13 Conference Report #techonomy13

Business Infinity

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  • From left, Zachary Karabell, Todd Bradley, David Kirkpatrick, James Manyika. (All photos by Asa Mathat)

  • From left, Zachary Karabell, Todd Bradley, David Kirkpatrick, James Manyika.

  • James Manyika

Panelists

Todd Bradley
Executive Vice President, Strategic Growth Initiatives, HP

David Kirkpatrick
Founder and CEO, Techonomy

James M. Manyika
Senior Partner, McKinsey & Company

Moderator

Zachary Karabell
Head of Global Strategy, Envestnet


Challenges and opportunities confront business from every direction, in ways that change almost hourly. Business models and ecosystems are being upended, disruptors emerge from the tiniest and least noticed corner, customers and employees demand new treatment, and the entire landscape becomes ever more global. How can and should leaders adapt?

Read the full transcript below. (Transcript by Realtime Transcription.)

Karabell:  I think you are supposed to sit right there. I know that because I’m the moderator.

Hi. So Business Infinity, which is clearly a humble and not over-weening title to begin this conference. I’m not sure where that leaves us. I know we have a time limit here of 40 minutes, although if it’s Infinity, I have a feeling we’re just going to keep going on and on and on, because this conversation clearly has no particular limits about the disruptive capacity of business and what is going on in the world.

I think the point of the session really is to frame the 20,000-foot big-picture views of what is transforming the way in which we conduct business and the way in which we conduct our lives. And—okay.

And David has, as usual, assembled an incredibly compelling group of people to talk about this. We’re actually going to from the far left and head kind of this way and around to create the infinity symbol rather than going in a linear fashion. And to start with James Manyika, who is a partner at McKinsey in Silicon Valley, and also one of the co-heads of the McKinsey Global Institute. And David referred to James earlier, having just been in Moscow and helped the presidents of Finland, Russia, and France think about their digital future, but this is more about the business side of things.

So the McKinsey Global Institute recently came out with, as it is want to do, a big think paper about the state of the world. And this was I think, what, twelve disruptive technologies, that will be disruptive as technological. You won’t go through all twelve, but why don’t you help us frame the thinking behind what do you see as the major disruptive elements and also how did you get to these in the first place.

Manyika:  Well, thank you, Zach. Glad to be here. We were trying to think pretty hard about what’s going to make a big difference, a disruptive difference to the economy over the next decade. And we actually took everybody’s list. Cisco had a list; MIT had a list; everybody had a list. There’s like 100 lists of exciting, interesting technologies that were going to change things.

We decided to select for three things. First, which of these technologies were we seeing a big enough step change in the cost and performance of the technologies, so think of the human genome. Took us 13 years, nearly $3 billion to sequence it. Now it takes a couple hours and a couple thousand dollars. So big step change.

Second, we selected for which of these technologies were going to touch the most number of things in the economy, where things range from people, workers, machines, sectors, et cetera.

Third, perhaps most importantly for this conversation, which of these technologies were going to disrupt or touch some of the largest profit pools today and big chunks of GDP.

So we sorted through all that and that’s how we got to the short list of the twelve that we got. It’s a list that includes everything from the mobile Internet to 3D printing to synthetic biology. You can always take a look at the list, but what was interesting about that list, though, are the implications.

So if you look at the list for the most part, as consumers, we should love all of these things actually, because either these are products and services that we’re not going to pay much for, if anything at all actually in some cases, so it will be great. As entrepreneurs and innovators, we should love the list. It’s going to be a fantastic list.

As workers we’re going to have to think a little bit, because some of it will put pressure on how we think about work and how we think about things. I think a group that is going to have a tough time are incumbent companies, large companies. Partly because it’s mostly a lot of their profit pools that are being disrupted. They’re going to have to do a heck of a lot more to keep up with what the entrepreneurs and the innovators can do. Some of them are doing it, but they will have a tough time.

