Crisis Generated in the Centre and a Recovery Driven by the Emerging Economies
Technology Driven Change in Economies, Industries, Firms...
Transcript of Technology Driven Change in Economies, Industries, Firms...
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Technology Driven Change in Economies, Industries, Firms, & Jobs
Uday Karmarkar Director, The UCLA BIT Project
Distinguished Professor, LA Times Professor of Technology and StrategyUCLA Anderson School of Management
The 2014 Global BIT ConferenceTechnology Enabled Business Models
March 27-28, 2014; The University of Auckland, Auckland NZ
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The UCLA Business and Information Technologies (BIT) Research Project
Global research network of leading research institutions in 15 countries Global survey of technology impact on
business (in 12 countries, six languages) GNP/Labor/Trade studies of economic
evolution by country (five countries) Technologies, Business Issues and
Sector Studies (several countries) Comparative studies of technology use
and business practices across countries
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UCLA BIT Global Research Network
IAE, Buenos Aires, Argentina
PUC, Santiago, Chile CINTEL, Bogota,
Colombia Innovation Institute, Zagreb
Croatia ESMT and Humboldt
University, Berlin Germany University of Athens,
Athens Greece SDA Bocconi, Milano,
Politecnico di Torino Italy
U.of Malaya, Malaysia
Korea U Business School, Seoul, Korea
U.of Auckland, New Zealand
ISCTE, Lisbon, Portugal
ESAN, Lima, Peru
IESE, Barcelona, Spain
U.of Lugano, Switzerland
National Sun YatSen U, Kaohsiung, Taiwan
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Picturing the Economy
Products Services
Material
Information
Steel, CementAutomotive
Consumer Goods
ComputersBooks, Magazines
Data basesMusic CD’s
TransportationRetailing
Construction
TelecommunicationsFinancial ServicesNews/Information
Consulting
Delivery Form
End product
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US GNP Breakdown (2007)
Apte, Karmarkar, Nath, “The Information Economy: Value and Jobs” (2012)
Services
Material
Information
10.2%
5.3%
29.6%
54.9%
15.5% 84.5%
60.2%
39.8%
Products
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The S. Korean Economy (2005)
19%
50%
20%
11%
PRODUCT SERVICE
31% 69%
61%
39%
MATERIAL
INFORMATION
Choi, Rhim, Park, “New Business Models in the Information Economy”, BIT Korea
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The Italian Economy (1995-2009)
1995 Prodotti Servizi
Tangibili 31% 42%
Intangibili 2% 25%
2002 Prodotti Servizi
Tangibili 19% 41%
Intangibili 4% 36%
2009 Prodotti Servizi
Tangibili 16% 40%
Intangibili 4% 40%
Baglieri, Zambolin, “The Future of Services”
56%
44%
80%20%
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The Chilean Economy 2003
Sergio Godoy, et al., “La empresa chilena en la economía de la información”, BIT Chile 2007
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New Zealand GDP Trends
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New Zealand GDP
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2008 2009 2009 %Finance & Business Services 36,228 36,793 27.6%
Manufacturing 18,597 17,612 13.2%
Personal & Comm Services 15,504 15,947 11.9%
Transport & Communication 14,304 14,334 10.7%
Retail, Hotels, Restaurants 10,410 10,042 7.5%
Wholesale Trade 10,523 9,973 7.5%
Govt Admin & Defence 6,374 6,673 5.0%
Agriculture 6,472 6,310 4.7%
Construction 6,592 6,010 4.5%
Fishing, Forestry, Mining 3,419 3,335 2.5%
Electricity Gas & Water 2,509 2,522 1.9%
GDP 135,367 133,486 100.0%Primary Industries 10,051 9,801 7.3%
Goods Producing Industries 27,833 26,305 19.7%
Services Industries 92,898 93,504 70.0%
New Zealand Treasury: http://www.treasury.govt.nz/
New Zealand GDP by Sector (mm NZD)
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US Employment, Number of Jobs (2007)
Non-Information
Apte, Karmarkar, Nath, “The Information Economy: Value and Jobs” (2012)
Information
Services
7.5%
3%
44.5%
45%
14% 86%
48%
53%
Products
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US Wage Bill Distribution (2007)
Apte, Karmarkar, Nath, “The Information Economy: Value and Jobs” (2012)
Information
Services
Non-Information6.4%
4.3%
36.8%
52.5%
10.7% 89.3%
56.8%
43.2%
Products
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US Average Relative Wage Rates (2007)
Information
Services
Non-Information 59
100
58
82
Products
Apte, Karmarkar, Nath, “The Information Economy: Value and Jobs” (2012)
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Causes of Economic Evolution
Reasons for the trends (Baumol)• High productivity growth in manufacturing and
low productivity growth in services• Changes in GDP, employment, wage shares
Now, a new technology driven dynamic• The “industrialization” of services• The growth of service productivity, competition• The impact on jobs and employment• Globalization of information and service chains• Massive change in many industry sectors
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Service Industrialization Unlike industrialization of manufacturing Different path for scale, power, standardization Standardization of process via ICT
