 Felly, dweud â'r obwysgol sy'n meddwl i chi am llunio i fynd i'r Cymru. Felly, ei ddim yn ystod i gyfnod ar gyfer y lluniau cymddiadol, gwybod i gyd yn ymlaen i fynd i'r audience wedi'i i'w cyflwyffordd ymlaen i fynd i'r newydd. Mae'r pleidio yn ôl yn gyflym ar y panel, ac mae'n gweithio'r enw i'r lluniau cefnod. Mae'n gweithio'r cyflwyffordd ymlaen i'r cyflwyffordd, a'r cyflwyffordd a'r cyflwyffordd, yn gweithio'r cyflwyffordd. ddigital transfarmation that is affecting every industry on the planet and by its nature it's affecting society as well. We are going to be first of all talking to my colleague Bruce Vynald, he has been conducting a study at the forum into how industries are being affected. Bruce, perhaps you could start off by talking about some of your key findings over the industries you have studied. See, so we start with a project this year named Digital Transformation from the industry which we are analysing the impact of digitisation in various sectors and we are doing this across nine sectors this year and we are doing it across another nine one next year and sectors we are dealing with this year range quite broadly along the digitisation curve, along the maturity curve digitisation from electricity through to media, to health care, we are talking to our colleagues in automotive supply chain logistics The finding is actually very interesting, digitisation clearly impacts every single industry but in different ways. Just to maybe talk about two industries, one is the health care industry which is really as an industry is going to be probably most impacted of all of these through digitisation. Historically it hasn't really been a particularly consumer centric industry. If you think about you as a consumer or a patient you make a phone call to a doctor, you get an appointment which is not necessarily imminent even though you'd like help immediately. It's at a time that is rather inconvenient to you. You have to wait in a doctor's office and you're sitting there with people who are sporting other infectious illnesses so it's not really customer centric or it hasn't been. However, the introduction of digital health care services is really going to change that quite significantly because that puts people at the heart of the services that are out there. Global spend is actually 7.5 trillion US dollars in the health care industry so for the people who actually win this race, both incumbents or new start-ups, the benefit is potentially very huge but there's also a lot of regulation to be taken into account. There's a lot of inhibitors basically in the health care industry. Just one more example maybe is the automotive industry. The automotive industry, in a session this morning we talked about it as a gorilla industry. There's really the big manufacturers who are there. However, digitisation is really going to bring more disruption or more transformation in the next 20 years than it has seen over the last 100 years. Two of the trends are really very much the connected traveller so when people step into a car now they don't only expect to drive the car but they expect to hear their music, they expect to be able to go online, they expect a completely different host of services from what they used to which is also the reason why we see a lot of non-traditional entrants into the industry such as Google, such as Alibaba. I think two days ago Sony announced that they are thinking of entering the automotive industry and the second trend that we see there very much is the autonomous vehicles so actually cars will start driving themselves. We already have assisted driving but this will be taken to the next level where cars are self-driving and that's going to have quite an impact on a multiple of other industries. So a lot of really interesting findings, a fantastic topic. The digital transformation starts here. Justin, you're the chief executive officer of Accent, one of our forum technology pioneers. How do you sum up business response and readiness to today's digital transformation? You work across a range of industries of course. It's a complex question because I think you have to break readiness and response into two sectors. One is internal readiness and response, how are people adapting to the changes in digital technology but then also the competitive landscape. I think that if you look at businesses that are founded today or created today, they're starting in the cloud world. We typically see people architecting their IT infrastructures in a very different manner. Where we actually see more challenges adapting to changes in the digital landscape are in existing organizations. How do they adapt to the digitization of data? So if you take healthcare as an example which you mentioned, in healthcare as you see electronic documents and electronic medical records becoming more mainstream methodology of storing confidential patient information. How are organizations adapting to that from a security perspective? How are people adapting to the global workforce? There's more of this sense of employees having the ability to work from home, the boundaries and walls of a business extending beyond physical walls. Rather to digital walls. People having organizations where there's a large percentage of the workforce that works from home and it's distributed. With that brings a whole new set of complex challenges from a digital perspective but also freedom to access talent from anywhere in the world. So I think if you look at the broad landscape there are those businesses that are being formed today in a digital world that are adapting quickly. Those that have huge legacy architectures and infrastructures and legacy employee structures that of course have challenges. But most businesses that we talk to and interact with I think are very focused on that as a key part of their sustaining as an organization going forward. But it's going to be kind of a 10, 20 year cycle to see people catch up to what's going on in digital information. But then there's the little external force which I think is something that is very critical because what you've seen in the past five years really is organizations that