Digital Shock: How Our World is Being Transformed

Digital technology features as the enabler to overthrow governments, corrupt elections, reveal secrets, destroy jobs and undermine the integrity of major corporations. It is now one of the major disruptive forces at the start of the 21st Century. It is also very clear that the underlying digital data being generated by individuals, companies and governments combined with the capabilities to sort, filter and analyse this data will transform – threaten and enhance - our economies, our societies and even our political systems as we transition fully into the Information Age. In a new series over the next 12 months, the Sign will look at how digital technology is changing our world through a series of lenses and assess its socioeconomic and political impact, as well as broader implications for the global order as a whole. In the first of this series, this month’s Sign provides an overview of the how digital technology is already changing politics, society and commerce and how this might develop over the next decade. The next part of the series will drill down into implications and challenges and the final part in the series will put forward a perspective on how individuals, societies and states will need to prepare for the digital future.

Technological progress during the 19th and 20th century transformed our world in a manner that would make many parts of it unrecognisable to a time traveller transported into the year 2000. Industrialisation, urbanisation and transportation fundamentally reshaped the physical world. While the development of digital technologies has not yet transformed our physical surroundings to the same extent, its impact is equally fundamental. By placing cheap and virtually limitless computing power and storage as well as ubiquitous communications and connectivity into the hands of individuals rather than keeping it in warehouses for the use of space programmes, intelligence agencies and the largest corporations, the lives of ordinary individuals have been transformed. Moreover, this is a transformation that is occurring on a global scale, in a compressed timeframe and touching the poorest to the richest. While industrialisation took decades to unfold within single countries and spread across the world, digitisation is a phenomenon that touches the global masses. The first passenger railway line in the world was laid in Britain in 1807. It took 43 years for the railway network to exceed 10,000 kilometres and 46 years before the first line was opened in India, its most important overseas colony. In communications, by contrast, it took only 20 years post the launch of the UK’s first digital mobile phone (in 1992) for mobile penetration to cross 80% of the UK population, and the introduction of mobile services in India lagged the UK’s by a mere three years.

Shaping a New Civilisation

The bold statement is that digital technology will transform the various human civilisations on the planet and create the first global civilisation. Former civilisations were national in character and as they spread across other nations, most of them kept at core a national characteristic and none were able to create something transcending all national identities. Their technologies – wood, steel, steam, oil – were enablers of war and commerce and had a huge impact on the lives of individuals by enabling them to travel, build and be employed. Digital technology is different in that it touches nearly every field of human endeavour from the very personal communications and relationships between individuals to the computation of how we reach other planets. “Information is a substitute for time, space, capital, and labor... A new civilization is emerging in our lives, and blind men everywhere are trying to suppress it.”Alvin Toffler, The Third Wave It is also personal in nature and viral in that it can be created in one place and can spread to many and can mutate away from its original form; and we see this in the proliferation of online news, websites, YouTube videos, Facebook pages, Twitter messages, eBay accounts, Amazon items for sale and all manner of new apps and services. It is already evident that digital technology is both microscopic in its impact and macroscopic. Moreover, given that the digital world is not discrete from the physical one; the two impact each other in myriad ways and each changes the other: Amazon put the world’s largest bookseller Barnes and Noble out of business and now is setting up stores of its own, schools are punishing students for cyber-bullying outside of the classroom, and many believe that Donald Trump may have Russian hackers to thank for his presidency. The digital and physical worlds are inextricably intertwined with one another and together represent what is in fact an expanded reality relative to the experience of previous civilisations. This will transform not just individual lives or society but the relationship between nations. In bringing about this change it is therefore a determinant of peace and war between nations and conflict between individuals and cultures.

The scope and scale of digital change is era-defining. Nearly forty years ago, thinkers predicted the shift underway to the Information Age, a post-industrial era in which knowledge is the key determinant of power and information processing replaces manufacturing as the primary economic wealth generator . Today, these predictions are not only proving to be true but the reality is even more extreme in its broad and deep impact on the world as digital becomes one of the major drivers of the movement towards a new global civilisation. Other major technological breakthroughs will take their place alongside digital and shape our times including new energy, bio-medicines, nanotechnology, robotics and synthetic life and quantum computing.

