How Technology Is Impacting the Future of Work through Fragmentation

One of the side effects of technology’s evolution is that it fragments existing architectures and creates new structures in the process. AI and Blockchain are currently doing this, but this pattern has been seen before and will continue as tech evolves. According to Kary Bheemaiah, fragmentations impacting the future of work, it's a tech-lead reality to be observed and leveraged when possible. 

Kary Bheemaiah, head of research at U change, will speak about how technology drives fragmentation and how this impacts the future of work at Spark the Change France 2018. This conference is held in Paris, France, on June 26:

We bring series of inspirational talks from people who already went through a positive change before, and are keen to share their learnings. Follow practical workshops created just for you by today’s transformers and disruptors.

InfoQ will cover this event with articles, summaries and Q&As.

InfoQ interviewed Bheemaiah about what the theory of fragmentation is and when and where it’s occurring in our society, how tech is driving fragmentation, how fragmentation relates to cognitive diversity, what the impact of fragmentation is on the future of work, and how we can deal with it.

InfoQ: What is the "The Theory of Fragmentation"?

Kary Bheemaiah: The Theory of Fragmentation is a rather dramatic title I gave to a repeating pattern I’ve observed in society every time a new technology gets introduced. What we see is that every time a new technology starts to get used, it breaks up an existing hierarchical structure in a sector and creates a new distributed and network-like structure in its place. This breaking down of existing mechanistic hierarchies is a phenomenon that occurs every time we get a new technology ... we saw this happen with the introduction of the printing press and gunpowder in western societies in the 17th century and today with Blockchain and AI. 

InfoQ: Where and why is this occurring in our society?

Bheemaiah: It is occurring at almost every area of society. As software becomes increasingly universal and part of almost everything we use, technological advancements in that realm mean that there is a transfer effect. The reason this happens is transaction costs and value chains begin to get altered. 

Previously, we established hierarchical pyramid structures as it was a way to ensure efficiency. Information went from the bottom of the pyramid to the top, and decisions came from the top to the bottom. Value chains were established so that the building of a product or a service could be done in a step-by-step manner. This was the core of Bruce Henderson’s (founder of BCG) approach to consulting. Determine the value chain and explore efficiencies. As the development of a product/service went from one point of the value chain to another, there was a transaction cost that was made up mostly of communication and information transfer costs. This was the core of Michael Porter's work on transaction costs. 

What technology has done is break up this glue between value chains as it has made transaction costs low by lowering the cost of communication and information exchange. As the cost of exchanging information goes down, at some time the balance between bottom-up information flow and top-down decision-making goes out of kilter. There is too much information to process for the top to make efficient decisions. To use a system’s term, the throughput of information renders centralized decision-making an inefficient value chain mechanism. The system - in this case a company or an organization - therefore adapts by fragmenting its structure and changing the balance between responsibility and accountability of its agents. 

A new structure begins to emerge with new job titles, new leadership positions, new jobs, new requirements, and even has cultural impacts. Capitalism after all is as much a cultural artefact as it is an economic one.  

It is this adaptive phenomenon that I call the Theory of Fragmentation, this continuous breaking of existing rigid structures to create a flatter, more spread out structure that stems from the combinatorial evolution of technology and which allows for the creation of new clusters, new businesses, new communities and new task requirements for existing jobs or new jobs that didn’t exist before. 

InfoQ: How is tech driving this? 

Bheemaiah: I think the question is which tech’s are driving this the most. Kevin Kelly has a great way of thinking about this. As per him, every technology goes through waves of evolution. 

Any technology starts off as being something very Specialized. It is made for some singular purpose or to address a very specific issue. As it gets used and becomes more refined, it starts getting used to addressing problems that it was not originally designed for. It gets Diverse. As it gets used in more diverse situations or different kinds of problems, it starts becoming Ubiquitous. It is something that can be used more generally. At this point it enters a phase of Socialization. It is now something that we use in our communication and transfer of information. When this occurs is gets into the final stage which is one of Complexity. All social systems are complex adaptive systems in which we communicate and exchange information which lead to emergent phenomena. 

Today we are seeing this with AI and Blockchain -- both technologies started off as being something specialized. As they improved, they got more diverse and began entering new markets and combined with other technologies to create more applications. Just look at how Blockchain is moving from sector to sector as the diversity of ICO projects grows:

(Click on the image to enlarge it)

Infograph by Smith and Crown, taken from 2017 Token Sales / ICOs in Review: Part II. Click here for a Hi-res version

Today AI is already getting ubiquitous. We find machine learning or NLP being used increasingly by different actors. Even the socialization phase is occurring with chatbots and smart contracts. We’re not yet in the complexity phase as the way the internet currently is, but we’re not too far away from it. 

The result is fragmentation. It’s most apparent in the financial sector - Previously, it was a very pyramid-like structure. Then algorithms came and changed the way finance was practised. At the same time, new banks and financial services firms popped up (like Atom bank and Kensho) that offer better services at much lower prices for a broader mass of people. The new competition was no longer the existing incumbents but new entrants who were creating companies with a fraction of the staff. Skill requirements changed. They started to hunt for data scientists more than financial professionals. Today you have the CEO of Goldman Sachs rebranding the bank as a tech firm that specializes in financial services. Meanwhile, Binance has become more profitable than Deutsche Bank. 

This is the pattern of fragmentation - a new tech is introduced and existing structures fragment leading to the creation of new structures and competitors. New skills are required and society begins to operate with a new framework in which they have access to powerful new tools which allows them to develop new ideas, and thus contribute to the fragmentation phenomenon. 

