Impact of Innovation and Technology in the Business World
Introduction
Based on a 2013 study carried out by the Boston Consulting Group on innovation and technology, Apple and Google were ranked as the most innovative companies. The report continues to reveal that innovation has many faces, including incremental changes in existing products to the creation of entirely new products for customers (Antoneli, 2014). So then what is innovation? It’s an idea realised; a concept fulfilled or an affected change meant to introduce something more efficient or more appealing to consumers. Regarding today’s consumers of technology and their views on technology, Avant (2014) noted:
“the views expressed by the net generation students interviewed and surveyed… suggest
that the net generation defines technology broadly. It is not just computers and the
internet, but whatever digital devices or application help a student meet his or her needs.
A key component of the net generation’s definition of technology is customization, or the
ability to adapt technology to meet individual needs than vice versa.” (p. 150)
In the recent past, there have been debates on the impacts of innovation and technology and whether technology has effectively fulfilled its purpose in the business world (Binz et al., 2014). The primary focus has been on the consequences of the third wave of digitalisation; these debates are important because they help in an emphasis on the real purpose of technology and whether it benefits society as intended (Avent, 2014). The chief purpose of this essay is to state the impacts of technology and innovation in business and whether these changes have been more beneficial or problematic. The methodology of this essay will include a literature review of the work by Avant on ‘rise of the new platforms’ and ‘the third great wave,' and the concept of the ‘robber barons’ by both Foreman and Piketty (2014). However, some limitations will place restrictions on the methodology and conclusions of this essay such as the personal views of these authors and the current technological changes in the world.
Literature Review
A. The third great wave (Avant, 2014)
Radical change discomfits most people, and often for good reasons. The Industrial Revolution that took place in the 18th century, and the second revolution that took place 100 years later, had their victims who lost their jobs to the Cartwrights’ power loom and afterward to Edison’s electric lighting, and countless other inventions that changed the world (Antoneli, 2014). However, these inventions also improved other people’s lives, they led to a sweep of old economic structures and transformed the society, creating new opportunities and new occupations to replace the old ones (Avent, 2014). The third great wave led to the invention and economic disruption, it was set off by advances in both information and communication technology (ICT) and computing later in the 19th century and promised to offer a similar mixture of economic transformation and social stress. The wave is driven by some technological advancements including advanced robotics and machine intelligence able to deliver significant innovations: pilotless drones, machines capable of translating hundreds of languages, and unmanned vehicles (Avent, 2014). Nonetheless, whether great digitalisation will create more jobs to make up for the mass job loss remains to be seen.
Dominant, global computing was brought by the developments that took place in the 20th century on integrated circuits, under a rough thumb rule is known as Moore’s law (after Gordon Moore, one of the founders of Intel, a chipmaker company) (Binz et al., 2014). The number of transistors able to fit on a single chip has been on the rise every two years. This exponential development has enabled the creation of even smaller, better, and cheaper electronic devices, for example; smartphones were more powerful the supercomputers in the 19th century. However, More’s law continues to approach its end because transistors have become so small that shrinking them further would only lead to increasing their prices, yet comically available computing power continues to get cheaper (Dagryse, 2016). Both Amazon and Google are reducing the cost of cloud computing for their customers; more firms are getting better by making use of the computing power. In a book published in 2011 by Erik Brynolfsson “race against the machine,” the analysis cites that between 1989 and 2004 computer power increased 45m-fold (Antoneli, 2014). More powerful processors accounted for only 40% of this improvement, the largest share came from more efficient algorithms (Stephens, 2017).
The benefits of these computer developments have been slow to come through; the reasons are shown by a story of a man who invents a new chess game and presents it before his king. The king is impressed by the man’s invention and offers him the choice of a reward. The man asks for a grain of rice for the first square of the chessboard, two for the second, and so on, the king agrees since the amounts seem small at first, but as they continue it rises to values similar to a rice field and later the king with his riches is not able to provide the quantities of rice. This allusion is analogous to that of development where exponential growth seems negligible until it suddenly becomes unmanageable (Binz et al., 2014). Progress in the computing world has the rough humanity to the second chapter of the chessboard. Problems that looked impossible to solve have been cracked, according to Frank (2005), driving a car on a busy street was impossible for the computer to master, yet a few years later, Google invented driverless cars. Many automobile manufacturers are developing autonomous vehicles. Programmers are now able to develop smart algorithms to manipulate some activities and bring a semblance of intelligence from the circuitry (Avent, 2014).
Recently, machines have been finding it difficult to “understand” written or spoken language and complex visual images, but they seem to be getting the grip. An example is Apple’s Siri which responds accurately to voice commands; it can also take dictations for an email. Also, the Google translation program is improving fast; their computers are becoming better at understanding visual images like Google Maps (Devenport, 2013). The wave seems to bring more improvements in people’s living standards, but history suggests that society’s response to digitalisation will be slow and challenging. Workers in Japan, Europe, and America have undergone a rough cut few decades, in the 1970s the blistering growth that came after World War II vanished in all three countries, entering a prolonged period of economic stagnation (Hijazi, 2016). Brief spells of development petered out, but the developed world is still trying to deal with the effects of the financial crisis that took place in 2008 (Burger et al., 2016). Between 1990 and 2013, the average annual increase in wages in Britain was 15% and 1% in America; this was the result of research conducted by the Organisation of Economic Co-operation and Development (Timmermans et al., 2014). That was far less than growth in the earlier decades; real wages for workers remained flat and soared for the highest earners. Most economic historians reckon that there was little development in Britain after the first industrial revolution, even after the Victorian inventions, productivity growth was still slow as has been in recent decades (Avent, 2014).
