How Canada can keep leading the future digitized world

| December 16, 2016 | 0 Comments

Excerpted from Tom Jenkins’ speech at the 10th Ivey-Thomas d’Aquino Lecture on Leadership held in Ottawa on Oct. 19

Canada's Waterloo-Toronto corridor is ranked the second-largest ICT cluster in North America and one of the best places to start a company. (Photo: © Kran Kanthawong | Dreamstime.com)

Canada’s Waterloo-Toronto corridor is ranked the second-largest ICT cluster in North America and one of the best places to start a company. (Photo: © Kran Kanthawong | Dreamstime.com)

Canada is winning the digital race. Although we are concerned about our productivity and the ability of our largest corporations to remain competitive, we are actually doing very well in digital. Over the past few years, Canada has been recognized for its digital capacity.
The Waterloo-Toronto corridor is ranked as the second-largest ICT (information communications technology) cluster in North America and one of the top 10 places in the world to start a company. We are the most significant alternative to Silicon Valley. Multinationals have recognized this. Recently, Prime Minister Justin Trudeau welcomed Thomson Reuters back home to Toronto and earlier, General Motors, CISCO, Microsoft and Google have all made major investments in the Waterloo-Toronto corridor.
We are building a strong ecosystem with domestic corporations. CGI, from Quebec, has more than 60,000 IT professionals and is one of the largest firms in the world that deploys digital solutions in every country. Open Text, a University of Waterloo startup, is one of the largest software companies in the world. Constellation, Enghouse, BlackBerry, Descartes, Shopify, Hootsuite and the Communitech, DMZ and MARS incubators have thousands more startups coming up. That is quite an achievement.

Henry Ford made history by selling low-cost Model-T Fords to the very workers building them. (Photo: Harry Shipler)

Henry Ford made history by selling low-cost Model-T Fords to the very workers building them. (Photo: Harry Shipler)

Our private sector has created digital capacity. However, our public sector may not be moving fast enough to keep pace.  There are productivity challenges in education and health care that no longer exist in the private sector. Future governments may not be able to govern effectively and remain relevant to society.

Canada is winning, but we must do more
Digital has transformed our lives, mostly for the better. However, digital may have negative impacts in the long term.
What happens in a society where many people can no longer work for value? How do we achieve inclusive growth then? Some digital observers question whether our very survival as a race might be eclipsed by a new race of machines that we created. That is profound.
Do we really understand the changes that digital is driving in Canadian society and other societies throughout the world? Do we understand the implications when the brain of a millennial is physiologically different than that of his or her parents? Something that once took tens of thousands of years of evolution to shape has been modified in one generation. This has never happened before and it has implications. For one, our education system has been organized for a different type of human brain. Let’s consider these implications in terms of the major public policy issues that face Canada in the economy and in society.
Let’s start with our economy. The world is in a global race of innovation. This year at the World Economic Forum in Davos, the next technology wave was considered as the fourth industrial revolution. It is estimated that we will grow from 5 billion connected people to 1 trillion connected devices within 10 years with a combined computing ability that will surpass the human brain within 5 years. Digital has a possible negative economic impact: massive unemployment in some sectors. If you are a truck driver, a taxi driver, an Uber driver, even a banker, an accountant or a lawyer, all of these jobs might be eliminated in the next 10 years by digital analytics. We are now automating so many jobs that there is a race between the old ones being replaced by machines and new ones being created by new capabilities. So far, humanity has been able to take advantage of these productivity improvements and create better quality of life and standard of living. But something is changing.

An access slowdown

As industrial hubs such as this grain elevator in Buffalo are abandoned, we must rethink the distribution of wealth and the balance of value and work in society, writes Tom Jenkins.  (Photo: fortunate4now)

As industrial hubs such as this grain elevator in Buffalo are abandoned, we must rethink the distribution of wealth and the balance of value and work in society, writes Tom Jenkins. (Photo: fortunate4now)