Digital technology has the potential to bring the world closer together than ever before. Digital technologies add unprecedented immediacy to the linkages created by globalisation: ideas can travel around the world ignoring language or political boundaries, and enabling sharing and connectivity on a level never seen before. Digital technology will transform the various human civilisations on the planet and create the first global civilization.This sharing is facilitating the creation of a new global culture. Since the dawn of time, the definition of community has expanded outward from the self to encompass a wider and wider circle encompassing more and more people, from family to village to clan to tribe to kingdom to nation, and now from the nation to the world. This does not mean of course that existing regional, national or ethnic identities will be replaced, as they will surely not be. The promise of digital is an expansion of consciousness to make room for global awareness and empathy alongside existing loyalties and identities, creating a world in which people can comfortably reconcile multiple loyalties and affinities and even different value sets, just as they move seamlessly between the physical and the digital worlds.

With digital technology reshaping our physical world, expanding our perception of reality and creating a new global civilisation, the mindset shift required in individuals is significant. For many, the challenge will be in hanging on to the old civilization and reality and the comfort provided by its familiarity. And for those with vested interests in hanging on to the past, digital technology represents a huge threat. Ironically, many of these actors are using digital technology themselves to prevent the shift to a new global civilisation, creating false hope for those being left behind by promising the past, using technology to restrict freedom, deploying propaganda combined with censorship and developing and using offensive digital capabilities to attack their opponents. It is of course a truism that technology can both help and hurt, depending on its use, and digital technology is no different.

A Ten-Year View of the Impact

Previous Sign of the Times have described the demise of the Western, liberal, post-war international order and the choices that countries and their leaders will accordingly face. With the rapid transformation driven by digital technology being global in scale and pervasive in nature, individuals, business leaders and nations will similarly need to plan for the impact of digital across many fields. This impact is political, social and commercial. “After the steam, steel, electricity and petrochemical revolutions, network-based digitalisation is the driving force today on the stage of business and private life.” M. Vogelsang, Digitalisation in Open Economies It is unavoidable and it is naturally destructive of the older order of things. Taking a ten-year view provides the opportunity to outline the seeds of the already momentous changes underway and look briefly at where it might lead. Predictions, are hard, especially about the future. This is even more so the case when talking about the longer-term impact of what promises to be pervasive social, economic, and political change. However, with the drivers of digital change becoming increasingly stark, the direction of change as well as the contours of its results start to emerge.

• Political Impact Areas

Potentially, the most significant impact of digital technology might be on the nature of power since it changes the relationship between polities, between politicians and voters (within a polity and across polities) and creates a powerful link between citizens. It also transcends the borders, physical barriers and geographic features on which our security depends, and is highly asymmetric in its ability to damage, destroy or disrupt economic, political and security systems. It therefore is a matter of national security and a determinant of political stability and the integrity of the political process.

1. National Security

The Disruption Underway. Cyber warfare has been recognised as one of the key battlefields in any 21st century conflict between states and as a national security priority. Experts agree that cyberattack will play an important role in any future armed conflict, with digital attacks disrupting or destroying command, control and communications systems in advance of conventional attacks. Off the battlefield, cyber-espionage and surveillance provides the potential to gather more intelligence than countries have ever been able to secure through conventional means; understanding how foreign leaders think, discovering military communication patterns, and attaining valuable technical information stored throughout global networks. Cyberwarfare is a game changer in terms of security and defence paradigms; its virtual nature ignores geographic and physical boundaries that have defined security for millennia, and its viral and distributed nature accelerates execution to speeds and to a scale beyond humans’ ability to control.

The Five to Ten Year View. Cyber is becoming a new global, multi-polar arms race. The US has recently elevated its Cyber Command, which coordinates the military’s cyber-strategy, to a unified command under the Department of Defence, an organisational upgrade indicative of cyber’s growing importance to national security, with US$35bn of official spending budgeted over the next five years. At the same time, global investment in cyberwarfare capabilities is set to continue to grow. China’s military has called cyberspace one of the two “new commanding heights in strategic competition,” and the country is building out both military and civilian cyberwarfare capabilities. Russian capabilities, on the other hand appear to be more focused on non-military attacks including denial of service attacks, hacker attacks, dissemination of propaganda, information theft and internet surveillance, among others. In other words, cyber appears to have all the hallmarks of a new global arms race.

