#60—Mark Esposito: The Great Remobilization—Redesigning the World

Welcome to the Outthinker Podcast. Each week we talk with forward-looking strategists and innovators that are challenging the status quo, leading the future of business, and shaping our world. I'm your host, Kyan Krippendorff, founder of the Outthinker Strategy Network. Dr. Mark Esposito, PhD, PhD, is recognized internationally as a top global thought leader in matters related to the Fourth Industrial revolution and the changes and opportunities that new technology will bring to a variety of industries. He is co-founder and chief learning officer at Nexus Frontier Tech, an AI scale-up venture, and co-founder and chairman of the strategic foresight board for the Circular Economy Alliance, an edtech venture. He was recognized in 2016 by Thinkers50 as one of the 30 most prominent rising business thinkers in the world. He's a global expert of the World Economic Forum, an advisor to national governments, and a distinguished fellow in the UNESCO chair in the Future Literacy of Finance. He is currently an advisor for the Prime Minister's Office in the United Arab Emirates, the UAE. He serves as senior advisor to the Ideation Center of Strategy& at PwC. He's a professor of business and economics at Hult International Business School and at Harvard University's Division of Continuing Education. He has co-authored or authored over 150 publications, both peer and non-peer reviewed, 12 books, among which 2 are Amazon bestsellers. Those are Understanding How the Future Unfolds and The AI Republic. His latest book, The Emerging Economies Under the Dome of the Fourth Industrial Revolution, with Dr. Amit Kapoor for Cambridge University Press. And his next one is The Great Remobilization: Designing a Smarter World with Dr. Olaf Groth and Dr. Terence Tse. He holds a doctorate degree in business and economics from the École des Ponts ParisTech, one of France's most prestigious grandes écoles in In this episode, he shares why the Fourth Industrial Revolution is proving to be different from past revolutions, the potential good and not so good future implications of AI to business and society, and which types of jobs AI will replace, which it won't, and how AI and more broadly Fourth Industrial Revolution technologies are going to shape the future of work. Ladies and gentlemen, Dr. Mark Esposito, PhD.

Mark, thank you so much for being here with us. It's great to have you.

Thank you for having me, Kian. I appreciate the invite.

To be honest, I've only discovered your work recently, but I think that it is profound and really future-oriented and socially oriented. So I'm really glad that we could have you on the podcast.

Yeah, you know, I've been following your podcast for quite some time, so very, very pleased that now I'm on this side of the fence.

Ah, great.

That means a lot. So the first question I'd like to open up with, which I ask all guests, is to complete the sentence for me: If you really know me, you know that—

I have a fourth dan black belt in Budo since many, many years. That was my passion when I was young and kept for a few more years afterwards.

So I'm familiar with Budo, but can you tell us what Budo is?

It's sort of like judo and also some more defense techniques and more ancient martial arts. I started with judo up to black belt. And then my second, third, and fourth dan, like this extension of the black belt, happened in Budo, which was with actually a sensei from Montreal that later on happened to become a student of mine as he did his PhD. And so we became friends besides being a colleague on the dojo, on the tatami. Wow.

So the student becomes a teacher and the teacher the student. Beautiful. So I know that you have studied with, and for many years been a mentee of, Michael Porter. You spend a lot of your life thinking about strategy and the future. I ask this question of everyone and never get the same answer. What's your definition of strategy?

For me, strategy is at the same time synthesis and foresight. It's really when we are creating future equity with our decisions. And I find that there is now more and more of this direction towards foresight because of the unpredictability of the world.

Explain to me what you mean by foresight.

So we used to think of, I have an hypothesis, I'm building resources, I'm building out of a vision. I'm generating a model, I will test it, I will validate it with data, and I will execute it. And for a long period of time, we've been thinking about strategy execution. Today, I think we're much more in the presence of what I call never normal, constant period of volatility that does not equally or easily normalize. And so rather than thinking of a specific trajectory, I think strategy is much more into the engagement of the options that we have. And this anticipation about the option is really an exercise of foresight. And I think creating the future in a strategic manner rather than to some extent by standing in the future is really where I have noticed a major trajectory. And I have noticed also from Porter when I saw his evolution as a scholar shifting from industrial policy to much more of a societally driven way of thinking of strategy. And that is inspired by this expansion of the concept from what we used to have.

Why do you think that is? I do sense that as well. And when we talk to our strategy officer members and followers of this podcast, there is certainly a shift from industry and corporation towards society being the unit of study, if you will.