And the point that we talked about earlier, that David brought up, it became clear as you thought through the implications across companies, sectors and economies, that leaders of every stripe—presidents, prime ministers, CEOs—they are all going to have be technologists.

So let me stop there. That’s what we kind of went through.

Karabell:  I’m going to do one follow-up before we turn to Todd, who will represent, I think on the panel, the incumbent company. So that was the—the opposite of a softball.

Did you consider, just for a moment, that it’s very chic, particularly in these kind of venues, to talk about the next wave of disruption, the change agent, the thing that’s going to make everything different. What about the potential that things aren’t going to be quite as different as we consider them to be in these kind of venues, right? It will be more like—all of us remember the futuristic images of Blade Runner. What was partly striking about that wasn’t the fact there were flying cars, it was that there were just decaying buildings and people going about their lives, trying to do whatever they’re going to do, with slightly worse scenery and slightly better technology.

Manyika:  We did, but most of this is quite real. We didn’t go too far into the future. So take what we have already seen. The Internet is wonder. Take search. Search as an economic question has created something close to a trillion dollars of consumer surplus. Now, if you add up all the revenues of all the search companies they don’t even come anywhere close to that. That is an example of a real disruption.

We are seeing the same with the mobile Internet. We’re going to see the same with cloud computing. So these are quite real disruptions for established companies and incumbents coming up from most of the innovators and entrepreneurs. So it is a very real thing.

Karabell:  So Todd. Todd Bradley is the executive vice president of Hewlett Packard. Again, probably in the wheelhouse of an incumbent established company. Certainly about as established as one can find in the technology world, which seems to be defined by the newest company and the newest thing. So if you have Twitter on the one hand, you certainly have HP on the other.

And you have been in various roles from heading up hardware divisions to strategic policies in China. And I’m sure you have heard at various points over your career lots of people coming in, from consultants to technologists, about what it is that’s going to change and transform the industry as we know it, but there is a big difference between those observations and the nitty-gritty business of one, how do you manage a large enterprise, how do you operationalize it in a business sense, and the very fact we still do live at least partly in a physical world and stuff has to be made and has to be gotten from place to place.

So how do you integrate these kinds of big-picture observations when it comes to how does this become operational as a business?

Bradley:  I read James’ disclosure. We’ve worked with James and McKinsey and the institute for some time. And I take a little bit of exception to the description of some of the things—not from the perspective you’re going to make fun of me for, but many of the technologies James and his team talked about in the paper are exceptionally relevant. And while they are innovative and disruptive, they are also transformational.

When we think about the category of wearables, the category of 3D printing. I think the way we think about them and some of the hype that gets presented around them may not necessarily be the way the products come to market. We see a lot of media around 3D printing and whether it’s cartoon characters or—I think I saw somebody produced larynx, with a 3D printer the other day.

I think the true innovation that’s going to come is how people use that technology to transform their businesses, to affect their supply chains, to affect the efficiency they have, to affect the cost structures and their go to market capabilities.

It’s so crystallized for me. I was with a large cereal manufacturer. If you think about cereal manufacturing, you have these large factories that I guess you bake, cook, prepare cereal. And the machinery is older. It’s one that has moving parts. And the discussion was how can we use 3D printing to stop having to inventory all these parts over 100 different facilities? How could we have a digital file that we can very quickly remanufacture parts?

So I think lots of these things, whether we think about wearables or the internet of things has a multitude of implications.

Look, I think the challenge, when you lead a large, large public company with all the pressures of quarter-to-quarter earnings or how do you understand the innovation that’s going to matter the most to your customers, the innovation that’s going to matter the most to your shareholders, and I think it’s very fair to say there’s a degree of patience that you have to learn.

Some of you may remember, back—I guess about eight years ago, seven years ago, we created really the first smart television. The challenge wasn’t necessarily the technology. We used a Linux kernel and built code around the kernel, allowed you to do all the things that you can do today. But the challenge was really, how do we sell it and how do we have the patience to allow that to mature.

