Technology Matters, Even More in the Future
It seems obvious that “technology matters” in our society today in this information age. We see technology affecting our day to day lives, then why write an article. Perhaps the question to ask is it obvious (that technology matters) for the decision makers and policy makers? Before considering the policy directions and their consequences, let us first try to get some perspective at the contributions
the technology sector has made to the society, as it is helpful to focus the mind. It is particularly useful to gauge the quantity as well as the quality of technological contributions to the economy and society in this age of economic rationalism where return on investment plays a key role in the strategic decision making process.
Technology, and in particular information technology, is impacting the way we work and that way we live our day to day lives. In fact, information technology affects pretty much every part of our lives, whether it is healthcare, where even routine activities such as getting admitted into hospital require technology, let alone any sophisticated diagnosis and treatment; if you take the travel industry, it cannot function without computing technology whether it comes to booking tickets or check‐in, let alone sophisticated software and hardware technology in the planes, trains and emerging smart driverless cars. In fact, traffic management systems are controlled by software technology. When it comes to utility services such as electricity, information technology plays a major role in their operations; already smart grid infrastructures are on the way, with their complex cyber‐physical systems distributing power and electricity as well as providing value added services. Information technology have been playing a key role in the banking industry for a long time, from the inter‐banking systems to ATM systems to personal online banking services across the globe. So we are impacted by information technology when we do day to day things such as taking money out of the bank, crossing the road, going on holidays, watching TV, pretty much anything.
What do these trends mean for the future? For the future of a country, especially a country’s economy, industry and employment, and society as a whole? Any conversation about the future will inevitably lead to the subject of “change”; changes in society, changes in the industry, changes in skills, and importantly the ability to deal with the change and influence the change and create businesses and industries of the future for the benefit of the society. Innovation therefore clearly plays a critical part in this story.
The World Economic Forum, an international nongovernmental organization that assesses global business and socioeconomic policy, classifies the United States in the 21st century as an “innovation driven economy.” This means that the creation of new wealth depends not just on traditional inputs like natural resources or land or on increasing the efficiency of existing capabilities. Rather, new wealth in an innovation‐driven economy requires the discovery and development of new ideas and the seizing of new opportunities. Clearly this is where ingenuity and technology have a fundamental role to play.
But the importance of innovation is not measured simply in new inventions; it requires dissemination through market adoption and public acceptance. For innovation to blossom there must be investments in human capital, infrastructure, and of course research. To be a leader in the world in innovation and creating businesses and industries of the future, it is abundantly clear there is a need for strong investment in research and development, and education and skills. From the societal and industry developments mentioned above, it is clear technology sector has a critical and significant role to play in the innovation and creation of new opportunities for economic and societal growth.
A simple back of the envelope calculation will show the huge return on investment that the technology sector has generated over the recent history. I will take the National Science Foundation as an example, as it is the main research agency in the US for public funded research1, the country with an innovation driven economy. It has been operational since 1952 when its funding was $3.5M (roughly $29 million in 2012 dollars), growing to $7 billion, or 0.05 percent of US GDP, in 2012. Just one outcome from a couple of students working on a research project supported by the National Science Foundation led to the creation of Google, which is today worth an estimated $250 billion employing some 54,000 people. This alone would pay for more than all the NSF program’s costs from its inception; but note that the NSF funding has also been instrumental in the development of new technologies and
companies in nearly every major industry, including advanced electronics, computing, digital communications, environmental resource management, lasers, advanced manufacturing, clean energy, nanotechnology, biotechnology, and higher education. So, even for strong sceptics, this should allay any doubt that investment in technology related research has the potential to change the
world and grow the economy.
In Australia if one were to look at research and development funding for Information and Communication Technology (ICT), the amount of investment is very small. Certainly it cannot be a rationale based on return on investment and the creation of business and the potential opportunities. Any shrewd business person would not miss the huge returns from the technology sector over the last decade. So it must be due to something else. What is clear is if the current climate persists in Australia as it has done in the past, the probability for a Google or a Microsoft or Facebook to be created in Australia will be next to impossible.
There could be several reasons why such a climate exists. Certainly one possibility is that Australian economy is doing well and there is no need to look for new opportunities for wealth creation and economic growth. The impact of the resources boom over the last decade or so speaks to this. But already we are beginning to see that we cannot count on digging stuff from the ground alone.
Increasingly there is a need to look for new opportunities growing the economy even to maintain the current living standards let alone for improving them. In such a context, one would have expected that the technology sector presented clear opportunities worth grabbing with two hands. Another major reason is the policies that are being followed, especially policies related to investment
on research and development. In the recent times in Australia, there has been interest in STEM and innovation polices coming from various circles including reports from different government agencies.
