Thefutureisfullofamazingthings.Onmywayhere,Ispokeoutloudtoa$150dollardeviceinmykitchen,askeditifmyflightwouldbeontime,andthenaskedittocallaLyfttotakemetotheairport.Afewminuteslateracarshowedup.Andinafewyears,thatcarmightwellbedrivingitself.Someoneseeingthisforthefirsttimewouldhaveeveryexcusetosay“WTF?”ThatofcourseisanexpressionofsurpriseanddelightthatstandsforWhat’stheFuture?Butmanylotofpeoplearereadingthenewsabouttechnologyandtheeconomyandarefeelingaprofoundsenseofunease.TheyarealsoaskingthemselvesWTF?What’stheFuture?Butinaverydifferenttoneofvoice.

“…47percentofjobsare“atrisk”ofbeingautomatedinthenext20years.”

Carl Frey and Michael Osborne,OxfordUniversity“TheFutureofEmployment:HowSusceptible

AreJobstoComputerisation?”

TheyreadthatresearchersatOxfordUniversityprojectthatupto47%ofhumantasks,includingmanywhitecollarjobs,couldbeeliminatedbyautomationwithinthenext20years.

They’veheardthatselfdrivingcarsandtruckswillputmillionsofpeopleoutofwork.

Will there really be nothing left for people to do?

Is there really nothing left for humans to do?

They’veseencallsforUniversalBasicIncome,withtheassumptionthattherewillbenothingleftforhumanstodooncecorporationsoutsourcealltheworktomachines.WhileIthinkUniversalBasicIncomeisanintriguingidea,Idon’tthinkweneeditbecausetherewillbenothingleftforhumanstodo.There’splentytodo.Theproblemisthat

Our global economy has the mistaken idea that the goal of technology is to maximize productivity, even if that means treating people as a cost to be eliminated.

Oureconomyhasthemistakenideathatthegoaloftechnologyistomaximizeproductivity,evenifthatmeanstreatingpeopleasacosttobeeliminated.

That’s a problem

“The people will rise up before the robots do.”

Andy Macafee Co-author, The Second

Machine Age

Erik Brynjolfsson and Andy Macafee

Evenleavingasidetheobviousproblemofinjusticeandinequality,thisisthestuffofrevolutions.AndyMacafee,theauthor,withErikBrynjolfsson,oftheSecondMachineAge,oncesaidtome,talkingofthefearthatrobotswilltakeover,“Thepeoplewillriseupbeforetherobotsdo.”

We’ve seen this happen before

We’veseenthishappenbefore.InEngland,backin1811and1812,agroupofweaversledbyNedLuddstagedarebellion,smashingthesteampoweredloomsthatwerethreateningtheirlivelihood.Luddandhiscompatriotswererighttobeafraid.Thedecadesaheadweregrim,asmachinesreplacedhumanlabor,andittooktimeforsocietytoadjust.

TheweaversofNedLudd’s rebellioncouldn’timagine…

ButthoseweaversofNedLudd’stimecouldn’timaginethattheirdescendantswouldhavemoreclothingthanthekingsandqueensofEurope,thatordinarypeople,notjustkingsandqueens,wouldeatthefruitsofsummerinthedepthsofwinter,luxuriesbroughtfromallovertheworld.

Theycouldn’timagine…

Theycouldn’timaginethatwe’dtunnelthroughmountainsandunderthesea,thatwe’dflythroughtheair,crossingcontinentsinhours,thatwe’dbuildcitiesinthedesertwithbuildingsahalfmilehigh,thatwe’dputspacecraftinorbit,thatwewouldeliminatesomanyscourgesofdisease!Andtheycouldn’timaginethattheirchildren,grandchildren,andgreatgrandchildrenwouldfindmeaningfulworkbringingallofthesethingstolife!

Whatisourfailureofimagination?

