President Trump’s New Economy Challenge (Part 10 of 20).
President Trump’s meetings with the likes of Amazon CEO Jeff Bezos, Apple CEO Tim Cook, Oracle CEO Safra Catz, Intel CEO Brian Krzanich, Tesla CEO Elon Musk, IBM CEO Ginni Rommety, Facebook COO Sheryl Sandberg, Microsoft CEO Satya Nadella, Alphabet (Google) CEO Larry Page, Cisco CEO Chuck Robbins, and Palantir CEO Alex Karp is a very positive first step to understanding the revolution in network and digital technologies that are giving rise to the emerging Digital Economy that has already begun to transform the U.S. economy. Jobenomics hopes that the appointment of Jared Kushner, a tech-savvy Millennial and President Trump’s son-in-law, as a senior White House Advisor will be instrumental in leading the Administration’s efforts with the digital economy and mobilizing American digital natives, the Millennial (Gen Y) and Screenage generations (Gen Z).
Using the parable of the Seven Blind Men and the Elephant as an analogy, the elephant is the Digital Economy and the seven economic communities define the different ways that these groups perceive the digital behemoth. Each of these seven digital communities must be integral to the Trump Administration’s economic and job creation plan to realize his promise of “Making America Great Again” economically. In the parable, each of the blind men argued that his perspective of the elephant was the right one. The man that touched the elephant’s leg thought the elephant was like a tree. The one that touched the elephant’s side thought it was akin to a wall. The other five blind men had other opinions. Eventually a wise man wandered by and explained that each blind man was correct but the ultimate truth could only be realized in their collective vision. The world sees the nascent digital economy through an opaque lens based on seven distinct and connected economic communities. Only time will tell which communities will grow. Some communities will merge. Others will disappear. However, the elephant most certainly will grow into a global behemoth that will transform society, nations, businesses and labor forces.
From a Jobenomics perspective there are at least seven unique but intertwined economic communities within the emerging digital economy: the E/M (electronic/mobile) Economy, Sharing Economy, App/Bot/AI (artificial intelligence) Economy, Platform Economy, Gig/Contingent Workforce Economy, Data-Driven Economy and Internet of Things (IoT) Economy.
The E/M Economy community views the digital economy through a consumption-based electronic-commerce/mobile-commerce lens. Electronic (E) and mobile (M) commerce is already transforming economies, government, business and society via network and digital technology, processes, systems and services. Today, online retail e-commerce sales alone exceed one-third of a trillion dollars in the United States and two trillion globally. By 2020, it is projected to be one-half trillion in the United States and four trillion globally.
E-commerce involves networking customers, suppliers and partners, including sales, marketing, order-taking, delivery, customer service, purchasing and procurement. E-business involves networking the entire business cycle from research and product development, knowledge management and human resources, finance, procurement, production, distribution, transportation, logistics, risk management, sales and marketing. E-commerce is primarily involved with online transactions like purchasing and shopping as well as free transactions like downloads and information exchange. E-business generally is inward-facing using emerging NTR technologies, processes and systems to enhance operations, while e-commerce is out-ward focused on customers and partners. E-commerce/e-business industries include business-to-business (B2B), business-to-consumer (B2C), consumer-to-consumer (C2C) and government to business/consumer (G2B and G2C).
M-commerce is the buying and selling of goods and services through wireless handheld devices such as mobile phones, pads, tablets and laptops. The explosion of mobile applications (apps) and ubiquitous mobile devices, especially in underdeveloped economies, has created an industry that will eclipse United States e-commerce by 2017. M-health (a subset of e-health, involves the practice of medicine and public health supported by mobile devices. While U.S. m-health is growing in popularity, the field is revolutionizing healthcare in low-income communities and nations. Other high growth m-applications include games, music, entertainment, sports, lifestyle, education, transportation, utilities and lifestyle.
The Sharing/On-Demand Economy is a new wave of peer-to-peer, access-driven businesses that are characterized by the ability of individuals to rent or borrow goods rather than buy and own them or to quickly fulfill consumer demand via the immediate provisioning of goods and services. A significant trend in the new economy involves sharing underutilized or idle assets via mobile devices, redefining the value of ownership and upending major industries like transportation, accommodation and logistics. Today, 44% of all Americans have participated in the sharing economy from ride-sharing, accommodation-sharing, services-sharing and food goods delivery services. The Millennial generation has already moved from participation in to dependence on the Sharing/On-Demand Economy.
