Technology’s Fast-Forward Future

May 06, 2016

Case categories include: Entrepreneurship   Leadership   Technology   

By Warren Lutz

Addressing CEOs at a recent Regional Alliance meeting, Eamonn Kelly, author of Powerful Times: Rising to the Challenge of Our Uncertain World, encouraged Alliance members to begin adapting new business models for the future. “It’s not like everything’s going away,” he said. “But the configuration of how we think about making money today is being undermined and eroded by the speed of technological change.”

As we examined in our recent Spring 2016 Alliance newsletter, Bay Area leaders have largely been responsible for creating the technologies that drive today’s global economy. As the Alliance celebrates its 20th anniversary this year, we’re proud that many of these leaders have been members of the Alliance. Moving forward, rapid acceleration of technological breakthroughs poses tough questions for leaders. How will their industries evolve over the next 20 years? What will their workplaces look like? And how will they, as leaders, lead?

For example, while technology has already transformed routine manual and cognitive labor, it’s now doing much more, Kelly said. Robotics has begun to take over non-routine manual jobs, and artificial intelligence is replacing non-routine cognitive work. For example, news stories about sporting events and stock quotes are now being written by computers.

According to Kelly, artificial intelligence is one of three major technological changes shaping the future. The other two are the virtualization of talent pools, through outsourcing, and virtual reality, through advancements in telecommuting and teleconferencing. “Technology can now make teleconferencing very close to a physical experience, as if you’re in the same room having a live conversation and reading each other’s body language,” Kelly said. “It’s going to come very fast, and I think it will be quite spectacular.”

Stan Schneider is CEO of Real-Time Innovations (RTI), a leading company developing the Industrial Internet of Things. Schneider believes that smart machines—the term used for artificial intelligence applied to electromechanical systems—“are the most disruptive force in history.”

For instance, self-driving vehicles will soon change the way the world works. “When the car came along, you could suddenly travel safely 20 miles every day,” said Schneider, whose company serves the driverless car market. “That changed work, leisure, real estate, and more. The coming self-driving vehicles will again extend our range and do it much more safely. Autonomy will fundamentally change work, real estate, and leisure. And, it will probably end industries like roadside hotels and auto insurance as we know them.”

Schneider believes autonomous cars are only one of the huge changes happening. Smart power, medicine, factories, and cities will soon rewrite the very infrastructure of society. Bay Area companies are leading a bold new world.

With shifts happening so quickly, Patrick O’Malley, EVP of Seagate Technology, believes that leaders need to change the way they think about education. “The idea that one’s formal education ends at twenty-two is archaic thinking,” he said. “When we see a new grad come in, we say, ‘We’re glad we hired someone like him—he knows the technology.’ But today’s workers will need a life-long continuing education.”

Leaders must constantly learn, too, O’Malley said, although he admits that “I catch myself on the back of the 8-ball sometimes.” Yet O’Malley makes a point of frequently attending business forums to learn and get ideas and opinions from others. “You need to challenge yourself to do it, because there’s always something that’s going to keep you in the office. It’s really a commitment to go outside the company. The Alliance is part of that.”

O’Malley also believes that new technologies will bring along more regulation over the next decade because of concerns over displacing skilled and unskilled workers. “Around the world, governments are taking a much heavier hand to business,” he said. “The vast majority of businesses bring good to the community, but they also need to be aligned with political leaders and show they do good by communities.”

The need for certain leadership skills will remain the same, says Dave Summa, Managing Director of Business Model Innovations, a professional services firm that helps large organizations validate new business models. In particular, Summa sees recruiting, putting together a great management team, and building a strong financial foundation for organizations as skills that won’t go away.

On the other hand, Summa predicts outsourcing will increase substantially throughout Silicon Valley over the next 20 years. “It used to be that companies outsourced only one or two things and kept the rest of their expertise in house,” he said. “People are now able to create very flat organizations and access expertise as needed, and that will continue.”

Huge changes are in store for some of the world’s largest industries, he said, although it’s unlikely these industries will go away. As an example, Summa mentioned the impact of new automotive sensors and big data on the insurance industry. He said car companies will be able to risk rate drivers better than insurance companies’ actuarial tables. Data could be gathered directly on each driver for example by voice recognition, allowing companies to assign risk on an individual level. “The business model will evolve because the foundation of the entire insurance industry is actuary tables,” Summa said. “But the insurance industry is not going away. It’s just being disrupted.”

