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In Part III of our interview with Brett King, we discuss his views on the potential “winners and losers” during the transformative decade of the 2020s. If you missed the earlier parts of our interview, please find links here to Part I and Part II.
We asked Brett about the industries where he sees the biggest potential impact of Digital Transformation: “I definitely think Financial Services is up there, we're talking about a $26 trillion annual industry. The fact that technology can radically displace incumbents who really haven't innovated in the last 30 to 40 years is very acute. Healthcare is another, its highly inefficient now because we wait for people to get sick and then treat the symptoms of disease rather than the root causes. Whereas with the use of gene therapy, for example, we can eliminate diseases like Parkinson's or Alzheimer's or cardiovascular disease or various cancers like breast cancer. You won’t need drugs to treat the symptoms because you just edit out the DNA like a software bug. It's a radical change in the way we think about healthcare using data to diagnose, instead of waiting for you to get sick. With personalized medicine, we'll take your genome and the genome of the particular type of cancer you have and come up with an individual drug regime that will work for you as an individual much more effectively than a mass marketed patented drug. Retail continues to be radically disrupted, the distribution of goods and services is obviously being disrupted now by the app layer, but the next level of disruption is going to be around the automation of the supply chain to the point where you can have raw materials delivered to automated factories producing goods and then have these goods shipped on autonomous flying vehicles and robots deliver them to your door. We see many retail stores now finding the storefront model to be uneconomical based upon changes in the way people are consuming and purchasing goods and services.”
Brett explained how, besides the energy sector itself, even businesses and individuals tangentially connected will be impacted: “There is also the energy sector, there's going to be increasing pressure to become carbon neutral or carbon negative. The cost of renewables is plummeting and improvements in storage is ramping up rapidly. It's going to reach the point soon where distributed Smart Energy grids based on renewables will be much more cost effective than traditional systems. The economy is based on energy and half the world's commodity markets today are based on energy trade, so you've got the potential again for really massive structural shifts. I think we're going to start to find that GDP and quarterly returns are no longer going to be the only metric that matters. We're increasingly going to have rejection of organizations that support pollution and fossil fuel burning such as we saw with the pushback against Roger Federer for his sponsorship partnership at Credit Suisse because of their support for fossil fuel organizations and fossil fuel infrastructure projects.”
Brett described how a Corporate Social Mandate will become not just a ‘nice to have’ but a ‘must have’: “I also think that as automation kicks in and companies are using automation to become extremely profitable, these profits will be shared less with the public because with fewer employees the profits are limited to the shareholders rather than distributed among employees with a broader economic impact. These large trillion-dollar corporations that have invested heavily in technology will understand it's in their best interest to mitigate the threats by having a social consciousness, by investing in the environment, by creating programs that give people access to basic services. For example, Amazon is creating housing for homeless people in San Francisco and Seattle, Marc Benioff from Salesforce has promoted a similar strategy. Companies that lead in the future will not just be those that make massive profits, but will have an increased social consciousness as part of their business and people will believe that it's good to buy their products and services because not only are they a good company but they also have a strong social mandate.”
We asked Brett about countries that are well-positioned to succeed with the coming transformations: “China's obviously going to be the world's number one economy by the end of this decade. There are a number of reasons, the primary one is the national level of investment they've made in technologies. I was in Shenzhen a couple of weeks ago and I would say it’s probably the world's most innovative city, there is an innovation culture from the ground up that we just don't have in the United States. In the US, we have some of the world's largest technology companies, but they depend on technologists, and we don't have enough new technologists being trained in the United States. We don't have public support for STEM programs like China does and other countries like the Nordics, for example. As a result, we've had to supplement technology resources in the United States through importing people with H1 visas and so on and this has become unpopular because of the immigration issue. We're starving the technology companies of resources with the immigration policy and lack of education. China has invested 60% of the world's R&D spend in Artificial Intelligence over the last 10 years and they've got massive data pools as a result of large populations to be able to model the AI algorithms. China will have a significant advantage in the coming decade. India also has a very strong technology culture that will continue to help them. China is moving more aggressively towards renewable energy technologies than India, which will probably hurt India in the medium term, but I think they'll eventually get there just purely based on costs. The US has to go through pretty significant changes in terms of the way it thinks about access to education in technology and the way it thinks about encouraging development of technologies. For example, the Trump government doesn't have a single AI person in the administration right now, while in China the President talks about it at almost every address he gives to the nation. In China, primary school children are being taught AI in classes now, it's a very different sort of investment in the future.”
While on the topic of China, we asked Brett his thoughts on reports such as this one by NPR which describes how China has plans to introduce a digital currency that could potentially rival the US dollar as a global reserve: “If you designed a currency from scratch today, using a first principles approach, a geographically based physical currency wouldn't really make sense, you would come up with something a lot more like Bitcoin or a digital fiat currency. Most of the urban centers in China have gone cashless with mobile payments and their currency is essentially becoming digital. The really interesting thing is how China could use this to overcome the dominance of the US and the Petro-dollar markets. As the world becomes less dependent on US underpinned energy commodities like oil, gas, coal and so forth, there is definitely an opportunity for China to step in and say: ‘Let's create a new reserve currency that's digital in nature.’ I definitely think there's an opportunity there.”
As you can see, it was a real treat to be able to spend time with Brett and to discuss such a wide range of profound issues. We hope the conversation will be ongoing and would like to incorporate your comments and reactions in future discussions. What did you find most insightful in Brett’s remarks and why? Do you see any of the issues he talked about differently? If an ultra-conservative politician in a deep-red state in 2020 calls a Socialist crazy and utopian, what does he or she call a Techno-Socialist in 2030? We look forward to reading your comments and making this an ongoing conversation.
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