Why tech innovation is essential for future economic growth

Automation might mean job losses in the short term but longer term the impact of technology can be much more positive, if we let it.

The Luddite protests against machinery in the early nineteenth century are often characterised as a movement which was against machines replacing people wholesale; whereas in fact the primary concern of the early protesters was that new wide-framed automated looms could be operated by cheaper, less skilled workers, with skilled textile workers losing their jobs.

As such the dispute was as much about individual job displacement as overall job loss; in modern parlance, less skilled workers moving up the process ladder.A more positive view of is that the more skilled workers' time was being freed up so it could be used in more imaginative and productive ways: new product design, market, sales and so on.

In other words, the new looms would not just increase productivity and profits but open new markets and grow the business to the benefit of all. Whether or not this happened in the nineteenth century textile industry is another matter, but it is often the case put forward when making the twenty-first century case for more automation driven by IT.

Quocirca reports have echoed this: for example, The wastage of human capital in IT operations (December 2012) argues that more automation of IT management will free skilled operators to move up the IT process ladder focus on building more business value and Customer automation management (October 2013) tells how IT can drive more back office automation free staff to focus more on pro-active communication with customers.





However, there is a danger of a growing digital divide and whilst many benefit there can be extreme losers if the benefits of technology are not extended to all. This is a story well told by Erik Brynjolfsson and Andrew McAfee in their 2011 book Race against the machine.




However, what is less often asked is what the future would look like if the IT industry stopped innovating and driving more and more automation: the answer is surely not good!

KPMG's Tech Monitor UK report published this month shows how jobs growth in UK IT sector has outpaced that in the overall economy consistently throughout the last decade. In other words, IT-related jobs are becoming more and more important overall.

This will include front line jobs deploying and managing IT systems but more importantly it includes jobs and increasingly whole industries that only existing because of the IT industry – jobs that are primarily based on the consumption of bytes and not atoms.

The KPMG report also looks at the growing success of tech clusters in the UK that are one of the results of this. Jobs and profits (when they follow) in firms in cloud services, gaming, social media, big data processing all depend more on bytes than atoms; all have fantastic growth prospects.


But Brynjolfsson and McAfee highlight two things that need to be tackled to ensure more of us have chance to participate in the digital economy; organisational innovation (for new and existing firms to make better use of technology) and investing in human capital (relevant education).

Perhaps this is best summed up by a quotation they reproduce from a book by the great chess player Gary Kasparov.After the grandmaster first lost to IBM's Deep Blue computer in 1997, he and other players went on to experiment with playing against each other by co-operating with the machines rather just playing against them. Kasparov reported the following based on this experience "a weak human + machine + better process was superior to a strong computer alone and, more remarkably, superior to a strong human + machine + inferior process".

In other words, machines and most humans can work well together providing their co-operation is well planned. Opportunity and growth for all is possible through IT – any latter day would-be Luddites please take note.



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