In the Hindu pantheon sits Shiva, a god of opposing dynamics, both Benefactor and Destroyer; if there were to be a god of technology, Shiva would be perfect. Technology creates and destroys value; brings opportunity and threat and creates winners and losers – all in equal measure.
This has been so throughout history – the impact of the wheel and writing driving the change from hunter gatherer to farmer, the internal combustion engine literally driving the industrial revolution and our most recent move into the digital age driven by the silicon chip, the internet and increasingly smart devices.
What sets this time apart from all others is the pace of change and how technology is woven into every aspect of life, dramatically altering everything – business structures, personal lives and crucially, our cultures and behaviours; the very DNA of what makes us who we are. This is true not only in a philosophical sense – technology is now evolving our actual DNA as well, as the recent mitochondrial / 3-parent debate has demonstrated.
Technology impacts us from cradle to grave – perhaps more appropriately, from lust to dust, given that it is already affecting us directly before we are born, and we can deliver personal messages via social media after we are gone!
It is fair to observe that the pace of change is outpacing our ability to handle it effectively, not simply from the impact on business – where the free market economy remains the best determinant for winners and losers, but more fundamentally in society. We are reminded daily that our laws, institutions and cultures are struggling and often failing to adapt.
In business we are accustomed to seeing rapid value creation driven from technology; just look at the dramatic rise in value of companies with business models that didn’t exist until relatively recently – Amazon and Facebook among them.
The growth trajectory of the Internet economy is phenomenal; in the G20 alone this will reach $4 trillion next year. Future growth is projected to continue to grow by 15-20% annually, even higher in developing countries that are now coming ‘online’. Apple has an equivalent GDP equal to medium sized nations and liquid reserves of $178 billion, comparable to Norway.
More recently there has been the phenomenal value growth of new business models (for example Uber and Airbnb) which has the potential to solve issues like Jersey’s decline in hotel beds, given the number of empty bedrooms we have.
These are incredibly powerful forces, shaping the global economy.
Some companies change and adapt, like IBM and Apple (again), some however fail and are consigned to history – does anybody recall Wang, Polaroid, Alta Vista, and Commodore? Many of these were equally ground-breaking, leading companies of their time, and yet they failed by being outcompeted, outthought, out-innovated, complacent or just unlucky.
Sometimes it is entire industries, not individual companies that fall, as the worlds of publishing and music have demonstrated.
Moving closer to home, Jersey needs to be especially alert to change in our most vital sector; finance, and to the impact of Fintech.
While we continue to deal with the challenges in the regulatory environment, including AML, FACTCA, the Vickers Report on banking, BEPS, AIFMD and many others, not to mention intemperate and uninformed commentary by opposition leaders on crown dependencies, the impact of Fintech will be equally great and is already well underway.
Global investment in Fintech has tripled in the past 5 years, with $3 billion raised in 2014 by private companies alone. The Fintech spectrum not only covers large established companies providing massive and complex systems, but also increasingly small, highly creative companies and start-ups, applying technology in innovative and disruptive ways. Changes in insurance, payment systems, mobile services and crowd sourcing are exemplars.
Cryptocurrencies have also caused a great stir – excitement and optimism together with worry, disdain and defence (Shiva in action once again). This will play out in due course but we must be alert to the underlying technology ‘blockchain’ – with the ability to provide real time, instant verification of data, transactions and transactors, this has huge implications for the industry, and the potential to rewrite procedures and processes in key areas – audit and KYC come easily to mind. Elsewhere we have already seen the impact with high street banking – an ‘institution’ in every sense –driven in equal parts by the need to reduce costs, increase service, embrace new technology and the much increased consumer expectations of how they want to deal with providers in the world of ecommerce. It is interesting to note that UK banks have moved away from the commitment to keep banks open in all communities – ‘the last bank in town’ promise has gone.
Fintech is the nexus of the digital and the financial world and it will be interesting to see how this clash of cultures works, especially given the digital sectors’ tendency to openly and publicly debate issues.
To this already potent mix, we add the growing impact of automation and artificial intelligence, replacing functions and entire jobs. Timing of this is unclear but depending on your reference source, between 20-50% of jobs are now relatively easy to replace through technology. Even at the lower end of this trajectory, this is of strategic and critical importance to Jersey where approximately 12,000 people work in Finance alone… and pay tax.