In July 1987, a book review of the New York Times was written by Robert Solow. In the book, Solow laments about a shift in the American workforce into the service sector and also explores the reasons why manufacturing in the US seems to be losing to competition from other developed countries. He stated that one cause of this shift was the failure of the American business industry to take full advantage of the new technological advancements in computers that help in automation and more sophisticated ways of manufacturing. Solow comments that “like everyone else, are somewhat embarrassed by the fact that what everyone feels to have been a technological revolution… has been accompanied everywhere… by a slowdown in productivity growth (Avent, 2014 p.340)
The failure of new technology to bring about the expected growth and boost productivity became known as the Solow paradox. The big leap in the economy that took place in America between 1940 and 2000 when the average output per person was recorded at 2.7% annually, both before and after these years, the rate became slower (Johnston et al., 2016). The decrease in productivity after 2000 coincided with the acceleration in technological advancements as smartphones spread everywhere and machines became more efficient.
B. The concept of the ‘robber barons.'
The 700-page book by Piketty claims that inequality has increased sharply since the late 1960s, with a spectacular rise in the share of total income going to the biggest earners. In the book, Piketty quotes statistics: that 60% of America’s national income went to the few 1%, this happened 30 years after 1970 (Piketty, 2014) The only section of America’s population that did well was 10% of the 1%, while the 90% did better than the rest. He goes on to show that the rise in inequality in all rich countries does not have to do with capital, but the lack of proper management in the technological innovations in these countries (Piketty, 2014).
The extensive compilation of this story makes Piketty focus on money; he suggests that it has become more unequally distributed, especially from the 1970s, not just in America, but Europe too (Antoneli, 2014). He trusts that this trend is likely to continue, because the profits from capital continue to grow faster than the economy itself, and the owner of this wealth does not spend it. This Is the “central contradiction of capitalism,” which he ends by saying: “the entrepreneur inevitably tends to become a rentier, more and more dominant over those who own nothing but their labour. Once constituted, capital reproduces itself faster than output increases. The past devours the future.” (Piketty, 2014 p.300)
Things start getting tricky for both Piketty and the reader, who only wants to confirm his facts. Let me cut to the chase by stating that the proof of rising wealth inequality is not as clear as the evidence of rising inequality in incomes. Further, some of his book’s biggest fans have their doubts about forces pushing the economy in the direction that Piketty is suggesting. Recently in the United Kingdom, the leaders of the leading companies took a significant share of the national income and the others remained with little to share (Johnston et al., 2016). However, the trend reversed when the economy hit its skids in 2006, and the labour share went back to where it was in the early 70s. Piketty sees an apparent gap between the wealth creators and asset strippers-between the fat cat “rentier” capitals that devour the socially useful capital of the entrepreneur (Margolis, 2014).
To critically review the concept of the robber barons using Foreman’s works, we also need to look into the book itself: “the myth of the robber barons,” (Piketty, 2014 p.560) it tells a story about entrepreneurs in early America. People in business are portrayed as being behind America’s greatness; it goes further to explain that there are two kinds of entrepreneurs, the market, and political entrepreneurs. According to Folsom (2015), “no entrepreneur fits perfectly into one category or the other, but most generally fall into the category. Political entrepreneurs provide the classical robber baron mole; they do business in a corrupt manner (Timmermans et al., 2014). They get aid from the government and usually end up wasting the money instead of using it to help the majority. Their products are also of poor quality; their only concern remains in getting things done and making money.
C. Rise of the new platforms
Information technology management has brought automation and has increased productivity in business. One Silicon Valley capitalist was quoted saying that people in his profession move around looking for new ways to eliminate jobs. The software is becoming more powerful, and computers are becoming cheaper (Antoneli, 2014). The retinol to reduce dependence on labour is becoming more intense. Digitalisation has enabled the increase in globalisation, global trade, and economic integration across businesses and countries. Many enterprises make their profits in the global trade. Hence they will resist the effort to control technology and innovation in business. To remain relevant in the tech world, companies are seeking to produce more goods at a lower price; this means that workers have to be willing to work at lower wages. The effects of these dynamics are being witnessed in the United States, where workers are being forced to accept lower competitive salaries (Mowrey et al., 2015).
Digital technology boosts productivity for some employees; it enables them to temporarily demand and receive higher wages that come with more benefits, however, the number of these privileged jobs is decreasing, and it is unlikely for everyone to be trained for that job (Avant, 2014). The change also works by de-skilling some workers, cheaply available technology like computers and smartphones has enabled workers with lower skill levels to work in jobs that formerly required training, and this has acted as an advantage to employers since they offer low wages for the jobs and still fill their workforce (Timmermans et al., 2014). The problems of increasing productivity and prosperity have been solved, but the remaining issue are how to distribute these benefits. These issues are political, but the political systems have failed to deal with them because they are either dysfunctional or plagued by partisan extremism. Additionally, these political climates are controlled by various individuals who own large corporations. We need to make a world where the profits of technology go across the board and profits are shared more equitably.
Political giants and rich donors favour large corporations; governments listen to corporate interests more keenly than private ones (Avent, 2014). The digital revolution is opening up a wide gap between workers and the few wealthy in society. In the past, the rise of new platforms in business led to an increase in wages by boosting productivity in companies, and gains were split equally between capital owners, workers, and consumers. Today, technology is empowering talented individuals like never before and is also opening up gaps between the income of the capital owners and employees. At the same time, it creates a large population of underemployed groups that arrest development. Technological change in trade is also changing development in poorer economies, more manufacturing work is being automated, and skilled design labour now shares a large percentage of the value of commerce, and this leads to what economists call “premature deindustrialization” in developing economies (Binz et al., 2014). Governments can no longer count on the developing industrial sector to absorb unskilled
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