And I think that’s something we’ve learned from with a host of successes, and I think at the same time some things that haven’t gone as well.

Karabell:  And when you think about some of the points James raised in terms of the issues on sort of human capital and labor, right? And HP is an interesting example of this in that it is a technology company, but it’s a manufacturing company. And it’s also a company that employs a large number of bodies globally.

Can that particular circle—not really a circle, it’s three points—but can that be squared, can that be harmonized? Or does something have to give in order for that enterprise to continue to succeed, whether it’s labor or whether it’s products or whether it’s the actual shape of the company?

Bradley:  Well, I think those things evolve over time. They are not instantaneous. We don’t go into the internet of things and systematically change what’s the largest technology supply chain in the world.

A big challenge, and I think many, many companies—and I know a gentleman from Ford will speak tomorrow, I think—is how do you engage the middle of the company? How do you engage the masses in the middle, the senior managers, the salespeople who are out talking to customers every day. How do you continue that excitement about the products that we build while create the ability to educate and inform about what we will produce, what the value proposition is of what we will do.

We ship three PCs a second. The ability to sell those and create an excited sales force that excites a customer is critical. At the same time, as we think about—someone at the pool this morning, “Oh, well, PCs are done. The PC world is over.”

Well, PCs are transforming. PCs have become the ultimate tool to create and consume content, much the same way the printing world is doing the same thing, that ability to consume content.

So I think this morphing that’s taking place, we’re talking a lot about business infinity here. I know especially in the Silicon Valley, there’s a lot of times, just throw out everything that’s old and start fresh.

Our challenge, our opportunity, our motivator is how do we continue to build great products that innovate technology, that use innovation that matters to customers, to create a result that will matter for our shareholders.

So when we look at all these things, Internet of things, how does our infrastructure both create and consume those types of capabilities, what’s the market for wearables, and how do we deal with all the data that’s going to come from a population using wearables.

By the way, how do we do that in a very safe, secure manner that protects the privacy that’s so dear, dear to all of us.

Karabell:  So David, Todd just said these things are not going to happen on a dime, right, whether it’s for a large company or society as a whole. You have been looking at these trends from the rise of Facebook to starting your own company, right?

To what degree are—it’s certainly exciting to talk about the disruptive edge and the infinity, what’s the gap between kind of life as we’re currently living it and these issues, or we’re not yet in a place where you can virtually set up a conference. Someone has to come in, put in panels. It’s not all the brave new world of technology. Where does disruption meet reality in the business world?

Kirkpatrick:  Well, there’s that—I forget the exact way people frame it, but there’s that old thing, if you—what you think is going to happen in a year is much harder to predict, but in ten years, it all happens.

And just think of the fact we’re Livestreaming this and how simple it is for us to do that. That’s something that wasn’t possible at this kind of cost very recently. We’re producing in our little company, we have infinitely more ways to distribute it than would have been available to us a very small number of years before.

So I don’t think that the world is turning upside down tomorrow, if that’s what you’re asking, but I do think when you look at the simultaneous set of forces that are at play, you have to recognize, you have to get a grip on things in a way you never did before, and the intellectual challenge of leadership is greater.

I mean, we’re seriously talking about Techonomy in China. We feel we have to, if we’re going to continue to thrive as a business, for example.

So I was talking about globalization before and the incredible convergence of the world economy into one integrated economy. James is talking about the set of new technologies that are simultaneously transforming industry after industry. At the same time, I know Todd at HP uses a lot of these internal tools that allow for a much more flat management structure and participative style of leadership, so the structure of the company is changing.

So you have the company changing, the products and the technologies that are effecting it changing, the landscape changing for the customers, employees, et cetera. That’s a lot of stuff changing all at once. That’s why we came up with this hyperbolic title. I don’t think it’s inappropriate to try to be a little bit alarmist, partly because, as James said, if every leader has to be a technologist, they are not today. That’s why we are hyperbolic.

