29 May 2015
I was recently invited to deliver the keynote address at the University of Melbourne engineering and IT awards night. I took the opportunity to challenge today’s students to think about the people being left behind as in the move to a digital economy.
Some 25 years ago I had the privilege of attending this university. In thinking about tonight and the achievements of so many of you, I couldn’t help reflecting on the challenges my generation faced entering professional life in the 1990s and comparing them to what you will see in the decades ahead.
Wherever you turn in the media you are hearing the term “digital disruption”. For those of us lucky enough to be educated in the so-called STEM disciplines of Science, Technology, Engineering and Mathematics, we probably feel empowered and excited by the talk of “digital disruption”. How could we not look forward to using the technology of our time to replace the cars we drive with electric vehicles, our plastic credit cards with mobile wallets or the work cubicle of my generation with working flexibly at a local café.
We must not forget that the same sense of optimism is not necessarily true for societies around the world. At a macro-level, where there is technological disruption, business disruption follows. But where there is business disruption, social disruption is all too often the result.
Already email has all-but killed traditional mail. Mainstream bookstores are a shadow of their former selves. I can’t remember the last time I was in a record or CD store. Hardly any businesses worry about advertising in the telephone directory. Each of these changes has cost jobs and not everyone who lost out has found a role in the changing economy.
We have a responsibility to make sure that change is not only good for those of us lucky enough to have access to the right skills, but also to make change good for society as a whole. Future generations will judge us by how we navigate the next two decades.
Change leaves winners and losers
We should be under no illusion, the changes we are going to go through in transport, energy and, particularly, financial services will leave far more at a disadvantage than any change that we have seen so far in the era of the Internet.
Does it matter that the next wave of innovation could see the end of local media content rules? Does it matter that Department stores could be wiped out in Australia? Does it matter that banks could be taken to the brink by a wave of fintech innovators, including peer-to-peer lending?
Take the last of these; replacing banks sounds an awful lot like risking the failure of the banks. Whether it was in the nineteenth century, twentieth century or most recently in the GFC in this century, whenever banks have gone down many ordinary people have been badly hurt.
Disruption spurred-on by digital technology is extending into mainstream engineering, for example, batteries are looking to finally fill the gap of solar energy, providing stored base load power for when the sun isn’t shining and electric vehicles that hardly need servicing. We could be just a few years away from houses going off-grid en masse. These changes will leave car dealerships without a source of service income and power utilities without a market.
The concentration of wealth
The birth of the commercial Internet offered an opportunity for small business to compete with large companies with many of the advantages of scale and geography being removed. At the turn of the century we saw an opportunity for a utopia of innovation spread across the globe with the rewards reaching far more people than ever before.
20 years in and the reality is not entirely aligned to this vision. The network effect means that there are advantages to scale. The more people that use the same search engine, the better its algorithms. The more people that use the same music service the better its catalogue. The more people that use the same social network, the greater its reach.
However, the evidence is that the groundswell of innovation is turning the tide with new money pouring into start-ups regardless of location and value being added in more locations that ever before. That is where this room can lift its sights. Seek to add value to the local economy where you and your family want to live and where you can see a society that you want to build. Don’t be afraid to resist the pull to traditional centres of innovation. Don’t just think of your personal wealth but also of where your effort will contribute to your community.
Using technology as part of the solution
We in this room have the ability to channel our knowledge, skills and innovative flair to not only develop new applications of technology but also to corral and encourage the application of technology in such a way as to minimise unintended consequences and potential achieve new benefits for our society.
We can choose to enable a sharing economy, created through yet more innovations such as 99designs, Kaggle, Freelancer, Airbnb, DriveMyCar, and so many more, which provide income to a wider range of people using their available talent and resources.
We can choose to support local talent through the development of great ideas and then seeing them through to commercial success. We can use automation and 3D printing to enable local manufacturing. We can develop specialised services which are ready to be purchased by government and industry so that they are less dependent on imports.
I refuse to believe that we can’t use technology to improve access to capital while maintaining a safe financial system. I am convinced that we can find better ways to access products and services without doing away with storefronts. I know that we can make the move from fossil fuels to renewables while keeping a highly skilled engineering capability locally.
You will face different professional challenges to those that I faced as I approached the end of my education at this university. You will be the shapers of society in the decades ahead. You will help decide whether to throw ourselves headlong into technology-driven disruption or whether to keep a watch out for those who are left behind. You will decide whether you will be drawn into ever greater geographic concentration of innovation or if you will take the path to keeping value in the community you want to be part of.
I hope you will seek to make the right choices with the education you have worked so hard to earn.