VictorianEnglandeventuallyrosetothechallenge.Insteadofsendingchildrentoworkinthefactories,theylearnedtosendthemtoschool.Theyshortenedtheworkweekandpaidhigherwages.Andsocietybecamemoreprosperous.Whatisourfailureofimagination?Whyareweusingtechnologytoputpeopleoutofworkratherthanusingtechnologytoputpeople*to*workonthejobsofthefuture?Whatisourequivalentofsendingkidstoschoolinsteadoftoworkinthefactoriesorthechimneys?Whatisourequivalentofthewondersthattheindustrialagebroughttotheworld?

It isn’t technology that wants to eliminate jobs

“Technology is the solution to human problems. We won’t run out of work till we run out of problems.”

Nick Hanauer

Itisn’ttechnologythatwantstoeliminatejobs.Here’swhattechnologyreallywants.NickHanauer,whowasoneofthespeakersatmyNext:EconomySummitlastyear,putitbestwhenhesaid:“Technologyisthesolutiontohumanproblems.Wewon’trunoutofworktillwerunoutofproblems.”Arewedoneyet?Arewedoneyet?

Some global grand challenges technology can help us to solve

• Climate change.• Rebuilding and rethinking the infrastructure by which we deliver water,

power, goods, and services like healthcare.• Dealing with the “demographic inversion” — the lengthening lifespans

of the old and the smaller number of young workers to pay into the social systems that support them.

• Income inequality.• Displaced people. How could we use technology to create the

infrastructure for whole new cities, factories, and farms, so people could be settlers, not refugees?

Someglobalgrandchallengestechnologycanhelpustosolve-Climatechange.-Rebuildingandrethinkingtheinfrastructurebywhichwedeliverwater,power,goods,andserviceslikehealthcare.-Dealingwiththe“demographicinversion” — thelengtheninglifespansoftheoldandthesmallernumberofyoungworkerstopayintothesocialsystemsthatsupportthem.-Incomeinequality.“Thepeoplewillriseupbeforetherobotsdo.”-Displacedpeople.Howcouldweusetechnologytocreatetheinfrastructureforwholenewcities,factories,andfarms,sopeoplecouldbesettlers,notrefugees?

The use of automation by business to reduce labor costs and increase profits is a social and political choice, not an economic law!

It’snotnewtechnologyweshouldbeafraidof.It’sthedominantideologythatsaysthatpeopledon’tmatter,thattheneedforbusinesstomaximizeprofitsisasnaturalasthelawofgravity.Theuseofautomationbybusinesstoreducelaborcostsandincreaseprofitsisasocialandpoliticalchoice,notaneconomiclaw!ImadethiscaseinanarticleIwrotelastyearonLinkedIn,arguingthattherulesofeconomicsthatwetakeforgrantedaremoreliketherulesofagamethanthelawsofphysics.Therulescouldbeoptimizedtomakethegamebetter.Thatisyourchallenge.

The March of Progress

Ifyou’relikeme,you’vegottenaccustomedtoseeingchartslikethis,fromMaxRoser’sOurWorldinData,documentingthemarchofprogressduringthe20thcentury.We’vecongratulatedourselvesrepeatedlyfortheseemingly

inevitablecontinuationofthatprogress,despitebumpsintheroad.InSiliconValley,peoplearesooptimisticthattheyimaginethatprogresswillbecomeexponential.

But not everyone is equally happy

ButasBrexitandtheelectionofDonaldTrumptellus,therearealargenumberofpeoplewhodon’tthinktheeconomyofthefuturewillbebetterforthem.

Fitness Landscapes

The way in which genes contribute to the survival of an organism can be viewed as a landscape of peaks and valleys.

Through a series of experiments, organisms evolve towards fitness peaks, adapted to a particular environment, or they die out.

Image source: http://evolution.berkeley.edu/evolibrary/article/side_0_0/complexnovelties_02

Recenteventsinworldpolitics,aswellasthehistoryinthetechnologyindustryasI’veliveditforthepastthirtyyears,remindmethatthenotionfromevolutionarybiology,ofafitnesslandscape,isperhapsabettermetaphorforhowthefutureunfoldsthanthegraphthatgoesalwaysupandtotheright.