I want to add one other thing. You were pressing on the dystopian side, the Blade Runner. I think there’s a huge risk that we are heading towards a very, very unequal world. I think we’ll hear a lot about it. I know James is very concerned about that also, maybe you want to add to this.

And it will come up tonight in the discussion also, because in prepping for that, I could tell you, this is something you are never far from when you’re talking about the economy right now. Companies have to embrace this stuff. But it’s inevitably, in almost every case, going to involve fewer employees. It is enabling a lot of start-ups to emerge from nowhere, with very few resources and be disruptive. That creates jobs. But whether the number of jobs created there is going to be sufficient to employ all the people who are losing their jobs in the old system is very dubious really.

So I think there’s a huge risk that we are headed towards a kind of society where some leaders are technologists and they keep their organizations super-sleek, super-innovative, but the society in which they live has monumental, vast numbers of suffering.

Karabell:  I push on this, because I tend to share the sort of everything is getting better, we are moving forward, isn’t that wonderful; but to put the brakes on that for a minute, Tyler Kellen recently wrote about the net effect of this—you said this would be good for individuals. His point is the net effect of this is that it could be good for a limited number of individuals and highly disruptive, as we have already seen, for a lot of people who are used to working in a certain fashion and are unable, undisposed, unwilling to work in another sort of fashion.

Manyika:  But I think when we talk about individuals, I always think that we tend to bundle too much into the individual. So if you say individuals as consumers, this is mostly good news, right? Individuals as innovators and entrepreneurs, good news. Individuals as workers, maybe mixed. So we have to go through what do you mean when you say “individuals.”

Given that this is supposed to be about business infinity, one of the things that you both taught and David you touched upon it, I’m actually quite astounded at the way in which the simultaneous nature which everything is changing. You showed demographics about global prosperity.

Keep in mind that over the next decade, we’re going to have 3 billion new consumers who are able to consume at unprecedented rates. They are going to spend about $30 trillion, and most of them are not here, right, in the societies, in the sectors that we think about.

So take a category like machinery, industrial machinery. We talked about this, David. If you laid out, for example, the ten largest producers of industrial machinery on a revenue basis, right, it would be mostly companies we all recognize. If you did that on a unit basis, units shipped, you may be lucky if you can recognize two of those companies.

The point about that is much of this is happening at very different price points in markets and spaces that are going to put enormous challenges on established incumbent companies. So companies are going to have to think about that. Think about some of the points around capturing value and surplus, right.

So the list of technologies that we had include some that have well-established business models, but some that do not, right. Where surplus is going to be up for grabs, either because we’re going to pass it on to consumers in cheap or free things, or it’s going to be a—gettable by companies outside of your sector.

So I’ll do a quick example. If today you wanted to find out what did I do that’s financially relevant or the transactions that I did today, would you rather talk to my bank or would you rather talk to someone who’s shaping the mobile platform I’m doing the experiences on. Who has the better information.

By the way, does that then create an opportunity for whoever has that better information to participate in sectors like financial services that didn’t participate before.

That’s an example of how surplus could start to shift between sectors. These are real challenges that executives are going to have to think through, but they also represent tremendous opportunity.

Bradley:  The other point, I will disagree with David a little bit on this, is tools that have spawned out of the massive consumerization. Think about how you use social networking to now engage with the workforce, consumerization. Think about how you use social networking to now engage with the workforce. There are multiple ways to think about it.

We tend to think about it as how do we use those tools to improve the efficiency and effectiveness of that workforce, be it a salesforce or a distribution network. We tend to think about it, how do we use those tools to affect the supply chain to make sure that our products get to market faster. How do we use those tools to talk about things that are important to our customers, the Facebook type of communication tools.

