A World Swallowed by Software. What Kind of Abilities Are Necessary to Survive?

Eleven years ago in 2011, a column in the Wall Street Journal (WSJ) captured a lot of attention.

New article was published on Forbes Japan Online

It was written by Marc Andreessen, the well-known developer of the world's first popularized Web browser “Netscape,” and now a venture capitalist. The title of the column was “Software Is Eating the World.”

In this column, he noted that many industries are being replaced by software companies and predicted that the trend would continue to affect a wider range of industries going forward. This prediction by Marc Andreesen 11 years ago has become a reality and strategies and actions based on the premise that most industries, including fashion, finance, and automobiles, can be made possible by software, are essential.

Furthermore, the performance of computers that run software has advanced so rapidly that it is said that the performance of supercomputers over the past 30 years has improved 10-fold in five years, 100-fold (10-fold x 10-fold) in 10 years, 10,000-fold (100-fold x 100-fold) in 20 years, and 1,000,000-fold in 30 years.

There are no other management resources that grow at such a rapid pace, and it goes without saying that how to use these computers for the evolution of the management of a company has become a key factor for survival.

Software Adaptation that Changed the Laws of Competition

Software adaptation has exponentially evolved its functionality and performance. It has evolved in such a way that if the first year is 1, the second year is 2, the third year is 4, the fourth year is 8, the fifth year is 16 and so on. This is the case when the evolution is a power of 2 (a number which is expressed in the form of "a to the nth power"), but the evolution will grow at an even more rapid pace with the power of 3. In digitalization, this results in a "winner takes all" situation.

Exponential growth creates a situation in which it is difficult for second-tier companies to compete against successful companies with digitally driven business models.

Conversely, it will become important to build platforms and solutions in a way that facilitates the power law in the digital age. This is why various platform providers are promoting microservices of their functional components to prepare for digital-driven competition.

In other words, it will be possible to evolve the laws of competition to a different dimension by having an exponential mechanism instead of the conventional linear differential growth-type mechanism.

Three Abilities Necessary in the Age of Software

Based on these trends, we can see that the skills that will be required in the future are clearly different from those required in the past.

Many suggestions have been made in self-improvement and business books but I would also like to offer some more basic skills. In the past, improving skills by accumulating work experience based on what one had learned in college was the usual approach. However, in the promotion of digitalization and software today, we must constantly update past common sense because new technologies and scientific discoveries are being made every day.

The following are the three "abilities" that I believe are particularly important in the digital age.

Ability to Learn
The ability to absorb new things that keep appearing

When software technology becomes the center of a business, new ideas that lead to innovation will always emerge. Though these ideas may be incomplete or have issues, I believe it is important to become human resources who can absorb these suggestions, understand them, learn to use them as one’s own and create products and solutions.

Ability to Search
The ability to search new fields on one's own with curiosity

New ideas are often triggered by tips given by leading technologists at conferences, which then become topics of conversation and excitement among leading technologists. The only way to encounter such new ideas is to be curious and to constantly search for them while keeping our antennae fully spread out.

Ability to Associate
The ability to relate and understand seemingly unrelated events and phenomena

In many cases, new ideas may seem unrelated to the work you are involved with on a day-to-day basis. You may also feel that the idea alone is not sufficient to create a solution or product. However, by exercising your ability to associate, such as, "what if this were added to that," I believe that proposals that previously seemed irrelevant will come to make sense.

It has been some time since people have been talking about lifelong education but if we neglect to learn, we will be left behind in the ever-evolving digital economy. I have heard the saying, "Those who make efforts are no match for those who are passionate about what they do.” I believe it is important for each individual to find a theme that he or she can be passionate about and become a creator of new value in the digital age.

Foreseeing the Future of Society Means Observing the Behavior of the Younger Generation

I would like to introduce one way to predict the future. It is to observe how the younger generation behaves and what they prefer. The trend to introduce to each other entertainment such as books and videos as well as products they have experienced has become well established. A new ecosystem of information sharing has also been created as a result of this content.

For instance, instructional videos for various events and things are uploaded to UGC (User Generated Content) video distribution services. When we want to know how to use software such as video editing and music production apps with many functions, or image and sound editing hardware equipment such as video switchers and audio interfaces, we rarely look at instruction manuals any more.

It’s not that the instruction manuals are flimsy or unhelpful. The manual of my video editing app is thousands of pages long. Not hundreds of pages, but thousands. As it is a hassle to read the e-manual, I considered having it bound into a book but decided otherwise when I counted the pages.

However, when I search for a function or use I want to know through UGC video distribution services, help videos are already uploaded not by the app maker but by heavy users of the app or professional video creators. They are more helpful than the help video provided by the maker. An ecosystem of customer service has been created without the maker having to bear any cost.

If this goes on, products whose help videos are uploaded on UGC video distribution services will become popular and may accelerate the so-called winner takes all situation.

※This article was published in "Forbes JAPAN Online posted on June 6, 2022". This article has been licensed by Forbes Japan. Copying or reprinting without permission is prohibited.

Masayuki Chatani

Fellow, Partner of KPMG Ignition Tokyo Inc.

KPMG in Japan

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