historically would have been believed to be untouchable from a disruption perspective, a digital disruption perspective being disrupted. So of course things like hotels. How do you disrupt a hotel digitally? Well five years ago no one would have thought that was possible. How could you disrupt a hotel digitally maybe from an infrastructure perspective, a bookings perspective but not from the actual core of what the business is. And then of course you have companies like Airbnb which have fundamentally disrupted something that has physical walls. Transportation industry. How would you disrupt from a digital perspective taxis? Again prior to five years ago people would have attacked that and looked at that from the perspective of how do you make routing more efficient or GPS more efficient. Charging more efficient even hailing an existing taxi infrastructure more efficient. And now you have the whole concept of a taxi or transportation architecture disrupted. And I think that's going to happen across every major industry. So one of the big topics in Silicon Valley is is there any industry at all that's safe from digital disruption. And people are rapidly concluding that although we don't have clear visibility into how some of the most antiquated and historical legacy architectures of industry are going to be disrupted, that anything is disruptable. Great question. I was going to actually follow up with that. Are any industries at all disruption proof? Peter, you work across a range of industries to introduce you or the global MD for strategy and sustainability at Accenture. Which industries are the winners and which are the losers in your experience? And where is disruption being adapted to best and where are we seeing huge seismic shifts in the competitive landscape? I'll start by saying I love the quote, any industry is disruptable. I think we would probably broadly speaking agree with that. The question is the pace and the scale of change in different industries. And clearly I think at the moment to answer your question although we're seeing a wide spectrum of industry adoption and industry disruption. So let me take a step back and then answer it in more depth. I think the first thing to say is that we believe and we see this day to day with our clients that digital disruption is real. It's here and it's actually happening at a greater scale and faster pace than anyone anticipated. And we're seeing that day to day across a number of different industries using different technologies, the industrial internet of things, cloud computing, data analytics, the next wave of social media. But that's not the real story. The real story for me is exactly as Justin was saying. The real story is the innovative new business models that those technologies and the combinations of those technologies are bringing to bear. And I think that the World Economic Forum's project now, we're very pleased to be partnering with the WEF on this, it's attempt to map out now and on the road to Davos and beyond these industry road maps. And for the first time I think globally to give us a real picture of what's happening both within industries and across industries is really useful. And I think a unique contribution to understanding this era of digital disruption. To then go to your specific point, I mean industries in my view that are being most disrupted are those that what we're seeing I guess is the sort of second wave of digitalisation where we're seeing players entering traditional verticals, traditional value chains like energy, for example, like automotive, and providing far better customer propositions and disintermediating the existing players. Examples of that, you've used Airbnb, that's a great example, but it doesn't necessarily always have to be small innovative businesses emerging, disrupting. It's just that in many cases incumbents in those industries have not responded quickly enough and that's a story that we see universally across industries. Some examples of where some bigger companies have responded well, for example Michelin in the automotive sector, shifting its business model away from selling tyres to selling the number of kilometres travelled by that tyre using digital technologies, using sensors, using devices, providing tyres as a service rather than tyres as a product and having an internal innovation engine that allows you to disrupt yourself. So I think my quote would be that actually it's different across different industries but either you disrupt yourself or you will be disrupted. And that is going to happen, as Justin mentioned, right across sectors. That's a really interesting point. Of course we look into the sharing economy and the circular economy here a lot at the forum, and how new business models can extract more value through greater services. Very, very quickly. The Michelin example is a great example of where the circular economy actually plays out as another element of that. What happens with digitisation, for example, of their services, is that by embedding sensors in the tyre technologies they design things differently because they know they're going to get them back at the end of life cycles, so they design them for re-manufacturing, they design them for recycling, renewable materials, so they actually close their own loop. So as well as the business benefit and the customer benefit, you also end up with a broader societal and environmental benefit. It goes back to the asset optimization. It's asset optimization that is enabled by digitisation. And essentially what's really happening, the real disruption is providing better customer solutions, citizen solutions, using these blends of technologies and in some cases what that technology allows you to do is to dematerialise that. So in actual fact you see that shift from products to service in tyres, you actually don't need to throw the tyre away or turn it into incinerated energy at the end. You can actually re-use it, repurpose it, re-manufacture it and use it again. It's generally at this stage where I invite the floor to ask any questions. I've had a few over social media in the coming, in the preceding couple of hours. I'm