So I think many of these disruptive innovations we see coming out of the world are—have broad, multiple sets of usages and multiple ways to think about how do we use these. How do we use them effectively, not just as individuals. Not just as individuals, but as large companies that have the task of deploying and distributing information across 180 countries. And how do you engage that workforce across that broad spectrum.

Karabell:  On this question, it’s like the incumbents, right, versus the new. There’s definitely a tendency in tech land to celebrate the new as the inevitable successor and everything will go the way of BlackBerry and Nokia and we’re going to be here in five years and we’re going to be talking about a completely new set of companies because everything that was is going to be over. And it doesn’t necessarily work that way. There are plenty of examples of companies littered with failure, but then again, HP is still one of the largest producers of these things.

Kirkpatrick:  Let’s not get too sanguine here. Because all the data shows company life spans are shortening. That’s well documented. There’s so—the thing I love about the topic, and it obviously can go in many directions, which is good, but the thing you said about the industrial equipment. That’s fantastic if you’re building housing in Thailand, because you can get cheap machines in from China to move the earth. It is not so good for Caterpillar or somebody, but that’s the breaks.

But the way I look at it, and this is going back to one of the big-picture themes for me, but the business is functioning in a world where we’ve had all these very well-established markets for American companies like HP, made a lot of profit; company like McKinsey, surfing on the wave of—but we are living in a world—again, I have to go back to that data I showed at the very beginning. All those people are continuing to come up, and they—now they have information more than ever about what our life is like. They are not going to stop coming up until they get what we have. And if that means they have to come here to get it, they will. Forget about immigration controls. 7 billion people. They will come—they will go where they have to go.

My basic feeling is either those coming up or we go down, or both, but business opportunity is to somehow create wealth while trying to keep everybody coming up.

And that to me is an irresistible theme that has to be part of this discussion. Companies cannot just be about making money. That’s another thing that I think we have to enter into this discussion.

Karabell:  Yes. It’s also true that the larger companies have been kind of at the epicenter of providing all these goods and services to this, as you talk about this vastly emerging, rapidly emerging middle class globally? It hasn’t been corner shops. It’s been a lot of these global enterprises that are—

Manyika:  It’s easy to demonize business.

Karabell:  Not if you are McKinsey.

Manyika:  No, but if you look at most economies, the role that large, multinational companies play is actually pretty huge. I will give you a factual example. In the U.S. economy, there are roughly about something like 1,500 companies you would classify as multinational companies by virtue of the spread globally of their operations at a certain scale.

The interesting thing is that all the roughly 1,500 of those companies, they’ve purchased something like 90% of the intermediate products and inputs into their businesses from local small or medium-sized businesses.

So this dichotomy we often set up between large and small is a bit of a false one. These companies are bringing up much smaller medium-size businesses operating the ecosystems to drive economic growth. So then if you look at questions of employment and growth, you have to take that into account.

So I think we have to—your point, David, about this as a business composition is absolutely important. Businesses, whether they’re U.S. or multinational or global, are going to play an important role in capturing—as these people come up, in providing them products, goods and services and employment.

Now, there’s a different larger debate we can have about the—what happens with employment and growth as we get productivity and GDP growth. You can see that quite plainly in the manufacturing sector.

So if you look at what happened between 2000 and 2008, so the U.S. manufacturing industry lost something like 5.8 million jobs and only, at most, a million of those can be explained by off-shoring. The rest was technology-enabled productivity. So you then have to ask the question, okay, so how do we then think about this question of employment, about human capital, skills, learning, renewal of people’s capabilities in order to participate. That is a bigger question, important question that’s very Techonomic.

Kirkpatrick:  To me, I think it’s an interesting question when you cast it that way. What is the responsibility of a company, even a company like HP, to continue being profitable and innovative, and yet still accepted as a responsible corporate citizen in a society where—you know, those things you described before, the efficiencies, a lot of those are involving fewer people. Does it matter or not? I don’t know, but I think it’s a question that will be asked more and more.

