Climate change which will cause people to move inland. Disruptive technologies that will lead to an explosion of craft economies. Millennials who prefer experiences to products. Richard Fitzpatrick examines how the Age of Disruption and AI is going to profoundly change the world of commerce.
The world is changing fast. Perhaps no more is this evident than in the move by people from rural to urban areas. The UN estimates that by 2050 68% of the world’s population is expected to live in cities. This will have a profound effect on business, particularly because most of the world’s greatest cities – think New York, Hong Kong, Sydney – are based by the sea, which are susceptible to potential climate changes. According to the Financial Times, for example, 570 coastal cities will be vulnerable to a sea-level rise of 0.5 metres by 2050. This will greatly impact how companies do business and how they hire and retain staff.
“With climate change, it really doesn’t matter what political stance you take on whether it’s going to happen or not,” says Dr Mathew Donald, author of Leading and Managing Change in the Age of Disruption and Artificial Intelligence. “The fact is that if a whole swathe of the community believes that it’s real then over time people will start to think about where they live and what sorts of companies they choose to work for. Over time, they will work out that property prices that are high for low-lying, coastal properties at the moment may well become devalued ahead of any potential sea rises because people will believe they’re such a risk they’ll move away.
“Therefore companies will have issues to address. On the first hand, people won’t necessarily want to work for high-carbon polluters. We can see that already starting to happen. Likewise, from an organisational perspective apart from attracting people because you might be a high-polluting organisation, you’ll also have issues if you’re located on a coastal property – and all your best staff have moved further away – it will be harder to attract good employees because of the commuting distances involved. It’ll be harder because your organisation may not have a carbon neutral policy. Staff will have an emotional response to climate changes as well as a financial one.”
In the brave new world of increased automation and artificial intelligence (AI), much has been written about the threat to traditional forms of employment and the fear that robots will replace many of today’s job, from blue-collar factory work to more highly skilled work in sectors like accounting, healthcare and law. It’s not all doom and gloom, however. AI will also create opportunities. Disruptive technologies will enable more than they will destroy, argues the futurist Ian Pearson.
“People always talk about AI in terms of automation and redundancy,” says Pearson. “But AI won’t so much automate as help workers to up-skill – it will allow them spend more time on better quality work. We should see AI more in terms of being a co-worker rather an automation role. It’s true if you’re setting up a new factory, you might get away without using many people in your automated manufacturing plant, but most jobs aren’t in manufacturing. Most jobs are in offices. A lot of roles are in trying to influence people to buy your product, or leading your staff and doing appraisals, which require human contact skills.
“Another area is automated transport. A few taxi drivers will inevitably lose their jobs because autonomous vehicles will do all the work of today’s cab drivers and bus drivers, and they can do it a lot better. On the other hand, the number of jobs that will create will be far higher. Here’s the reason. If you’ve got drones, self-drive cars and an automated distribution system, which can arrive at your house, pick something up, drop it somewhere else, and you don’t need companies that are expensive to employ to drop it there, the cost of doing an awful lot of business comes down significantly. At the same time, AI is making it much easier to work from home and to convert your hobbies into a start-up business.
“For example, one of my friends makes really nice wedding cakes. She doesn’t have any business knowledge. If you said, ‘You make really nice wedding cakes. Why don’t you make a business out of it?’ she’d be horrified. She’d have to register for VAT and fill in tax forms for the Inland Revenue. Every five minutes, the government invents a new form if you run a small business. Imagine if all of that was taken care of by a futuristic version of [virtual assistant] Alexa that talks to the government’s version of Alexa. Between them they sort out the corporate admin. Suppose she doesn’t have to worry about packing and delivery because it’s automated. Another area is 3D printing, which is moving into kitchens, so all those hours making elaborate icing decorations she will be able to 3D-print those. AI will generate a whole new craft economy.”
The way people will spend their money is also set to change, which will create different opportunities. Although we’re coming out of a recession, people are getting richer. At present the UK economy, for example, is growing at a rate of 2-2.5% per annum. Over a few decades that has a huge impact on average wealth. By 2050, the UK economy will be 2.5 times bigger than it is today. If people are better off, they will be able to buy more luxury goods. Pearson sees a counter-trend – people are becoming a lot more environmentally aware and because of house prices are living in smaller spaces.
“Millennials are not buying as much stuff because they haven’t got anywhere to put it,” says Pearson. “They’re spending their money on experiences. It’s called ‘The Experience Economy’. People are doing more and buying less. They’re spending more on travel. That might be a persistent trend that lasts a long time. They’ll buy fewer, higher-quality clothes and make them last longer rather than the disposable clothes on sale today.
“We’re seeing a lot of these trends, which are quite interesting because they oppose each other. On the one hand, people are getting richer, and this is a global trend – it’s not just in the UK. On the other hand, people are getting more environmentally conscious. It’s anybody’s guess which direction it might pan out.”