While the threat is clear, so is the opportunity. Technology is opening new markets, breaking down geographical barriers and creating huge export possibilities for Jersey. For an island that is service and knowledge based this is huge. The outstanding growth of Singapore shows what can be done – and this is one nation that we should ‘go to school on’. That their long term growth and success is driven by a long term and audacious vision is something I will return to later.
Technology driven growth brings other benefits as data from the UK supports -demonstrates – digital sector revenue growth has exceeded 20%, even through the recent economic troubles, the sector is highly productive, it has been resistant to the downturn and employment will grow at 5x the UK average.
No doubt Jersey has to find its place in this.
Laws and Institutions
Given this tsunami of change, how are we holding up managing it? Is the pace of change now outstripping capacity to deal with it? It seems like our system for managing change – our laws, our institutions, our culture and our values are all creaking under the strain.
Returning to the subject of DNA, the cost of mapping our individual DNA is now around $3000 and will shortly fall below $1000 – incredible that the total cost of mapping the first human genome project is variously estimated at over $100 million. The question is though, how could, or rather – how should this data be used?
For example how should insurance companies change their policy premiums depending on the quality of your DNA and propensity, or not for future problems? These are deep philosophical and ethical questions.
Staying with insurance, companies are already planning to exclude property damage cover due to fracking. This at the same time that the UK government plans changes to the trespass law, allowing companies to frack at depth. Should damage occur the only option would be to resolve through the Courts. While that may be good news for lawyers it’s hardly an effective, efficient or value adding approach.
Fracking may be not be an immediate concern in Jersey but data definitely is and the question of data ownership especially so.
Today’s technology produces unbelievable amounts of data. The equipment that we use from the sophisticated, such as phones and tablets, to the everyday such as washing machines and cars are all delivering data. New capabilities are taking this data and turning it in to information. This is the ‘internet of things’ and ‘big data’ working together.
Black box car data has already been used to prove or disprove innocence or guilt in court cases. But who owns this data, who gets to say who uses it and how? This is a very ‘murky’ area, and quite possibly the words ‘I accept’, that we all so casually tick for services, will prove to be two of the most dangerous words used.
Turning to culture, what of the impact of technology on our dealings with each other and with our institutions, especially government? This is a deep and profound subject, likely more critical than the technology itself. Of course culture change is constant, even insidious and most often unconscious. The pace and impact of technology now calls for us to be more conscious in this area.
In our personal and business lives technology is rewriting how we deal with each other. How common is it today for people over dinner, in meetings, at all events to be using their smart devices? While sometimes frowned, on this activity is increasingly accepted in our ‘always on culture’.
In the realm of social media, companies such as Facebook and LinkedIn are moving connectivity to un-dreamt of levels, while simultaneously raising serious questions over privacy and misuse; similarly while communicating in 140 characters or less has its place, including pandering to the lazy appetite for sound bites, it does little for informed debate!
Jersey’s strengths and needs
How is Jersey measuring up to these changes? How prepared are we? And what will it take for us to not simply survive, but to thrive? Especially when compared to the rate of change in the rest of the world.
The fundamental elements of Jersey, our cultural ‘DNA’ position us well. The societal ‘infrastructure’ we have is a powerful asset (and for clarity, I don’t mean our physical infrastructure, though by many yardsticks we are extremely well served here and the ambitious decision to investment in fibre will prove to be one of great foresight). This should give us all optimism for the future. Jersey’s essential advantages include:
• A connected society
• Excellent regulatory environment
• Financial security
• Potential to be agile and quick
• Enviable quality of life
However, while building on these we need to face some ‘killer’ issues that undermine progress, including:
• Inability to change quickly
• Overly conservative attitude to risk
• The loss of an entrepreneurial mind-set
• No vision for the future
• Our own success
While we are rightly proud of this last point, we should acknowledge that the well-trodden path to success Jersey, via financial and professional services, has depressed our entrepreneurial instincts. This success has also diluted financial drivers seen elsewhere, for example last downturn exponentially increased new business start-ups in the US as people searched for alternative employment and income.
Entrepreneurial Mind set
These factors, combined with the nature of our leading sector, has contributed to growing risk aversion and the lack of an entrepreneurial mind set. We have some very successful entrepreneurs in Jersey; some home grown, more imported, but it is not generally a strength here. There are plenty of ideas but real entrepreneurs not only spot the opportunity, they do something about it – we currently lack this.
I extend the concept of needing more entrepreneurs to include the need for an entrepreneurial ‘mind set’ everywhere – in business, in government and privately, including in this the characteristics of welcoming change and embracing risk.
