSOs through processes of fiscal equalisation. Other countries have similar mechanisms

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Limitations to Government

1. Conservative electorates fearful of change2. Trends towards coalition formation through social and cultural diversity3. The tyranny of the macro:

Domestic macro-economic considerations (external trade, fiscal and monetary settings, Reserve Bank discount (and interest) rates, financial regulations, competition policy, conservative government budgetary settings, etc.)

International and inter-state competition trumping regional interests

4. Congenital inability to spark business innovation or identify new business options – this is largely the realm of commerce

5. Increasing complexity and uncertainty of their policy-making environment, leading to risk aversion and failure of imagination about what might be and how best to achieve it

6. Lack of understanding of the dimensions of 2MA and threats posed7. Preference for waterfall rather agile projects – there are many more

votes in building dams (and opening them!) compared with fostering imagination

8. Lack of experience in policy arenas involving changing people’s and communities’ psychologies - perceptions, attitudes, opinions, cultures, ambitions, etc.

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The Local Option

So, in my view, creation of the future for places is largely being left to local communities each with very different portfolios of assets, human capacities, and geographical relativities

But this localisation is likely to create a wide range of outcomes, some positive in rural communities like the one where I live, but perhaps most negative – depending as noted earlier on: Leadership qualities Resources – various kinds of financial , human, social, built, and

natural capital, and Appropriate Psychologies (regional development is, drawing on

the work of economist Richard Thaler and my own work, profoundly a question of understanding and shaping attitudes, opinions, beliefs and behaviours)

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A Portfolio of Local Strategies Creation of innovative and adaptive futures might

include the following threads: Funding Talent Support Mindset Trendsetting Diversity Amenity Optionality (as conceived by Nassim Taleb)

The first six items come from startupcompass (see http://startupcompass.co/)

I’ve added the last two myself from other literatures

These dimensions reach their apogee in places like Silicon Valley and Tel Aviv, two of the world’s leading business start-up locations

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Interdependencies

Note that each dimension is interdependent with the others in often complex, non-linear, and cumulative ways

The whole agenda requires enormous qualities of leadership sustained over a very long period of time

Prominent leadership qualities include: imagination, creativity, analysis, knowledge, ability to galvanise action (i.e. motivation), networking capacity, lucid – but - simple explanation of direction, etc

Moreover, leaderships are likely to be teams rather than individuals. This task is too big for a single person. See Alex Pentland’s notion of social physics

Such leadership talents are more likely to be prominent in larger and more diverse regional economies

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In Conclusion

This is a game changing agenda – one focusing on attitudes rather than infrastructure – and clusters of energetic and innovative people, not inter-linked or inter-dependent businesses

It requires enormous and sustained energy Endemic risk taking and trial and error are central to it

– which can be observed in some businesses, but not across whole communities

We badly need a compendium of what works or doesn’t work for businesses and why that is the case (we learn from experience and in fast moving economic environments we can cut corners by drawing other’s experiences – see Montaigne’s ‘essais’, published in 1580!!)

This action requires participation by as many interests as possible – a whole of community experience

Non-participation is not an option – your survival is at stake

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Armidale Well Placed?

In many of the respects already discussed, Armidale is well-placed to be part of the action.

…. but we could a lot better, and approaches to the task should be the subject of considerable on-going debate.

…. and the Chamber of Commerce could be a lead player.

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Thank You!