Part 2 of an interview with Professor Leslie Willcocks, London School of Economics and Political Science by Peter Warren, Future Intelligence.
In this interview the issue of homeworking is placed in a broader context of the government role, the power, upsides and downsides of technology, and how we live in a time of systemic risk, which as yet we have not caught up with handling.
PETER: So to a certain extent you might say that the government could be mandating a certain amount of homeworking?
LESLIE: Well that would be interesting to see the degree to which people will tolerate more centralized, regulating government. The big picture here—what we are learning—is we are in the middle of an experiment, not just academics, but the whole world. An experiment in systemic risk and the interesting question is the extent to which we learn lessons and change habits for the future. The extent to which we learn fundamental lessons in the next few months—hopefully months rather than years—and the lessons are about so many things that we are not very good at. I think that we haven’t learnt about exponential mathematics for example, but we are watching it on a daily basis when we see the figures for coronavirus contacts and deaths unfortunately rise. I think we have got lessons here on systemic risk. I mean, basically the coronavirus occurred in Wuhan, China, and we are at the mercy of our transportation systems which transported the virus, inexorably, in just four days through airline transportation to most sectors of the world, and that is systemic risk very difficult to mitigate against. And its just one example of systemic risk that we have in our supply chains, our trading systems, and the way that we function as societies.
Homeworking has to be seen in a much bigger picture of the systemic risks that we are experiencing and it may well be a default that we have to move towards in order to manage those risks in the future. You are probably right that more centralised government is only one way in which we can deal with those systemic risks, but I suspect that we need to operate at an even bigger level than centralised government. We need to have cross border coordination. The pandemic is an indicator of, even a metaphor for how connected so much of the world is today, whether financial systems, economies, supply chains….. this creates systemic risks that needs systemic responses. It may even be above the national level that we start having to getting mandates. Of course we have been trying that for the last 100 years, but we have reached a level of interconnectedness and integratedness now where we will run out of the option of not doing it well.
PETER: So not travelling is actually good for us? One of the reasons that this virus spread quickly has been our transport systems. One of the reasons for this virus occurring in the first place is the pressure that we have been putting the environment under—so it would be good to travel less in so many different ways.
LESLIE: Well, you make a lovely point. I think it is not just about transportation. What we have created in our many different countries is a set of systems highly interconnected, and they are open systems. But with the systems themselves, we have tightly coupled them made them much more complex, then put massive pressure on the system and that has created systemic risk. The example I experienced regularly in London is the London Underground which I am amazed has functioned so well over the decades. Because here we have a very tightly coupled system, highly complex and with massive pressure on the system—and we know that the weak points are legend! Just one signal going down means the system fails. So we have got to move away from those kinds of systems. We have to disconnect from them and then reconnect at a lower level of systemic risk. That means building slack into the system, building modularity and simplification, more flexibility. Reducing the pressure on those systems and building default mechanisms. That is where I see homeworking and remote working as a default mechanism—enabling us to put less pressure on the system and to disconnect and reconnect in better ways.
PETER: Is there a case that in the 21st century, with all of these networks, that what is gradually and organically happening is that we are replicating the old transport networks in the networks of the computer and the Internet? And to go to your point about yes, there is a lot more complexity involved in that, well there sort of has to be if you’re going to be coming up with these virtual networks.
LESLIE: Yes, we know the benefits of all that. The higher connectivity can be extremely good when it works. We also know the downsides and the insecurities and vulnerabilities being created on a much more generalised basis than ever before. We are building in systemic risk by building in heightened connectivity and complexity. We have to rethink how we do these systems, I think. But I agree with your point that virtual systems might be easier to deal with than physical systems, that virtuality does have real benefits, but we would be fooling ourselves, if we thought we were reducing risk by making systems virtual. The invisibility and abstractedness of virtual systems is just the starting point for understanding the inbuilt risks here.
PETER: Do you think that in the course of this interview we have been making an argument that in the UK we should really invest in 5G rather than HS2?
LESLIE: I tend to agree with you there, I have never been a proponent of HS2. Just looking at it from a project level, I never really saw that the benefits and the costs were quite as played out in the media and the various reports on it. But by the by, I think the move to virtuality is a necessary default in many ways and the coronavirus pandemic is a lesson that will drive us and accelerate the use of these technologies. Yes, what I want us to do though is to move to those technologies in a much more careful way than just think that it is all about connectivity and complexity which we can manage. I think we will keep on demonstrating time and again that we are not good at managing complexity and connectivity, unless we rethink how we design these systems.
PETER: HS2 - it’s a lot money to spend to get 20 minutes more in the office.
LESLIE: Yes, I have never been a fan of that. Maybe we ought to talk about the role that technology will play in the post-pandemic business landscape. I think you have done a good introduction there, from ‘place to space’, as it were.