Key Challenges. The rules of engagement have yet to be set. The most critical challenge of cyberwarfare is its lack of definitions and rules. In physical warfare, what constitutes an ‘attack’ is clearly defined. No such definition exists for cyberwarfare, making appropriate and measured responses difficult. Further, there are no agreed-upon processes for escalation and de-escalation for countries to follow in a conflict. Finally, given that cyberwarfare is being waged by states, state-sponsored actors and individual agents, this presents unique challenges with the attribution of attacks given tracing and proving the origins of an attack are often unclear. In the absence of clear rules governing international cyber-conduct, any conflict carries the risk of rapid escalation, and in extreme cases, carrying over into a physical one.

2. Political Stability and Election Integrity

The Disruption Underway. The past year’s US presidential election has highlighted the risks to government from foreign digital interventions. The US intelligence community has confirmed extensive tampering throughout the election process by Russia. According to intelligence reports, Russian security services have been collecting information on election processes, technology and equipment in the United States since early 2014 and have intervened directly into the election process, both through directed hacks of the Democratic National Committee with selected leaks of damaging information, as well as through the placement and propagation of fake news and bots to sway public opinion. While the impact of these initiatives on the outcome of the election is difficult to fully isolate, the closeness of the election results indicates that the Russia’s intervention may well have played an important role in the outcome. If the democracy of the US, as the superpower and “leader of the free world”, is open to such an assault, then the rest of the world’s political system likely have little chance of not being undermined.

The Five to Ten Year View. Creating, rather than just shaping, foreign election outcomes becoming a reality. America’s experience during its election is not an isolated incident. U.S. intelligence agencies also found that Moscow has targeted political processes in France, Germany and the Netherlands, among others, including providing loans to preferred political parties via Russian banks . To date, Russia (and other foreign interventionists) appear to have stopped short of the most obvious way to rig an election, directly controlling decentralized voting machines, most likely due to the technical difficulties involved, which would explain the more multi-pronged interventions taken. However, state and state-sponsored actors are surely working hard at penetrating voting technology with the objective of directly manipulating future election outcomes in foreign countries. Initially this will likely be at the local and regional levels, where the degree of electoral security, oversight and resources lag behind that of important national elections under federal scrutiny.

Key Challenges. An existential threat to democracy. An obvious but important point is that election tampering only works in countries that have elections. Authoritarian and undemocratic countries do not have electoral processes to tamper with in the first place. Similarly, countries ruled by strongmen who regularly win 90%+ of the popular vote, presumably by conducting some domestic election tampering of their own are unlikely to be affected by electoral process aberrations caused by foreign intervention, since they control the outcome and the process does not have integrity. Given that election tampering is only effective when it attempts to influence free elections, it is really an attack on democracy itself. Even if unsuccessful, election tampering damages citizens’ faith in the democratic process and its ability to reflect the will of the people, and thereby undermines the legitimacy of elected governments, making it a deeply subversive tool for manipulating foreign relations and the liberal global order, which is already under internal and external attack.

• Social Impact Areas

Digital technology is reshaping humanity at both the societal and individual level. For individuals, digital technology reopens the question of the mind-body problem, creating a parallel reality that augments or even replaces the physical world we inhabit, fundamentally reshaping how we live our lives. For the foreseeable future, technology cannot yet replace our physical bodies but its ability to take over many responsibilities of the mind, such as analysis, critical thinking and decision-making is rapidly increasing. It does so by means of creating and processing massive amounts of data on individuals, raising new questions about data ownership, property rights and, critically, the nature of the self. At the societal level, digital technology allows global and instantaneous communications and the exchange of ideas, but the decentralised nature of information and lack of accountability on digital platforms creates a significant risk of manipulation too.

