Jobs of 2037: Preparing for the Future

ladies and gentlemen please welcome CEO of the Milken Institute Michel cloud n' good afternoon it's been an incredible two days three days for some of you who are at our private sessions and we as always are saving among the very best for last but before I get it started on our concluding panel there's one very very important thing that I want to do and ask you to join me in doing this great event was put on by the wonderful staff of the Milken Institute particularly primarily the Milken Institute Asian Center with great assists from our folks in our events department development department the vision matrix Pete built if you've had a good time if you filed it worthwhile please join me in thanking all of them for the water [Applause] and with that let us get started on our closing plenary bookending the conference jobs of twenty thirty seven preparing for the future looking forward twenty years and it's moderated by our chairman Mike Milken [Applause] good afternoon and I think as many of you know 2017 the theme of the Milken Institute global conferences around the world and other programs and our efforts has been building meaningful lives and the challenge we have as we look to 2037 with the world's population probably going to increase by as much as another billion people on the planet what will they be doing what are the opportunities what will they consider to be meaningful lives and so this is our theme for this year and it's one of the great challenges as we look forward if we could pull up slide 36 for a moment as we think about these issues and you can ask each one of you what is a meaningful life and for many of the Millennials today it is far different than it might have been for their parents or their grandparents slide 32 when we address some of these issues in 1982 there was a book written by John Nesbitt called megatrends and in the second chapter of the book he talked about the challenge of high-tech high-touch and his technology was being deployed this principle symbolized the need for balance between our physical and spiritual reality and in a book last year by Tom Frieden he pointed out in interacting with the Surgeon General of the United States when he asked what is the biggest disease in America his response was no it's not cancer it's not heart disease it's isolations it is the pronounced isolation that so many people are experiencing that is the great pathology of our lives today as we think forward and so as we think about these issues there is no better place in the world to turn to then Singapore and it was a number of years ago when I first came here in 1970 you to meet Lee Kuan Yew and a number of years before that he was focused on what's the future he looked a lot younger when I met him the first time but what's the future of Singapore and he actually traveled to Jamaica to meet with the leaders in Jamaica and asked them what's your strategy and so Singapore and Jamaica had about the same per capita income at that time in the beginning of the 1960s well Jamaica strategy he was told their strategy strategy would be tourism and agriculture Lee Kuan Yew strategy was human capital educate your own citizens and invite and attract the best and brightest from around the world to come to Singapore no one today would confuse Singapore and Jamaica as per capita income in Singapore is more than 10 times Jamaica and Jamaica doubled their per capita income and it took them more than 50 years whereas Singh Singapore increased its per capita income 25 fold so if we're going to study this issue in the future and what are the opportunities and skills we are in the best place in the world Singapore to address that issue and luckily we have the best person in Singapore to address that issue the minister of manpower who's also interacted and been in charge of the labor union interaction education etc so josephine can you give us any insights we should be thinking about thank you very much Michel and delighted to be able to join us for the concluding panel for this Asia summit of the Milken Institute I wanted to start by just making three points and then we can elaborate on each of the point the first point I want to make is that when we think about the future what we know does sound very scary very frightening but the outlook for jobs is not all gloomy the first point I want to make and I'll elaborate on it a little later the second point I want to make is that we really need businesses to take the lead to transform and there is a role for government and and that is primarily in helping citizens to adapt to the transformation that is needed again I will say more about that the third part interestingly Michael relates to the point that you use right at the beginning of the session which talks about the meaning of life I think that the amount of upheaval that we can be expected to have to deal with both at the enterprise level and also at the individual level will create many instances of stress for both businesses and also for individuals and what we really need is to cultivate a sense of solidarity a sense of solidarity dollar fee that we are in this together and again I'd like to be able to say more later but back to my first point that what we know about the future certainly sounds very frightening but the outlook for jobs is not all gloomy if I could have just the first slide and I think that was slide 85 Sean if it was just pop it up now I just like to say that improve longevity is one reason why the global population will still grow but it is also why having more people does not automatically mean that we will have expanding workforces in fact the working-age share of population is expected to fall marginally and in advanced economies like Singapore we could expect a sharper decline and for us it will go from 72 percent to below 60 percent among the resident population and except in the developing world shrinking workforces everywhere else will put a drag on economic growth and of course we already know that there is going to be the relentless pace at which technology will change how we manufacture products deliver services and create enterprise value I think sean has a slide 19 which shows that of the 11 companies here I think a good seven to eight of the companies by market they are the top companies by market capitalization they did not exist before 1975 and no business I think