Disrupting Unemployment

2/4/14Follow @dnordfors

The global market for unemployment care is huge, waiting to be disrupted. The US alone spends ~$100 billion yearly on unemployment benefits. But the value of under-used resources is much bigger than that. Less than half of all Americans have paid work. Of those who have, many have jobs that don’t do justice to their abilities. And there is even more hidden in the gap between wealth and well-being. Not everything that matters to people is a part of the economy. Because of that and market failures, what people want is not always what people do. There are even incentives to waste resources or to destroy well-being.

All people can create value for each other. If they do it a lot, there is wealth. We ‘only’ need an economy that makes it happen. Information technology is allowing us to test new types of economies. There is, for example, the sharing economy, where people can earn money by sharing what they have with others. There is collaborative consumption, where participants share products and services. There is crowdsourcing of projects, which get funded by many small donations from many people. The power of volunteering has turned out to be immense—look at Wikipedia, Linux, and Firefox. How can that be included in the economy?

There are certainly many more ideas to be tested. Which new economies will succeed in achieving the goal together, we do not know yet. The answer can only be found by many iterations of testing ideas and analyzing results.

Information technology allows us to interact in new ways that change the economy. Computer science is unfolding new ways to measure, quantify, and model all aspects of life. Is it possible to improve the way value is measured? Is it possible to develop an ultimately competitive economy where creating wealth always creates well-being, and vice versa?

What should organizations be focusing on in the innovation economy—tasks or people? With tasks at the center, information technology can screen and sort workers into slots, as often is done today. With people at the center, it can identify markets for what people can do. In an economy focusing on tasks, people and machines may compete. In an economy focussing on people, machines will provide leverage. The industrial market economy has traditionally focused on tasks. Can an innovation market economy focused on people be more competitive than one that is focused on tasks?

No matter what the answer is, our old ways of fitting people to tasks is without doubt leading to a waste of human resources that will not result in successful societies. For example, today we are employable between our twenties and fifties while expecting to live into our eighties or nineties. At the same go, with the innovative tools we have today, anyone of any age can create value. The time window for employability should be widening, not shrinking!

We need to deconstruct what we mean by jobs. It’s time to separate jobs from employment. After all, when people say they need a job, they are talking about making a limited commitment in return for a stable income with benefits. It’s a fair request. We don’t want most people to care more for their jobs than their families (or do we?). Today a “job” means an employment contract. In the future a job can be something else. A job has to deliver the stability ordinary people need to feel well and bring up their kids to live good lives. Whatever satisfies this definition should be considered a job, whether it is an employment contract or something else.

Innovation experts and social/labor experts don’t have enough language in common to discuss these things properly with each other. Labor experts look at the workers’ needs; they care about offering people jobs. Most innovation experts care for the market economy; they focus on satisfying customers’ needs. Many of them say that workers must adapt—they must accept becoming entrepreneurs. But the customer needs to earn in order to spend. Can the players in innovation ecosystems compete to satisfy the customer’s need for a job?

This could be key to economic stability. Many people are earning money in an old economy and spending it in a new one. You might say that people are spending their jobs away. If the economy is about performing tasks, they might become redundant. But if the economy is about raising the value of people, they will get new jobs. These assumptions might be disputed, but one thing is for sure—when spending means earning, the economy is sustainable.

There is no solution to innovation for jobs without including education on an equal footing. Education systems are lagging, unable to keep the pace with innovation.

For example, kids are often forbidden to bring their smartphones into the classroom, to stop them from playing while following the lecture. But students who are required to sit quietly listening to lectures are not practicing problem solving; they are practicing following directions. Work life today demands other skills from them. Students need to learn real-world problem solving, to innovate, create and interact constructively with others. They need to learn how to use computers as tools, to learn the basics of computer science. They need to learn how to be responsible digital citizens.

Students might be learning today what the workers of tomorrow stopped needing yesterday. The half-life of most professional skills is shortening. The half-life of the skills of a software engineer is shorter than an undergraduate education. Does it make sense that we expect young people to have fifteen years of full-time education before getting their first job? How many of the skills they learned during that time are still valid when they enter the workforce?

Education needs to keep up with the pace. It might need to be done in parallel with working. We might need closer tie between schools and work. Germany is attracting interest, because of its well developed systems for vocational training and apprenticeships. Ironically, many countries moved away from apprenticeships during the 20th century, because they felt they were perpetuating old norms. It is another sign that the innovation economy is taking over; there is so much money in innovation that mainstream business is pushing forth instead of holding back, in comparison to schools.

Even if smartphones have difficulties getting into schools, educators are getting into our smartphones. Harvard, Stanford and other top universities are giving away their courses online. Venture capitalists are supporting initiatives like Khan Academy and Udacity. What new types of accreditation can bring currency and credibility to the online markets for skills, talents and opportunities? Accreditation must match the paces of innovation, education and jobs.

Science and radical, disruptive innovation are strongly connected. Science is often behind the creation of the new industries that give people better jobs than they had before, for example nanotechnology, bioelectronics or genetic manipulation. Also, in an innovation economy, all people need to be acquainted with scientific method. Curiosity needs to be hailed for its own sake. Positive humanitarian values are crucial. These are basic values that knowledge driven societies need to have woven into the culture. A long legacy of thinking in terms of science OR business, that one must yield to the other, is in the way of science AND business, where both leverage on each others differences. Solving this challenge is key for providing the best education, as well as enabling radical innovation.

We will be brainstorming about how to address these challenges and opportunities at the i4j International Summit on Innovation for Jobs, taking place 17-18 March in Menlo Park, CA. i4j is a global network of business, academic and public leaders with expertise in innovation, labor and education issues. I started the i4j summit last year together with my co-founders Vint Cerf at Google and Sven Littorin, the former Swedish minister for Employment because we agreed that the world is shifting toward an innovation-driven economy and the labor-market systems can’t handle the accelerating rate of innovation. We are bringing together leaders with good brains and imagination who are willing to bridge those gaps and are interested in finding the opportunities in the future of jobs.

David Nordfors is the president of IIIJ Innovation and Communication. Follow @dnordfors

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