You know, an easy way that I explain this to myself is the direction of strategy changed from what used to be inside out and the entire emphasis about the value proposition. Then it was like encircled with the idea of outside in because the world is changing, external forces are shaping the content of strategy. And then it became a lot of outside-out. Things are happening regardless of what we think. Think of climate or think of conflicts. They happen no matter what control we think of having, even like the pandemic. And then it equally went down to the inside-in. So the internal politics, the fact that you're looking at the fact organizations are nonetheless political entities and you have to navigate those conversations. So if you put it into, let's say, a chart, it would be on a quadrant the four directions: inside-out, outside-in, out-out, in-in. And that constitutes, I think, an extension of the field of work of strategy. On top of the fact that, as you know, we started to talk about adjacent strategy, new market strategies, I think we simply have expanded the field of research. That's why we talk about it.

Got it. Got it. Can you describe to us your DRIVE framework? Because it sounds like you have arrived at five macro trends that are going to be shaping that future that we want to shape. Sure.

Yeah. So the DRIVE The DIVE framework is a contextual analysis. So it helps us see, similar to, for example, PESTEL or STEEPEL, what are these trajectories of transformation that we see. The slight difference from the other framework is that it tends to look on a longer trajectory. So it tends to start from things that have started in the past and they will continue over time. So they are what we call large-scale, to some extent consequential trends. So D stands for demographics and social change, how we are changing from the social fabric to our behavior, to the input, of course, of population in the world. Which equally shapes geopolitics. Resource scarcity is really the conversation on how we have seen the paradigm from abundance to scarcity fundamentally impact the way we think of growth. Inequality is a challenge that we don't seem to be able to easily address. Started, I think, after the '70s with more and more stagnation of the middle class and then expanded to different kinds of inequalities. So we explore from capital to income, but also gender, access to education, healthcare, There's a number of different typologies of inequalities. The V stands for volatility, scale, and complexity. It's mainly a conversation about how technology is shifting the sense of normal to more exponential structure, digital assets that do not follow the same rules of finance as the physical ones, and of course how technology is changing strategy in the first place. And the final one, enterprising dynamics, is the fact that many business models are disrupting, and they're no longer coming from the traditional R&D houses. Coming pretty much from all over the world. So from a company piloting something in Bangladesh and maybe scaling back to France like Danone, or for example, what we learn in Kenya that then can be applied in a city in Canada, or what we had done in India that now scale out, right, and become a practice. We see disruption happening in a much more diffuse manner rather than centralized as before. And that's kind of what constitutes the DRIVE framework as a contextual tool.

So those seem macro results, but in your most recent book, you're talking about the technological drivers of those results. And maybe there are other drivers and other results, but you talk about the Fourth Industrial Revolution of being composed of some technologies— AI, IoT, etc. What are the key technologies that compose the Fourth Industrial Revolution? How is that industrial revolution different from past industrial revolutions?

Thanks for this, Cullen. I will start from your second point. The difference is that the previous revolutions, they were impacting low-income labor. Because we were doing a lot of mechanization. So we're shifting labor from physical to less physical. It was ideal to go from a factory to supervising a shift. In the fourth industrial revolution, we're actually less interested about low income and high income, but much more in the middle income distribution. So it has been a revolution that has impacted what we call in everyday life the white collars, mainly office jobs. And to answer to the first point, there's a series of technology that are really becoming more interoperable and converging. From 3D to Internet of Things to any form of automation robotics. And of course, you can extend it to wearables, you can extend it to big data and cloud. But the two foundational technologies that really are reshuffling the concept of value creation are artificial intelligence and blockchain. And this is why it's such a different combination of technology from the one that were mainly the previous cycles, mainly driven by efficiency. This is much more about redefining value in the first place.

And in your book, you talk about the rate of adoption of these technologies is faster than in past industrial revolutions. But you also talk about it's different in other ways, like fusion and penetration. Could you talk to us a little bit about those?

I think there's an upside about how quickly this technology can help organizations and even countries leapfrog. We see this a lot in examples in emerging economies where countries that didn't really have access to infrastructure, now they can bypass and be directly fledged and green and much more sustainable. On the other hand, we notice that countries that are not really prioritizing their fourth industrial revolution technologies, they are becoming more and more on the disequalizing side of the story. So the digital divide or the digital gap is becoming bigger. So I think it's a story with two different directions, almost like a fork. On one side, there's great opportunity for advancing and accelerating, but if you're not really catching on, right, the distance becomes almost insurmountable. Uncomfortable, unfortunately.

Yes, yes. Talk to us a little bit about the AI component of this industrial revolution leading to a greater divide, creating a fragmentation in society. I think that what's really interesting about your work is you talk about the economic motivations of people when some of them are replaced by AI and what kind of political socio-demographic changes that will induce.

