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China’s Skill Development Imperatives For Leadership In The Intelligent Big-Data Economy

China no longer has the labour cost advantage required to remain the low cost manufacturing hub of the world

Photo Credit : Reuters

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The world has entered the era of the fifth productive economy. The intelligent big-data economy (IBE). An economy in which the four previous productive sectors of agriculture, manufacturing, services and non-intelligent software services, are simultaneously being disrupted by the power of real-time massively-connected big-data intelligence (RMBI).

Where previously, the value of the productive output of each economy was in the core product or service (food, products, services, computing), in the intelligent big-data economy (IBE) the production value will be in the real-time, massively-connected, big-data intelligence (RMBI) embedded in the product or service: 

- A food whose molecular structure adjusts itself to its environment or to a person’s metabolism

- A manufactured product which responds to the environment and its user

- A service that adapts to its environment and user

- A software program that learns and adapts to its environment and user

Data is the new "crude oil". RMBI will be like the "fractional distillation oil refinery", producing an ever evolving stream of valuable data-enabled distillate products and services, which in turn can be further blended into even more complex and valuable composite products, services and systems. A whole new, multi-layered downstream IBE industry will evolve over time.

Increasingly, when one pays 10 RMB for a product or service, we will be paying more and more of the 10 RMB for the real-time massively-connected big data intelligence (RMBI) and less and less for the core product or service. Companies that produce products and services without embedded RMBI will die, companies with more RMBI in their products and services will thrive. A rapidly growing new intelligent big-data economy (IBE) will be created around the design, embedding, operating and exploitation of this intelligence. The GDP growth of a country will depend on the growth of this real-time connected big-data intelligence (RMBI) production industry.

Countries that have most of their GDP still in the agricultural, commodity, base manufacturing or non-intelligent software production sectors will see lower and even negative growth; while countries that have a larger and larger share of the intelligent big-data economy (IBE) in their GDP, will see their growth rates as well as productivity (per capita GDP) increase. The higher the current GDP per capita of a country the more will this trend hold true.

The implications of this transformation on individuals and on society will also be profound and disruptive. How individuals think, learn and work will undergo profound change. How people work in teams and in organizations will also change. Wider social structures and dynamics will change. The space between humans, technology, systems and things will blur, and blend into an almost a seamless continuum. Connectedness will become the central paradigm for evolution, innovation and growth of individuals, teams, organizations and society.

What does this mean for China? By leveraging abundant low cost labour and focusing on the export-oriented manufacturing sector, China became the manufacturing hub of the world and grew its GDP for 4 decades at an unprecedented rate. This lifted hundreds of millions of its citizens out of poverty and into an upwardly mobile aspirational middle class, and the country into a middle income economy, in what can only be termed as the biggest & fastest economic development transformation the world has ever seen. It has also spurred the creation of a burgeoning services economy and e-commerce economy to cater to the rapidly growing consumption capacity of the new middle classes.

However, the recipe of success for the past 40 years cannot work for the next 40. China no longer has the labour cost advantage required to remain the low cost manufacturing hub of the world. The foundational base of China's past success is no longer its core strategic advantage. In fact, it is already becoming a liability. Hundreds of traditional manufacturing firms are closing and laying off labour due to the inability to compete with lower cost manufacturing in lower income countries on the one hand, and much more efficient new age manufacturing on the other.

While the services sector and e-commerce sector continues to provide GDP growth, and the manufacturing sector is going through a dramatic modernization drive, there is a critical need for a new and substantive source of GDP growth. The financial services sector was seen as one option, and has indeed grown significantly over the last 15 years. However, there is an inherent danger in growth in this sector not reflecting real growth in the productive sectors of the economy, leading to a bubble building up that could be dis-proportionately sized compared to the real productive GDP. In recent times, this issue has been seen as a significant concern. High growth of a financial sector not supported by comparable growth of a real sector is simply not sustainable.

It is therefore imperative that China sharply focuses on, seriously prepares for, zealously develops, rapidly grows and takes the unassailable leadership position in the next large emerging economic sector that is visible today, which is the intelligent big-data economy (IBE). This will ensure China's continued fast growth towards developed high income country status, and help it become the economical as well as technological powerhouse of the world for the next 100 years.

It will also enable Chinese society to evolve towards the most advanced and mature societal model in the world - based on the highest standards of citizen inclusiveness, universal access to basic human services, fair and balanced economic distribution, empathetic human connectedness, and resultant gross national happiness.