3. Personalisation and Predictive Decision-Making

The Disruption Underway. Personalisation has long been a core goal for companies seeking to engage with their customers, traditionally using data gathered from previous interactions to understand user preferences. The growth of big data and predictive analytics is fundamentally transforming the scope and scale of personalisation, integrating larger and larger data sets and variables from multiple sources to improve the power of predictions, while increasing digitisation is increasing the channels of personalisation. Personalised digital recommendations and services used to be limited to the PC (and the smartphone) but now come from wearables (providing health and wellness services) your home (networked devices managing the environment) and your car (providing routing recommendations), to name a few.

The Five to Ten Year View. Total personalisation and the end of search. Personalisation and predictive decision making will continue to accelerate. Big data and predictive analytics have already reduced internet searches from Boolean queries to a few keywords to now a few characters. In the future big data analytics promises to shift to eliminating or substituting searching with push recommendations to users. The next decade will accordingly see the emergence of personalised solutions including personalised education, personalised healthcare (focusing on prevention and intervention, rather than treatment), personalised advice on everything from relationships to voting and of course personalised consumption, creating friction free experiences for users that automate ‘non-essential’ decisions and serve up tailored options for essential ones.

Key Challenges. Predictive decision-making and free will. Within the next decade, personal A.I.s are expected to increasingly know us better than we know ourselves, making health, relationship, job and even voting recommendations based on personalisation technologies. This promise of full personalisation and predictive decision-making carries risks, however. For one thing, they create tools for service provider discrimination, deciding who gets to fly, who gets a job, who gets health insurance and who does not. Further, predictive analytics are not infallible, they do not ‘know’ you, they analyse and make statistical inferences based on large data sets, correlating the data they have on you with that of thousands or millions of people to make a probabilistic recommendation. And while it may be acceptable to make an occasional wrong recommendation for a movie or a restaurant, most would agree that this is not the case for important lifestyle choices, relationships and voting decisions which predictive analytics are also expected to focus on too. Digital persona – whether a digital representation of the individuals or a digital entity - are clearly not a replacement for human beings and will not be in the next decade, but at some point the value of these will lead to the demand for their protection, if not their rights.

4. Privacy and Security

The Disruption Underway. Digital technology and data capture has given rise to serious issues regarding data privacy and ownership. It is almost impossible to opt out of 3rd party digital data collection in modern life. Digital devices such as PCs, smartphones, wearables, cars and even household appliances are gathering a continuous stream of data on users and sending this to service providers and manufacturers to analyse and use or package and resell as they wish. Data security is another issue, given that we have more and more personal and sensitive information digitised and increasingly stored on networked devices susceptible to hacking intrusions. Further, with more and more of our user names, passwords, and personal information being stored on third party corporate servers, the opportunities for data theft will continue to grow. Clearly, if the US election can be hacked, no one else is safe.

The Five to Ten Year View. There will be a battle between individuals, corporations, the state and rogues for control over private data. Corporate data breaches compromising customer information have become both more frequent and greater in scope. The most recent high-publicity breach obtained credit card and personal information from 143m customers of credit information provider Experian, opening customers to identity theft and fraud. However, the issue of data security extends beyond the question of illegal breaches, given governments’ massive data gathering and analysis initiatives. We are all connected now by the internet, like neurons in a giant brain.” Stephen Hawking The National Security Agency’s PRISM and other mass surveillance programs have been called a limited and necessary measure by the governments involved and the first stage to ‘Big Brother’ level oversight by privacy advocates. Billions of dollars are flowing into new security technologies such as blockchain that have the potential to significantly enhance data security over the next decade. This increased security will be accompanied by an increasing user backlash against the unfettered use of personal data, with initial legislation such as the EU’s General Data Protection Regulation aiming to give citizens back control over their own personal data.

Key Challenges. Privacy needs to move the arena of human rights. In a recent ruling, India's Supreme Court declared that privacy is a fundamental right of its citizens . Of course, even given adequate data security and data privacy options, many may still choose to not control or protect their data and expose themselves to potential misuse and abuse as a result. Fundamentally, user demand, protest and regulation is required to drive the availability and adoption of any new technology, security included. Unless people understand the concrete value of admittedly abstract personal data and the need to control it, the technology platforms that are today benefiting from our personal data will not willingly give it back. Citizens will at least initially need to forego convenient and popular services that require handing over personal data, at least until the popular pressure becomes strong enough to force change.

