11 Sep

Creative destruction and how blockchain ushers in the next phase of future growth

Since the dawn of the industrial revolution, new technologies and systems have created opportunities, employment and productivity growth that has driven wealth creation and ever higher living standards.

Inevitably these changes created dislocations for existing systems of production that threatened people’s livelihoods and means to earn a living. The eighteenth century Luddites were the most famous collective expression of the fears that accompanied industrialisation as the angry textile workers of nineteenth century England tore up weaving machinery. Extreme though this may seem now, echoes of those Luddite fears are heard with each successive generation as new technologies are introduced.

The rise of blockchain technology and potential application of digital currencies as a decentralised means of exchange has led many to question the current position of blue-chip banks, governments, clearing houses and Central Bankers in our current financial system.

Although some high profile establishment figures have been quick to denounce blockchain technology and its potential worth, many are beginning to question if the current status quo is sustainable and if the high street bank in its current format will become a distant memory. Employees, particularly in the retail banking sector are wondering if they should fear the onset of blockchain technology.

As with their predecessors, some functions will become irrelevant as distributed ledger technology reduces intermediaries and other verification processes so jobs will be lost. Research from ComputerWorld has however found that new technologies destroying old technologies creates new opportunities and jobs for the agile worker. It estimates that there are approximately 18.2 million software developers in the world and this number should rise to more than 26 million in 2019. These jobs didn’t exist prior to the early 1980’s when computers began to enter the mainstream consumer conscious.

As with previous IT revolutions, home computers in the 1980’s and the internet in the 1990’s, AI and blockchain is slowly beginning to be adopted and disrupting existing technological services and how we as a society work. Most secretarial, PA and administrative tasks will become automated as blockchain and AI technology enter the mainstream. Inevitably people will lose their jobs, however newer higher value jobs will be created such as blockchain software developers and data scientists, the direction is overwhelmingly weighted towards the better educated and skilled. 

The onset of blockchain has seen different industries react in different ways, with some discrediting it as a fraud or Ponzi scheme and others such as accountancy taking the first steps towards adopting this technology and accelerate its application to the remedial everyday time-consuming tasks that need to be completed.

At EZYcount we are enabling new technology to be applied to existing accounting services aimed at SMEs. By using token-as-a-license (TaaL), small business owners let an AI input the data for them without human intermediaries so that they take their time evaluating the financials and not creating the reports.

Invoices and expenses verification and audit is streamlined because human interaction is removed from the process. It’s a small step in the blockchain revolution, however by enabling new technology to accelerate this change and support the workforce in adapting to new technology, people will begin to move out of less productive tasks such as data input and into more skilled and higher paid work such as analysis and advisory.

EZYcount’s endeavours are supported by progressive industry bodies. AICMA and CPA.org, the major financial expert associations, both have launched a joined accelerator programme to support start-ups disrupting their industry. By supporting startups that automate manual repetitive work, these associations of chartered accountants are investing in the future of their profession and ensuring that their members are up-to-date and ahead of the masses to embrace and accept any future disruptive changes to their industries.

Schumpeter described creative destruction in the 1950’s as being “the process of industrial mutation that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one”. It describes the need for break-through innovation (vs incremental innovation) to tear apart the old way of doing things in order to progress.

Blockchain technology has in just under a decade gone from being a concept to an ever expanding industry sector with fully functioning systems and platforms that have the potential to disrupt any number of incumbent companies in a wide variety of sectors. How these companies adapt their processing systems, supply chains, inventories and data management will determine their future success, while those that cling to the old ways of doing things and fail to adapt to innovation, will be condemned to the past.

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