Why we can't measure disruptive technology
Why we can't measure disruptive technology
New, disruptive technologies can make existing products and industries irrelevant faster than ever before, but measuring their economic impact has also become tougher.
"The digital age may be more disruptive than previous revolutions as it is happening faster and is fundamentally changing the way we live and work," Citigroup (NYSE:C) said in a note in February. "Historically, countries have adopted a new technology on average 45 years after its invention ... [but there's a] shortening of the lag in adoption, from telephones needing 75 years to get to fifty million users, to Angry Birds taking just 35 days." (Tweet this)
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Companies around the globe face the possibility that not just their products, but also their industries can become irrelevant faster than ever.
For example, while Eastman Kodak arguably first created a digital camera in the mid-1970s, it was able ignore the disruptive technology for decades before the hemorrhaging of its obselete film business pushed the company into bankruptcy in 2012.
More recently, companies can get forced out much quicker, with video-rental giant Blockbuster filing for bankruptcy in 2010, just three years after rival Netflix (NFLX) introduced its streaming service.
No system for measurement
But it isn't entirely clear how to measure the impact that particular disruptive technology had throughout the economy, especially amid declining consumer pricing. Blockbuster typically charged its U.S. customers around $4 per video rental -- unadjusted for inflation and without including travel to and from a bricks-and-mortar location or late-return fees -- while Netflix offers unlimited viewing via its streaming service for $8.99 a month without the need to travel.
"Doing the math" on a former Blockbuster customer who rented more than two movies a month easily adds up to a lower economic contribution, but that doesn't capture any potential added economic value. It also doesn't place a value on eliminating the environmental impact from driving to and from a retail location.
"The statistics on economic output do a poor job of tracking goods and services that, while expensive to design initially, can be copied at very low or zero marginal cost," Citigroup said.
"The digital age has so far arguably failed to deliver the leaps in productivity associated with earlier general purpose technologies like electricity and the steam engine," it said. "It could be that we're not able to capture the increase in productivity that the digital economy has produced because many things the digital economy allows us to access are free."
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As an example, Citigroup cited the "sharing economy" making it easier to match supply and demand through services including car- or room-sharing businesses, such as Airbnb.
Predicting disruption
Some analysts have attempted to quantify the potential economic impact of disruptive technology.
In a 2013 report, McKinsey Global Institute estimated that its top 12 picks for technologies likely to become truly disruptive would have a direct economic impact of $14 trillion to $33 trillion a year in 2025. Even then, however, McKinsey noted that it is trying to quantify the total value from using each technology, especially through "consumer surplus," rather than gross domestic product (GDP) impact.
"GDP and other growth accounting metrics of IT impact do not fully account for improved quality of outputs through use of technology. Nor do they measure the surplus that users capture through improvements in quality and other benefits," McKinsey said.
Science or guesswork?
But doing the math on technologies' impact remains an inexact and changeable science, it noted.
As an example, it cited how social media technologies can be dismissed as trivial based on their consumer uses.
"However, when applied to complex business organizations to improve communications, collaboration, and access to knowledge, the same tools that are used to share links to cute cat videos have enormous potential to improve the productivity of knowledge workers," it said.
-By CNBC.Com's Leslie Shaffer; Follow her on Twitter @LeslieShaffer1
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Robots will 'take over third of British jobs in next 15 years'
Almost a third of UK jobs could be taken over by robots during the next 15 years, a study has claimed.
The report by PwC found that around 10 million workers are at risk of being displaced by automated machines as the robot revolution gathers momentum.
But the research also said that new Artificial Intelligence (AI) technologies could boost production and generate more human jobs.
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The UK reportedly has fewer jobs at potential risk of automation than in other countries including Germany, the United States and Japan.
Jobs in transport and storage, manufacturing and retail are most likely to be taken by robots, while the lowest risk jobs are teachers, health and social workers, the report said.
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John Hawksworth, chief economist at PwC, said: "A key driver of our industry-level estimates is the fact that manual and routine tasks are more susceptible to automation, while social skills are relatively less automatable.
"That said, no industry is entirely immune from future advances in robotics and AI.
"Automating more manual and repetitive tasks will eliminate some existing jobs, but could also enable some workers to focus on higher value, more rewarding and creative work, removing the monotony from our day jobs.”
Employment Minister Damian Hinds said: "We have a resilient and diverse labour market in the UK, demonstrated by the latest record-breaking figures showing more people in work than ever before.
"Whether it's in cyberspace or on the shop floor, advances in technology bring new jobs. It's only right that we embrace these opportunities, support new skills and help more people get into employment to secure a workforce of the future."