happy to continue but do we have any questions here? Okay, let's move straight on to one of our questions that came in over the internet this morning. Disruption, of course, a big question here obviously is always jobs. Are you bullish or bearish about the digital transformation? And perhaps Peter will start with you this time. This is a great question. This is a real debate going on amongst economists at the moment. So there's a real debate going on globally amongst around the theme of labour productivity and technology and what it means in terms of disruption. I think the real answer is that as we've seen in various different phases of the industrial revolution you can sort of decide whether you believe the German model that we're in 4.0 or 3.0 but let's say we're moving through probably the fourth wave of the industrial revolution in terms of the combination of digital technologies. What we've seen in all the other phases is that there is real disruption and it does in a shampaterian sense, it does create destruction in a positive way. You lose some industries, you gain other industries and actually what you find is that you need to repurpose people but there is a lot of turmoil in that. So I would say that I'm bullish about the ability for digital to free up resources to provide better customer citizen outcomes but I'm realistic that that will require the transformation of a lot of different workforces and I guess the final point I would make there and this is I think very important for this project and it is a key part of this project looking at the societal implications of the digital transformation of industries as part of the story and broadly webs future of industry of the internet projects. I think you only have to look back to the industrial revolution in the UK there's a term called Luddite which was back in the 19th century Luddite resisted the first wave of the industrial revolution they were smashed machines all over the UK because they thought it meant the end of jobs for weavers and spinners so that has always been the case. What does it mean for us? What does it mean for Wef? Well it means that this is a unique public private platform where we need to discuss how to take the majority of stakeholders on the journey through digital disruption because people don't like change and so we have to make sure that the case is made and that the journey is managed. Justin, you're a fast growing technology pioneer you've probably displaced jobs with your disruptive business model I'm sure you've created some as well, what's your views on this one? You know again it's a complex question so I think it's a matter of what time horizon you look at it I think there's no question that you're going to see as you've already said a lot of jobs disrupted the reality is that you're going to have technology replace what normally took human being from either a labour perspective or an analysis perspective I think that one of the things that's most interesting to me is a lot of the discussion in the early days about how technology would impact the labour force was that it would impact the lower end of the labour force so that improvements in manufacturing and automation and robotics would replace human labour that the reality is I think if you look at where the most disruption is probably going to be it's actually going to be in that mildly to actually well skilled labourer probably disrupt the middle class the most because what you're going to see with machine intelligence artificial intelligence analytics improvements is a lot of the analysis jobs will probably be disrupted by technology I think the time horizon to look at it is very important because if you look at disruptions historically one of the differences today is the fact that if you look at the renaissance or the agricultural revolution or industrial revolution these took period over longer periods of time the digital disruption today is happening accelerating rates so fast that people can't predict what jobs are going to be disrupted what industries are going to be disrupted because it takes a matter of single digit years for entire disruptions to occur that's going to be a challenge on the other hand though I think it's a generational challenge in that what will happen is as jobs are replaced by technology new job opportunities will be created and education really becomes the solve for that which is if you have education improvements in education to focus on creating workers the digital era there will be no shortage of jobs in my opinion for digitally skilled workforce so yes there will be disruption it's unpredictable where that disruption will take place it will happen I think more in the middle class than people realize middle class worker I think then when you look at it from a time horizon perspective it will happen faster in some ways than people predict but then if you look at it from a long term perspective as long as we enter that with eyes wide open say okay that means we need to have shifts in education to improve skilled workers to improve technology and digitally oriented workers those jobs will be recreated down the line Just in the context of the conversation we had earlier about robotics and artificial intelligence and the point there was made that robots actually could play a very valuable role in the Chinese manufacturing sector for example by replacing jobs that cannot be filled because the supply chain keeps the manufacturing in China but there is not enough labour for the roles available so it's interesting to see the middle class is taking the hit and possibly something which we may not all think about Bruce you've been looking at six industries over the past few months any thoughts about the job challenge for those industries that you've been studying That's actually come up in the conversation quite a few times but just to add what was said previously there's also the approach we just had a fantastic session this morning a private session this came up very much around the education system and jobs and upskilling and reskilling and what you mentioned earlier on Justin is also that technology can actually help in