Our ability to create those productivity improvements and benefit society has slowed down and in some cases reversed. Why? It may be that in this next fourth industrial revolution, the machines are thinking so fast they are moving beyond our capacity to keep pace and we are thus losing the race to remain relevant. This is the opposite of the Model-T Ford effect of the last century.
If you recall, Henry Ford made history by selling a low-cost automobile, the Model T Ford, that would be affordable to the very workers who were building them. This created a virtuous circle that lifted the quality of life for the middle class in the U.S., and this pattern was soon repeated elsewhere.
The problem with digitization in its current form is that we are not replacing the lost jobs fast enough. We are not organized to retrain our human employees on the scale and with the speed required and we need to think about that more deeply while we still have time.
Our creativity is currently the last vestige for humans contributing to the overall productivity of society. We cannot just be consumers of the goods and services that machines produce, but rather, we must also produce something or the virtuous circle first created by Henry Ford as the economic pillar of our modern society will be forever broken. This has profound implications for social order across the world. Recent elections indicate the unease throughout society. Our modern economics will require a re-think in terms of the distribution of wealth and the balance and value of work in our consumer society.
Consider another aspect of our economy and society — infrastructure. This usually means the creation of jobs and better and safer roads, railways, bridges and so on. This is a well-known method for building our society and we have a great history of doing this in Canada. But, have we modelled the impact of the sharing economy and the driverless automobile? This may cause a dramatic reduction in our need for infrastructure as we may take current road utilization and quadruple it, thereby creating a “holiday” for road building for decades right at the same time that we seek to build it out. As we use more of Uber- and Airbnb-type services we may find that we have a radical reduction in our demand for infrastructure. We should think about this carefully before we spend $1 trillion over the next decade.
Indeed, the very best societies may wish to consider the virtual infrastructure that we will need for the fourth industrial revolution. We know, for instance, that if you have a 3D printer (a printer that creates objects instead of documents) and an internet connection, you don’t need to move goods around, since this will be on demand, and you don’t need to have an elaborate warehousing and transportation system. We also know that we may have drones that will effectively fly your products to your door, or a self-driven truck that will deliver them. The world will be a different place.
Let’s think about the infrastructure that this new digital world would need and look forward, not backward. It’s actually very simple. It needs communications with a lot of bandwidth.
Think about infrastructure, but this time digital infrastructure. Let me give you an example of how another nation state approaches this issue. A five-megabyte communications network is what you need to livestream something from Netflix on a TV. But countries that are concerned with productivity invest in much faster networks at the one-gigabyte level since businesses will need to be able to receive a 3D printing file from a city on the other side of the world to remain competitive and that requires the latest in computers, software, and 3D printers.
Connectivity is everything. Recent consumer research indicates that millennials rank wi-fi as just as important as food and shelter. Imagine that.
The brains of millennials are different
Consider the impact of digital on society. Communications is at the core of digital infrastructure and if we define our needs solely as consumers, we are then hastening our demise as producers. We must keep up or be rendered non-competitive and thus irrelevant in the global economy. We need to imagine the future digital world when we plan, but the conclusion is simple: Low-cost high bandwidth is an essential public good for any future society. We must recognize that digital infrastructure is a key factor in our future productivity as a nation.
Despite the fast pace and dramatic impact of digitization in the past few years, one can only foresee that the pace and impact are about to substantially increase and perhaps occur as a step function rather than a geometric progression. This is due to the shift from human-based data collection and analysis to machine-generated collection (FitBit, Apple Watch, Internet of Things) and machine-generated analysis (robo adviser, high-frequency trading, digital doctor). This shift has already happened in other industries (automated welders, for example). We are moving to one trillion connected machines. That is a stunning number. The world will be forever changed.
Many of our leaders are now leading the first generation of millennials or digital natives. They are the kids that grew up with the internet similar to the way the previous generation grew up with TV. As many parents will tell you, these kids appear not to be able to remember anything and also appear to be doing too many things at once. Guess what? Those observations are correct and supported by research that has been done into their brains. In California, researchers have been conducting CAT scans of digital native brains and they have found that the areas of the brain associated with memory are diminished while the area of the brain that “networks” between the right and left sphere, is enlarged. So, you are not imagining these traits, they are real and supported by actual physiological changes to the brain in digital natives.
After hundreds of thousands of years of brain development over tens of thousands of generations, in one generation we have made a massive impact on brain function. That is an acceleration like we have never seen before. It is profound and it demands our attention.
What is behind this? Well, it’s the impact of machines. Smartphones are just personal machines. The brain of a digital native is just efficiently handing over the memory function to a machine and concentrating on the integration of information rather than just the storage of data. This has a huge impact on how we train and lead our next generation. They are not like us. If we force them to memorize things as we did, they will soon quit and go to somewhere more suited to their abilities. No wonder millennials consider wi-fi an essential need.
Now we know why many of them have such difficulty with their education as the courses they take rely on human memory without machines. The education system was developed for our brain, not theirs. How disappointing that fact must be for a digital native to realize, as they get older. There wasn’t anything “wrong” with them. They were just different and the system had not anticipated their lack of capability nor their enhancements.

