Education, Evolution, Economics

How the digital revolution is bringing chaos – and opportunity – to the global markets

September 30, 2016

The digital revolution has transformed economic growth throughout the world. My position with Avasant provides me a unique perspective on the effects that technology and social economics are having on businesses at a macro scale. The trends I see are affecting every level of business, from the most successful executive to the unemployed college graduate. At Avasant, it is our goal to help organizations find a way to leverage these trends to transform their business for the digital economy.

Early in his first term, President Barack Obama made a statement about the ‘jobless recovery’ following the 2008 sub-prime lending crises. People did not understand why we were not able to bring more jobs into the economy even as it was recovering. The answer is simple: we’ve been moving toward a digitized and robotics process automation (RPA) economy since the 1980’s, eliminating analog jobs like tellers at banks, and replacing them with digital equivalents like ATMs. The 2008 credit crisis simply exacerbated this trend, tightening regulations and compelling businesses to switch from hiring employees to hiring contractors and outsourcing operations overseas. In 2011, I wrote an article discussing this phenomenon, and was contacted by the Rockefeller Foundation, whom invited Avasant to partner with them on a study analyzing the effect digitization and sourcing was having in emerging African countries, specifically Uganda, Kenya, and South Africa. Inspired by this study, Avasant went on to form our own Foundation. We expanded the study to include 23 countries in Africa, Asia, and Latin America. Our report, titled “Impact Sourcing”, discusses how to create jobs through strategic sourcing in low-income, sometimes depressed communities, in light of the digital economy.

“As the digital age progresses, many traditional forms of employment have disappeared and been replaced by jobs requiring new skill sets, which traditional colleges and trade schools have failed to equip graduates to fill.”

Job creation is on the minds of struggling Americans as well, and is at the heart of the macro level trends I mentioned earlier. As the digital age progresses, many traditional forms of employment have disappeared and been replaced by jobs requiring new skill sets, which traditional colleges and trade schools have failed to equip graduates to fill. While the ‘ivory tower’ approach to education is laudable, it is not preparing young people with the skills businesses are currently looking for.

Avasant Foundation has seen a 99% success rate when we’ve flipped that formula on its head: instead of training students and then hoping they’ll find jobs, we approach companies and ask what kind of skill sets they need, then train applicants to fill that need. This has been particularly useful in emerging economies where they don’t have traditional systems of education that are as strong as the West. This may seem like an obvious solution, but there has been surprising resistance in America to updating our education system to meet the needs of businesses. Rather than investing in training, politicians are focused on free college for everyone or tighter restrictions on immigration. Neither will solve the issue at hand.

It’s important to remember that this isn’t just an American issue; it has international effects as well, sometimes indirectly. The crisis in the  Middle East, for example, can be understood through an economic lens  – unemployment and a lack  of infrastructure have erased the hopes of those citizens, leaving them with the choice to leave (as we’ve seen with refugees) or stay and  fight for what limited options remain (as we’ve seen with the  rise of ISIS).

Perhaps more important than the geographical size of the problem, is the historical resonance of the issue: we’ve seen this  kind of economic upheaval with every major technological shift from the  Stone Age to the  Industrial Age. Each time a worker-heavy system shifts to a technology-driven system, a huge percent of the population becomes temporarily unemployed and political and economic turmoil follow. The existence of easy communication and access to information will not solve these issues for us – they will simply help to spread the word more rapidly. It can’t be stopped, but it can be recognized for what it is: a natural progression.

“Each time a worker-heavy system shifts to a technology-driven system, a huge percent of the population becomes temporarily unemployed and political and economic turmoil follow.”

As business owners we can help smooth the transition by investing in training and maintaining an employee culture. We can recognize the importance of preparing today’s young people with specific skills they’ll need to be successful in the digital economy. We can strategize to maximize the value of this transition. At Avasant we specialize in global strategy, strategic sourcing, and digital business transformation. As a management consulting firm with clients of Fortune 500 companies, we help our clients globalize their enterprises, reduce costs, and find new opportunities to venture into global markets. We specialize in helping businesses transform, so that they can embrace the Digital Age and bolster their success. The Digital Age is here to stay and you can fight it and inevitably lose – or embrace it and come out on the winning side.

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