Afitnesslandscapeisawayofvisualizinghowgenescontributetothesurvivalofanorganismandaspecies.Externalconditionscanbeviewedasalandscapeofpeaksandvalleys.Throughaseriesofexperiments,organismsevolvetowardsfitnesspeaks,adaptedtoaparticularenvironment,ortheydieout.

Fitness landscapes are dynamic

When conditions are stable, a population chooses one fitness peak and stays there.

But when conditions change rapidly, populations must migrate to a new fitness peak.

Whenconditionsarestable,apopulationchoosesonefitnesspeakandstaysthere.Butwhenconditionschangerapidly,populationsmustmigratetoanewfitnesspeak.That’swhatBrexitandDonaldTrumpvotersaretryingtodo.

Local Maxima

Once you are on a peak, it’s hard to get to another one, even if it’s higher. You have to go back down. It may be easier to get to the top if you are already starting from a valley floor.

Oneofthereallyinterestingideasisthattherearelocalmaximainafitnesslandscape–peaksofadaptivesuccess–thatorganismsareevolvingtowards.Buttheykeypointisthatyoucan’teasilygetfromonepeaktoanother.Youhavetogodownbeforeyoucangoupagain.Itmaybeeasiertogettothetopifyouarealreadystartingfromavalleyfloor.

Technology also has a fitness landscape

In my career, I’ve watched a number of migrations to new peaks, and I’d like to share with you some observations about what happened, and why. And then we’ll talk about some lessons for digitalization of the overall economy.

Personal Computer

Big Data and AI

Smartphones

Apple

SowhyamItellingyouthis?Technologyandbusinessalsohasafitnesslandscape,andonethatchangesveryrapidly.Inmycareer,I’vewatchedanumberofmigrationstonewpeaks,andI’dliketosharewithyousomeobservationsaboutwhathappened,andwhy.Andthenwe’lltalkaboutsomelessonsfordigitalizationoftheoveralleconomy.

Whenanewwaveoftechnologyhits,anewcompanyalmostalwaysbecomesdominant.Thedominantcompanyofonetechnologywavesometimesmanagestosurvive,butitlosesitsprivilegedpositionasthetechnologymarketplacemigratestoanewpeak.Thepathtothetopofeachnewpeakrequiresnewcompetencies–anewfitnessfunction–andtheoldcompetencyactuallyholdsbackthepreviouslydominantcompany.

Big Data and AI

Tim Berners-Lee, 1990The World Wide Web

Linus Torvalds, 1991Linux

OneofthethingsthatI’velearnedisthatthesurestwaytodriveentrepreneurstoseekthefitnesspeakofanewtechnologyandanewbusinessmodelisfordominantplayerstotaketoomuchofthevalueforthemselves.Andjustasinbiology,it’seasiertogettothenewpeakfromthevalley.IwatchedthishappenwithMicrosoftinthe1990s.Thecompanyhaduseditsdominanceovertheoperatingsystemtolockoutcompetitors.Buttheinnovatorsjustwentelsewhere,wheretherewasanopportunityforopeninnovation,andinventedthefutureonthewayupanewfitnesspeak.TimBerners-LeeintroducedtheWorldWideWebin1990,andLinusTorvaldsintroducedLinuxin1991.Betweenthetwoofthem,theparadigmchanged.Softwarewasnowacommodity.Bigdatawasthenewsourceofcompetitiveadvantage,withGoogleatthelatestpeakinthefitnesslandscape.

Netlesson:Youlosewhenyoutrytocapturetoomuchofthevalueforyourself.Andyouloseagainifyouhangontotheoldrulesofbusinesswhenfacedwiththeresultingchangeinthefitnesslandscape.