It’s more likely that smaller companies will drive these changes, as big companies are not known to be innovators, Summa said. Regardless of size, however, CEOs need to pay attention to their business models. “If you are selling incumbent technology, you better watch what’s coming because the foundation of your business model will be attacked, often from places where today, you do not see a competitor.”

Gene Banman, CEO of DriveScale, an architect of Big Data environments, believes Silicon Valley’s predominant business will continue to be software development. But instead of developing software and selling it, entrepreneurs will do all the work themselves—a trend that’s already happening. “Uber developed the software but didn’t sell it – they took the product to market,” Banman said.

Computing will continue to get faster and smaller, he added. “The thin client that is our cell phone is going to get thinner and thinner, and networking is going to continue its performance improvement curve,” he said. “Right now, you can maybe get 15 mbs of Internet service to your house, but that’s going to improve dramatically. I see a lot more geographical dispersion of employees, as cloud computing allows more workers to access all the things they need to do their jobs from anywhere, on any device.”

Banman believes these trends will ultimately reshape communities, as workers desire to live closer to work. He expects “little villages” will spread throughout Silicon Valley, similar to what is already happening in Sunnyvale and Mountain View, where mixed-use neighborhoods are gaining popularity. “The suburbs are not going to be attractive for the next generation of workers. People want to live and work in the same place. They don’t want to commute,” he said.

Kelley Steven-Waiss, a thought leader in the future of work and Chief Human Resources Officer (CHRO) for HERE, sees a tremendous disruption in the Bay Area workforce by 2025, when about 75% of the workforce will be Millennials. “Because Millennials have a very different perspective on how and where they will do their work, it’s highly likely that many of them will become ‘free agents,’” Steven-Waiss said. “How we attract them to our organizations, what roles they will choose to play, and how we compensate and reward them is going to be completely disrupted.”

Steven-Waiss also envisions Silicon Valley moving toward a more “project-based” work environment in which leaders will hire based on someone’s capabilities, not to fill specific job descriptions. She said most jobs only utilize about 60 percent of a worker’s actual capabilities, leaving 40 percent on the table. “As we move to a project-based work environment, we have an opportunity to leverage more of each individual worker’s capabilities. In doing so, we can break down work into tasks and more fully utilize their talents. This will not only create higher levels of engagement in the worker, but high productivity gains for the employer. Thus, a win-win for both.”

A move toward more project-based work that is deconstructed into disparate tasks could create issues with respect to our current compensation philosophy and practices, Steven-Waiss said. Today the infrastructure that companies are built on is around hierarchies, job families and specific jobs. However, new technology platforms that leverage external and internal talent to fulfill more temporary assignments or tasks could be deployed to alleviate this issue. “Right now, we are hiring for specific jobs with very specific compensation guidelines, but in the future we are going to break that work down into actual tasks and match those tasks to specific capabilities or skills. We may need those skills for years or months,” she said. “In the next five years, there will be incredible momentum towards leveraging free agents, or what we call the ‘human cloud.’ This new workforce will demand a new way for us to source and deploy talent. It’s a huge opportunity for CHROs to put talent at the center of a CEO’s agenda by making the workforce a company’s true competitive advantage.”

Eamonn Kelly says that in the end, future technological change should be about creating “a much more accurate delivery of the outcomes people want, instead of the inputs that helps us get there.”

“If we get it right, it will be good for us all,” Kelly said. “Believe me, there are scenarios that terrify me. But I also believe there is incredible promise ahead. If more of us can believe in that promise and set our goals to achieving it, the more likely it is to happen.”

Most technology leaders would probably agree. For the past 20 years, the Alliance of Chief Executives has helped create the kind of strategic conversations that make achieving the promise of technology possible.

Will we “get it right” 20 years from now? Only time will tell. But our members seem to be on the right track.

Warren Lutz is a writer for the Alliance of Chief Executives newsletter. He may be contacted at wlutz@allianceofceos.com.