should believe it can avoid riding the bumpy waves of digitalization and still stay afloat but I still do believe that we don't know enough of the future to conclude that the jobs outlook is all gloom and doom because a very often asked question is whether robots will put millions of workers of work as if disruptive technologies lead inevitably to disrupt it livelihood the truth is probably not quite as we imagine it to be because although there's no doubt that advances in artificial intelligence and machine learning will increase the prevalence of workplace automation it is probably true that at the level of tasks many routine tasks will be automated but it's hard to imagine jobs completely automated away this is also consistent with a recent study that the OECD made so if you take a look at this this is already what has happened 60% of the jobs in 1950 were unskilled today that number is 12% and look at the number of skilled jobs that have gone up it's gone from 20% to what it is today 70% if you project it into the future for the vast majority of jobs human beings will likely still be needed although the use of technology will intensify and you could call it a tech and touch so for example you you know may not have marketing in the way it was done before but you have digital marketing so even as routine tasks are automated we possibly can have knock-on effects and new jobs being created and if the past is any guide to the future in fact technology has also always created a net addition of jobs and in more recent times a new job roles have emerged we've never heard of people who do cybersecurity but now we do and if you take just take ecommerce brick-and-mortar retail type of jobs have gone but in the whole of the supply chain management you have many more new jobs so there is however a catch and that lead me on to my second point the catch is that the prospect of a net addition of jobs is comforting only to the extent that the work is involved can find ways to access the new opportunities otherwise it is a very frightening thought and you could have a very unhappy situation where unemployment is rising and yet at the same time businesses are growing below potential so the second point that I said earlier was that we need businesses to lead in the transformation and governments to help in the adaptation for Singapore I think there are two other factors that shape our response to the potential impact of technology the first is that we have an imminent slowdown of workforce growth and that's because we have smaller cohorts coming of age baby boomers retiring we have an already high labor force participation rate and moderated inflows of foreign manpower second for us there is a risk that productivity and wage growth will stagnate especially in the domestic oriented sectors so if you think of it against this background in Singapore certainly we have a very real interest in helping businesses to be more productive and man perylene and it is also essential to their continued success in Singapore and their ability to provide better jobs what do we do with the people who are displaced well I think we have to help help them adapt and there is no running away from helping them to acquire the skills that will help them to access these new opportunities so I'll keep my remarks here and then we can come back and talk about the third point I made which is how to cultivate this sense of solidarity thank you very much so first Jaime I want to congratulate you on being named the United Nations sustainable development goals pioneer this week so congratulations you're the first I believe to ever be recognized from the Philippines for this award and second you are the head of a company that was founded in 1834 so as we think back over those centuries and your family and what's occurred obviously your workers are substantially different today and as we saw in China the drop-off in the working age population at this time that is not the case in the Philippines and so the Philippines brings us one of the youngest populations in Asia so talk to us a little bit about the challenges that you see and it may be contrasts a little bit Philippines with its very young population and China yeah thank you thank you very much Michael and I think the challenges that we all face as these job revolutions take place will be as challenging obviously in countries like ours as they are in the developed world we're all going through massive shifts but it is an interesting time for developing countries like ours a per capita income is way below say for example Singapore but as we look at the the problem as they say it sometimes depends on how you look at the the issue at hand there is a lot of focus right now on the Philippines on on the jobs that will disappear and and I'd like to focus instead and I think I take a page from from Minister Tara on the issues of how the nature of jobs will change and if maybe we can go back to that slide slide 20 maybe as a start and start by focusing on the issue of median age you look at the Philippines on the chart and our median age is pretty much the smallest the lowest on the list and to a certain extent I think it's all about taking advantage of a possible demographic dividend rather than see this as a problem now if you don't address it properly obviously you've got a lot of young people coming into the workforce it's an opportunity that can also be a problem if not tackled properly if we go to the next page I think slide 21 it's an interesting slide because on one hand the Philippines is high on the digital leader platform and also high on the super city's leaders list I used to look at density in cities as a negative and over time I've realized that the big cities if handled correctly can be catalysts for great innovation there's a lot of cross current learning that takes place young people academic institutions the workforce all huddled in a closed area if handled correctly there's a lot of unique discussion that begins to take place you take that with a young population like the one we have and their ability to adjust very quickly to changing technologies and you have a possible positive catalyst for change I think it's no accident that we became a leader in the outsourcing space it's a young population they're willing to adjust their cultural affinity to the US and the UK their ability to speak English well and Justin very quickly and