Bringingthisinsightroundtotheworldyoulivein,ofeconomics,thisgraphfromJamesKwakshowstheriseintheshareofcorporateprofitsgoingtofinance.Bankingisasystemthatwascreatedtoservetheneedsoftherealeconomyofgoodsandservices,butnowitlargelyservesitself.Oneofthebigdriversoftheincreaseinprofitsisprogramtrading,whichdoeslittleornothingfortherealeconomy.RanaForoohar,authorofMakersandTakers,abookabouttheriseoffinanceandthedeclineofindustry,estimatesthatonly15%offinancialactivitynowgoestotherealeconomy.85%issimplypeopleprofitingfrommovingmoneyaround.GovernmentspendsalotoftimelookingathowtoregulatetheimpactoftechnologycompanieslikeGoogleandFacebook.Ibelieveyoushouldbelookingmorestronglyatthefinancialindustry.Afinancialtransactionstax,limitsonstockbuybacksandexecutivecompensation,wouldbeagoodstart.Theworldwideeconomicmalaiseisasymptomofthisproblem.

What is the result?

Voters are moving away from the fitness peak of the neoliberal consensus. We don’t know yet where that new fitness peak will be, but the migration is telling us loud and clear that the economy needs some fresh thinking.

Votersaremovingawayfromthefitnesspeakoftheneoliberalconsensus.Wedon’tknowyetwherethatnewfitnesspeakwillbe,butthemigrationistellingusloudandclearthattheeconomyneedssomefreshthinking.

Yes, things are changing.

But one thing doesn’t change.

A successful ecosystem creates opportunity for everyone, not just a few.

Yes,thingsarechanging.Butonethingdoesn’tchange.Asuccessfulecosystemcreatesopportunityforeveryone,notjustafew.Thefundamentalfitnessfunctionofgovernmentistomakeabetterlifeforallitscitizens.AgroupsuchastheG20musttakeasitsscopeabetterlifeforallcitizensoftheworld.WhatI’velearnedfromwatchingsuccessionsoftechnologyleadershipisthatcompanieslosethatleadershipwhentheyforgetthis.

We will create the economy of the future when we remember that the function of technology is to empower people to do things that were previously impossible!

Wewillcreatetheeconomyofthefuturewhenwerememberthatthefunctionoftechnologyistoempowerpeopletodothingsthatwerepreviouslyimpossible!

Government statistics, economic modeling, and regulations are too slow for the pace and scale of the modern world

“Would you cross the street with information that was five seconds old?”

-Jeff Jonas, IBM Fellow

Thegreaterspeedandscaleofthesystemsweusetodaymakeacompellingargumentthatthetoolsgovernmentreliesontomanagetheeconomyarefar,fartooslow.AsformerIBMfellowJeffJonasnoted,“Wouldyoucrossthestreetwithinformationthatwasfivesecondsold?”Yetgovernmentstatisticsformanagingtheeconomyareusuallyyearsold,whilehedgefundsandotherfinancialplayersarenolongerforecasting,but,asGooglechiefeconomistHalVariancallsit,“nowcasting.”

OurproblemswiththefinancialindustryareanalogoustotheFacebook“fakenews”controversy.We’vegotanentireindustrybasedonFakeFinance.IftherewereonepieceofadviceI’dgiveyou,itwouldbetotakeamuchharderlookatwhetherourcurrentfinancialsystemisservingtherealeconomy.Ithinkyou’vedoneamuchbetterjobofmanagingthathereinGermany,butintheUSatleast,shareholdercapitalismhasrunamok.Frankly,IthinkFacebookandGooglehaveafarbetterrecordofpolicingthemselvesinthepublicinterestthanourfinancialsystemdoes.

Users post 7 billion pieces of content to Facebook a day.

Expecting human fact checkers to catch fake news is like asking workers to build a modern city with only picks and shovels.

At internet scale, we now rely increasingly on algorithms to manage what we see and believe.

Fakenewsalsoteachesusalotabouthowregulatorysystemsneedtochange.TherehavebeenmanycallsforFacebooktousehumanfactcheckerstoeliminatefakenews.Userspost7billionpiecesofcontenttoFacebookaday,andmoststoriesthatgoviraldosoinamatterofhours.Expectinghumanfactcheckerstocatchfakenewsislikeaskingworkerswithpicksandshovelstobuildamoderncity.Atinternetscale,wenowrelyincreasinglyonalgorithmstomanagewhatweseeandbelieve.Thosealgorithmsarethetoolsofhumanjudgment,notareplacementforit,justlikethegiantmachinesweseeontheskylineofBerlinarethetoolsofhumaneffort.

