NEW TECHNOLOGY DISRUPTS THE ECONOMY'S STATUS

Overview

We are witnessing a new industrial revolution. Technological and scientific advances they follow one another at incredible pace. Its impact is not limited to improving existing products and services; the current innovative process has a depth disruptive, that is, the rules of the game are being changed in multiple areas, and at the same time! In no more than a decade the world has witnessed a cascade of novelties such as large-scale robotization, big data, smartphones, the Internet of things, human genome sequencing, bitcoin, green energies, digital platforms, biotechnology just to name a few where the result is a radical transformation of many industries with the entry of new competitors.

Throughout history there have been many disruptive moments due to technical advances. The difference from the present moment is the speed at which the changes happen, a speed never seen before. The first industrial revolution brought mechanical innovations such as the steam or rail; the second involved mass production through electrification; the third popularized computers and the Internet. Now we are at the doors of the fourth industrial revolution, which is characterized by devices connectivity, mobile communications, social media, machine learning and AI. This is a time when the barriers between the world physical and digital are more confusing and the consumer is always connected.

But what is at Play ?

One of the characteristic features of the current disruptive moment is that it is about the field of information. The data is the essential ingredient of business and the economy. That is where lays the difference: it is not a simple project, process or technological innovation. In fact, it is brewing for years, with the computerization of processes first, and with the Internet after. Now what happens is that all these technological advances are accessible to all and that makes it global, powerful and, in many ways still uncertain on who will win in each sector, with what technologies and with what advances.

One of the economic consequences of so much disruptive innovation is that the axis of the system shifted from supply to demand. Consumers have taken command in business relations. Also, there is a sociological change, almost cultural, by which the idea of status by possession of material objects is abandoned versus the idea of sharing economy. These two factors, together with the technological development of digital platforms that connect consumers, are behind of the sharing economy phenomenon and is predicted that income of the new economy will exceeds the current figure in 30 to 40 times by 2030

Next Decade will change all

This transformation in the heart of current 'status quo' makes management very concern. This sensitivity to transformation disruption that comes from the hand of technology predicts that this transformation without precedents will be much more decisive for the evolution of the economy than the previous half century. 
With a strong belief that must be acted "now", more than 50% of executives around the world admit their concern about having to address issues for what they have little experience, such as the digital transformation of the company or the adequacy from their businesses to the new tastes and demands of consumers. The hard true for many is admitting that their organizations will be transformed into another significantly different in the next decade, with a greater focus on the customer, the use of data analysis systems, cognitive technology, and cybersecurity. The exchange between individuals of goods and services are putting against the ropes traditional companies in several industry sectors such as tourism, transport, leisure or finance.

Traditional Ecosystems are suffering

Traditional companies are overwhelmed because the tastes of their customers have changed and because the new competitors are not their peers, but recently arrivals whose DNA is 100% digital. An obvious case of transformative upheaval is in the financial sector. The development of fintech put pressure on lifelong banks. Disruption is traumatic because it involves a deep transformation, requiring a change of culture and humility because most of the profound changes require a new mental frame that are so common in millennial  newcomers.

Technological disruption has had a first visible impact and is that the global ranking of profits or sales for organizations is a consequence of the implementation or shortening of the cycles of innovation. A company that does not assume its deep and permanent transformation as the fundamental tool to ensure its competitiveness in the face of globalization of markets, it will not be able to maintain its leadership position. Traditional companies tend to have two types of reactions to the threat of the new digital competitors. The first of these is to pressure for regulations to contain change, the other reaction is joining the enemy by buying those startups that in the future may shade them. But this process what brings at the end, is more disruption. The key is to change the culture and create an environment where new talent may emerge.

Challenges and Market Evolution

However, this current transformation shall be considered a huge qualitative change that will produce effects in each industry as the technology is imposed and be adopted. This is happening at the same time while in the advanced economies many citizens face a loss of quality in their employment and to more inequalities. The adjustment during the next years is not going to be easy or comfortable. 
Technology must be understood as an engine of increase. In terms of employment, for example, innovation cannot be conceived as a threat. It is true that in some specific areas new digital tools can supplant more mechanical jobs, but this transformation will require new professional profiles with other qualifications and skills.

Two activities will be critical in the market in years to come. The first has to do with data analysis. It is an activity where organizations have high hopes to help them interpret the massive information generated by disruptive technologies. The other activity is that which shall include specialized commercials as they will have to sell to their customers products and services they are not yet familiar with.