Image Credit: Peter Adams / Faces of Open Source
As the founder of O’Reilly Media, one of the tech industry’s most prolific publishers, Tim O’Reilly popularized the terms open source and Web 2.0. He organizes conferences that both define and advance technology trends. In 2016, while developing one of these conferences—the Next:Economy Summit about the future of work—O’Reilly began to focus on the increasingly anxious discourse concerning allegedly biased algorithms, job-annihilating artificial intelligence, and social media–manipulating bots.
In his new book, WTF?: What’s the Future and Why It’s Up to Us, O’Reilly argues that the invisible hand of the market will not automatically brush these threats aside. He warns that to fend off instability and suffering on a global scale, companies need to give up their addiction to maximizing shareholder value at any cost and get back to building businesses that put customers first.
We asked O’Reilly what business leaders can do to bring about a future in which we say “WTF?” in amazement rather than dismay.
Q. You write that the biggest threat to our future isn’t tomorrow’s algorithms but the financial market’s “algorithm” that prioritizes short-term profits over everything else. How can business leaders rewrite the rules?
Tim O’Reilly: Above all, they can stop pursuing a rapid growth trajectory and focus again on generating healthy long-term revenues and profits by satisfying their customers. To do that, today’s companies have to see themselves as a platform that enables their entire ecosystem—employees, suppliers, and customers, not just shareholders—and creates a lot of value for a lot of people. For example, if you’re a ride-hailing company, you can treat drivers as a disposable commodity as long as lots of people want to drive for you. But to get customers who trust you and keep using your services long term, you need drivers who love the job, are good at it, and stick with it because you pay and treat them well.
Q. You’re famously optimistic that AI and other emerging technologies will eventually replace old jobs with better, new ones, but you acknowledge that the transition will be painful. How can business leaders minimize that pain?
O’Reilly: There’s going to be displacement, and people are going to need a safety net. If you’re wildly increasing profits by using new tools, you should, at the very least, pay your taxes to take care of the people you no longer need to employ. That’s not idealism, it’s simple self-interest: you want to be sure people can afford your products and services.
That said, I think a lot of the fears of displacement by automation are overblown. New research from the Progressive Policy Institute, for example, shows that from March 2014 to March 2017, e-commerce created five times as many jobs as were lost in retail shops and that the e-commerce jobs pay more. The automation in today’s retail fulfillment centers helps companies better match supply and demand by helping humans move more physical goods faster. If we use technology to augment humans instead of replacing them, we won’t shed jobs on a massive scale.
Q. What role do business leaders play in creating a future that’s more wonder than worry?
O’Reilly: They have a great deal of influence, and some of them realize it. For example, Tesla’s CEO, Elon Musk, is worried about big problems like the global energy supply. He’s trying to use technology to solve these problems in astonishing ways. And he’s internalized the idea that you can profit by helping customers, employees, partners, and society as a whole to prosper.
Most executives don’t think this way, though, because we’ve told them not to. We’ve told them that the definition of success is increasing the stock price no matter what, even if that means shortchanging customers and treating employees as a cost to be eliminated. Executives actually need to redefine those outcomes as failures, because while they might be good for financial markets, they aren’t good for jobs, wages, and the lives of people.
We have this idea that the invisible hand of the market automatically comes up with the right answer, but it doesn’t. The invisible hand is about the fight for advantage. The genius of some of the new technology platforms is that they help the invisible hand along by doing a better job of matching up supply and demand using more timely, accurate information. Technology platforms, and indeed all businesses, rise and fall to the extent that they generate value. When they extract more value than they create—directing profits to management and shareholders instead of investing earnings in assets, employees, and customers—they eventually starve themselves of resources, and they fail. But when they create a lot of value for a lot of people, they flourish. Every CEO can internalize that. D!