5. Opinion Shaping

The Disruption Underway. Social media and other digital communications are increasingly becoming a key channel for news gathering and opinion shaping. Donald Trump’s use of Twitter and social media allows him to circumvent traditional media and communicate directly with his 40m followers, disintermediating the “Fourth Estate” whose credibility he is constantly attacking. Moreover, with the explosion of digital channels for information, the effective capacity to fact-check sources and protect sites is reduced, leaving social and digital media vulnerable to attacks by bots, fake trends, misinformation, targeted trolling and other forms of misinformation for the manipulation of public opinion.

The Five to Ten Year View. Digital echo chambers and personalisation undermining the search for and value of the ‘truth’. We are already living in a ‘post truth’ era, where sentiment and opinion count more than facts in personal decision-making. This phenomenon is being exacerbated by digital media and personalisation technologies, which deliver content and search results pre-shaped by users’ existing opinions, leading to an echo chamber that amplifies their favourite narratives, forms polarized groups and blocks out any information that does not conform to their beliefs. Considering that personalisation and analytics will only get more advanced and automated over time, technology is likely to exacerbate, rather than solve, this information divide over the next decade. Further, with communities, particularly in the US, increasingly physically segregating themselves according to beliefs and values, the digital echo chamber is being complemented by a physical one in which all your neighbours read the same news and share the same opinions.

Key Challenges. Weighing freedom and truth. “Truth” in politics is vital for a democracy to function properly. However, given that freedom of speech is one of democracy’s most cherished tenants, this often includes the freedom to spread misinformation and falsehoods as well as (in many cases) offensive and hate speech. Short of a law mandating truthfulness, which will also be a feature of many embattled democracies, it will be up to the distribution channels of information themselves to regulate their content. Google and Facebook, two of the largest internet platforms, have both announced initiatives to cut down on misinformation and fake news. Facebook is handing to government investigators details of 3,000 opinion shaping ads on the US elections placed by Russian entities on its site . As publicly traded institutions with global shareholders and customers, these platforms can be held accountable through a wide range of means – indeed, Facebook only released these records under sustained pressure, having initially dismissed the claims that its site may have been used to tamper in the election. With the scale-less nature of the internet though there are thousands if not millions of other channels and content creators that are under no such scrutiny and have no incentive to self-regulate, potentially raising the need for legislative intervention.

• Economic Impact Areas

Digital is now not merely a technology but the disruptive force shaping an emerging world. This world enables individual level innovation, destroys the cost of entry and provides the platform for the best of these to scale; almost anyone can create a global eBay store, start a news channel on YouTube and be a future trend shaper on Pinterest, Instagram, Twitter or a half dozen other platforms. At the other extreme, it has propelled technology companies to rank among the top 10 companies in the world pushing aside industrial era giants. It is now a self-sustaining engine for creating new industries, disrupting old ones and changing the nature of employment.

6. Creating New Industries and Industry Leaders

The Disruption Underway. Technological innovation has driven the creation of new industries throughout history, and digital is no exception: seven of the ten most valuable companies in the world today by market cap are digital technology companies. Digital technology has created new companies and sectors at an unprecedented rate with Alphabet, Google’s parent company worth nearly twice as a much as the world’s largest oil producer, Exxon Mobil, a company with assets in excess of US$330bn (and the only industrial company remaining in the top ten). While these companies are racing to develop and integrate advanced digital technologies such as A.I. and blockchain, it is likely that these technologies will also give rise to a new generation of start-ups with the potential to become global market leaders.

The Five to Ten Year View. New digital businesses will kill their own as well as others. A new generation of digitally inspired businesses will replace the last generation of digital and traditional ones in the top ten ranking and this will be true across sectors and countries. Five of the ten most valuable companies in the world did not exist 20 years ago, and in the past decade have displaced former giants across banking, telecommunications and industrials. In fact, only Microsoft and Exxon have maintained a top ten spot for over ten years. The next generation of digital companies will drive further innovation and create significant value for both investors and for the ecosystems in which they operate. Value will come from emerging technologies and adopters that turn these into business models. Older industrial businesses will adopt technology and some will indeed survive and most will not. This generation’s digital businesses will not be safe from new disruptive technologies which will be faster and more ferocious in their disruptive impact. Emerging countries will have the chance to leap-frog mature ones; India newly minted 300 million bank accounts are set to find it easier to adopt mobile, electronic and cryto-currencies than established banks in the west. This has disruptive implications for which nations will be the market leaders in innovation in a decade or two.