The Sharing/On-Demand Economy is a new wave of peer-to-peer, access-driven businesses that are characterized by the ability of individuals to share (goods, knowledge, money, time, skills, content, etc.) rather than buy or own, or fulfill consumer demand via the immediate provisioning of goods and services. In sharing, the trend is towards usage, as opposed to possession, of underused or idle assets. In many incidents these assets, tangible and intangible, are free. For example, Wikipedia, Google, Facebook, LinkedIn, Instagram and Dropbox all contribute freely to sharing. In the case of companies like Uber and Airbnb, the idle assets are available for rent. Consumers and entrepreneurs will be the greatest beneficiaries of the sharing economy. Such peer-to-peer sharing concepts can provide additional income for owners, while providing cheaper alternatives to consumers. For consumers, the sharing provides cheaper goods and services by quickly satisfying consumer needs via internet-connected applications.
The Sharing/On-Demand Economy is expected to grow over time. PwC estimates that the five main sharing/on-demand sectors (peer-to-peer financing, online staffing, peer-to-peer accommodation, car sharing and music video sharing) have the potential to increase global revenues from around $15 billion to $335 billion by 2025. According to the PwC study, 44% of U.S. consumers are familiar with the tenets of a sharing/on-demand economy, 19% have already engaged in a sharing/on-demand economy transaction as a consumer, and 7% as a provider of sharing services or products. Among US adults familiar with the sharing economy, 86% agree that the sharing economy makes life more affordable and 78% think that it builds a stronger community. Of those consumers (from 18 years old to those 65 and older) who have tried the sharing/on-demand economy, the vast majority intends to continue participating in these transactions, and, more importantly, are “re-thinking the value of ownership” with 81% stating that it is less expensive to share than own and 43% agreeing that owning today is burdensome.
With major business successes, like Uber and Airbnb, the Sharing/On-Demand Economy is much more than a fad or trend. It is an emergent ecosystem that is upending mature business models across the globe. If successful, the Sharing/On-Demand Economy is likely to usher in a transformation as significant as the personal computer did when it was introduced in the 1990s.
The App/Bot/AI Economy community’s broad view emphasizes automation of daily mundane tasks via smart algorithms and artificial intelligence agents that reduce the need for human intervention and increase leisure time for more productive pursuits.
The App (application) Economy refers to the range of economic activity surrounding applications. An app is a type of software that allows you to perform specific tasks. Applications for desktop or laptop computers are called desktop applications, while those for mobile devices are called mobile apps. A Bot, also known as a web robot, an internet chatbot or simply bot, is an interactive, artificial intelligence-driven software application that runs automated tasks or simulates a conversation to deliver text-, voice- or video-based information to a user via a networked device. Artificial intelligence (AI) is the intelligence exhibited by machines or software that is able to do things normally done by people.
The App Economy. Apps are the digital interface through which we live, work and play and the primary way we engage with media, brands and ultimately with each other. According to App Annie, a global analytics services and market intelligence firm with over 500,000 registered members, forecasts that global app revenue will double from $51 billion 2016 to over $101 billion by 2020 driven by third world growth and greater first world wallet share. Global mobile app downloads will also double to 284 billion in 2020. Games generated about 85% of app market revenue in 2015 but will decrease to 74% by 2020 due to growing popularity of subscription-based apps, such as music streaming, video streaming and online dating.
Today, the global app industry has grown to over 4 billion mobile applications. Most digital applications are available free or nominal cost on U.S. app stores including 2.2 million on Google Play and 2.0 million on Apple App store. 74% of all mobile apps are developed in America (82% by U.S. startups and small businesses of which 82% are outside Silicon Valley). However, a few lucky startups, like Instagram, Snapshot, WhatsApp and Maze, went from $0 to over $1 billion within one to six years with fewer than 100 employees.
The Bot Economy. Many experts believe that the App Economy will give way to a Bot Economy. The most well-known bot is Apple’s Siri that was introduced to the American public in 2011, followed Google’s Google Now in 2012, Amazon’s Echo (aka Alexa) in 2014, Microsoft’s Cortana and Xiaoice in 2014, Facebooks’ M in 2015, and Microsoft’s Tay in 2016. Each generation has become progressively smarter, engaging and more widely used. The newest bots not only research and deliver information but are designed to be a companion, or friend, that offers friendly advice or casual conversations.
While American chatbot use is somewhat limited, largely due to content and cultural issues, Chinese use has grown exponentially. Microsoft’s very successful Xiaoice (pronounced Shao-ice) Chinese chatbot has 40 million users and has even joined China’s Dragon TV morning news as a weather “girl’. To date, Xiaoice has conducted more than 10 billion conversations with humans, most of them about private matters. The Bot Economy has unlimited potential if chatbots can mature to the point of being practical, friendly and trustworthy—there are billions of lonely people who would love to have a companion that would help them with daily tasks as well as emotional issues. Conversation-as-a-Service may be the next big thing.
