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Even disruptors will be disrupted, tech panel warns

April 30, 2014
   
   

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We are living through perhaps the most innovative period in human history. But with those innovations comes disruption on a massive scale. The Internet revolution has destroyed thousands of jobs in industries from music to manufacturing to retail sales. The carnage will only continue, according to the panelists at “Adjusting to the Tech Revolution: Surfing the Wave or Swept Away?” when an additional 3 billion users upgrade their “dumb” cellphones to smartphones. 

“Beggars in India now go around with smartphones that are more powerful than the first Cray supercomputers that we used to forecast the weather,” said Vivek Wadhwa, a fellow at the Arthur and Toni Rembe Rock Center for Corporate Governance at Stanford University. “Many employees have better IT at home than what their employers give them in the workplace.” 

Perhaps the most surprising aspect of this revolution is that the disruptors themselves may be just as much at risk of being swept away as the entrenched businesses. “Technology is a continuum, so you have to be constantly disrupting yourself,” said Marc Benioff, chairman and CEO of Salesforce.com, which helped usher in the era of cloud computing more than a decade ago. He said companies, even disruptive ones, that hold on to old paradigms too long are at greatest risk of irrelevance.

Steve Case, the former CEO of AOL, learned that lesson from personal experience. “When we started AOL in 1985, we were an attacker, challenging the status quo. As we got larger, we shifted to being more of a defender. Entrepreneurs swing for the fences; large companies are trained by business schools to manage risk.”

 Case also said there has not been enough disruption in education and health, two industries he targeted for big changes in the coming decade as classes go online and wearable devices replace MRIs, X-ray machines, and other expensive imaging technology. “Traditional universities are threatened. There are 20,000 colleges with 100 million students. That’s where the money is. So they’re trying to figure out how to augment their offerings with the cloud.”

Case compared the current state of affairs with the Industrial Revolution, which transformed the United States from a 98 percent rural economy to one in which just 2 percent of Americans farm today. The 21st century may demand a similar reallocation of labor.

Such a radical overhaul of the labor force will require governmental action, especially in immigration reform, to bring the world’s most talented workers to U.S. shores. “The U.S. doesn’t have a monopoly on innovation,” said Wadhwa.

“We have to take steps to make sure this is a place people want to come,” said Case. “Otherwise the center of gravity will be somewhere else.” He noted that 60 years ago, Detroit was that center of innovation. “Now it’s bankrupt because it lost its innovative edge.”