Key Challenges. Adapt, acquire or exit. Given the rate of innovation and scale of the disruption underway, competition will be increasingly fierce. Digital consumer platforms such as AirBnB and Uber will seek to widen their offerings into new areas to unlock global growth, staking out new territories and eventually competing with each other and with more established digital giants. Companies that innovate and reinvent industry models such as Tesla will continue to gain market share with a chance to dominate their sectors, and incumbents will be faced with difficult choices to adapt or die. Acquiring innovation is theoretically an option, although for the world’s largest car manufacturer Volkswagen, which produces 6m cars annually, spending $60bn to acquire a company that manufactures less than 200,000 vehicles is likely unpalatable. And while VW has vowed to transform itself organically to become the world’s largest electric vehicle maker by 2025, history has shown that incumbents are unlikely to wholly reinvent themselves. The earlier waves of digital have already consigned formerly great companies to ignoble endings: Nokia, Kodak and Blockbuster to name a few. The current wave of innovation is likely to trigger many more.

7. Disrupting Business Processes

The Disruption Underway. Digital technologies are becoming increasingly embedded into every aspect of today’s companies, transforming the way companies source, develop and manufacture products, manage assets, capital and people and engage with customers and partners. Digital disruption is occurring across nearly every industry with B2C sectors such as media, telecommunications and consumer financial services being among the most fundamentally impacted, alongside retail, consumer, education and healthcare, education and industrials. As of today, the digital economy accounts for 5% of global GDP, a number that is set to grow rapidly. The process of how business is done – the role of the work place, the value chain and relationship between customers and suppliers – is already being transformed by online platforms such as eBay, Amazon, Uber and YouTube.

The Five to Ten Year View. Digital will become pervasive even across traditional and asset focused industries. The world’s most valuable retailer, Alibaba, has no inventory; the world’s biggest media company, Facebook, creates no content, and the world’s largest hospitality group AirBnB, owns no real estate. By focusing on the software that controls the user interface and collects and analyses data, these companies have fundamentally disrupted the industries they play in. However, digital platforms can only replace so much: somebody still needs to make cars, grow food and provide the energy required to power our digital lifestyles. In these industries, digital has the potential to modernise manufacturing and financial processes, streamline supply chains, revamp marketing and sales strategies, drive collaboration and innovation and rethink talent recruitment and management; in short to completely transform how the business works. The current ability of individuals to set up global businesses using the mass user platforms at little-to-no cost will continue to cross sectors, this has never been the case in all of human history. In ten years’ time Nestle will almost certainly still sell the same yogurt it is selling today, but the company delivering it will have radically changed on the inside, changing the way it designs, manufactures and delivers its products, the way it engages with suppliers and customers and the way it uses its own human capital. The current ability of individuals to set up global businesses using the mass user platforms at little-to-no cost will continue to cross sectors, as has never been the case in all of human history. The cumulative impact of these changes in terms of value creation is staggering: The estimated combined value – to society and industry – of this digital transformation across industries is estimated at $100 trillion over the next ten years .

Key Challenges. Companies will need to continuously self-disrupt and self-destruct to survive. Companies in these sectors will increasingly need to transform themselves to compete with their peers, as digital technologies become more pervasive throughout the enterprise. For this transformation to occur though, digital will need to be built into the core strategy, systems and processes of an organisation. Doing so requires addressing two core challenges. The first challenge is the scale of change, which can lead to large and expensive legacy systems becoming redundant. The second is the speed of change, with technological innovation now outgrowing individuals’ ability to adopt it. These challenges point to a world of continuous disruption and will require companies to fundamentally reorganise themselves for increased flexibility and scalability. In much the same way as people need to adapt their mindset to the emerging digital future, companies will also need to adapt. With organisations generally moving more slowly than individuals (consisting largely of individuals themselves, organisations move at the speed of the slowest one) established companies will constantly be playing catch up to technological developments spreading at viral speeds, and disrupters will quickly find themselves to be incumbents under disruption from the next paradigm of technology.

