Technology, Societyand

The Next Transformation

Jonathan MurrayWW Technology Officer, Public

SectorMicrosoft

Magna to lose Magna to lose production of BMW production of BMW

SUVSUVCBC News, May 16CBC News, May 16thth 2007 2007““Magna International Inc. confirmed Magna International Inc. confirmed

Wednesday that it will lose Wednesday that it will lose production of the BMW X3 mid-size production of the BMW X3 mid-size sport utility vehicle in three years.”sport utility vehicle in three years.”

[BMW] CEO Norbert Reithofer said the [BMW] CEO Norbert Reithofer said the shift in production to the United States shift in production to the United States

was part of a strategy to reduce the was part of a strategy to reduce the risks associated with a falling U.S. risks associated with a falling U.S.

dollar against the euro.dollar against the euro.

Information Technology: Information Technology: Transforming Business Transforming Business StrategyStrategy

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Labor/Marginal Cost

ComputableServices

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Increasing Increasing computational powercomputational power and and networked infrastructuresnetworked infrastructures are are enabling a dramatic enabling a dramatic transformationtransformation

in business modelsin business models

……

And we’re only at the beginning!And we’re only at the beginning!

Challenges and Challenges and OpportunitiesOpportunities

Sources and location of value Sources and location of value creation:creation:

Manufacturing Manufacturing Services Services

Local Local Regional Regional Global Global

Changing business models and Changing business models and competitive landscapescompetitive landscapes

Accelerating demand for high Accelerating demand for high level skillslevel skills

Balancing positive and negative Balancing positive and negative social impact and policy issuessocial impact and policy issues

The future of information Technology

Prediction HorizonsPrediction Horizons

3-5 Years3-5 Years: : Highly predictableHighly predictable

Products already in developmentProducts already in development

5-10 Years5-10 Years: : Relatively PredictableRelatively Predictable

Basic technologies identifiedBasic technologies identified

10-15 Years10-15 Years: : Non-predictableNon-predictable

New basic technologies will disruptNew basic technologies will disrupt

Trends are the only guideTrends are the only guide

Moore’s LawMoore’s Law

Transistor density Transistor density doubles every 18-24 doubles every 18-24 MonthsMonths

Computational power Computational power doubles at this ratedoubles at this rate

Or, for Or, for constantconstant computational computational capacitycapacity

Chip size halvesChip size halves

Power requirements Power requirements halvehalve

Prices halvePrices halve

Courtesy of Intel Corporation

10 Years = 7 Doublings = 27 = 128 Times today’s capacity

Riding the wave…Riding the wave…

The TransformativeThe TransformativePower of TechnologyPower of Technology

Technologies enable the capture, distribution and repeatable application of value creating knowledge

Connection Generates economies of scale

The ability to create

network effects

Abstraction Enables generalists to replace specialists

The ability to hide complexity

EncodingConverts

Tacit & Implicit into Explicit Knowledge

The ability to formalize

knowledge

A 10 Year View:A 10 Year View:An An Algorithmic* Algorithmic* TransformationTransformation

Encoding

Abstraction

ConnectionAlways connected,

Auto-adapting Service Networks

Human-like interaction and

Simulated Realities

Model BasedKnowledge and

Decision Processes

UnlimitedComputation

UnlimitedStorage

UnlimitedBandwidth

*Prof. John Zysman, BRIE – UC. Berkeley

““Any sufficiently advanced Any sufficiently advanced technology is indistinguishable technology is indistinguishable

from magic.from magic.””

Arthur C. ClarkArthur C. Clark"Profiles of The Future", 1961 "Profiles of The Future", 1961

(Clarke's third law)(Clarke's third law)

The Politics of The Politics of MagicMagic

Will Will social acceptance social acceptance issues limit our ability issues limit our ability to tap technology’s to tap technology’s full potential full potential ??

How will concepts of How will concepts of liabilityliability and personal and personal responsibilityresponsibility evolve? evolve?