The key components that will power the development of the IBE are:-

- High-performance “sensors” for real-time data capture from any kind of data emitter - be it a man-made system, a person, a man-made thing, or the natural environment

- Massive high-performance data storage capacity

- Massive high performance data transportation capacity

- Massive high performance data processing capacity

- Increasingly sophisticated artificial intelligence and machine learning models and systems
And most importantly....

- Skilled people who can envision, design, manufacture, operate, service and support the above

Of these, the ultimate competitive advantage of a country will be determined by the speed at which it develops the right range, quality and quantity of skills in its workforce, as required to power a world leading growth rate in the new IBE economy.

The skill development task is a mammoth, multi-layered, multi-dimensional and multi-generational one.

- Mammoth because it needs to address the entire population

- Multi-layered because there are multiple levels of skills that need to be addressed

- Multi-dimensional because the range of skills span across many disciplines and subject domains

- Multi-generational because there will need to be a simultaneous but differential focus on skill development across age demographic cohorts

MULTI-LAYER

The new IBE will be made up of a five layered pyramid workforce-based industry.

- A digital innovator layer

- A digital developer layer

- A digital shaper layer

- A digital worker layer

- A digital citizen layer

Digital Innovators (DI) are the scientists and innovators who work in basic and applied R&D to create a continuous stream of new RMBI based products and services. The skills they require will be a very high end set of mathematical as well as technological skills across various application domains, as well as product life cycle management skills to be able to invent many new RMBI products and services and take them to commercialization. They will also require high end collaborative creative skills, as most path-breaking innovation will require an intense level of cross disciplinary collaboration.

Digital Developers (DD)
are the high skilled workforce who will support Digital Creators to help them build the RMBI products and services; as well as to implement, maintain, modify, enhance and operate the same. The skills they require will be around product manufacturing and software development methodologies and technologies; as well as implementation, services and support of these core product or software components.

Digital Shapers (DS)
are the leaders and managers in government, institutions and businesses, who need to be able to envision the potential future for their organizations, business units, functions and departments, and be capable of driving the programs of innovation and change to transform their organizations and business models through the continuous leveraging of newer and more complex and sophisticated RMBI products and services. They would need training to understand the potential of the new RMBI possibilities, and requisite ability to lead and chart a course of digital transformation for their organizations. They would also need new leadership, managerial and interpersonal skills for the millennial and post-millennial world.

Digital Workers (DW) are the rest of the work force in the organizations and businesses in the IBE economy. They would need relevant new basic functional literacy skills to operate effectively in the new digitally transformed organizations in the IBE economy.

Digital Citizens (DC) refer to the rest of society across all age groups, who will need the requisite basic digital literacy skills to be a full active member of the new IBE enabled society.

MULTI-DIMENSIONAL
The skills needed for workers at all four levels in the new IBE world, will be multi-dimensional and cross-disciplinary, in particular for DI's, DD's and DS's. The essence of RMBI is extracting intelligence from the confluence of environmental and contextual data from a variety of sources. This would imply need for skills across subjects and disciplines, rather than only narrow skills in one subject or discipline. A range of skills would be required in three broad areas

• Core Technical skills (e.g. IoT, Machine Learning, Robotics, Artificial Intelligence, Virtual Reality, Core Digital Software skills, etc.)

• Industry Domain skills (e.g. Manufacturing, Healthcare, Education, Government, etc.)

• People & Interpersonal skills (Teamwork, Collaboration, Creativity, Design Thinking, etc.)

MULTI-GENERATIONAL

The skill development agenda will need to have a four-pronged structure, if it is to truly transform China from today’s economy and society, into a mature IBE economy and society.

1. A K-12 education agenda

2. A university & professional skills agenda

3. An existing workforce retraining agenda

4. An agenda for general purpose IBE literacy for everyone else

While the initial focus would rightfully be on immediate retraining and producing immediate fresh supply into the new IBE workforce, it is critical that a serious study and appropriate revamp of the entire K-12 educational model, curriculum and teaching-learning methodology be undertaken to ensure that entire cohorts of the future enter the industry with a high generational change impact on powering the continued rapid innovation, change and growth of the IBE economy. Similarly, the entire University education model, curriculum and methodology must be studied and changed suitably, to remain relevant to the needs of the rapidly changing IBE economy.

In summary, China has the opportunity through a planned transformation agenda, to reach full development status as an economy and society, by ensuring it takes a leadership position in the emerging intelligent big-data economy (IBE). The most critical factor to ensure success is in having the right nation-wide skill development strategy.

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.


Rahul Keshav Patwardhan

Rahul Keshav Patwardhan is the Chief Executive Officer of NIIT Limited, a global leader in skills and talent development, offering multi-disciplinary learning management and training delivery solutions to corporations, institutions, and individuals in over 40 countries.

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