8. Automation and Employment

The Disruption Underway. Just as industrialisation has led to the automation of manual processes, digitisation is leading to the automation of mental processes, and promises to transform the white-collar work space. Workers in fields such as journalism, finance, medicine and law are seeing an increasing use of machines to automate basic tasks, with artificial intelligence (A.I.) and machine learning capable of faithfully carrying out a wide range mundane processes across the workplace.

The Five to Ten Year View. Automation will move from mundane to value added tasks… and jobs. To date, automated tasks remain sufficiently mundane to enhance work productivity, rather than replace the workers themselves, but as A.I. technology develops, the scope for automation will become increasingly complex. Estimates place the percentage of white collar jobs currently at risk from artificial intelligence at 30% within the next 20 years. And digital has the potential to disrupt employment in blue collar industries as well: by 2030 up to 70% of US and EU trucking jobs (or 4.4m) could be at risk from A.I. powered autonomous vehicles. The next ten years will see the widespread adoption of ‘mundane’ automation technology and the initial introduction of complex technologies that can replace humans, entirely.

Key Challenges. Self-perpetuating technology will drive net job loss for the first time in history. Historically, technology has created more jobs than it has destroyed. Industrialisation may have automated manual jobs such as weaving and spinning but also fundamentally grew both supply and demand for textiles, for example, cotton production in the U.S. increased c.4x after the introduction of the cotton gin and led to a sharp increase in the demand for slave labour. Similarly, sixty-five percent of Americans today work in information jobs that did not exist 25 years ago. However, these shifts were made possible by equally large shifts in global trade and production patterns, with these information jobs being created in industries with global customer bases. Assuming that progress drives increasing productivity and efficiency, this ratio of job destruction and renewal cannot be perpetuated and technology will eventually drive net job loss. Data scientist may become America’s fastest growing job in the next decade, but it still will not be able to absorb the millions of other while collar jobs automated away. When machines can faithfully replicate both the acting and thinking capabilities of humans, the field of exclusively human endeavours narrows to creating, but there is no reason to assume that technological progress will stop there. People may cry out for lost jobs of the industrial era, and politicians may initially exploit this to win their elections, but ultimately, we will have to all face the fact that the nature of work itself has changed.

Conclusion: The Core Themes of the Digital Transformation

Digital is the equivalent of planetary terraforming, it is set to reshape the contours of our politics, economies, societies and fundamentally our beliefs, values and cultures.

With the benefit of distance from the immediate issues, it is clear we are in one of the critical phases of the Digital Revolution: the displacement of a whole civilisation. The revolution began with hardware, moved to communications and now to the digitisation of everything, beginning with the invention of the transistor, continuing with the spread of the internet and global communications and has now progressed to the comprehensive digitisation of information processes and decision-making. The Digital Revolution of the past 50 years has marked the transition from the Industrial to the Information Age, and all of the issues and challenges we face are features of the post-industrial societies being created as a result of this shift. Seen from today there are a few common themes. The next Leaders in the series will explore these issues and challenges, as well as potential solutions, in greater detail. A review of the summaries above however reveals a number of common themes across nearly all of the areas of digital impact, including:

• Digital Technology is Strategic for International Relations, States, Industries, Corporations and Individuals.