Yeah, I find that technology like AI, they are fantastic to really increase efficiency because they are designed for that. But if they're not coming with an explicit trust mechanism, it could truly exacerbate the public debate about technology. And what they do, they tend to be dividers rather than convergers, right? And I think this is the challenge we see this day with a quite immature conversation, no matter where we are about the power of these technologies. The other thing that I guess is kind of problematic, but equally where I think the opportunity for this to change the narrative, is technologies like AI, they have the premise to augment humans in ways we never thought before. But they have been for the time being, so like pigeonhole only for the optimization of outputs on a pure economic fashion. And I think this is where we're kind of missing on the opportunity to think of technology as a way to improve people's lives. But we have, on the other hand, used technology to exacerbate even more this divide that we were mentioning before. So I find this rather than a problem with the technology, it's a problem with our collective design of the technology and what we think technology is for by thinking it's neutral. It's not. Technology is an extension of our brain, and our brain has been propelling these inequalities for quite some time now. So it's much more on our side than on the side of technology per se.

Technology is not something that evolves on its own. It is influenced by us as humans, right?

Absolutely. And I think today more than ever, especially when you're having the challenges that are amplified by the social media chambers as well as, for example, For example, the fact that we're using some of our biases as part of our, let's say, unintended extension of this bias into an algorithm. What we're mainly doing, we're using technology to amplify these echo chambers. And going back to a conversation that we were touching upon before, this is also why much more radicalization can be seen. Polarization and radicalization are seen because technology is unfortunately helping microclimate of, let's say, limited opinions to now get an amplification that can raise to of people liking an idea. And this form of ideology empowered by technology is quite dangerous. And we've seen this a lot in the United States, but elsewhere as well.

Can you illustrate where have we seen that?

See, we kind of lost the middle ground of the public debate where people were mainly talking about stuff and trying to get them sorted. And now what we do, we have this microchamber that comes up with an idea, sometimes very, very absurd or radical, and suddenly gets out there on social channels. It generates engagements because social media companies, they don't have an economic model that differentiates real news from fake news. For them, it's kind of the same kind of engagement. And so in the absence of that mechanism of control, we have really opened and proliferated to so many different silos of information that are creating their own narrative. And that is reflected in our political spectrum, which is quite divided right now. I think in the US we feel it, but I see this elsewhere, right? We see populism rising, we see the challenge of the center to hold it together everywhere, and we see these streams or actually the more radical side of the political representation gaining momentum. But that's not an expansion of their side, it's depriving the center from what the center used to be and moving that public opinion towards those poles. This is why I find the extreme left and extreme right, they're very similar in many ways in what they think. Before, I think they were more politically differentiated.

Hmm.

So it seems that a lot of this is driven by that the future of work will evolve, right? And I think people think about which jobs will be replaced and which which won't, and you have some interesting thoughts on which ones and what regions or geographies they will be. And then also you talk about that it's maybe not the most helpful way to think about existing jobs being replaced. Could you talk about those two things? So like, one is where will jobs be replaced and how should we be thinking about job replacement versus augmentation?

I find that the current GDP per capita will give us a sense about where we'll see jobs being replaced and where they will be. So quick example, countries that are on a really low GDP likely will continue to actually hire and retain people because they're cheaper. We're talking about countries like Nigeria, Brazil, to some extent China, India. We're also talking about millions of billions of people represented by just these few countries. Countries that are going to be much more prosperous, so country in their $50,000, $60,000, $70,000 per capita, they will have an automation rate that is close to 1 person out of 4. Because the design of the job that we have today never contemplated the level of technology we have today in our society. So it's not truly a problem with the technology. It's the fact that jobs were designed when we didn't know about this technology, and therefore jobs were kind of represented this degree of repetition that is easy to optimize with technology. Which brings me a bit more to your second point. You know, Kai-Fu Lee, former president of Google in China, who wrote this wonderful book called Superpowers AI, defines this into two slight categories: the optimization-based jobs, jobs that can be automated because they can be optimized. And so if I answer the phone 100 times a day, that can now be replaced by a chatbot. And jobs that are actually much more about creativity and strategy-based, because they're very idiosyncratic, so they don't really have this degree of repetition. Of course, this job will hold firm because they are based on human-centric systems, or at least since there's a reference. To me, Kai-Fu Lee representation, rather than just representing the nature of the jobs that will go versus the one that will stay, is almost like an invite to what kind of job we want to design, which jobs that are designed with technology being part of that. So we are using technology as a component of the job, not in this detrimental trade-off between humans or machines. Because if we ask the question, we might not really end up too well with the answer, because in many of our processes we can be replaced. But what about humans and machines? I think this expansion is really where we'd like to go.

Could you give us an example for us to visualize of where a human augmented by machine can be helpful? For example, I've read and listened to you talk about cognitive decline in elderly, for example?

