InfoTech 2013 Report
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The digital age has fundamentally changed the way commerce operates.
The digital age has fundamentally changed the way commerce operates. Due to the rapid proliferation of the World Wide Web, mobile telephones, tablets and large, connected databases, consumers have more power in the market than ever before. Throughout the world, the relationship between consumer and producer is more fluid and transactions are more transparent. “The crowd” is solving problems, funding companies, designing products and creating new channels of marketing. By piercing the constraints of the traditional market, furthermore, Big Data is facilitating the production of innovative products and creating a demand for new services.
All of these factors have significantly reduced friction in commerce by facilitating more direct contact between buyer and seller, removing geographical barriers, improving competition and lowering the cost of doing business. Commerce not only has the ability to be targeted and instantaneous, it has essentially become “weightless.”
Among the more interesting developments adding to this weightlessness is the way people pay for their goods and services—increasingly by mobile devices, with the prospect of alternative currencies lurking in the foreground. These alternatives to traditional commerce offer businesses and consumers many opportunities for extending the reach of markets, offering greater credit and meeting other needs of the market.
At the same time the implications of these trends and developments hold many perils for businesses, consumers and governments. As is the nature of commerce, there will be winners and losers. How much anonymity can a consumer expect with mobile payments, on the one hand, and alternative currencies on the other? How does a business prepare quickly enough for the disruptions ahead? More difficult, how do governments, whose controls over currencies and trade within their borders are an essence of sovereignty, keep up with the rapid pace of innovation? How can a “weightless marketplace” provide new opportunities for communities in need?
These and other policy questions were addressed by the Aspen Institute Communications and Society Program during a three-day dialogue in Aspen, Colorado in August of 2013. A knowledgeable group of leaders, innovators and entrepreneurs assembled for the 22nd annual Aspen Institute Roundtable on Information Technology, with the task of developing a more sophisticated, timely understanding of the latest technology innovations affecting commerce, and particularly payments.
Rapporteur David Bollier details the results of that wide-ranging dialogue in the following report. In describing the changing nature of commerce, Bollier explores new trends in retail commerce and labor markets, both nationally and overseas. He offers a glimpse of the cutting-edge production methods that are changing the commerce paradigm, as described by Michael Chui of the McKinsey Global Institute. He describes the legacy, as well as innovative new payment systems emerging in the global market, as related to the group by Jack Stephenson of JPMorgan Chase and Eric Dunn of Intuit. As players transact in the new world of commerce, they will want to consider consumer data policies and alternative currencies, again related by participants in the Roundtable.
Bollier then examines ideal environments for innovation in payment systems. Incumbent payment systems are well established and have created an inhospitable environment for upstarts in the field. Due to these entrenched systems, John Clippinger of MIT’s ID3 noted, innovations will come increasingly from underdeveloped countries that don’t have legacy models. Along these lines, the report then turns to the impact that new, innovative technologies and services are having on low-wage work, particularly in emerging markets. As digital platforms bring the work to people, are they lifting them out of poverty, or exploiting cheap labor?
Bollier concludes the report by investigating the proper role for government in the regulation of commerce. Public policy needs to be rethought and updated so that it can address serious concerns on competition, privacy, consumer protection and social inclusion, without smothering important innovation. Governments always struggle to keep up with technological innovation. The new and exciting realities of the “weightless marketplace” are no exception, causing foreseeable tensions with existing regulatory schemes.
We would like to thank our senior sponsor McKinsey & Company for its leadership in developing this Roundtable, as well as our other attending sponsors of the 2013 Aspen Institute Communications and Society Program for making this and our other conferences possible: Deloitte Center for the Edge and Markle Foundation, Senior Corporate Partners; Cisco Systems, Inc., Corporate Partner;PCIA, Corporate Associate; and John Kunzweiler, Individual Associate.
I also want to acknowledge and thank David Bollier, our talented rapporteur, for his excellent synthesis of the discussions and debates that transpired during the Roundtable as well as our participants, listed in the Appendix, for their contributions to these important issues. Finally, I want to thank Ian Smalley, Project Manager, and Rachel Pohl, Program Associate, for their help in producing the Conference and this report, along with the Communications and Society Program’s Assistant Director Patricia Kelly, who oversaw its editing and publication.