I think the kind of jobs that have taken place in that space I think people think are still on the low end people have used I've been used to seeing the Philippines as a call center it's already evolved into a much more complex space people have built up squeals in in equity analysis CAD cam design healthcare and many others and so what you've had is a mirror image of our service industry abroad being reflected locally because of the shift that's taking place in telecommunications and bringing those jobs back to their home country that combined with a young population has really made the Philippines a very unique place as a as a catalyst for adjustment I guess in this new digital age I think if we go to slide 21 it was just following the order they were in and then 22 while we talked a little bit about the high literacy rate and in the affinity to the US and I think one more slide forward going back to the history I guess of the institution Michael that you mentioned you've seen here that the services component of our economy has been growing rapidly in agriculture which was the traditional business of our country when our family business started has begun to decline it's just amazing how our young population has taken onto the service industries and a lot of it has been helped by this telecommunication revolution that's taken place that's managed to relegate services to our part of the world India of course it's also profited a great deal from this but it's just amazing how we've adjusted to it I think the challenges as we go through the changes taking place the use of artificial intelligence and how the BPO industry is changing is to keep adjusting the skill set of the country and what issue I wanted to put on the table Michel is it is now more important than ever for the educational institutions and industry to talk generally educational institutions in industry have not always conversed properly we have produced students following old schools of learning and old ways of getting degrees I think the changes taking place now on the industry front require us to really have consultation in a much more serious way between industry on one hand and in the educational sector I think the whole issue of technical skills and of a workforce beginning to adjust even as high school graduates to the needs of these new economies that are shaping up is going to be more important than ever I think in a country like ours a developing country because our demographic situation high urbanization the mix of ideas and in an ability for young people to take on technology easily has really created a new atmosphere of entrepreneurship willingness to take risks and they and they changing nature and the way people are looking at jobs so even a country like ours I think if if the right direction is set can evolve and survive and maybe blossom in this change that's taking place thank you very much and plop slide 50 as we look at these challenges to the future I think the minister pointed out something really interesting it's not just that people don't have jobs but it's also the jobs that go unfilled and the matching of skills and what that does is it reduces the growth of businesses industries by not being able to find qualified workers are being forced today to overseas many of the issues in the United States today are not to go overseas for lower wages or pay but to look for qualified workers and as we look at just ten areas then potential disruption and innovation I just want to highlight one before I go to Joe here and that would be agriculture number one on the list there so if we look just at the history of the United States and evolution of the agriculture we have a country than in 1898 percent of the people in the entire country lived in on farms or involved in agriculture a hundred years later we were down to 42 percent and then a hundred years later we were down to two percent and as you look at scientific breakthroughs today just even increasing the power of the Sun can increase output by fifteen percent and new technologies that exist can further increase output reduce the use of water by 50 percent at this time so I'd like to just show a couple second video here of potentially the future of farming from a warehouse in China let's take a look at that video the Chinese government has been funding scientists like Professor Jung chee-chaw to research vertical farming you will use that cocoa plant actually it's in house without a concubine it should be a genius woman and so though we would you know put on your project here's how it works seats are placed in sponges grew up to 17 days then the plants are moved a few feet away to a nursery area and finally into a finishing area where roots dangle beds of fertilized water until the previous is ready for harvest because our container is climate control it allows us to do a full harvest 26 times a year and a typical farm can only rotate their land anywhere to 46 times so the change in productivity at Sentra now Joe in many ways your company has been one of the great creators of jobs in the world over the last decade so it's not only creating direct jobs those working for Alibaba but the potential for small and medium businesses throughout to distribute their products drive their products etc how do you look at the challenges in China for your own employees and how do you interact with those small and medium businesses to sell their products the common understanding of e-commerce is that it replaces or destroys a lot of jobs in the real sector of the economy if you look at the United States I think retail the retail segment has been losing jobs but China is a little bit different in a couple of respects number one the the jobs the reach job in the retail sector is not a very well developed sector so there's not a lot of big retail footprint in China when you go to a fourth tier city in China and you go out into the streets you would not be able to find quality products and sometimes you did products on the shelf are not even real they're counterfeits so this so this is that's the reason why ecommerce grew very very fast so instead of replacing jobs in the real sector you know we are our perspective is that e-commerce actually created more jobs that the second phenomena is that China of being the manufacturing base of the world has been a huge export economy in the past 20 years but more recently since the financial