Vast, automatic and invisible: the "Second Economy" is here
Delaney Turner 270003RQ8K Delaney.Turner@ca.ibm.com | | Tags:  ibmsoftware information-insights baforum iod11
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There's a fascinating article in the latest McKinsey Quarterly - one I'd deem essential reading before you head down to Vegas for Information On Demand 2011.
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The article is called The second economy and it's written by W. Brian Arthur, an economist, an author, a visiting researcher with the Intelligent System Lab at the Palo Alto Research Center (PARC) and an external professor at the Santa Fe Institute.
The full article (including PDF download) is available here, and I've provided some excerpts below.
"Vast, automatic, invisible"
Arthur makes the argument that digitization is creating a vast, automatic and invisible "second" economy that's driven entirely by data, systems and by systems of systems. It's also driving the biggest change to our world since the Industrial Revolution:
Every so often—every 60 years or so—a body of technology comes along and over several decades, quietly, almost unnoticeably, transforms the economy: it brings new social classes to the fore and creates a different world for business.
A Second Economy on a Smarter Planet?
As I read through the piece I was struck by how closely Arthur's Second Economy mirrors the attributes of a Smarter Planet - that is, one that's increasingly instrumented, interconnected and intelligent. Take, for example, the dramatic transformations we've seen in air travel:
Twenty years ago, if you went into an airport you would walk up to a counter and present paper tickets to a human being. That person would register you on a computer, notify the flight you’d arrived, and check your luggage in. All this was done by humans. Today, you walk into an airport and look for a machine. You put in a frequent-flier card or credit card, and it takes just three or four seconds to get back a boarding pass, receipt, and luggage tag.Who benefits?
It's perhaps the paradox of an invisible economy that its will bring about effects that we can all see. As befits an economist and "pioneer in the science of complexity," Arthur doesn't shy away from examining the disruption these changes will bring to the job market and to the very nature of work. The second economy will bring about new kinds of work, while others will disappear completely:
Nowadays, fewer people are required behind the desk of an airline.
Still, Arthur sees new opportunities for growth as well. The challenge in the coming years won't be to create prosperity, but rather to better distribute it:
The second economy will certainly be the engine of growth and the provider of prosperity for the rest of this century and beyond, but it may not provide jobs, so there may be prosperity without full access for many. This suggests to me that the main challenge of the economy is shifting from producing prosperity to distributing prosperity. [...] For centuries, wealth has traditionally been apportioned in the West through jobs, and jobs have always been forthcoming. When farm jobs disappeared, we still had manufacturing jobs, and when these disappeared we migrated to service jobs. With this digital transformation, this last repository of jobs is shrinking—fewer of us in the future may have white-collar business process jobs—and we face a problem.What's your role?
As the architects of your organization's own information networks, I'd argue that you have a direct hand in building this second economy. You may have already been affected one way or another by the disruptions and transitions it's driving in the real world. As the largest conference in the IBM Software universe, I'd also argue that Information On Demand is the ideal forum to discuss these transitions. You'll come away with a better understanding of how they impact your organization, and you'll discover new ways to harness the technologies that drive it to drive better outcomes on all fronts.
What do you think?
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