This is why Mark Zuckerberg tells his team

“Move fast and break things.”

-

Mark Zuckerberg

OneofMarkZuckerberg’srules,whichhedrummedintohisstafffromtheearliestdaysofFacebook,isto“movefastandbreakthings.”Thisiscompletelycounterintuitivetothosewholiveinthecarefulworldofpolitics(thoughasDonaldTrumphasshownus,thatischanging.)Thisisnotaninjunctiontobecareless,justareminderthaturgencyandinnovationbeatover-carefulplanninginafastmovingworld.Facebook,Google,Amazon,andotherSiliconValleysuccessstoriesaremachinesforlearning.

“Build, Measure, Learn.”

Eric Ries, The Lean Startup

WhatdrivesMark’sinjunctionisanapproachthathasbeenformalizedbyEricRiesas“theleanstartup.”Erictellsthestoryofhisfirststartup,whichdesignedandbuiltacomplex3Davatarsystemforinstantmessaging.Itfailedutterly.Inthinkingwhattheycouldhavedonedifferently,Ericrealizedthattheycouldhavesavedthemselvesyearsofeffortandmillionsofdollarsiftheyhadbuiltsomethingmuchsimpler.Hedefinesthe“minimumviableproduct”as“thatversionofanewproductateamusestocollectthemaximumamountofvalidatedlearningaboutcustomerswiththeleasteffort.”AtypicalSiliconValleycompanydoesn’treleasesoftwareafteryearsofspecificationandprocurement,followedbyyearsofdevelopment,onlytofailonrelease,liketheUShealthcare.govwebsite.Instead,featuresarerolledoutandtestedincrementallyinwhatEriccallsa“Build,Measure,Learn”cycle.Featuresarebuiltincrementally,testedonusers,anddeployedonlywhentheyareknowntowork.

Every day, they are inspecting the performance of their workers and giving them instruction (in the form of code) about how to do a better job

In digital systems, the workers are programs, and software engineers are their managers

Programmers are actually managers. Every day, they are inspecting the performance of their workers and giving them instruction about how to do a better job. The Build-Measure-Learn cycle is the equivalent of a manager giving feedback to his employees. Except that the employees are now programs. Companies like Google and Amazon run thousands of experiments a day, constantly improving their algorithms and their product.

“This isn’t just how we should be developing software. It’s how we should be developing policy.”

Cecilia Muñoz, Director, White House

Domestic Policy Council

WorkingwiththenewUnitedStatesDigitalService,theWhiteHousedevelopeditsnewcollegescorecardprogramusingthesetechniques.AsHaleyvanDyke,DeputyDirectoroftheUSDStoldthestory,theUSDSteamthatbuiltthesoftwarewasrakedoverthecoalsfornotincorporatingfeaturesrequestedbyWhiteHousestaff.Theyrepliedthattheyhadtestedthesefeaturesonthousandsofstudents,andnoneofthemusedthem,sotheytookthemoutoftheproduct.Whenstaffersprotestedthattheywantedtheirfeaturesintheproduct,CeciliaMuñoz,theDirectoroftheWhiteHouseDomesticPolicyCouncil,backeduptheUSDSteam,saying““Thisisn’tjusthowweshouldbedevelopingsoftware.It’showweshouldbedevelopingpolicy.”

Oneofthethingsthatitisessentialtounderstandisthat,asTomSteinberg,thefounderoftheUKnon-profitMySociety,oncewrote,“Goodgovernanceandgoodpolicyarenowinextricablylinkedtothedigital.”Digitalizationisnolongeranoption.Wehavetogetitright.

OneofthemostusefuldocumentsoutlininghowtoapplythebestpracticesofthetechnologyindustrytogovernmentistheUKGovernmentDigitalServicedesignprinciples.It’sunfortunatethatafterthechangeingovernment,theUKGDShasbeensidelined,withareturntobusinessasusual.IworrythatthesamethingmayhappenintheUS.

“Doing digital is not the same as being digital.”