Bradley:  I think that dynamic is changing pretty dramatically. I think—I will hit a couple of disparate points, to put all this together. First, I think when you look at the world and what are the drivers to product adoption, we now see that very differently than what we saw 20 years ago.

When you look at a company like Tencent in China, unlike any of its U.S. counterparts, 60% of its revenue comes from casual gaming. Different dynamic, different scale, but as technology leaders, you have to understand those balances in users and how users will buy and how they will grow your specific segments.

We operate the largest technology supply chain in the world. And if you think about consumer electronics broadly, right, over the past 25 years, we’ve migrated from a model of low-cost, very reliable, very available Chinese labor and low-cost fuel, to a world that’s now high-cost fuel—we’ll say more expensive Chinese labor, and it changes the dynamics. It changes the economics very, very significantly.

So as you talk about historic models—I don’t know if James, you guys, I’m sure have seen it, but if you look historically at the off-shoring models, I think those dynamics you will see change dramatically over the next five years.

Kirkpatrick:  But one of your points about Tencent, though, is they understand their market better, so they’re the ones that could come up with a huge business serving virtual goods to a Chinese market, right?

Bradley:  Well, my point is about Tencent, is that our responsibility is to understand those drivers of a Chinese consumer, use that as a broad, broad example, but what are those things. And if we decide that China’s an important market to grow in, how do we adopt those things that are most important to that Chinese market? It’s a real product management discussion.

Kirkpatrick:  This is a point you explained very well, and when you take the implications of these low-cost products and who can exploit that.

Manyika:  Absolutely, because it raises this question about who captures the value from these and what are the business models need to look like in order for companies to capture the benefit of this.

But I also don’t want to lose the point about work in the future. There are a few thoughtful people in the audience, by the way—Tom Malone is in the room, and Gary also, has been thinking also about these questions about the future of work. I think that’s a tougher conversation that our education system will have to come up and face up to what companies—

Karabell:  We should turn to the audience. Partly it’s tougher because if you had said when Pittsburgh and the rust belt was falling apart in the late ’70s, early ’80s, that there was going to be some sort of service-oriented, tech hub, Carnegie-Mellon infused revival in that area, you could have made that argument, but you couldn’t have charted a pathway. You only knew what was ending. You had really no credible argument about what was being created.

Clearly, even in the retail space now, which has been the only source of job creation, retail, low-pay healthcare services, and temporary work, in my neighborhood, this is true everywhere, a bank branch opens up and a Duane Reade opens up. It’s all ATMs and now of course Duane Reade is all self-checkout with bar codes. So even a store can open up with potentially no people serving consumers who have no jobs.

So questions.

Kirkpatrick:  If Tom Malone wants to be ambushed, I would love to hear where he is and what he has to say.

Karabell:  You know the drill, please identify yourself and let everyone…

Leo:  Hi, I’m Alex Leo. I’m the head of product for IVT media via Reuters and ABC News “Huffington Post.”  I sort of hate the word “disrupt,” and I think that’s means I will be asked to leave this conference, but mostly because it embraces the idea of aging technologies while ignoring the execution of things.

We all remember Blockbluster, which met its sad end this week, was partnered with Enron back in the day, I believe before Netflix or at least at the same time as Netflix, to do digital streaming video. And it was going to be the future and it was going to disrupt everything; but it failed, because it didn’t—one of those companies was corrupt and one of them just failed to adapt quickly enough.

So when we talk about disruption and new ideas, that McKinsey report you put out didn’t have ideas that are so nascent that they haven’t been forged into. They have been established. And how do we talk about disruption and new companies and new ideas and new platforms in a way that makes it not about the things that you are going to find on a business insider list or whatever, but in ways that you are going to actually find value for your users, for your workers, and for everything you have talked about here?