crisis the the Western markets have consumed a lot less and what happens is that there's a lot of dislocation in the export sector so manufacturing jobs you would think that manufacturing jobs would be lost but what's happening is these manufacturers are starting to look inward into the domestic market try to access domestic Chinese consumers instead of exporting their products so in the factories even though I think overall China probably lost something like eight or nine million manufacturing jobs last year it would have been a lot worse without ecommerce because the export factories would just shut down and without access to the domestic consumer market all right could you take us one level farther so not just Alibaba how does Alibaba if I'm developing a small business I have my products how do you interact with them to let them know in your stores or your ability to distribute that they can tie into your distribution system the the the small business are typically very nimble and they learn faster than big businesses that that's what we found so it's easier actually for us to onboard a small business on our website and when you're a small business owner you have a product you want to sell you would they would over time as they scale their business they will want to find new sources of product new factories and we have an ecosystem that helps them do the sourcing in the onboarding front they would need to hire people to develop their web presence and also digital marketing from the traditional marketing to digital marketing if you're selling apparel one of the most you know common jobs now in this in the apparel and apparel sector is people who will model your clothes and literally billions of photos are being taken every year so and being posted on the Alibaba website and now more so on the mobile app so that people are so the the models are showing the clothes did you talk to Naomi Campbell I was thinking about that I was thinking that you know while I was on stage during lunch time I thought to myself just now that you're working me overtime and if I if I you find me repeating myself I need a new audience if you got the joke that lunchtime but anyway yes I I mean but the the as you set up a web presence there are a lot of jobs that are being created and then ecommerce you would think it's just a website right but it's all it's about getting the product to the consumer to the end consumer so logistics is very very important and we all know that in the logistics segment if you build warehouses you need people to work in the warehouses for fulfillment and then you also need a ship the product to the end consumer so you need to have delivery and the Alibaba ecosystem supports about two million people on the streets making deliveries day in and day out we generate about 55 million packages per day on our platform that need to be delivered so that is a ecosystem that needs that is supporting all the employment and the delivery guys you know a lot of them have come over from the manufacturing sector they were working in factories as the factory jobs scaled down the the delivery business goes out in employment so I think one of the keys here Tony you're lying what Joe has said hmm is that the use of technology and distribution Alibaba mobile apps etc as an way that small and medium businesses which create most of the jobs in the world can tie into a distribution system that you have built and they don't have to necessarily have to have 20 stores to distribute their product they can tie into this distribution system and when you think about where these jobs are created you could just look back at the United States and during the period of time between 1970 and 2000 let's take the latter part of the 20th century you had 62 million jobs created by small and medium businesses and minus 4 by large companies at that time and so in many ways by building your distribution system you've afforded many many small businesses an opportunity to succeed whose expertise is designing or manufacturing their product and you you are the in source distribution for them I want to shift a little bit here to world quant I an Igor if I can unlike most companies in the world you've already had to deal with the technological changes that have occurred in building your business what lessons have you learned in designing world quant that other companies need to learn or that you could pass on today in a world of technology thank you Mike the lessons I learned are many but the main lesson is this that the world is changing at exponential rates so many things are growing exponentially data is growing exponentially computing power is growing exponentially knowledge is growing exponentially and this creates a lot of growth opportunities and what I've seen inside work want is nothing but growth headcount has been increasing since day one it's continuing to increase and we see no sign of any kind of job destruction internally within the company and the main lesson you know if I have to say any one thing is in this new world you have to set audacious goals you know we generate something called trading signals we call them alphas and we had one alpha in 1995 we have hundred and fifty in 2007 we had a million of them a few years ago now we have six million by the end of year we're going to have 10 million and so as you set these goals you have to make sure that they sound a little bit crazy otherwise you're not participating in a new age I think egor one of the other elements is that I know you've taken the view unlike many other companies that the intellect and talent at the highest level is evenly distributed throughout the world so that those with the highest IQ aren't dominated in any one part of the world how have you been able to put that to work it's fairly simple we go all over the world we open up offices and we hire the best in the most intelligent people that we can other than that we are location agnostic in that researcher working in Moscow is doing the same things as a researcher working in Beijing and we have some you know management layers and management techniques designed to make it all seamless so the offices and people operate independently you know once every two weeks we have something we call the Keystone Forum where the whole company gets on a giant video conference and we all get together and we speak to each other it sounds like it should be chaotic