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Disruptive Change: Are You Ready? Disruptive Change: Are You Ready?
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Disruptive Change: Are You Ready?

Insights & Ideas Team •  April 1, 2015 | Your Finances, Home and Family

Disruptive technological change is reshaping the way we live and do business at an often blistering pace. Is rapid innovation here to stay? And what impact does this have on our economic landscape? We recently asked Northwestern Mutual’s Chief Technology Officer Karl Gouverneur and Northwestern Mutual Wealth Management Company Chief Investment Officer Jeff DeAngelis, CFA, to consider the societal and economic impact of technology.

Karl: We live in a world of constant change, where innovation is happening at an ever-increasing pace. Take smartphones and tablets as examples. It took less than a decade for these devices to gain wide acceptance and to fundamentally shift how we think, behave, and work. And innovation like that is only increasing. In fact, we’ve seen more technical innovation in the past three to four years than we saw in the previous 50.

In a few years, everything you can think of will be connected and accessible from the Internet—not just your phone, but your car, your bike, your refrigerator, even your clothes. Those fitness bands and smartwatches everyone wants now? Those wearables will soon be replaced by ingestibles—a pill you can swallow in the morning to track your biometrics and send the data directly to your smartphone and maybe even your physician. In the not-so-distant future, your doctor will be able to tell you, ‘I think you may have a heart attack coming. Let’s get on top of this now.’ That may creep some of you out, which is another challenge. People are going to have to decide if they’re comfortable with some of the things technology will be able to do. Younger generations are likely to accept these technologies faster than those of us who are older.

But the technology is already coming quickly, and there’s good reason to think that as computing power increases and more things are connected to the Internet, the pace of change will move even faster.

Jeff: We’re clearly in a period of exponential change. So what does that mean economically? When I think of disruptive technology, I first look back to the ’70s: not the 1970s, but the 1870s. That period brought us the telephone, the first practical light bulb, and widespread use of the sewing machine. We grew up as an agrarian society, and we transitioned to an industrial economy. That shift displaced a lot of people and caused significant disruption, but eventually we worked through it. You see it now in oil fields. No one would have envisioned the U.S. producing 9 or 10 million barrels a day because we couldn’t have without the technology that exists today.

Karl: This is good, right? I like filling up my tank for 40 bucks.

Jeff: But your investment in oil is not doing so well. This has changed geopolitical relationships around the globe and led to an abundance of oil in a society that five years ago thought it was reaching peak oil. That kind of transformation is good on many levels, especially for consumers. But it’s been a disruptive force for others, especially oil producers. During any period of transition, there are initial winners and losers until a “new normal” is established. But think about the industrial revolution. Although people can make it a dark period, it’s wasn’t. It was a period that required transition. And we came out in a better place.

Karl: Society as a whole takes time to catch up when technology catapults us forward. Autonomous vehicles are a good example. Many expect driverless cars to be commonplace on the roads in just a decade. But before this can happen, there are legal questions that need to get sorted out. What happens if the driverless car crashes? Who is at fault? Is it the owner of the car? The car manufacturer? The programmer who wrote the algorithm that drives the car?

For that matter, who will be responsible for insuring a car that drives itself? Who needs to be covered? And if driverless cars are less prone to human error, will they be cheaper to insure? All of these issues will ultimately be resolved. Then, people will have to get comfortable with the idea.

In the meantime, technology doesn’t stand still; driverless vehicles are being used in industries where you can control the environment, like mining. There, driverless trucks use a combination of sensors such as radar and GPS to navigate around a pre-defined course from loading units to dump locations, including waste dumps, stockpiles, and crushers.

Jeff: It sounds like something right out of a George Lucas film, doesn’t it? But in the case of sectors that can be automated fairly easily, technologies like the ones that make driverless cars possible have the potential to cut costs while increasing productivity and worker safety. At the same time, these advancements could displace millions of workers. Like I said earlier, there are always winners and losers when innovation pushes us forward.

Karl: Our ability to develop technology that can complete tasks that we once thought were restricted to humans is increasing so rapidly, we know we’ll face many more challenges like this.

Jeff: So what does all of this mean to you from a career perspective? The most educated workers are going to do the best. Be ready for technology to change the world around you. It may change your job or even make your job obsolete. But it will also present new opportunities. When you are able to react and adapt, you’ll find many opportunities as disruptive technological change reshapes our lives.

The opinions expressed are those of Northwestern Mutual as of the date stated on this article and are subject to change. There is no guarantee that the forecasts made will come to pass. This material does not constitute investment advice. Information and opinions are derived from proprietary and non-proprietary sources. 

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