• Automation of data management and processing• Component and object based software• Low cost “logistics” through telecommunications• Distributed processing
Now migrating up to modularization of business processes, multi-tier service “chains”
And to modularization of businesses, industries With similar consequences for productivity,
globalization, competition, innovation
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Service Industrialization Looks a bit like manufacturing in the 60’s,70’s
• Automation• Out-sourcing, virtualization• Off-shore sourcing • Process reengineering• New processes and new services• Operations shifting (in the service chain)
• Self service (shift processes to consumers)
Supported by • Network logistics, B2B services (cloud,
platforms, SaaS, IaaS), distributed work
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Vast Consequences
Economies: GNP, jobs, wages, trade, investment, income inequality
Sectors: globalization, reach, lateral bundling, vertical de-integration, modularization, commoditization
Companies: virtualization, distribution, platform strategies, new processes, front office automation, re-organization
Jobs: redefined work, automation, new jobs, shadow work, global workforce
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Biggest impact: Info intensive services
Financial Services (banks, insurance) Software and IT enabled services Business Services Business data management Publishing, entertainment/media Telecommunications Education Government
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All Sectors Affected Health care: diagnostics, EHR, telemedicine
Manufacturing: management, systems, factory automation, sensor data, CIM, virtual plants
Supply Chains, Distribution, Retailing: Asset & vehicle tracking, RFID, eCommerce, package tracking, monitoring, self service,
Internet of Things, smart systems, home robots
Industrialized organizations: CRM, data and content management, IS services, enterprise planning, business processes, transactions, accounting and costing, HR management, distributed and virtual organizations
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Info-intensive Businesses
Technology (hardware,software) affects all layers
New services appear to serve businesses
These changes affect economics of processes
Business tradeoffs change, sectors re-structure
One important consequence is “convergence”
Base Infrastructure
Infrastructure Services
Information Products Information Services
Information Chains
B2B B2B B2CB2C
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Converged Logistics (forward links)
Create
Process
Store
TransportServer
Distribute
OS
/Bro
wse
r
Screens
ServicesCapture
Assemble
Appliances
Content
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Convergence in Info Chains
Cannot happen in physical (supply or service) chains and systems
Physical chains (steel and wood) may partially substitute, but cannot converge
Commonality in form, tools, process, use can extend to entire chains and sectors
Technologies also allow for new structural forms, markets, services
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Example: Consumer Imaging
Capture Film, Camera Digital camera
Transport Film Disk, card
Process Photofinisher Software, PC
Archive Photo album Digital Media
Transport Mail photo Online or batch
Display Photo Screen, print
Capture Film, Camera Digital camera
Transport Film Disk, card
Process Photofinisher Software, PC
Archive Photo album Digital Media
Transport Mail photo Online or batch
Display Photo Screen, print
Capture Film, Camera Digital camera
Transport Film Disk, card
Process Photofinisher Software, PC
Archive Photo album Digital Media
Transport Mail photo Online or batch
Display Photo Screen, print
Film-based Digital
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Vertical De-integration Economics of media (film, paper, CD’s)
the major reason for vertical integration• High fixed costs of production• Media served multiple functions • Linked production, distribution and use• Proprietary technologies (photochemicals)
Now: digital = media-less • Simple loss-less, cost-less interfaces between
stages, low cost transport, storage• Functional decoupling, process independence• Common technologies across different chains,
sectors (convergence)
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Lateral or Horizontal Dominance
Store
Transport Distribute
OS
/Bro
wse
r
Process
Store
TransportServer
Store
Transport
Services Appliances
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Short Circuits: Direct to Customer
Process
Store
Transport Distribute
OS
/Bro
wse
r
Screens
eMarkets
Assemble
Appliances
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Back to Barter: Community Exchanges
Process
Store
Transport
AssembleServer
Screens
Exchange
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Apple: Content Store and Appliances
Create
Process
Store
TransportServer
Distribute
OS
/Bro
wse
rCapture
Assemble
AppliancesContent
ContentStore
Appliances
Screens
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Apple becomes a consumer products company(3Q Revenue Breakdown 2006-2011 %ages)
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Who Wins? Basic hardware or simple B2B services?