but it's actually a pretty good thing so I think one of our key competitive advantages is the fact that we're able to reach out throughout the world and we're able to get the best talent because talented is talent is distributed equally throughout the world but opportunity is not and we arbitrage this gap thank you ignore chose me I'd like to go back to you and you raise an interesting issue on how can business so I would say how can businesses and governments better prepare the workforce how can they work together it is estimated in the United States that there are potentially 50 to 70 million jobs in technology and other areas that will go unfilled to the fact that the population is not prepared or educated in this area and I know from early childcare on you know and the country that there's a focus in this area and a focus on retraining could you talk a little bit about that and what suggestions we have people from more than 20 countries here today that you could make for government leaders business leaders in this area there are many different kinds of companies some companies are in very competitive internationally oriented sectors and almost certainly the pressures of competition creates an internal impetus for them to innovate because if they don't then tomorrow they may not be around but you showed very interestingly in an earlier slide that if you look at the amount of job creation it isn't just a big companies it isn't the companies that are out there at the frontier that are creating jobs in fact a lot of jobs are created by very small companies micro enterprises and actually enterprises that in many parts of the world don't have a governance structure don't have proper systems processes in place and actually may not be able to grow much bigger than when they first started that's something important to bear in mind that when we think about businesses transforming it isn't just the businesses at the frontiers of their various industries and sectors that we need to take care of it's actually the vast majority of the smaller businesses who have difficulty appreciating all the time what's going on and how they need to adapt and so in the case of Singapore the way we think about it is that it's so much easier for the businesses to transform if you recognize the fact that they're part of Industry ecosystems and there needs to be momentum in the industry ecosystem in other words other people are changing platforms are changing industry rules are changing and so when you are part of that ecosystem very naturally you have to adapt along with it and that's the approach that we've decided to take what we've done is to say that you want your people to adapt but in what context do they adapt they can only adapt to the business transformation that is going to take place there is no point in asking people to prepare for the future by being trained in this kind of skill or that kind of skill if those new skills that they get trained in don't eventually land them a new job that's something that we have to bear in mind so but how to land a new job that starts with how the businesses are transforming so the approach that we're taking is that we say each sector is going to have to transform differently and you have to create a different kind of momentum what we've done is to join hands with the stakeholders mainly the industry players to chart what we call the industry transformation maps so it could be transportation it could be maritime services it could be the finance sector it could be health care it could be retail and we want to be able to say how will the business look like in five years in ten years and what kinds of things need to happen in order for you to raise productivity and infuse the way in which you operate with more innovation so productivity innovation are key themes in the industry transformation Maps another very important part of the industry transformation Maps is what kinds of skills will you need your people to do differently will you need your people to have now so that's that's the part that concerns to businesses concerned industry then you need the other part which is how can you get hold of the individuals and design interventions that will target those who are at risk of being displaced and then to organize the training so that they would be able to access the jobs that are being created or the jobs as they are being transformed so a couple of years back we decided that it's very interesting point that you suggested earlier I think it was a slide that has to do with the returns of investment on education how that's shifting to preschool and once you enter the workforce it gets increasingly difficult so this is a sly work that was prepared by Jim Heckman Nobel Prize winner in University of Chicago had pointed out that one it's depressing but by the age of five you can identify who won't be able to compete in high school and and afterwards and so what his work showed was the most important period of education in the terms of the highest rate of return was basically five or six are younger and you needed $3 at 15 years old to get the same return as you do at five and you need $5 at 22 and you need $10 at 30 and Singapore has been a leader in early child care education and what's so interesting is China not based on the work of Jim Heckman Nobel Prize winner I know when I first visited and focused on China and education more than 20 years ago the cost of early child care education was four times the cost of college so in the United States the cost of cow which was four times the cost of early child care education and so this investment and youth both in Singapore and China was obvious from that point in time but Mike I think part of the reason the returns on job training at an older age is so low is that very often the training is not tied to the needs at the workplace very often the training is not related to what the person actually has to do and that is the exactly the point that we are trying to change so we have not given up on job training for adult Lucas okay well we obviously I would say we can't afford to give up on job training because the skills change so quickly today and I think the other I just want to emphasize the point you had made this is really a partnership of business and government to understand the mapping of jobs from that standpoint I mean a lot of people come from different parts of the world