C&W Perspectives

Whilst AI promises much, the true heart of the fourth industrial revolution lies in the less exciting area of digital automation. This means that the processes, functional and administrative stuff that adds limited value will be done more quickly and cheaply by code and by robots. When humans no longer have to do this work, they rise up Maslow’s ‘hierarchy of needs’ to those activities which are about purpose and self-actualisation. An example comes in retail. If you can order your groceries more cheaply from home at the click of a button, what do you do with the liberated time and money? For many the answer will come in increased leisure activities, which provide much more fun (and probably cost more) than going to the supermarket ever did. Human progress in evidence. Similarly, if you can carry out your boring workflows from your desk at home whilst avoiding the commute, why would you bother coming into the office? To meet people, to share ideas, to be creative and to create relationships. The commonality in these higher order activities is interaction and community, both of which sit at the heart of human purpose. These are also things that are inferior in the digital world (at least for now). Great. So it’s positive news? Not entirely; there are two challenges. Firstly, the path ahead will involve some rebasing and redundancy as the structural change works its way through. This in turn will create some pain, as it did for the Luddites. Secondly our physical assets are not typically well adapted to this new order of things. If you can order your groceries more cheaply from home at the click of a button, what do you do with the liberated time and money? Our shopping centres are still focussed on boxes to sell things in, and our offices are still arranged like the Taylorist factories of a bygone era. At a point where value feels to be ebbing, it takes a brave investor to double down and spend more. However, it is precisely these contrarian investors who are able to spot change and reposition assets in a way that responds to nascent demand who will create value in the coming years. As Che Guevara once said, ‘The revolution is not an apple that falls when it is ripe. You have to make it fall.’ The commonality [of ] higher order activities is interaction and community, both of which sit at the heart of human purpose PERSPECTIVES 22 #TRENDING