InfoQ: How does fragmentation relate to cognitive diversity?

Bheemaiah: As fragmentation occurs, it ensures that new structures need to be created which allows for collaboration to solve new problems. When it comes to problem-solving, research shows that addressing complex problems or making predictions is best achieved when we have teams made up of cognitively diverse people. This goes against the current gender-focused rhetoric on diversity. I have explained this concept in Science and Profit of Cognitive Diversity. 

But the point is that if you are going to be operating in a new fragmented framework and are going to collaborate with people to solve hard problems, then you need to ensure cognitive diversity to improve the chances of success. It's next generation team science to a certain extent and a subject that is going to get more important as the newly liberated rugged individuals search for other rugged individuals to solve new challenges that are fueled by fragmentation and the creation of new technology. 

InfoQ: What's the impact of fragmentation on the future of work?

Bheemaiah: As this fragmentation continues, it is redefining our conception of work. Today, we have access to powerful SaaS platforms which can be used to create multiple sources of revenue. For example - previously an academic had a pretty straightforward career path: publish papers/books, teach, and sometimes do some consulting on the side. Today, an academic has the possibility of teaching online (revenue source 1), publishing blogs (which can lead to potential revenue streams), self-publish books (revenue source 3), do online consulting or problem solving projects such as with Wikistrats (revenue source 4), gain exposure via social media, as Jordan Peterson has, which in turn boosts the new revenue sources ... All of this while still doing their academic job. 

What we are seeing is that the fragmentation effect of technology is creating fragmented business models which can be leveraged by individuals. The Collectivist Ethic of the 19th century is being replaced by a form of Rugged Individualism as we can now use the tools that we have created via tech fragmentation to create value independently or in combination with a small group of people.

Moreover, this individualism is also getting fragmented. In our example of the academic, as an academic begins to use these different platforms to create multi-revenue streams, they create multiple identities. On each platform they have a certain reputation in that ecosystem, and it is based on this reputation that they are able to thrive and work with others. A great place to see this is with Colony.io where people come together and work on projects. Reputation is getting tokenized and revenue is based on individual contribution and the tokenized value of that reputation. Augur is another example of this fragmented tokenized identity phenomenon. 

Fragmentation is therefore doing what it does best - it is seeping and fragmenting structures as tech evolves. 

It also means that we have to update our entire comprehension of what it is to do a "job". It is my belief that as we get more fragmentation, we will become a task-based society and not a job-based one. I think places like wikistrat and colony.ioare the precursors to this new work structure. 

InfoQ: How can we deal with fragmentation?

Bheemaiah: The simple answer is that we do not have any form of control on this phenomenon as it is based on market forces. In any distributed and decentralized system, markets are the best way to ensure that information is diffused and value is properly allocated --- prices act as a proxy for value attribution and allocation. It is not a perfect system. But compared to any other control mechanism, markets win by a long shot. They are the engine of tech evolution and culture. 

As markets begin to get fragmented thanks to the tech evolution, they help progress, they are creating new markets in the process --- We did not have an online book market 25 years back. We did not have an ICO market 10 years back, even though crowdfunding has been there for a while. We didn't even have a drone market five years back as drones were expensive and reserved the defense sector ... But as these sectors have been fragmented thanks to technology, they have created new markets and new skill requirements in the process ... Specialization and Expert Generalism are the new tools that people need. Either you are a specialist in a domain and everyone needs the work you do, or you are an expert generalist in which you are able to see the link between one domain and another (I'm in this category and I'm a Blockchain specialist to a certain extent). 

Unfortunately, the current education curriculum and work structure are not tailored to this fragmenting architecture and the effects it causes. We still educate in siloed programs and as a result, most people completing an MBA are not suited to this new work paradigm. They find themselves outdated even after having dropped $100K on a degree. The age-old excuse for this investment is that it gives you access to a network. But in a world in which platforms allow for becoming part of an online community where you can learn via observation and participate via contribution, the network argument is losing traction. Most people in tech circles gain a rich network via gaining reputation on domain specific or channeled networks. 

What is therefore required is an understanding of the environment in which we are immersed. If you can visually map this environment using the Theory of Fragmentation, then you realise what is going on and how you can leverage it --- either to become a rugged individualist who makes their own value creation channels, or as someone who realises how they need to move from the workplace that they are currently in, to a place more suited for the future, in the context of this fragmenting environment. Irrespective of your choice, you have to determine what role you want to play and which network you need to become part of to adapt and ‘stay in the game’. Autodidactism and rapid just-in-time learning is therefore a necessity in a market that is fragmenting and requiring that we update our skill set. 

What I'm trying to provide is a way for people to make sense of this environment so that they can exercise some control and logic in their evolution and decide how they want to be contenders in this paradigm, rather than simply being spectators. Democratic systems only evolve if the people in the democracy change. If we do not have a tool that helps us understand in which direction we can change, we risk severing the fragile link that currently exists between democracy and capitalism. I'm trying to avoid this by providing a compass. But this compass is useful only if used in tandem with self-learning and adapting. Education is after all supposed to provide the ability to self-learn. The day that schools provide this as an outcome, is the day that it will justify the high-price tag that is currently attached to it. 

About the Interviewee

Kary Bheemaiah stands at the cross-roads of applied research and business development. As the head of research at Uchange, Bheemaiah develops algorithmic frameworks for digital transformation projects. His pluri-disciplinary research is focused on technology adaptation, design of technology and the implications of technological evolution. He is the author of 'The Blockchain Alternative' (2017).