Manyika:  I’ll be happy to respond to that question directly. I mean, we were not trying to answer your question in the twelve. So we were trying to find things that no one’s ever heard of or—we were trying to understand of the things that are going on, which are the big enough—which ones are big enough to impact some of the largest economics that exist today.

So I would have been shocked if you would have been surprised by anything on that list, but it’s more the selection that we got to was the point.

I think your point about execution is absolutely everything. We all know of examples where innovations have come up, but the execution was terrible. So this is not intended to minimize at all questions about execution.

Our point about disruption was really more of an economic question about large profit pools, different ways of doing business, different economic models for companies that may have to change, as well as shifts between sectors that are likely to look different.

Karabell:  Anyone? Sir. I think your point was to call it infinity, rather than disruption, as an endlessly unfolding, mysterious reality.

Bonchek:  I’m Mark Bonchek, chief catalyst with ORBIT. I’m very taken with the idea of every leader needing to become a technologist. My question is can existing leaders become technologists or do we have to wait for the next generation?

Kirkpatrick:  What do you think—

Bradley:  Both are looking at me?

Kirkpatrick:  When you talk to really big, non-tech companies that are buying a huge amount of HP stuff, do those—do the CEOs get it?

Bradley:  So I think in that example, do they get it, yes, they understand that technology is a phenomenal enabler to new products, to new routes to market, to new understandings, in-depth understanding of what their customers want. It’s invaluable in how they think about the futures of their companies.

I think to your question of can people change or do you have to wait, well, it’s self-fulfilling. You have to—I’m sorry. You have to evolve to continually be successful. I can’t think of an industry on the planet right now that doesn’t have an enormous dependency on technology of some sort.

If you just take the 3D example I used as we started this, of a factory in the middle of the Midwest somewhere that will use 3D printing as a way to improve the efficiency of that factory, improve the return for their shareholder, it is a continual evolution. And I think the ability of people who understand the usage of technology and understand the ways that it can make innovation relevant for their customers is unprecedented.

Kirkpatrick:  I think we should ambush Tom Malone whose name was mentioned. Could we get the mic to Tom back there?

Malone:  Well, thank you. It almost makes it worth being ambushed. So I think there are a couple thoughts I had as I was listening to the panel discussion so far.

First is I think that in some ways, it’s easier to predict how things are going to change in terms of how businesses are organized and how they work, than it is to predict the specific products or services they will be selling.

So some of the things, as some of you on the panel at least know, I have written about are about that. I think we are likely to see much more decentralized decision making in business. The old days of hierarchical top-down command and control, I don’t think they are gone completely, but I think their dominance is definitely fading away. And I think that’s because of the technologies we’re talking about here.

I think the world in which most things got done inside a single company are also becoming less important.

Another thing that we’ll talk about I guess tomorrow morning that I talked about in other venues is the importance of engaging crowds in a lot of the things that used to happen inside a single company. Often those are external crowds. Sometimes they’re even internal crowds. But I think the old hierarchal models of should we have a functional hierarchy or a matrix, those are becoming less important questions than the questions about should we have a contest here, should we have a prediction market, should we have a collaborative system like how Wikipedia does articles. I think those things are fairly clearly going to become much more important.

On the question of what the products and services will be, I really agree with Zachary, that it’s very hard to predict. And even if somebody predicted correctly, you probably wouldn’t believe them, because it’s not obvious yet.

But that being said, I’ll make a nonobvious and not immediately clear to you that it’s correct, but a prediction. So my prediction is that an important source of jobs in the future will not just be people who are highly educated and good at doing kind of cognitive tasks. An increasingly important source of jobs, I think, will be people who are socially skilled and good at interacting with other humans. That’s my prediction.

Karabell:  The first rule of predictions about the future, especially ones that can’t be proved, is just don’t give a date.