Humans with implanted internet devices

Businesses will need to be able to receive a 3D printing file from a city on the other side of the world to remain competitive and that requires the latest in technology. (Photo: © Andrea De Martin | Dreamstime.com)

Businesses will need to be able to receive a 3D printing file from a city on the other side of the world to remain competitive and that requires the latest in technology. (Photo: © Andrea De Martin | Dreamstime.com)

Unfortunately, this first generation of digital natives will just have to endure this. They are the digital pioneers and set the tone for all that follow. Millennials must drive the change in the education system. As they go through stages of their careers, this will happen again to them. The millennials are the signpost generation and they are one of the most important generations in the history of human evolution. Probably on a scale with the first humans who walked out of Africa. “Wearable” internet devices will soon get smaller, to the point where they will be implanted into them, and their idea of privacy, consciousness and social media will evolve in a way that none of us can predict. It will happen in their lifetime.
The innovation of machines also has an impact on governance. Remember the movie Terminator? The Cyberdine Systems machine became self-aware and then destroyed humans in order to protect itself. Sound farfetched? Think about what happened in the financial industry five years ago. It had a “flash crash.” This happened one day when the nanosecond trading algorithms on bank computers decided that the market would go to zero and they all started automatically selling. The problem with machines is that they can operate much faster than we can. A nanosecond trade can make one billion trades within one second. We humans are lucky if we can react within one second to a complex situation. Consider that one billion trades for a human is the equivalent of 32 years. A group of machines can do 32 years of trading before we humans are even aware of what they are doing. We have to think long and hard about the governance of that.

Time is getting short to react
The impact of digital on our society will happen faster than any of us can imagine.
The pace of innovation is very deceiving. Most of us believe that growth and change occurs in a linear fashion. So what happened in the last five years will be about the same as what will happen in the next five years and so on. In fact, it does not. Studies show that the pace of innovation is geometric. In other words, instead of one, two, three, four, we are increasing the way we do things exponentially, as in two, four, eight, sixteen, and so on. You get the idea. We don’t notice change when it is early, but what about later, when instead of step eight on the linear scale, we are now at 512 on the geometric scale.
We as humans have met these challenges before. We must be aware that a machine has had one million chances at thinking about something compared to each single chance we have. Our public policy must move from specific rule of governance to principles that are technology and time invariant.
What are the opportunities for Canada? Although the digital agenda is daunting, we have many advantages as a country and we can lead the world with a nimble digital strategy. We must make digital a focus for our country the same way we did youth or the environment. We must create a digital department of the federal government and encourage the provinces to do the same — complete with a digital minister who has a seat at the cabinet table. For example, Ontario recently created the first minister of digital, Deb Mathews.

We will find benefit in several areas
Our millennials, who are getting frustrated, will have somewhere to go to help them cope. A dedicated department would attract the best and brightest in digital, since they would see a clear mandate and ability to make a difference.
Our citizens and our corporations will have somewhere to turn when they are dealing with out-of-date services from our government. This department would help shape new legislation that would be principles-based so that it would not be outdated by technological changes. Of course, creating another department is not a panacea. But what choice do we have? If we don’t overcome these challenges and change for the future, what legacy will we leave behind?
Canada is winning in the digital race so far, but we must continue to pick up our pace if we wish to remain relevant in the digital world. Having a digital department can help prepare us for the enormous changes that are coming. That would give Canada a true competitive advantage for the dramatic changes to come.

Tom Jenkins is chairman of the board of OpenText Corporation, chairman of the National Research Council and the 10th chancellor of the University of Waterloo.

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