I think that technology use will be greatly accelerated here and many people in the technology sector love that idea. Digital technologies will be an even greater sorter of successful and unsuccessful businesses than it already has been. What we have seen with this move to digital business is that 20% of the organisations have been very good at it, and I think the big high-tech companies in particular set to gain even more power from this move, which will be accelerated as a result of the coronavirus experience. Companies like the Gandalf companies—which you will be familiar with—the high tech companies, plus the businesses like DBS Singapore—the bank that likes to see itself as a tech company rather than a bank. The D in Gandalf—there’s Google, Alphabet. Networks—then there’s DBS (followed by Apple, Linked In and Facebook). They have coined the phrase ‘Gandalf strategy’ as if to indicate that they are trying to copy technology companies rather than other banks. I think they would be the first to admit that they should have included Alibaba and Ten Cent, from whom they also learned from!
PETER: One of the interesting points here is that model also started to develop initially as a bit of a mistake. Digital, the computer company, was suffering terribly. It started to go under; couldn’t afford to pay for its offices; so the staff started to meet in hotels, hotel lobbies in fact.
LESLIE: Yes, emergent rather than planned strategy! So my point here is that it is those that have already moved to digital businesses—the high tech companies, big pharmaceuticals, some financial and insurance companies for example – that are more likely to inherit the future. These are going to be the successful businesses of the future and, as I said, I think that whatever sector we are talking about there are some financially resilient companies. Most that are not and there will be a big sorting out and, if they have got technology helping them, then they become more resilient and gain competitive advantage, I think, whatever sector they are in.
We have looked at hundreds of companies that have moved to digital. Essentially what I see across sectors is that about 20% of the organisations that have moved successfully to digital are breaking away from other companies in terms of profitability and financial health. The gulf they are establishing in their sectors is likely to become irreversible. Some 25% are behind those organisations and are struggling to get there, but 55% in those sectors are really struggling and I don’t think the pandemic experience is going to help them much—there is going to be a big sorting out of successful versus unsuccessful companies, with weak companies going to the wall—even if they are supported by government for a while. I think in certain areas which are not going to inherit the future at the moment, we see retail, aviation and recreation being hammered. They might inherit a bit of the future, but the weak companies in those types of sectors that are not going to inherit the future are going to be seriously harmed over the next 2 to 3 years.
PETER: This is fascinating isn’t it? In a sense what you seem to be saying is that the working practices of the 20th century—the infrastructure of the 20th century—is now going to be under threat. Not just because of the coronavirus, but because these patterns were already developing; they were already latent and underlying the economy and now they will be accelerated.
LESLIE: Yes I think that is true they will be accelerated. I am not a person that believes that technology is the perfect answer to all our problems, by the way. I think with every technology you bring an inherent set of problems. So, for example, when companies move to homeworking they then inherit issues of security—how do they control the work force—as well as issues of privacy and motivation. There is a whole set of issues that come with the technologies that you can’t underestimate.
PETER: But those are the problems that were underlying our change anyway. Issues of privacy only recently started to develop. Cyber security is a relatively young industry. Many of the issues you have been talking about have literally only developed in the last 20 to 30 years. So those were the underlying problems anyway. Just to get back to your point, ‘place or space’. That is an interesting idea. I was visiting the Queen Elizabeth Centre (in London, UK) and I was meant to be interviewing a professor from Cambridge University. I had asked for a quiet room, the exhibition had ended and the room was taken away whilst I was in it, and I ended up sitting in a chair in a great big space rather than the office I had previously been in. This rammed home to me the impermanence of structures and infrastructure, which isn’t what we quite think about; too often we think this way of doing things is here forever.
LESLIE: Yes. As I said it’s going to be an interesting experience the next year and a half! The extent to which this experiment — this hard learning on systemic risk—is going to change our habits once and for all. Human beings are not great at changing habits and they do tend to revert to type and what they know how to do.
Quite interestingly, I have been in so many technology situations over the decades where we have introduced information technology and people have taken to it for a while but they keep a secret default system of the way they used to operate and when they run into problems, it gets too complex, or the upgrades a bit too difficult to deal with, they frequently revert to the old system or run it in parallel. I think that is a pretty good metaphor for how people will behave when it comes to work once coronavirus has gone away. We have had crisis in the past. You only have to look at some - SARS, the financial crisis of 2009, which were all warning signals for us for what is happening now. But it was amazing the extent to which we returned to many of our old thinking and our old habits after those crises had abated.
PETER: You say that we don’t change our habits, but look at the adoption of phone technology by millennials, by the young. Mobile phone technology swept away a lot of ways we did things before and developed new ways of doing things. One of the other things that we have been researching is the growth of Hikikomori in Japan. There is now a million of these isolated people staying in one room; they won’t venture out. They have actually got an underlying problem of this in Italy and there is now a lot of research into people in Italy and why they are staying at home. I think there is a concomitant problem with adopting technology, but there also seems to be people who quite like being isolated.
LESLIE: Yes, mobile phones, of course hit all the favourable conditions for diffusion of innovation in one go, not least ease of use, convenience, one stop solution, right price, attractive design. And such technologies are deliberately made to be addictive, thus the take-up; they became rapidly habit forming. And it did not so much break habits as augment what we like doing, by playing into what we usually did or wanted to do.