and they say well they're dealing with a different workforce or the people have different goals describe to us since you're in so many businesses what is and since the median age in the country is 24 what are Millennials thinking about today and how does that contrast let's say from 20 years ago for your employees I think the changes might have been have been tremendous I think millenials these days from what we've seen we're a company that basically gives it flown in to about 35,000 people directly and of course they're many others that surround that but they're there the way they look at jobs is far different to my generation essentially they're comfortable moving from job to job to begin with number two there are spaces in social media now that allow them to look for opportunities to join projects and use specific skills they have for the projects that are needed at a specific point in time and that flexibility is something that they value they like to be challenged they're quite values driven and they like to work for institutions that that have a broader meaning or a broader goal that VR goes beyond I guess the return on capital that many managers are trained to just focus on so that flexibility that desire and willingness to move even in the Philippines as a country we have a large workforce that's even comfortable moving abroad and seeking employment where their services are needed that flexibility is something that was unheard of before and is and should be adjusted it goes head to head a little bit with the rigidity of some of our labor structures in the country both at the policy level and even in the corporate sector we've tended to see the whole issue of employment in a much more rigid way when we should be adjusting it the leads of this community which actually would create a a more exciting environment for the workforce but but following that issue just I wanted to mention two things Mike one is is taking on from an equation that you showed us earlier that you worked on in your youth about the whole importance of financial intermediation in creating a platform a country like ours and perhaps an emerging country like like the Philippines could be a proxy for other emerging countries the whole issue of access to the capital for people at a certain income bracket is is almost zero there's still many unbanked members of our community and very recently for example we tied up with Ali payer the sister company of of Jose to start developing very quickly a platform using the skill set that Ali Pei has built up in China to get micro loans and payment systems at at a different price point to a broader community in the Philippines ideas like this empowering people who traditionally not have access to financial services giving the micro loans and giving them access to a financial system is a key component of getting them to enter the general economy and I think that whole issue of how it revolves around entrepreneurship and how it encourages it is it's going to be I think one major element to getting employment at the Entrepreneurship level moving in the future and and so that that that whole broadening of the of the engagement of low-income groups in getting access to capital is an important one the second idea came from a slide you showed us earlier Mike about the changing nature of jobs I looked your slide on on urban agriculture in a setting you take a country like ours and this is a row idea we've had a long history of in the semiconductor industry we've had manufacturing plants used to enclosed spaces low bacterial count and manufacturing at in in in a very rigid form for the electronics industry it is the largest export in the Philippines I think still so that skill set is there in the workforce if you were to take the nature of that job and swap it and move it to Orban agriculture perhaps that's a thought of a changing nature of a skill set that could be applied and why do I say it would be relevant to a country like ours the logistics that Joe was talking about that work so seamlessly in a place like China it's much more difficult in a country like the Philippines we have 7,000 Islands and the whole logistics sector is still very underdeveloped getting agricultural projects products from the mountain down to the city is an expensive proposition and in many cases it takes days and it's difficult why would turbine agriculture in a controlled setting using the skill set we built up in the electronics industry not be a possible solution but that would take a major change in mindset on that work force and the people who fund those industries and shift it using new technologies that take place to an urban environment this density but perhaps that density could be an advantage if you take advantage of the marketplace there and use new skills new ways of preparing food in an urban setting that would basically bring down the cost of transportation I'm not saying it would be a solution for all types of food products but certainly for vegetables and some of the ones shown in the video it could be and I think we're gonna need that type of imagination in in figuring out how existing jobs could also be shifted to ones that have potential for the future well thank you well we're excited that we're now here that allows about to go into new businesses so distribution changes in retail the largest company in the world in terms of number employees Walmart two and a half million concerned about what Amazon was doing went out and bought jet comm let's take a look at that video for a second the old economics of saving money meant you had to buy items in box that's weird because five pounds of mayonnaise is actually a fundamentally ridiculous thing to buy when you're done with it you can live inside the jar seven years from now that's how long it's going to take jet comm is transformational izing the shopping club so now you can buy a human-sized mayonnaise and millions of other human sized things that teeny tiny prices so that is an effort not necessarily how Walmart might have been presenting itself to address some of these issues and as Walmart is grappling I think this underlines the challenges for many of the world's largest companies they've now suggested they might be using drones today to respond to the comments of Amazon and they've applied for patents now in floating blimped like warehouses so they're your warehouse is just gonna be floating