As a special note, the priority of technological change and an entrepreneurial approach needs to be raised in the board room, with directors and non-executives. This is no longer just an item on the risk register.
Regarding the challenge of driving change in Jersey, let me turn to eGovernment.
While the UN is reporting on its last set of millennial goals it is now setting goals for the next decade. One of these goals identifies the crucial role that eGovernment has in “transforming public administration into an instrument of sustainable development.” I couldn’t agree more.
This is no less important here but for Jersey to achieve eGovernment success we need to ‘change how we change’ because reform, rather the lack of it, in the public sector demonstrates how difficult fundamental change is here.
Despite several attempts over the years, including the latest intense effort and good work over the past 18 months, progress has proved elusive; the recent announced pause in the eGovernment programme for re-scoping is hugely disappointing. While I can understand the need for a ‘pause’, the island cannot accept an extended delay, with an urgent need for a published timetable and deliverables in 2015.
In perspective we must recognise how critical this is – as the UN position endorses. eGov is much more than filing taxes online or booking services, it is the mechanism to:
• Reset the social contract between citizens and government
• Restructure how SoJ operates
• Drive out inefficiency and costs
• Engage all citizens in Jersey’s future
Before proceeding four essential requirements must be in place:
• Aligned political leadership and will
• Aligned CMB and unequivocal leadership of change
• Appropriately resourced eGov team with authority and accountability
• An executable plan
Given these we must move forward with intent and deliver progress this year.
There are successful blueprints to follow – Estonia in the top 90th quartile for eGovernment is a favourite. We would also benefit from adopting the approach of Government Digital Services; ‘GDS’ in the UK, which reports directly to the Cabinet Office for implementing change, while the ministries and departments look after business as usual – it’s a model that causes tensions and stress but it is delivering fast progress.
Amongst all of this debate and change, I am frequently asked what Digital Jersey’s vision is for the future of the island, I understand why this is asked, but it is fundamentally the wrong question. Surely the question must be ‘what is the vision for Jersey’ and then what is the role for Digital Jersey in bringing this to pass?
In developing a vision for Jersey, it is time for us to be more… ‘visionary’. Let’s adopt some ‘right to left’ thinking; that is starting with an ambitious goal (think Kennedy’s ‘putting a man on the moon’) and working back from there. The vision could be many things, being a net energy exporter would be an example, but developing it will take a different approach that previously used. The vision for Jersey must be aspirational, ambitious, compelling and long term.
Digital Jersey’s role
In all of this, Digital Jersey’s role is to act as an accelerator, for the economy and for society.
In our 2015 business plan, we have outlined three streams of work, firstly creating the right conditions in Jersey for growth the ‘digital ecosystem’; secondly, business development, supporting on island growth and inward investment -while we look to support a wide range of businesses, we are especially focussed on opportunities in Fintech, eHealth and e-gaming; and thirdly skills availability and development, looking at what the island needs now and in to the future.
Digital Jersey became operational at the beginning of 2013 and, after a slow start, gained momentum last year with the opening of the Hub. We assisted in the creation of over 120 jobs while growing a pipeline of new business opportunities for the island. We launched the Coding Programme, a 6-month industry-defined training course, with the first cohort graduating this February, with the majority of participants already snapped up by local companies. In partnership with Locate Jersey we hosted the Island Innovators un-conference, welcoming 120 participants from more than 20 countries, aimed at putting Jersey on the digital map.
2015 will see us build on this momentum – we are targeting the creation of 150 jobs, we are expanding our skills programmes and our business support, while targeting a new programme to attract entrepreneurs and start-ups to Jersey. I welcome review of our plan and our targets available through the Digital Jersey website.
While Jersey is a late entry into the digital development stakes, (Malta, for example launched their digital strategy in the early 90’s) progress is beginning. Like a flywheel a lot of effort goes in to getting it moving – Jersey’s digital flywheel is beginning to turn and we all need to put our shoulder to it.
Three ingredients will spin the flywheel faster:
1. Delivering e-government as the mechanism to engage all citizens in our future and to stimulate growth
2. Fostering an entrepreneurial mind-set that enables change
3. Creating an aspirational vision for our future
It is sobering to realise that, as great as it is, today’s rate of change will be the slowest we will experience in our lifetimes, but it only gets faster and more challenging from here. There’s no avoiding it and there’s no escaping it – we just need to get on with it.
Driving Jersey’s digital bus, our roads may be a little narrow but it’s exciting, challenging and it’s important.
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