Data, and the technology that generates, sorts and analyses it, is a critical strategic resource in the Information Age, just like coal, steel, oil and arms were important in the 19th and 20th centuries. Digital technology is strategic for individuals, companies and states. It provides the key to unlocking and potentially controlling individuals as customers, employees, partners and even friends and is therefore of critical value to control. Companies that can develop and control digital technology hold the keys to our economies and the transformation of our industrial order, and therefore stand to destroy and create outsized value (just as energy and industrial companies drove and dominated the Industrial Age). Digital is the equivalent of planetary terraforming, it is set to reshape the contours of our politics, economies, societies and fundamentally our beliefs, values and cultures.For countries, digital technology is critical to defence, protecting sovereignty and ensuring the integrity of the body politic. Controlling digital technology therefore needs to be a priority for everybody: individuals need to leverage technology to secure their data (and participate in modern life), companies need to secure access to continuous innovation to compete effectively, and countries need to secure sufficient strategic capabilities in digital to ensure economic and political autonomy. However, digital technology presents a unique problem with regards to control. Unlike previous physical assets and resources though, digital technology increases its value through greater distribution. While this is less of a problem for individuals, it is a significant one for corporations and states. Unless countries are able to agree on shared standards or the use of open source technologies, the network effect of digital technologies will likely give rise to a new series of digital arms races, with countries and corporations seeking to establish de-facto monopolies on each successive wave of emerging technologies.

• Digital Technology is Asymmetrical and the Experience in Warfare Shows this Challenges Incumbent Powers.

While being a leader in technology is strategic, particularly for countries, leadership alone does not always guarantee security or success. The US today accounts for a disproportionate share of the world’s tech innovation and power (based on the size of its tech industry and share of intellectual property), yet cannot prevent its corporations’ intellectual property being stolen, its intelligence services being compromised and its elections being tampered with. In almost all of these cases, the size and resources of the attackers are a fraction of the victims’. Complex digital attacks can be carried out by a small group of determined hackers, who may or may not be state-sponsored or even organs of some state. This asymmetry and the power it bestows on smaller actors is much greater than that provided by asymmetric conventional means (e.g. terrorism). While coordinated intelligence and law enforcement services have demonstrated they can identify and shut-down the majority of terrorist threats before they are realised, the pervasive nature of digital communications and the speed of innovation make effective defensive measures much harder to implement, and many attacks are only identified after they occur. This asymmetry will open the door to smaller nations, which are unable to compete directly with major nations such as the US, developing capabilities to disrupt or interfere with international power relations, and turn what were often formerly bilateral or small club deals in foreign diplomacy into much more complex negotiations.

• Digital Technology, Unmanaged, is a Threat to the Peaceful Transition to the Next World Order.

Technology, particularly next generation digital technology, remains almost totally ungoverned. Most standards in technology to date have been developed by the corporate sector rather than by governments or multi-lateral institutions, and often the self-regulation of industry is an afterthought to forestall government intervention. However, in a world where technology itself is strategic, its governance must surely be strategic too. If we are to avoid (as far as this is possible) digital arms races, predatory competition and the destruction of privacy, the world will need to develop a digital order for the 21st century, anchored by multi-lateral institutions and agreements and supported by the global community as a whole. The 20th century created institutions that governed physical assets and ideas such as the conduct of warfare, the governance of trade, nuclear energy, space and many other others. These institutions were products of the time and reflected the reality of the world they faced and its issues. Today’s world is moving beyond the ‘Great Powers’ model that have governed the 20th century: the US’s “America first” mission, Russia’s fall and China’s rise, the rise of emerging markets and the ageing and fragmentation of Europe are changing who the rule makers will be, while the nature of digital technology, its viral distribution, speed, pervasiveness and scale, will change the nature of the rules themselves. This, combined with the fact that the views on cyber-governance vary significantly between nations, ensures that digital order and the institutions governing it will look very different to what the world has seen in the past.

Digital technology is one of the most important factors that will catalyse the decline of the current world order as well as shape the nature of the one that will replace it in the coming decades. Looking further afield, the macro and socio-political changes that have been predicted to occur during the first half of this century, the rise of Asia and emerging markets, the end of Pax Americana, and the birth of the post-industrial society, among others, will all be dwarfed by the changes that digital technology might bring in its next iteration: artificial intelligence, neural up-and downloading, virtual realities populated with digital counterparts and newborns with lives, loves and wars and much more that today seems the realm of science fiction. Digital is the equivalent of planetary terraforming, it is set to reshape the contours of our politics, economies, societies and fundamentally our beliefs, values and cultures. Those that fail to fully understand the implications of this change have relegated themselves to be the losers in politics, business and their personal lives.

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