The Artificial Intelligence (AI) Economy. Given the limitations of human beings to rapidly develop hypotheses to assess and act on large amounts of big data, AI-enabled machines and AI software agents will be used to generate hypotheses and provide solutions from zettabyte pools of complex data. Via an AI technique known as deep learning, AI agents are already being used to power internet search engines, translate languages, block spam, write reports, detect fraud, recognize voices and identify individuals out of large crowds.
AI-enabled machines are replacing workers on factory floors as well as soldiers and airmen on the battle field. Recent studies suggest that up to half of the U.S. labor force could be replaced by automation by 2030. Routine cognitive and manual jobs are most at risk, whereas jobs with non-routine cognitive and manual skills will become more valuable. Whether super-intelligent Ai-enabled machines or AI agents will eventually eliminate the need for human labor is now hotly debated. Technical experts forecast that AI machines and agents will reach the point of singularity (equal to humans) as early as mid-century and will rapidly advance to super-intelligent soon thereafter, which will upend workforces as well as society. Historians and economists are more optimistic and argue that, based on previous technology revolutions, new high-skilled jobs will be created and that society will adjust to new norms and potentially a much higher quality of life.
Regardless of who is correct, AI and the other NTR-related technologies will be brilliantly creative and creatively destructive. A landmark study by Bank of America Merrill Lynch forecasts that by 2025 AI and smart machines will have annual disruptive impact of $14-$33 trillion, including $8-$9 trillion of cost reductions across manufacturing and healthcare, $9 trillion cuts in employment costs via AI-enabled automation of knowledge work and $1.9 trillion in efficiency gains via autonomous cars and drones.
The Platform Economy community sees the digital economy from a network platform business model where mega-corporations exploit network effects to garnish greater and greater degrees of influence and control of major segments of society and the global economy.
A Platform Economy is dependent on the value of “network effect” of people using the platform as opposed to the value of a single user or owner. The more people who use a digitally networked platform, the more valuable the platform becomes to each user. Increased value creates a bandwagon effect that facilitates a positive feedback loop encouraging progressively greater and greater numbers of people join the platform’s ecosystem. Due the NTR, tens of thousands of platform ecosystems exist across the planet. Collectively, they comprise the global platform economy.
According to research by The Center for Global Enterprise, there are 176 major (over $1 billion annual revenue) platform companies worldwide, each with their own ecosystem or group of interconnected entities. The market valuation of, these 176 companies totals $4.3 trillion. Asia is home of 82 companies, followed by the United States with 63 companies, Europe with 27 companies and the rest of the world with 5 companies. Due to their global reach and access to 3.4 billion internet users, today’s platform owners are far more powerful and formidable than yesteryear’s biggest industry tycoons.
According to Accenture, “The Platform Economy is considered one of the biggest transformations for business since the Industrial Revolution. It’s a bold claim, but the speed and scale with which today’s platform businesses have developed really only hint at the profound economic shifts that lie ahead….For most businesses—whether they are “born-digital” or have an industrial heritage stretching back over many decades—the opportunities for new growth and development are unprecedented.”
The platform economy, or digital platform economy, encompasses NTR-enabled social, business and government activities. The industrial revolution was organized around factories. The information revolution focused on computers. In the network technology revolution, platforms are king. Google and Baidu started out as search platforms. Facebook gained fame as digital asocial media platform. Amazon, eBay and Alibaba began as e-commerce platforms. PayPal and Taobao commenced as digital financial platforms. Airbnb, Uber, Lyft and Didi launched as digital hail-riding platforms. Today, they also provide infrastructure on which other platforms are built. Global leaders in all industries are now creating adaptable, scalable, and interconnected platforms that underpin their future success in the digital economy.
The Gig/Contingent Workforce Economy community’s focus is on creating an employment landscape that provides opportunities for workers in the future economy where part-time and temporary workers outnumber full-time workers with standard workforce agreements.
A Gig/Contingent Workforce Economy is an environment in which temporary positions are common and organizations contract with independent workers for short-term engagements. The trend toward a gig/contingent workforce is well underway. America’s labor force is in a state of transition from a standard full-time work force to a contingent workforce that consists of part-time, temporary, contract labor, independent contractors, consultants and free-lancers.
A short time ago, a “gig” was a term largely used by musicians for a part-time job, a single engagement of short or uncertain duration. Today, due to uncertain economic conditions and the influence of the revolution in digital and network technology, 40% of all Americans make their living working gigs rather than a full-time job. Most gig-livers are contingent workers who are dependent on temporary, uncertain or conditional employment.
