Has Software Eaten the World?

Jun 12, 2017 · Guest blog from Stuart Cochran, CTO at Huddle

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In 2011, Marc Andreessen, co-founder and general partner in his eponymous VC firm Andreessen Horowitz, published an article in The Wall Street Journal. The article was titled Why Software is Eating the World. In it, he persuasively argued that the wide access to the Internet, from powerful smartphones, to services delivered by cloud computing infrastructure, would allow software companies to transform any and all industries, with digital goods that can be delivered at scale.

So, has software eaten the world?

Today, there is no doubt that global software companies drive economic growth and employment. The top 4 places in the Financial Times Global 500, at the end of March, 2017, were software companies: Apple, Alphabet, Microsoft and Amazon, with a combined market value of $2.3 trillion. Back in 2011, oil and gas companies dominated the list of largest companies; the only one of those in the top 10 today, Exxon Mobil, has seen its value decrease from $406 billion to $339 billion, and its number of employees fall by nearly 10 thousand.

In London, and across the UK, software companies are hugely important too, and something we rightly celebrate during London Tech Week. Tech City UK, in its third annual Tech Nation report, revealed that UK digital tech jobs grew at more than twice the rate of non-digital ones, to 1.64 million jobs at the end of 2015. The companies that create these jobs depend on access to capital, with $6.8 billion raised in venture capital and private equity in 2016, over 50% more than any other European country.

Strong economic growth and outsized job creation – what’s not to like?

But there are challenges to overcome.

The next wave of smart automation – leveraging an explosion in sensors and rich sources of data, advances in AI software algorithms, and faster and cheaper infrastructure to process AI workloads – will cause the reallocation of jobs. Some jobs will disappear, replaced by software and robots; other jobs will be created. According to a 2016 report from the OECD, 10% of the jobs in the UK are at high risk of automation. Additionally, some jobs are being substituted with on-demand work – the gig economy – that, while offering flexibility and independence to the workers, may also have undesirable aspects that erode job security or employment rights.

Equally, while jobs for software engineers, data scientists, and other technologists are expected to grow significantly, the culture of companies can, in hopefully rare, but sometimes high-profile, examples, fall well short of the very best standards for inclusion and diversity that should be the aim of all companies.

For inspiration about how companies can look beyond the pursuit of profit and growth, we can turn back the clock to 1914, in the early part of the 2nd industrial revolution, when Henry Ford doubled his workers’ wages, reduced their work hours, and offered profit sharing. This is an early example of what we would now call a purpose-driven organization, where Ford believed in making a positive societal change as well as profit.

Technology companies are perhaps uniquely placed to combine creating economic and societal value, as there is an immense need to retrain workers with digital skills as jobs are replaced by automation. And, of course, digital technology can itself play an important role in education, healthcare, and a myriad of other social issues.

Having an authentic purpose is important for companies hiring and retaining talent. Remarkably, employees that are inspired by their company’s purpose are more than 2 times as productive as employees that are simply engaged, according to a study published in the Harvard Business Review by Bain & Company.

A purpose-drive company may look beyond the pursuit of profit, but this doesn’t mean that these companies don’t perform and provide a return to investors. In fact, the opposite could be true. In a study performed in 1992, by John Kotter and James Heskett, companies with strong, purposeful cultures outperformed in revenue, profit and share price growth – the latter by an incredible 12 times.

So, a purpose-driven company is better for society, better for employees, and better for investors. Amongst the talk of unicorns, I hope we can use London Tech Week as a stage to highlight the very best purpose-driven technology companies, to inspire and encourage others. And let’s not forget London Tech Week has its own purpose – to show London is open, inclusive, and diverse.

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Stuart is Chief Technology Officer at Huddle and is responsible for overall product design and direction, technology and infrastructure strategy, and engineering and operations.

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