Josh Bersin Deloitte

Asyouthinkaboutdigitalization,it’simportanttorememberthat,asDeloitte’sJoshBersinputit,“Doingdigitalisnotthesamethingasbeingdigital.”

“We have to go from apps to ops.”

Jennifer Pahlka Code for America

& USDS

Mywife,JenniferPahlka,founderandexecutivedirectorofthenonprofitCodeforAmerica,whichworkstobringgovernmentservicesintothedigitalage,andwhowastheco-founderoftheUnitedStatesDigitalService,likestosaythatgovernmenthastomove“fromappstoops.”Inmovingtodigital,governmenthastoooftensimplyrecreateditsoldpaper-basedprocessesratherthanreinventingthem.It’sessentialtorethinkservicesinlightofwhatisnowpossible.

OnecountrythathasdoneagoodjobofthefirstgenerationofdigitalizationisEstonia,whichwasalsothehomeofSkype,oneoftechnology’sgreatsuccessstories.Estoniadidn’tjustrecreateitspaperbasedprocesses,itcreatedawholenewdigitalinfrastructurecenteredonwhatitspeoplereallyneed.

“The smartphone is becoming a remote control for real life.”

Matt Cohler, Benchmark Partners

IsaidthatwhatEstoniahaddonewasthefirstgenerationofdigitalization.It’scriticaltounderstandthatdigitalizationiscomingtotherealworld.MattCohler,oneofFacebook’searliestemployeesandnowaventurecapitalist,notedonekeypointabouthisinvestmentinUber.Hesaid“thesmartphoneisbecomingaremotecontrolforreallife.”Thisisakeytakeawayfromon-demandapps.Don’tgetallcaughtupinwhetherornotbeinganUberdriverisbetterorworsethanbeingalicensedtaxidriver.Thinkabouthowtechnologycantransformrealworldprocesses.Wehavetoreinventprocesses,notjustduplicatethem.

“Uber is a lesson in building for how the world should work instead of optimizing for how the world does work.”

Aaron Levie, Box.net

Iknowyouaren’tbigfansofUberhereinGermany.Butitisanapplicationthatteachesussomethingveryimportantaboutthefuture.WehadconnectedtaxicabsbeforeUber.Theyjuststuckacreditcardreaderinthebackalongwithatelevisionscreentoshowads.Ittookaradicalrethinkingofthepossibilitieslyinglatentindigitaltechnologytorealizethatasmartphoneinthehandsofbothdriversandpassengersmeantthatitwouldbepossibletocompletelychangethewaytransportationwassummoned,whoprovidesit,andhowpaymentiscollected.Whatbusinessprocessesareyousimplyrecreatinginthedigitalera,whenyoushouldcompletelyreinventthem?AaronLevie,founderofanotherinternetstartup,box.net,madethisadmiringcommentaboutUberthathasalwaysstuckwithme.“Uberisalessoninbuildingforhowtheworldshouldworkinsteadofoptimizingforhowtheworlddoeswork.”

Zipline,aCaliforniastartupworkinginRwanda,isagreatexampleofreinvention.Itshowshowtwoofthelatesttechnologies,on-demandanddrones,canutterlytransformhowwethinkabouthealthcaredelivery.Theyhavebeendoingapilotproject,deliveringbloodandcriticalmedicinestoisolatedlocalclinics.Thecountryhaspoor,oftenimpassableroads,andlacksdevelopedhospitalinfrastructure.Postpartumhemorrhageisamajorcauseofdeath.Bydrone,bloodcanreachanycornerofthecountryin15minutesorless.

Weshouldbethinkingabouthowtechnologieslikeondemandandself-drivingcarswouldletusreinventpublictransportationandtheshapeofourcities,notregulatingthemasathreattoincumbent20thcenturyindustries!Thekeytomakinggooduseofnewtechnologyistokeepyoureyesfixedonthefitnessfunctionofgovernment,whichisthegreatestgoodforallofsociety.Embracethefuture.Don’tfightit.

WTFcanalsostandfor“Welcomethefuture!”

Thankyouverymuch.