By 2030, or sooner, Jobenomics forecasts that the contingent workforce will be the dominant form of labor in the United States based on seven factors: (1) increasing labor force losses versus labor force gains, (2) adverse corporate hiring and employment practices, (3) revolution in energy and network technologies, (4) automation of manual and cognitive jobs, (5) impact of the emerging digital economy, (6) shift from full-time, to part-time and task-oriented labor, and (7) cultural differences of new labor force entrants.
The Data-Driven Economy community’s mindset involves the exploitation of storage, search, capture, query, transfer, sharing, visualization and analysis of zettabytes of Big Data as a way to create a new digital economy.
A Data-Driven Economy involves storage, search, capture, query, transfer, sharing, visualization and analysis of zettabytes of Big Data. To compete in the digital world characterized by clouds containing zettabytes of data, enterprises must be able access pertinent data and provide as much information, knowledge and wisdom as possible using NTR tools to drive high-value business and societal outcomes.
In a Data-Driven Economy, enterprises will succeed or fail based on how well they leverage data to: improve operational efficiencies; make better decisions, customize products and services to customer and client needs, automate business processes, increase productivity, manage risk, provide security, protect privacy and intellectual capital, and form collaborative and innovative partnerships. Industries, governments, nations, regions and international coalitions will operate and function (either collectively or independently) via the intelligent use and sharing of data to optimize entire operational and sociological environments.
The Data-Driven Economy is not constrained by traditional borders nor measured by traditional import/export metrics. Data is difficult to quantify in dollars but is nonetheless of significant value. Data-driven economies and enterprises can create global markets and user groups across borders. Small business and emerging markets are growing at exponential rates. According to the McKinsey Global Institute, while flows of goods and finance have lost momentum, used cross-border bandwidth has grown 45-times larger from 2005 to 2016, and is projected to grow by another nine times in the next five years as digital flows of commerce, information, searches, video, communication, and intracompany traffic continue to surge.
Supporting and accelerating from the traditional economy to a data-driven economy is a high priority for many nations. For example, the European Commission recently outlined a new strategy for a Big Data/data-driven economy that will stimulate research and innovation on data while leading to more business opportunities and an increased availability of knowledge and capital, in particular for small and medium-sized enterprises, across Europe. According to the Commission, Big Data (data processing) technology and services are expected to grow seven-times faster than other ICT (information and communications technology) markets.
A Data-Driven Economy derives its greatest benefit on how data is used to enhance operations in vertical industries, such as healthcare and transportation, and horizontal industries, such as marketing and advertising. However, micro-businesses may be the biggest beneficiaries of the Data-Driven Economy. “Small businesses worldwide are becoming “micro-multinationals” by using digital platforms such as eBay, Amazon, Facebook, and Alibaba to connect with customers and suppliers in other countries. Even the smallest enterprises can be born global: 86% of tech-based startups we surveyed report some type of cross-border activity. The ability of small businesses to reach new markets supports economic growth everywhere.” according to McKinsey Global Institute.
The Internet of Things (IoT) Economy community looks at the digital ecosystem from the perspective that tens of billions of connected things exert significantly more worldly influence than the billions of connected people.
Today’s Internet of Things (IoT) mantra is morphing into an Internet of Everything (IoE) state of mind increasingly binding more and more things to things, things to people and people to people. The IoE will make many of the familiar devices and objects in our lives readily Internet-connected, smart phone-accessible and responsive in a world where more things are connected to the Internet than people. The IoT includes environmental “things” for monitoring weather, transportation things for traffic and energy usage, appliance things for intelligent electronics, manufacturing and logistics things, advanced health and medical things, as well as thousands of other things that will transform virtually every field of endeavor.
Cisco defines the IoT as bringing together people, process, data, and things to make networked connections more relevant and valuable than ever before—turning information into actions that create new capabilities, richer experiences, and unprecedented economic opportunity for nations, businesses and individuals. The number of devices in the Internet of Things is projected to reach 500 billion by 2030, up from 15 billion in 2015, which equates to more than six devices for every person on earth. The IoT is significant because an object that can represent itself digitally becomes something greater than the object by itself. The McKinsey Global Institute forecasts the maximum potential economic value of the IoT at $11.1 trillion per year by 2025.
Stay tuned for the next installment in the President Trump’s New Economy Challenge series entitled, “President Trump’s Biggest Chinese Fan” scheduled for release on 11 March 2017.
About Jobenomics: Jobenomics deals with economics of business and job creation. The non-partisan Jobenomics National Grassroots Movement’s goal is to facilitate an environment that will create 20 million net new middle-class U.S. jobs within a decade. The Movement has a following of an estimated 20 million people. The Jobenomics website contains numerous books and material on how to mass-produce small business and jobs. Monthly website traffic exceeds one-half million hits, which is indicative of the high level of public interest regarding economic, business, labor force and workfare solutions. For more information, see Jobenomics Overview and the Author’s Biography.