What your company URGENTLY needs to know about the “Second Machine Age”

By Wilhelm Crous – MD of Knowledge Resources

The Second Machine Age by Erik Brynjolfsson and Andrew McAfee is a wake-up call for the world of work, as well as policy-makers, and especially for countries with a lower skills-base, lower labour-productivity and a low propensity for innovation.

The “Second Machine Age” is undoubtedly the most significant disruption since the Industrial Revolution. It has emerged as the combined result of:

  • Exponential improvements in most aspects of computing (think Moore’s Law),
  • Large and growing amounts of digital information,
  • Innovation, leading to real and useful artificial intelligence,and
  • The result everyone being connected to the digital network.

There is no doubt. The Second Machine Age will forever transform the world of work.

How will your organisation be affected?

Routine and cognitive manual tasks will be inevitably be replaced by the digital world. It’s already happening at a frightening pace. Jobs are being lost at a rapid pace. For example, in China, manufacturing jobs have dropped by 25% or 30-million workers since 1996. And along a similar vein, the impact of new developments such as 3D-printing will only become evident over the next few years.

What was considered as science fiction 10 years ago, is now a reality.

The digital era is changing the way work is performed but not replacing the jobs that have been lost. Take Kodak versus Instagram for example… Kodak, at its height, employed over 140 000 people. Instagram, one of Kodak’s disruptors, employs only a few hundred!

The trend is frightening…

In the US since the industrial revolution, the technological advancements taking place improved labour productivity. In turn, income per hour increased at the same rate and so did employment. That trend continued until 1998. Since then, technological advances have increased rapidly and so has labour productivity. However, the median income per hour for lower skills is steadily dropping and so is employment.

The impact is obvious: Expect higher unemployment and increased inequality in income.

The reality is clear, and the trend cannot be reversed. Disruption will escalate. Work will increasingly be replaced by artificial intelligence. And remember – computers and robots never sleep, are never ill, and their wages don’t go up! No, wonder trade unions are scrambling to maintain memberships.

What’s to be done?

Here are a few suggestions for companies, individuals and policy makers:

  1. Invest in high-level human capital.
  2. Upgrade education. Teachers need to be paid more. Technology should be leveraged to bring the best teachers (trained in a specific skillset) to everybody. More resources should be allocated to universities. More funding should be provided for students to take their education to a post-graduate level.
  3. Scientists need to be developed in SA. Immigration laws should be relaxed to recruit more scientists, innovators and entrepreneurs.
  4. Companies should invest exponentially more in the development and upgrading of their internal skills’.
  5. Invest in your own personal development. Ensure you are high-level human capital

The impact of digitisation will really hit the business world during the next 10 years. In a recent interview with Bloomberg, John Chambers, Cisco’s CEO, made the point that 40% of the Fortune 500 companies will not exist in 10 years’ time due to the disruption by the digital era.

Get a better understanding of the digital world now and prepare for the future now. Pieter Geldenhuys will be addressing the Second Machine Age phenomenon at the upcoming HR Directors Conference taking place in Cape Town from the 18-19 March 2015 at the CTICC. For more information, contact Debbie Atwell on +27 083 651 1664 or email debbie@knowres.co.za. Or learn more about the programme and line up of speaker – by clicking here.


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