that we had an example today where we talked about virtual reality glasses actually helping the low skilled labourer understand the neck, the highest skilled job and helping him or her in executing that job so it's not only that technology either replaces, destroys with the glass half empty or creates new jobs it's actually technology is an enabler to create these new positions it's an enabler to cross an upskill individuals interposition that without technology they would never be able to actually take on so I think there's a risk obviously there's an opportunity but technology technology sits across all of these things in the spectrum it really is the fundamental driver in this change in more than just one single sense I want to come back to this but I want to go off piece a little bit first because we've got Justin here he's just recently made a technology pioneer and the question that came in this morning which I thought was a very good one is it exceeding in technology is it more important to be using breakthrough technology or as some people have suggested to package and simplify existing technology we see again it goes to the pace of innovation businesses often can't keep up with the pace of innovation it just takes a bit of time as a lag before somebody actually realises what can be done and how it can be leveraged and packaged and made easy and valuable to a consumer or an end user what's your view there? This is a conversation we actually have internally on a regular basis and that I have with our engineering team and that is a broad topic of discussion Silicon Valley which is ultimately and I think it was Peter that said this earlier it's about what you deliver to the customer I mean really technology is an abler technology is what enables you to improve customer experience to improve education to improve the product that the customer purchases so innovation for the sake of innovation is not actually innovation it's how is the customer impacted and when you look at it through that lens the answer to that question becomes rather easy which is what is the simplest path to delivering a better product to better service a better customer experience what is the best path to reducing costs to making a product or a service more affordable it's a combination of both is the reality the smartest companies figure out where the greatest need for disruption in existing technology is where is the gap, where is there an IP gap where does something need to be created created, developed to solve the problem in a different way and then leverage existing technologies and repackage existing technologies around that so I think the key is to identify where is the gap, where is the challenge that no one has an answer to make that the core of your IP everything else that you don't need to build that isn't a core part of the IP that isn't a core part of the disruption repackage, simplify and use existing technologies and it's that balancing act it's truly a balancing act those that have a not invented here mentality are suffering including startups that believe that they have to be completely innovative from ground up and replatform everything they're going to be disrupted by those that more intelligently find the balancing act and leverage existing repackage technologies but then figure out their clear points of intellectual property it's a frighteningly complex situation as we all know so I'm going to challenge you all to give me some of the ideas for business and maybe even government should be looking at if they had to choose one or two areas of priority action when it comes to future proofing or even reinforcing their success in the digital transformation what should they focus on most and Peter let's start with you again so you asked for two sort of stakeholder constituencies so the one for business let me tackle multinationals and the larger companies and others to tackle some of the more smaller innovators I think in the work that we did previously with that we launched in Davos the industrial internet of things one of the things that came back very clearly from that was that there is a real awareness amongst business that disruption is real and it's coming in their industry I forget the exact statistic I think it was more than 70% of respondents to the survey we put together said that they thought it was real but only 7% of them had investment plans on digital and so I think the real that's a fair point I would say yes I mean you'd have to be in an industry that I haven't worked in to believe that that's not going to happen to you in the next five years so yes so two frightening numbers is part of that but I think the really they need to start to think very carefully about the disruption I think often the response of multinationals to the digital transformation challenge and disruption is to think about digitising their existing businesses not rethinking their business models so for example it's about how do I use less screens in a customer service call centre rather than how do I completely eliminate my customer service unit for example when was the last time anyone called google when did you call google up and complain about a product and get on the phone and ask them whether or not they could help fix something so it's about really fundamentally rethinking the business model and the way you interact with customers for governments we think that to 2030 just one area of digital transformation the industrial internet of things will represent a $14 trillion global economic opportunity here in China somewhere between $500 billion and $1.8 trillion and that's the key the policy measures that you take now will dictate whether or not it's the $500 billion or the $1.8 trillion so there's a lot of value at stake probably the most important thing at this stage is two fold one is to really put in place the customer friendly customer secure customer trustworthy platforms that you have industry standards that you have the right level of confidence in industries and solutions and government has a key role to play with that in terms of putting in place the policy putting in place the architecture that allows