in the sky and they're gonna hover above that and then they're going to be delivering to you from those blimps up above those deliveries so those warehouses that we talked about let's take a look at a warehouse today that actually exists [Music] this is a grocery warehouse we service grocery stores with dry goods items we received directly from the manufacturer and stock items and then deliver them to the stores by their request so if we were received in coffee it would be not just a case of coffee it would be a full truck of coffee in pallets we take those pallets low to mind two conveyors and then the first robot could take that pallet apart layer by layer and then those layers would then be broken up into single case quantities and then stored within the structure by the next set of robots we'd then receive the customers order and they would give us an order for coffee and for peanut butter and mayonnaise and whatever else they wanted those cases would then be retrieved by the bots and they brought out to a third set of robots which would then build the customers order in a pallet to their specification people do not handle the product in the automated system on each ship we have five or six associates out on the floor that are monitoring the system and their to resolve any issues that come up and keep the lines running it's running essentially 20 to 21 hours a day and seven days a week so four to five people working in a warehouse backing these up now Joe you have new distribution systems you call them darkrooms versus the front of the house and so you're changing in many ways goods are distributed you spoke about an army of two million people delivering 55 million packages a day but you're also attempting not necessarily in blimps hovering over sky but in physical buildings delivering goods and services could you talk about that for a moment logistics is a very complex topic and the warehouse that we just saw is probably as I look at it a wholesale warehouse in the sentence that the consumer or the small business is bi is the buying in volume so the the once you get into what we call the b2c warehouse that complexity goes up in in other words the packages are being fulfilled and packed in that warehouse going into individuals the but you know what's happening right now in especially in the grocery space is that distribution is changing and the new ways to distribute groceries is disrupting these large warehouses that are located probably outside the city outskirts what's happening in China today is that stores double as a warehouse so you can have a store that can serve walking customers but then as you mentioned there's the dark part of the warehouse where you can fulfill online orders so you may be in the store today but tomorrow you're sitting at home or in the office and you want to order something online you whip out the mobile phone and you order online then they will fulfil from the same location as the location that you just walked in yesterday so that kind of architecture is very disruptive to the large warehouse architecture it's going to change the way real estate developers develop their their their cities and malls and that's what we are pioneering in China we can locate our dark art stores with the dark part of the store within the three mile radius of the consumer and we promise 30-minute delivery which is something that cannot be done through that warehouse that we just saw so so there's a lot of innovation just in the logistics space the key thing is we're changing kind of the the architecture of the logistics network and what that means is the prior investment in the old architecture will have to be scrapped and new investments will have to be made so Josephine has to leave for a very important meaning when the government here today and I just wanted to ask you one more question before you left as you look at the separation between companies and industry and government is there a separation of responsibilities to the state where these are the responsibilities of government that could enhance the opportunities how do we create let's say reduce the fear and workers over the future of their jobs that's a great question where does the responsibility of the company itself began MN yeah I'm so glad you brought it up because when you talk about the transformation that is needed at the levels of businesses and industries some of it is very daunting so what you potentially could find is pushback and where will the pushback come from the pushback could come from the people who are affected so if you are a taxi driver you really don't like all these third party hailing apps because it's disrupting your livelihood and so you have a tendency then to raise the issue with the government and say you need to put a stop to this because this is very harmful and actually there are many cities in the world where third-party riling heaps are technically not allowed to operate and yet of course we know because of the tremendous benefits that accrue to the commuters people find a way to use them anyway so this is where governments potentially could get caught on the one hand you have people who are affected by the change and they say we want protection from the change and yet at the same time you know that unless you are able to allow the businesses to develop new models of operating that are more efficient and that will exploit their potential to the fullest you don't actually have the opportunity to create better paying jobs for the people your citizens and I think what the government needs to do is essentially a couple of things one is that in terms of the rules you have to be willing to re-examine them and you have to make the rules facilitative in other words they need to be able to enable innovation that's the first thing second governments have a huge responsibility to their citizens to help them to adapt to the change and that means essentially providing a sense that there is a way in which you can access these new opportunities through training and that you would also have to look at the social security whether that is adequately going to support them going into the future and I think the third thing that governments can play a positive role in promoting is the point that I made earlier which is to cultivate a sense of solidarity and what do I mean by that it cannot be that the future is about businesses winning with technology