What about What about privacyprivacy, , securitysecurity , , identityidentity: Will : Will consumers continue to trade consumers continue to trade privacy privacy for a for a free free lunch lunch ??

What What skillsskills will be required to be fully will be required to be fully economically economically productive productive ??

Can the Can the developing worlddeveloping world catch up or does catch up or does technology merely technology merely amplifyamplify the developed the developed world’s existing world’s existing advantagesadvantages??

Can Can policypolicy makersmakers and and regulatorsregulators keep up? keep up?

Implications: Implications: Business StrategyBusiness Strategy

If it can be automated, it will be If it can be automated, it will be automatedautomated

Labor cost may no longer drive Labor cost may no longer drive manufacturing locationmanufacturing location

Access to talent will increasingly Access to talent will increasingly be the primary driver of value be the primary driver of value creationcreation

Talent will demand new Talent will demand new organizational structures and organizational structures and governance modelsgovernance models

““The illiterate of the 21The illiterate of the 21stst century will not be those who century will not be those who

cannot read and write, but those cannot read and write, but those who cannot learn, unlearn, and who cannot learn, unlearn, and

relearnrelearn””Alvin TofflerAlvin Toffler

Implications: Implications: SkillsSkills

Much of today’s knowledge work will Much of today’s knowledge work will be automated be automated

Knowledge workers will need to up-Knowledge workers will need to up-skill to remain economically relevantskill to remain economically relevant

Countries/Regions will need to Countries/Regions will need to transform to attract the mobile, transform to attract the mobile, global talentglobal talent

Education systems will need to Education systems will need to transform in order to produce transform in order to produce economically viable talenteconomically viable talent

Implications: Implications: EducationEducationNeed to focus on developing higher level Need to focus on developing higher level abstract thinking skillsabstract thinking skills

Learning as a personal responsibility: Learning as a personal responsibility: Learning how to learnLearning how to learn

Abstract thinking: Abstract thinking: Higher level math, Higher level math, music, second languagesmusic, second languages

Information Discrimination: Information Discrimination: Good from Bad, Good from Bad, Truth from FictionTruth from Fiction

Teamwork : Teamwork : Working in ad-hoc groupsWorking in ad-hoc groups

Communications:Communications: Presentations skills, Presentations skills, performance artsperformance arts

Deep implications for the classroomDeep implications for the classroomTeachers:Teachers: Evolving from gatekeepers of Evolving from gatekeepers of knowledge to learning coachesknowledge to learning coaches

Students:Students: Using tools as an enabler of Using tools as an enabler of learninglearning

National Innovation National Innovation Strategy: Strategy: Quality of life Quality of life matters matters The The algorithmicalgorithmic transformation will transformation will

place increasing dependence on access place increasing dependence on access to to talenttalent

This talent is This talent is globally mobile globally mobile and will and will place a premium on place a premium on quality of life quality of life issuesissues

Focus on creating an “Focus on creating an “Intellectual Intellectual PlaygroundPlayground””

Opportunities for cross-disciplinary Opportunities for cross-disciplinary interactioninteraction

Opportunities to “birth” ideasOpportunities to “birth” ideas

Participative decision makingParticipative decision making

World class arts programsWorld class arts programs

International schoolsInternational schools

……

SummarySummaryMassive increases in networked Massive increases in networked computational power will enable an computational power will enable an ““AlgorithmicAlgorithmic” transformation” transformation

These new computational tools will These new computational tools will have have major implications major implications for society, for society, business models and skillsbusiness models and skills

Access to creative, conceptual, Access to creative, conceptual, abstract thinking talent will drive abstract thinking talent will drive national national economic advantage economic advantage andand global competitivenessglobal competitiveness

National economic development National economic development strategies need to focus on strategies need to focus on developingdeveloping, , retainingretaining, , attractingattracting and and enablingenabling this this globally mobileglobally mobile talent talent