The document discusses how rapidly increasing computational power and networked infrastructures are enabling a transformation in business models and society. Over the next 10-15 years, this "algorithmic transformation" will have significant implications, including the automation of many knowledge jobs, a focus on skills like abstract thinking and lifelong learning, and countries competing for mobile talent based on quality of life. National innovation strategies must develop, attract, and enable creative talent to drive future economic advantage.

1. Technology, Society and The Next Transformation Jonathan Murray WW Technology Officer, Public Sector Microsoft

4. Magna to lose production of BMW SUV CBC News, May 16 th 2007 “ Magna International Inc. confirmed Wednesday that it will lose production of the BMW X3 mid-size sport utility vehicle in three years.” [BMW] CEO Norbert Reithofer said the shift in production to the United States was part of a strategy to reduce the risks associated with a falling U.S. dollar against the euro.

8. Information Technology: Transforming Business Strategy Manual Production Automated Production Process Integration Service Abstraction Knowledge Content Labor/Marginal Cost Computable Services Knowledge Based Services

9. Increasing computational power and networked infrastructures are enabling a dramatic transformation in business models … And we’re only at the beginning!

10. Challenges and Opportunities Sources and location of value creation: Manufacturing  Services Local  Regional  Global Changing business models and competitive landscapes Accelerating demand for high level skills Balancing positive and negative social impact and policy issues

11. The future of information Technology

12. Prediction Horizons 3-5 Years : Highly predictable Products already in development 5-10 Years : Relatively Predictable Basic technologies identified 10-15 Years : Non-predictable New basic technologies will disrupt Trends are the only guide

13. Moore’s Law Transistor density doubles every 18-24 Months Computational power doubles at this rate Or, for constant computational capacity Chip size halves Power requirements halve Prices halve 10 Years = 7 Doublings = 2 7 = 128 Times today’s capacity Courtesy of Intel Corporation

14. Riding the wave…

15. The Transformative Power of Technology Technologies enable the capture , distribution and repeatable application of value creating knowledge Connection Generates economies of scale The ability to create network effects Abstraction Enables generalists to replace specialists The ability to hide complexity Encoding Converts Tacit & Implicit into Explicit Knowledge The ability to formalize knowledge

16. A 10 Year View: An Algorithmic* Transformation *Prof. John Zysman, BRIE – UC. Berkeley Encoding Abstraction Connection Always connected, Auto-adapting Service Networks Human-like interaction and Simulated Realities Model Based Knowledge and Decision Processes Unlimited Computation Unlimited Storage Unlimited Bandwidth

17. “ Any sufficiently advanced technology is indistinguishable from magic. ” Arthur C. Clark "Profiles of The Future", 1961 (Clarke's third law)

18. The Politics of Magic Will social acceptance issues limit our ability to tap technology’s full potential ? How will concepts of liability and personal responsibility evolve? What about privacy , security , identity : Will consumers continue to trade privacy for a free lunch ? What skills will be required to be fully economically productive ? Can the developing world catch up or does technology merely amplify the developed world’s existing advantages ? Can policy makers and regulators keep up?

19. Implications: Business Strategy If it can be automated, it will be automated Labor cost may no longer drive manufacturing location Access to talent will increasingly be the primary driver of value creation Talent will demand new organizational structures and governance models

20. “ The illiterate of the 21 st century will not be those who cannot read and write, but those who cannot learn, unlearn, and relearn ” Alvin Toffler

21. Implications: Skills Much of today’s knowledge work will be automated Knowledge workers will need to up-skill to remain economically relevant Countries/Regions will need to transform to attract the mobile, global talent Education systems will need to transform in order to produce economically viable talent

22. Implications: Education Need to focus on developing higher level abstract thinking skills Learning as a personal responsibility: Learning how to learn Abstract thinking: Higher level math, music, second languages Information Discrimination: Good from Bad, Truth from Fiction Teamwork : Working in ad-hoc groups Communications: Presentations skills, performance arts Deep implications for the classroom Teachers: Evolving from gatekeepers of knowledge to learning coaches Students: Using tools as an enabler of learning

23. National Innovation Strategy: Quality of life matters The algorithmic transformation will place increasing dependence on access to talent This talent is globally mobile and will place a premium on quality of life issues Focus on creating an “ Intellectual Playground ” Opportunities for cross-disciplinary interaction Opportunities to “birth” ideas Participative decision making World class arts programs International schools …

24. Summary Massive increases in networked computational power will enable an “ Algorithmic ” transformation These new computational tools will have major implications for society, business models and skills Access to creative, conceptual, abstract thinking talent will drive national economic advantage and global competitiveness National economic development strategies need to focus on developing , retaining , attracting and enabling this globally mobile talent