and innovation at the expense of their people neither can it be that the future is about people getting more protection against disruption at the expense of new business models now the only way in which we can make forward movement is if both businesses and people are prepared to say that we will win together because we're in this together and the only way in which you can do that is if you promote the sense of solidarity and really in the process of change ask ourselves how you can strengthen the partnership between businesses and the people sector and also to make sure that everyone has a stake in a successful future I think if we were to be able to do that then let me talk about jobs of 2037 preparing it for the future it will be a future worth working towards well thank you very much and I think so succinctly you've addressed the issue the going to the government to protect themselves against competition or change has occurred for hundreds or thousands of years and we look forward to Singapore showing us the way in this area in it it was no different when the mobility could not compete with the merchant class in England went to the king or the queen for protection and I think addressing this issue and using it in the form of ride-sharing was a great example and certain countries as you know in cities have at the moment provided protection long term that won't work and so really thank you for your participation I know you have to leave but we're gonna go for a couple more questions so please feel thank you very much thank you I hope you have a discussion so eager I was trying to think of how I could show the audience how you use technology that has disrupted in many ways traditional money management or as we see more and more hedge funds or others trying to develop algorithms or quant to figure out what to do so I was thinking about basketball and how you've somewhat changed the rules let's take a look at this video so we've noticed here that being able to use two hands at once could if you a lot more shots at the basket but I think it's easy to talk about technology and change and it's easy to say you have offices all over the world how do you coordinate the work what have you learned by having an office in Bulgaria and office you've just opened it in Singapore how do you focused on quality of our time of work and even what is a workday or a workweek look like today well I think coordination is achieved largely through a very good incentive system which makes you know makes people self-governing self-direct and what's what's the effect of a workweek and a workday is that we don't really even measure that we measure only productivity we measure how much you know somebody produces so with the improvements in technology speeding things up and amplifying human ability it's possible to produce more and more with less and less time and we welcome that as long as it you know the net effect is a positive so it's like we're we have three or four arms isn't that video as opposed to the two I understand so if I could a paraphrase for the group today which you've really says is you've looked at the output of the employee or the partner not necessarily how many hours they've put in but you're focused on the output and the quality of that output is that a fair description that's correct so I should tell you a brief story which I will about Einstein and so there was a reporter many many years ago who said Einstein you're one of the most creative persons that ever lived could I follow you around and see how you get these ideas and what you do and your creativity and innovation he said sure it's kind of boring but you can't follow me around so she had breakfast with him stay with him during the day and she noticed that he never had a pad to write anything down so she said to him after a week you don't write anything down where's your pen how do you write your ideas he says you know you don't get unusual ideas that often and when you do you remember him and so it wasn't to paraphrase what you said it wasn't the number of hours that you put in but the output and the creativity from that standpoint so in closing I just want to leave a point that I think is very important since our effort this year has been so focused on building meaningful lives and the opportunities and the challenge of the Singapore summit this year is what is the world going to be like in twenty thirty seven and I and I wanted you to listen to the minister today because Singapore will once again in my opinion shine the light for much of the world on that the cooperation of government and business the responsibility of business the fact that the government is thinking about what the industries or businesses of the future will be but one thing we should remember that when I go to bed at night makes me feel good and think is that for most of the people on this planet today was the best day of their life and as we think about 40 percent of the children that live in China and India those in Indonesia and so on or those in East Africa ours sub-saharan Africa these are the best of days health care reduction of disease access to the world through smart phones or mobile phones today 84 6% of sub-sahara Africa have mobile phones the ability to tie into a distribution system that Alibaba has built where they can figure out what their products are in designing but not have to worry about how you can get them to the customer sitting in the Philippines here with a company like oh you know and all of its potential to create jobs for this young country or as Igor has said using technology not to replace jobs but to continue to create jobs and so we are excited about the fact that today was the best day for more than half the people in the world and the facts are tomorrow will be the best day in history for more than half the people in the world and I thank you for joining us and I like to have my cloud and CEO of thence to close this session to join you have you joined me and I will join you and banking to groups I want us to thank our wonderful closing panel but I want you to join me in thanking each and all of you collectively because it is your participation here that has made this such an exciting event so thanks to all of you and thanks to the path you

Channel: Milken Institute

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Length: 62min 38sec (3758 seconds)

Published: Tue Sep 26 2017