Change in the next economy

Tim O’Reilly talks to McKinsey’s James Manyika about the interplay between technology, the economy, and the future of work.

Tim O’Reilly: I’ve been using the term “the next economy” to wrap up a whole load of concepts around technology and the future of work. We see a lot of concern about artificial intelligence, on-demand services, and robots, and we have this notion that these technologies are going to take away jobs. You hear people say, “Oh my gosh, we’re going to wipe out truck driving.”

What we haven’t created is an affirmative vision of what this technology could do that is today impossible and what is the work that needs doing. For me, there’s a cluster of principles that we can start with to identify what makes next-economy companies. One is that they enable humans, workers. You use technology to enable workers to do things that were previously impossible. I like to use Uber as an example.

James Manyika: Right.

Tim O’Reilly: You could call a cab on the street, you could call a cab by phone. But we had this latent capability in our smartphones to know exactly where the passenger and the driver are at all times. Uber said, “Oh wait. We can do this thing that was previously impossible. You can call a cab from anywhere. The driver can find out where you are and come right to you.” Magical, you know?

We’ve all been there in the old days, standing on some street corner in New York, waving vainly for a cab when, no doubt, there was an empty cab driving by two blocks away. Here was this new thing—augmenting the drivers made something new possible.

There’s another pattern that you see there, which is the platform pattern. It’s this idea that, increasingly, we see companies not as organizations that employ people full time but as organizations that create “affordances,” if you like, for those people to use the platform to perform quasi-entrepreneurial activity. So those two things alone are deeply transformative.

In a lot of ways, when you look at a platform-style business, it is empowering people to make decisions. There are a lot of critics who will say, “Well, an Uber driver isn’t really an entrepreneur. An Airbnb host isn’t really an entrepreneur.” And yet they are. They’re not told when to show up. They actually are encouraged to study what are the times when their income is going to be best. You have to figure out where are the best places to go. Uber says it will provide tools to help you understand that.