• Overcapacity, commoditized
Consumer service platforms: the new brands
• eBay, Amazon, Google, Yahoo, iMode
Telecom: big but not so profitable
• Need to learn how to bundle (iMode)
Screens and appliances near the head and in the home
• Apple, Samsung (Nokia? Sony? Google?)
Operating systems or Browsers?
• The fight continues
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Most Visited Websites
Image Credit: Oxford Internet Institute, Dr. Mark Graham, Stefano De Sabbata
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Most Visited (English) Websites eBiz MBA Ranking; Number of Unique Monthly Visits
1 Google 1,100,000,000
2 YouTube 1,000,000,000
3 Facebook 900,000,000
4 Yahoo! 750,000,000
5 Amazon 500,000,000
6 Wikipedia 475,000,000
7 eBay 350,000,000
8 Twitter 290,000,000
9 Bing 285,000,000
10 MSN 280,000,000
11 Microsoft 275,000,000
12 LinkedIn 250,000,000
13 WordPress 240,000,000
14 Pinterest 150,000,000
15 Ask 145,000,000
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Platform Player Market Caps (2013)
Apple: $507 Bn
Google: $373 Bn
Microsoft: $313 Bn
Samsung: $196 Bn
AT&T: $186 Bn
Amazon: $185 Bn
Vodaphone:$189 Bn
Samsung: $ 174 Bn
Disney: $131Bn
Ebay: $ 70Bn
NTT DoCoMo: $67 Bn
Baidu: $58 Bn
Facebook: $56 Bn
Twitter: $ 52 Bn
Yahoo: $ 37 Bn
Sony: $ 17 Bn
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Newspapers
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Information Services
Content based (entertainment)
Transaction (financial, ecommerce)
Functional (search, GPS, email)
Market and exchange (YouTube, eBay, craigslist, Amazon, Groupon)
Social Communication and Networking (Facebook, LinkedIn)
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Diagnostic Imaging
Machine
SCAN
Radiologist
Interpret
Clerk
Transcribe
ImageArchive
CustomerQueue
Report
To Physician
Customer
Tape
Technologist
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Decoupled Processes
Machine
SCAN
Radiologist
Interpret
Clerk
Transcribe
ImageArchive
Customer Queue
To Physician
Customer
Tape
Technologist
Report
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Industrializing Service Chains
Outsourcing of scans – being done
Outsourcing of diagnosis – being done
Automation of diagnosis? Coming
Off shore diagnosis? Starting
Off shore, outsourced transcription – done
Digital distributed archiving
Loss of specialization? Referring physicians can read the images
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Takeaways
The Information Economy
Industrialization and Productivity
De-integration of info intensive sectors
Emergence of platforms, bundling
Everything as a service
Appliances: still evolving (wearables)
OS, browsers, apps: shifting balance
Organizations, jobs, changing evolving
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BIT Research Volumes
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