Recently there was much emphasis on the need for research funding for science and even quantifying the contributions of science to the economy. Even from a cursory glance at the figures mentioned above, it would be clear that the contributions of the technology sector to the world’s economy is much more. A natural reaction would be interest in getting even a small share of the pie if not helping to create a bigger pie. However it is puzzling to note that somehow the technology sector does not get much of a mention in Australia at the policy level; often it is bundled within the umbrella of STEM wrapped with white coats in science labs. Furthermore, sometimes in our eagerness to promote the emphasis on science and maths, and a rigorous scientific foundation at the high school level (all of which are a must for a successful innovative economy), we tend to brush the technology underneath
the carpet at the higher tertiary education level. This further adversely affects conveying the benefits of technology research to the public; this is at a time where public opinion is increasingly becoming more important in strategic policy making. Despite the amazing contributions of the technology sector to the economy, and despite the technology affecting all parts of our everyday lives, the image and branding of technology as a “worthy” candidate for research and development investment policies has got some way to go in Australia. This situation is in total contrast to what is happening in other countries such as the US and even in some emerging economies such as China and India. It is not just in the Silicon Valley US, there are several other places such as Austin Texas, Raleigh North Carolina, Boston east coast, Berlin Germany, Bangalore, Chennai and Gurgaon Delhi in India and Shenzhen in
China just to mention a few, which are becoming technology hubs and re‐vitalizing the economy and life.
This issue of “image of technology” in Australia can get even more confusing at a finer level. Many times over the last decade in various strategic meetings that I have attended in various organizations, I have heard it said that Australians are early adopters of technology, and that we are avid users of technology! In fact policy makers including sometimes those involved in investment in research and development have missed the ball on wanting to be the “creators of technology”. Of course, we all know it is the creation of new technology that leads to new opportunities which leads to wealth and economic growth, not just purchasers and users of technology (even if we are early adopters of technology).
The lack of emphasis on the technology sector is also brought about by the existing structures and processes in the strategic and policy decision making bodies. Often these structures in the organizations were established in earlier times, with the powerful decision making committees having no technologist or even people who believe in the creation of new technologies. It is important to
realise that continuation of such strategies and mechanisms to protect the power base and maintain the status quo will ultimately be detrimental to the economy and country as a whole, as other nations will advance and their economies will grow ‐‐ leaving behind the one who is not willing to change and accept the new trends and realities.
Just to get a glimpse of the reality, one does not need to look very far. Just see what has been happening in the last decade. Thomas Freidman (NY Times) in one of his talks observed that, just some 7 or 8 years ago, “Facebook was still in University dorms, Twitter was a sound, 4G was a parking space, Application is what you send to University, Cloud was in the sky, LinkedIn was a prison and Skype was a typo”. Now we take all these for granted and enjoy the benefits of using them, but why can’t we be
creators as well. We see new technologies and their deployment impacting the economy every day. We see ‘uberization’, where a new technology completely turns an industry on its head and forces us to rethink the way things have always been done. 3D printing has the potential to revolutionise not just the manufacturing industry but also health industry with the replace of human organs. New
technology businesses such as Netflix is changing the nature of entertainment. Digital technologies disrupting the traditional industry and creating new businesses are likely to increase even more in the future.
It is not only in policies with respect to research and development that the technology sector has suffered disadvantages, it also faces major hurdles when it comes to education and developing people in ICT. The Universities have a clear role to play to address this issue. Recently the CIO of Westpac in one of his presentations observed that the future of IT as 'very cloudy' unless we do something to increase the number of technology students – “law and medicine graduates won’t power digital future”.
Based on many years of experience in technology in the UK, US and Australia, in my view it is time that we in Australia begin to fully recognize and embrace the potential and opportunities that technological developments can give rise to. Given the pervasive nature of the technological developments across the world and their visible impact on the economy and the growth of countries
with digital connectivity and disruption, acknowledging and recognizing the value of technology should not be hard. But changing attitude and habits can be a frightening thing and the temptation is often to resist. The resistance may come in different forms, including from the powerful vested interest groups. To make a country open for the new type of technology driven innovations, it is
necessary to look at the overall ecosystem, whether it is in the formulation of strategic research priorities of the future or in the re‐ organization of previously established processes and structures in strategic decision making as well as overcoming the attitude that business as usual approach with old practices are sufficient in the tomorrow’s world.
1 The High Return on Investment for Publicly Funded Research, Science Progress, Sean Pool & Jennifer Erickson, 10 Dec 2012
- Prof Vijay Varadharajan
- Phone: (02) 4921 8687
- Email: Vijay.Varadharajan@newcastle.edu.au
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