But on your other point about self-isolation through technology, well I think a lot of people feel under enormous threat. It’s not just coronavirus, they feel that the work is so complex, uncertain and they just can’t understand it. There are so many unknowns that they feel under threat and going into virtual space and becoming isolated is the way they achieve some level of certainty. I don’t think it is necessarily good for us. The interesting question then is how are they going to change those habits? By definition habits stick for a very long time and once you have learnt a set of habits as a response to a situation—it takes a crisis to move you. I am hoping, in many ways, that, from the present crisis, we will learn a range of lessons about the limitations of our technology; downsides that it brings and not just the upsides. The issue of how we respond to systemic risk? We have to have systemic responses. The major lesson is how limited our human capacity is to understand the world that we are busy creating. Our own creations are very difficult—we are not very good at understanding our own creations. With our relationship to the technology, we really need to re-think exactly how this technology is going to be our servant into the future and not our master.
PETER: Do you think that is something the politicians need to learn. Donald Trump was heard saying about the pandemic: “lets gets things up and running as soon as possible.” A lot of politicians just think that this is a blip and we will go back to how things were. The transport systems will just start up again and everything will be fine.
LESLIE: The unfortunate thing is that we had all this learning about the things I have described—systemic risk—for many years. There have been whole reports by various reputable institutions over the last 20 years about the nature of systemic risk and what we need—and ought—to do at government level, and above government level. It seems that we needed a real crisis, a real catastrophe in order for the lessons to get home. I am hoping that one of the positive things about the coronavirus is that this IS the big crisis. I mean, God knows we have had enough climate change crises to persuade people like Donald Trump that it’s real, it’s serious, and it’s going to get worse. I think there were 15 major climate change related natural disasters in 2019 costing the world an estimated $US250 billion, and the numbers get bigger every year. We have now had this one where the exponential growth in statistics, in terms of people getting this virus and dying from it, is a real lesson in exponential mathematics. I am hoping—I am an optimist on this—that people will change their habits and their belief systems; that politicians will learn from it, especially those that have actually got the virus—I am referring to our Prime Minister here—and will take decisive, different action in the future. But people do revert to type, after several years, and the crisis moves on. It’s difficult for them not to move back to old habits.
PETER: : Will the universal wage be something that will be developed in this new economy? In terms of the way governments could have responded, in terms of we will bail our businesses? We will give small businesses X, Y and Z amounts of money. That could have been one solution couldn’t it?
LESLIE: It’s one thing what governments do in a crisis, to what they do after the crisis. It’s quite laudable that they responded in the way that they have in this crisis, but will we always be on a war footing is the interesting question? And will governments revert to type and will they start saying we just can’t afford it? The universal wage is an interesting one because we have some prototypes of that already. At the moment, the USA recorded 6.6million unemployment benefit claims in the last week of March 2020. 57 million jobs were vulnerable in the USA, so something like a universal wage would seem to be an obvious thing to move towards. There are already prototypes within the UK, of paying 80% of wages of some people, and it may well be a prototype or learning vehicle for what we will move to afterwards, in terms of how sensible that is. I am wondering, though, because at the moment everything is affordable and we are just throwing money at the crisis. But afterwards is it going to be seen as affordable, will the public see it as palatable, with people getting money for nothing? Will it actually increase poverty and give people that are not poor money that they don’t need, depending on how the system is administered? All this is assuming an efficient administration of a universal wage, and I am not sure we are going to get that, judging from the way we manage universal credit and things like that at the moment. So there are a whole series of reason why we should move to it, and, incidentally, we were originally talking about universal wages as a solution to massive automation.
My take on automation is that we actually knew that something was going wrong and we were blaming automation as the future cause of all our crises, but it is pretty clear that it is not automation, it’s systemic risk that spreads across many fronts. It’s not just the technology and automation that is going to create massive unemployment. It’s more a skills shift issue than a job numbers issue that arises from automation. I think, eventually, the factors against the universal wage might outweigh the factors for it when we have finished with the pandemic. At the moment it is much more targeted that the people get specific benefits because of their specific circumstances, I would not want to lose that targeting, in fact I think it makes much sense. I think it would be financially irresponsible to move down the route of the universal wage, I am not sure that we are going to be able to afford it in a very radical form. It would probably lead to higher inequality and poverty and I think it might well undermine social cohesion with some people seeming to get away with all sorts of things and others working hard and really hating that. Not working and getting paid could accelerate crime, drugs and broken families. I think it undermines the incentives to participate in broader civil life and social life and work life. Is it really the panacea that it is presented as? It postpones a much broader discussion about what we need to do about work in the future, and what we need to do about technology. I wouldn’t want a postponement of that broader discussion.
We have to move to a much more resilient ways of managing businesses, managing work and, indeed, managing society, in the face of systemic risks and the need for systemic responses. This is a completely different mindset from what we are used to. We are used to a much more atomized approach to problems and creating solutions and if there is one lesson I want to be learned from the coronavirus experience, it is that a systemic risk needs a systemic response.