[LAUGHTER]

Manyika:  Can I make one quick point which builds on something that Tom says. One of the things I find fascinating through the course of what I do is how even functions inside companies are rapidly changing. I’m always struck by two companies, roughly the same size, in the same sector, in the same industry, you look at Company A’s marketing department, what they do. You look at Company B’s marking department, what they do. Wildly different. Wildly different. You take two retailers. How they use big data and analytics, wildly different. So I think even the way inside companies, and I think it will take leaders who understand technology and the possibilities of reinventing a lot of these functions to fully capitalize that. And you’re starting to see it in the results of these companies, so I think that’s an aspect of the change that I think is going to need to happen, and I think that’s what’s going to take different kind of leadership to realize that and do something about it.

Karabell:  And David, you have written about this, but the point about social skills, one of the things that all of us think here, all these companies are coming, doing this social stuff that has no dollar value; and then you have lots of people doing services and ideas, but who’s going to pay for it, because they are not making anything, without recognizing that the history of business is companies providing something to people that they value, need and desire, right? Period.

And then we create means of exchange in order to pay for them, and money is just an invented means of exchange. So it’s an interesting idea–hard for people to see what kind of dollar value social transactions, gaming are going to have, but it’s just another good provided. It may not be a piece of hardware, but it’s inherently a piece of software. I think that you sort of saw that very early with Facebook, and I guess maybe–

Kirkpatrick:  I’d love to hear someone talk more about that, but if you think we’re moving into a world where physical goods matter less and virtual experience matters more, it makes sense to me that in the indirections you do have with people in a commercial context, how they treat you is going to matter even more, because you’re not going to really care as much about what they sell you in a physical sense. That would be one thing maybe Tom’s talking about, but I’m not really sure. Can we get to one more?

Karabell:  Do we have one more? In the red shirt? Dominique Turk.

Turk:  Dominique Turk. First, one comment—and this is for you, David—leaders must think more like technologists, great. May I suggest technologists thinks more like responsible leaders. On the series of disruptive technologies, which the report was brought to light, which I love very much, I would like to add at least two disruptive technologies. One is collaborative economy.

Collaborative economy is not a technology, but a social technology that’s going to disrupt very seriously incumbents—think just of hotels, taxis and so on. The other is jugaad innovations, the simplification of product. And in emerging markets, very, very good at simplifying product and innovation.

The problem is we don’t see it here, because this is an innovation going from south to south. What’s innovated in India is developed in China, is developed in Africa, but we just don’t see it here in the north. So I would suggest we work a bit more on jugaad and collaborative economy. Thank you.

Karabell:  Final thoughts?

Manyika:  I agree with Dominick. One of the things you will see in the work that we did—it’s obviously open to critique—is across all the ones we identified, there are sort of some cross-cutting themes. Collaboration and collaborative technology is one of them. Data and analytics was another aspect of them. The social becoming a feature of just about everything was also another characteristic across all of them, so there are a couple of things that seem to cut across; but your point about what’s happening south to south is actually a big gap that I think we all would be well-served to pay attention to, because the next 3 billion people on the Internet are not us.

Kirkpatrick:  And just one final thought. I want to channel something you said to me when we were talking about this session before, is that you believe that given the price points that everything is plummeting toward as all these people are coming on board and are not willing to spend much and they want to buy earth-moving equipment for $3,000 or whatever, you know, the companies that are going to be able to be profitable creating those low-priced goods are almost always going to be companies created in those markets, rather than multinationals that are saying oh, great. I’m going to sell $3,000 earth-moving equipment in Bangladesh.

Manyika:  So far.

Kirkpatrick:  Yeah. I think that’s a very scary and interestingly bracing thought.

Karabell:  Even an infinite discussion must have a finite end. While this is the finite end of this infinite panel, it is not the finite end to this still two-day conference where I’m sure all these themes will continue. So James, David, the maestro, and Todd, thank you very much. And thank you all.

Kirkpatrick:  Thanks, Zachary.

[APPLAUSE]