One example that I find always very nice to mention is the research done in an MIT paper about who is best at predicting cancer, a doctor or IBM Watson. And of course, if I leave the question as is, the answer is likely the algorithm will be better because he can count on millions of records while the doctor only has clinical experience. But what happens if the very same doctor integrates IBM Watson in his or her research? Well, the answer is the coefficient of success is much higher than doctor alone or machine alone. So this level of symbiosis between humans and machine, what we write with my colleagues, well, as symbio-intelligent jobs, is when you're integrating technology into the job and you expand it. But even if we don't go too far into the future, okay, and we go actually in Imagine 1960 in the US, working in a bank, and suddenly the ATM was introduced. We probably would have tons of people freaking out that their jobs were about to be gone. But thanks to the ATM, we expanded banking from a very transactional job to something that allowed personal banking, investment banking, but truly have expanded the industry itself. So I see these examples not necessarily new, but they're new in the degree of exponential outreach they could really have. And the one on the doctor, I think, is the one that most speak to my heart because of the power of technology applied to helping people who are in need. It almost feels like the necessity for us to do that as a society. And there are many, from helping dementia and Parkinson's disease to using robotics for people that can't walk or 3D printing for people that can't see. There's so many different things.

I have so many questions to ask, but I know we're reaching the top of our time with you. I'm going to ask you one more question and then ask a closing question. From what I've read about your work, you really appreciate the role of government and regulation in society and shaping this future. It seems to me that, and this is not my idea, this is certainly your idea, is that there are some people who will upgrade to the creative work that humans are for, and then there'll be those who won't be part of that. What are the societal implications of that? Are we going to have a universal income so that people can continue to do things even if they don't fit a career that is available to them? What are the societal implications of that?

What comes to my mind, Kean, is how we will use education, not as a tool for technical employability by having careers that everybody thinks are safe. Like, I remember going to school and having conversations about if I do for engineering, architecture, medicine, likely I will have a job. To education for the purpose of just shaping who we are and what we'd like to have. So for me, having a job in the future does not have to have a correlation with your educational background per se. And I think it's shifting about who are you and how can you build your living out of your passions. And I guess this is something that can be structured. You can think of an interaction between a more digital versus social and empathetic profile coexisting. And this like new digital leader of the future capable of doing coding as well as having empathy with people. It's not too far. It's just rethinking our educational system. And that is the kind of direction we'd like to take. To your point about UBI, likely this is not easy as a transition because there will be naturally gaps that come from one set of variables trying to migrate to a new paradigm. That's what I think governments are fundamentally designed to help in this transition. I always find the government has two options. One is to preserve status quo for what it is, but likely doesn't make you future-ready. Or it can help you become future-ready and so build the capacity or the skills required require for you to transition, whether that comes from subsidizing education, whether it comes from stipends to students, whether it comes from access to, for example, discounts on things like public housing or food, whatever you want to call the model. The purpose is not the subsidy itself, it's the investment in people. And I really like to imagine that we can invest in the human capital. And I finish on this, in this question, and in finance we really have the idea of return on investment. We have it because it sense. In the public sector, not too much, but we can argue for return on public value. I love to see return on human resource or human capital. How can we invest in the capability of the future self of us, right, that can really start navigating the question that the 21st century is actually imposing upon us? Then this is really where I'd like public policy to go. I understand it could be idealistic, but there are many good examples from different countries that shows that this is not just hypothetical. It's really maybe experimentation to pursue.

Wow.

I wish that we had another couple hours. You have given us both profound insights that have led also to big questions, consequential questions. So how can people continue this dialogue with you? How can they find you or connect with you?

Well, LinkedIn, I guess, is what connects me to many of our colleagues, and I love to hear more from stories coming from listeners of your podcast. We are in this business because I think we want to grow our communities in the best possible way. So I would say that is the easiest one. I'm on Twitter too, but Twitter is really more of a microblogging exercise. And so Twitter is another place where I tend to have a voice as well. And there's a book coming next year. It's an important work with MIT University Press called The Great Remobilization: Designing This Market World. And a lot of the conversation we had in this podcast God with you will try to be expanded in that work. And the best gift that your listener can do to somebody like me is that they will maybe read the future book.

Yes, definitely. Well, thank you so much for taking the time to be here. I know it's late for you where you are in Dubai, and we appreciate the work you do and for you taking the time to share it with us. Thank you, Mark.

Thank you for having me, Kean. I'm very pleased to be with you, and I hope this is the very beginning of many project and collaboration that we can drive together.

I would love that.

All the best.

Thank you to our guests. Thank you to our producers, Karina Reyes and Zach Ness, our editor, and the rest of the team. If you like what you heard, please follow, download, and subscribe. I'm your host, Kaihan Krippendorff. Thank you for listening. We'll catch you next week with another episode of Outthinkers.