industries to compete on a level platform on a level playing field on a common ground and have citizen and consumer trust the second thing I would say is that we need to find ways and means to create technical standards because that's really going to be one of the things that allows us to create more and more opportunities more and more opportunities for entrepreneurs and large businesses we need systems in different technologies and digital to be able to inter-operate to be able to talk to each other and that's going to be key and again governments and industries have a key role in setting those standards so those are the two things I think on the government side I think Peter makes a very good point which is the reality is if you look kind of I think prior to 5-10 years ago from an investment perspective both internally at large companies or from a venture capital private equity perspective what people looked for in terms of good investment opportunities was how do I disrupt a legacy architecture but it was usually in some sort of small incremental improvement manner so how do I make it a little better how do I make it a little more efficient how do I make it more cost effective and the reality is the discussion is now in organizations that are large and innovative as well as in venture capital private equity is the most attracted to how do I create an entirely new industry around this how do I solve it in a completely different way that totally obslates and disrupts how it was being done before and when you look at the Ubers and Airbnbs and all these in the world that's actually what they're doing they're not taking existing kind of revenue streams and disrupting them in an incremental manner it's kind of an entire paradigm shift and a new industry created when you think about top priorities just to point out too one is really around that innovation priority which is how do you create an innovation team internally in an organization to constantly be challenging yourself from an innovation disruption perspective because the reality is to your point on should we be concerned about 70% yes every single company should be concerned about disruption 100% startups, growth companies existing enterprise organisations all are under a constant threat of disruption and disruption is happening at an absolutely incredible pace an pace that's unprecedented so everyone has to be looking at disruption and if you don't disrupt yourself you will be disrupted by somebody else so how do you create an organization of innovation how do you create a disruption team internally then looking from a more classical sense at kind of the digital priorities especially at large organizations and governments all around security information protection threat detection understanding the risks of cyber intrusion, cyber attacks the futures of kind of warfare both in terms of geopolitical and in terms of more kind of business war is going to be cyber warfare for sure and so how are you preparing for that and how are you creating architectures and systems internally to assume that you will be intruded or hacked by either a competitor or by another Grace I completely agree with everything you've said we've mentioned things like trust standards innovation preparedness which really takes all the box of what I really wanted to say and the one thing that I would probably add on top of that is we talk constantly in digitization we talk about blurring industry lines we talk about partnerships rather than competition even though competition is part of it and I think if you actually elevate that to a level what we do at the forum is this cross industry discussion and I think that's one of the things that's absolutely key here it is disruption that is cross industry if you even know how to define an industry so it's a cross industry discussion both at the business level but also the government level which are the two audiences that you talked about earlier on so have a very honest and open discussion how you're being disrupted what technology transformation digitization is doing to you with your peers in other industries to learn more and at the same time I think also governments need to look at standardization at policy cross industry just as one example for instance the topic of cross border data flow in a telecoms world people will say yep I know this this is quite simple it's contested but it's simple it's called roaming and if you talk about healthcare people would love to have cross border data flow but regulation goes against it if you talk in the automotive industry people are scratching their heads because for the first time we've got connected vehicles cars have always driven cross borders but it was never a regulatory issue or at least not from a digital perspective so it really is to recap what I was saying cross industry discussion within the industries themselves and all key stakeholders which is civil society but also have this thought process of cross industry best practice policies and regulation to put this digitization this transformation really in place and help to reach the numbers that you Peter talked about earlier on at the higher level rather than the lower level large scale multinational kind of global 1000 organizations there are quite a few that have actually been very intelligent about bringing young disruptive people from completely out of industry on to either their leadership teams or even at a board or advisory level to help them kind of cross pollinate what are you doing in this industry different industry different digital age people brought up in kind of a different world to spark that innovation from a leadership level and that's actually not enabled those organizations Starbucks is an example and Intuit's another one to really change how they look at the world and prepare themselves for disruption internally so I think it's critical different industry and kind of different perspective fascinating conversation gentlemen I'd like to thank you all very much I'd like to also thank our audience here in the room and also watching this live online at weforum.org this session is now closed thank you very much