The World Economic Forum brings the top business and political leaders to Davos late January. Mobile World Congress brings mobile, internet professionals and executives to Barcelona in late February. Normally discussions in Davos center around the main issues and trends affecting global business and economic development and how to handle select global issues. MWC is more about technology and business in online and mobile. But in this year they had topic that was strongly linked to both events: digitization.
In Davos Klaus Schwab, Founder and Executive Chairman, World Economic Forum, said, “We stand on the brink of a technological revolution that will fundamentally alter the way we live, work, and relate to one another. In its scale, scope, and complexity, the transformation will be unlike anything humankind has experienced before. We do not yet know just how it will unfold, but one thing is clear: the response to it must be integrated and comprehensive, involving all stakeholders of the global polity, from the public and private sectors to academia and civil society.”
At MWC William Ruh, CEO of GE Digital, said the last decade was mainly about the consumer internet, “but by and large if you look at the industrial world, it didn’t take advantage of any of this technology in a meaningful way.” He continued, noting that we have now seen only 1% productivity gains in the developed countries. Now companies must really look for ways back to 1990’s 4% gains and it will have to leverage digitization. Chuck Robbins, Cisco CEO, agreed that “almost every company in the world is thinking about how to use technology to fundamentally change their business models for the future.”
All these statements are linked to the very same issue and opportunity, how digitization can really change the value chains, processes and models of business, not only offer some more fancy online and mobile services to the consumers. One example of this is German Industry 4.0 strategy. It is not only anymore the consumer interface that has new digital components, but it changes production, logistics, sales models and payments.
Another example is fintech and digital finance. We have had Internet banking services and even mobile banking for years. But it is only the consumer or user interface. The fundamentals like bank accounts, money traffic between banks, investment banking, wealth management, and stock markets have been fundamentally similar at least 100 years. Now we start to see development that can be a true earthquake for these fundamental structures, we don’t anymore have money in banks, money can be digital, assets are distributed in the API ecosystem networks, wealth management and capital raising is done by machines, and alternative finance markets start to challenge stock markets. This same happens to all services and industries from health care to public services.
SoftBank CEO and Chairman Masayoshi Son talked about Artificial Intelligence, AI, at MWC. He reminded us that the average human IQ is 100. “But 30 years from now what will be the IQ of artificial intelligence? It will be 10,000, versus 100 for humans. Of course, computers will be much smarter than us and much quicker than us,” Son commented. (Read too Are humans the next machines?)
Some people believe that the time of great technology development is over and the development of technology can no longer contribute to growth and productivity at the scale it has since the industrial revolution. It is typical for people to predict the end of history as Francis Fukuyama did in his famous book in 1992, when he said the end of the cold war was the endpoint of humanity's sociocultural evolution and the final form of the human government. As we have seen in the international politics now, we can say he was (maybe unfortunately) wrong.
Most probably predictions about the end of history for technology development and its impact on the economy are wrong too. We may actually approach the biggest development in technology we have ever encountered. Digitization has more and more impact on our daily life, but it will really hit on production and work very soon. Data analytics, IoT, smart machines, sharing economy, and digital finance will touch the every part of our life, work and economy. This year's Davos and MWC conferences were opening a new chapter in the history of technology and the economy.