Why technology is not enough for the digital economy; Lessons for Generation Z

For technological changes to transform the economy, cultural barriers need to be overcome, and 'the rules of the game' (institutions) have to change. So said Ms Lana Hopkinson, international economic development practitioner and SMME Policy Component Leader at the EU-funded budget support programme, Ecosystem Development for Small Enterprise (EDSE). She was an expert participant discussing the topic Human Capital for Digital Economy on a virtual platform at the Entrepreneurship Development in Higher Education (EDHE) Lekgotla 2020 on 16 September.

This was on Day Two, during the session of the Lekgotla that was titled Breaking New Ground. The 2020 edition, themed #African Entrepreneurship through Technology, attracted participants from South Africa's 26 universities, across the African continent and elsewhere around the world.

Hopkinson said her presentation was focussing on human capital in the digital economy through the lens of cultural mindsets and 'institutions' (i.e. formal and informal societal rules and norms, not to be confused with institutes). She also discussed the implications for the development of human capital for the digital economy, beyond the boundaries of purely technical skills that are normally discussed. She introduced herself as coming from a multicultural background: she is British, but born in Russia, married to an American, and has worked in many countries and cultures around the world.

She said: "The topic of cross-cultural differences and management, the role of 'institutions' is often underestimated and undervalued in the understanding of how entrepreneurship and innovation work." She cited the Bologna Charter (1988) that pronounced that universities play an important role in producing, examining, appraising and handing down culture.

Defining culture in institutional economics, she said it is "the set of norms, behaviours, beliefs and customs that exist within the population of a nation. These beliefs and behaviours can be shaped by technology, but also can shape technology adoption," she said.

Ms Lana Hopkinson
Ms Lana Hopkinson, international economic development practitioner and SMME Policy Component Leader at Ecosystem Development for Small Enterprise (EDSE).

She also defined institution, more broadly, as the rules of the game. "These rules can be formal, in the shape of norms, laws and a constitution that is written down. But institutions can also be informal, where they are a set of constraints that are imposed in terms of behaviour, convention or self-imposed codes of conduct. Institutions also imply characteristics and mechanisms of enforcement of these formal and informal constraints," Hopkinson explained.

The fifth technological revolution

She said that the world is in the middle of the Fourth Industrial Revolution, according to the World Economic Forum. "But I like Carlota Perez's (Venezuelan technology and socio-economic development specialist) definition of the technological revolutions: she says we are in the middle of the 5th technological revolution.

"The first four are the Industrial Revolution that started 1771 with a 'canal mania', the age of steam and railways (from 1829), the age of steel, electricity and engineering (from 1875), the age of oil, automobiles and mass production (from 1906). Now is the age of information and telecommunications, and we're in the middle of it, at a turning point with a potential golden age opportunity for humanity." According to Carlota Perez, the next technological revolution is "around the corner" and could be based on bio- or nanotechnology, but it is too early to predict how that develops.

"We often hear that the digital economy is all about new technology. But technologies have existed for a long time, - long before any 'revolutions' happened." She referred to three examples from the past: Archimedes (who lived in 287-211BC and built a steam cannon and a steam engine in Syracuse); Ctesibius (lived in 285-222BC, wrote about science of compressed air for cannons and pumps); Heron of Alexandria (1st Century BC, invented the first coin-operated vending machine for dispensing holy water and automatic temple door opener); Leonardo da Vinci (1452-1519, developed numerous technological inventions).

"There were lots of inventions developed in the past. So, why were they not followed by a technological revolution and why did they not produce large-scale economic transformations?"

Hopkinson said that for a technology to take off and create significant economic effects, several conditions are necessary. "First of all, the cultural barrier needs to be overcome. When there is broad cultural acceptance of a technology, a cultural shift can lead to a technological transformation." She explained the cultural constraints in Heron's time when the ruling elite was expected to engage in wars, arts, sports, philosophy, getting involved in the economy or being concerned about labour productivity was seen as beneath those in the upper classes.

Said Ms Hopkinson: "Only when the ruling elite, aristocracy and broader population began to take an interest in technology, could that cultural shift happen." She mentioned an example of how technology could be embraced even by the monarchy, when Queen Elizabeth worked as a car mechanic during World War II. It became culturally acceptable.

Institutional change: selling the economic effect, not only technology or product

"The good news about the digital economy is that it has already overcome the cultural barrier, and it happened with the emergence of 'generation Z' (1995-2012, the generation that followed the 'Millennials generation'). "They grew up in a highly sophisticated media environment and are internet-savvy, they are 'born with a mobile phone in their hand' and are very comfortable with digital technologies." She conceded: "Even the older generation is already completely 'infected' with this new technological culture. COVID-19 has further helped us all to smoothly transition into this digital world. We feel uncomfortable without our gadgets."

However, for digital economy to take off, formal institutions (rules and norms) need to change, along with the culture.

Hopkinson said that the First Industrial Revolution began with the development of a steam engine by Watt and Boulton and gave England world leadership for about 200 years. "It was common practice for the steam engine inventors, Watt and Boulton, to both sell their machines and help mine owners and other customers to build engines. They also supplied men to erect them as well as selling specialised parts. "But the main profit was derived from their innovative business model: they charged a licence fee to their customers based on the proportion of the cost of the fuel that they saved thanks to the installation of the steam engine.

"They were selling the economic effect, it was a new institution. This allowed for the broader spread of this technology than just selling the product."

Some research findings and insights for universities, on Generation Z

Ms Hopkinson noted that even though the Z-gens are a very young generation, they have been studied extensively. While some of them they are only just approaching university-entering age, they are already very different.

  1. They have difficulty concentrating with a reduced attention span of about 18 minutes (according to some studies), before they lose track. Since many university lectures are 90 minutes long, lecturers have to adapt by changing the topic, or making a joke to regain students' attention, or breaking up teaching into thematic modules of no more than 20 minutes.
  2. They have difficulty in working with large bodies of text; they don't read volumes of books or process large amounts of information. They are used to 'clip mentality' – working on social media means they switch attention all the time. They do write, but use a lot of abbreviations, short phrases or pieces of phrases, memes, so a specific 'language' is formed. As a result, difficulties arise when working with large texts – i.e. books with multiple volumes. The difference here is how they express themselves, what they read and how they read it.
  3. They have difficulty making decisions. They are born with too many choices and navigating through those choices is very challenging.
  4. They do not deal with difficulties very well. They believe that success should be guaranteed. They are used to computer games where, if you encounter a problem, it means you are doing something wrong or are on a wrong path. They are not used to overcoming and going through pains, they take the path of least resistance if they can.
  5. Systemic thinking is also a challenge. They lack of a lot of skills (related to the clip mentality and the fragmented attention span). However, systemically, they have a hard time linking concepts, notions and facts and phenomena that are not immediately linkable. "This is important as creativity comes from a convergence of creativity, science and different disciplines," Hopkinson said. "Universities have to find ways of transferring this set of skills to the new generation brought up on completely different models and ways to process information."
  6. Multi-tasking is often quoted as their real talent. Hopkinson asks: "But is it? How effective is Googling, chatting online and pretending to listen to a lecture at the same time? Someone said students are like ducks: they walk, they swim, they fly, but they don't do any of those tasks very well."

Humans vs Artificial Intelligence (AI)

The challenges to humanity as a whole also exist, Hopkinson said, adding that there are fears that artificial intelligence (AI) may replace humans altogether. "From history we learn that the threat of large scale unemployment is not necessarily true. A shift in employment normally happens and new types of jobs follow as technology advances, with new skills sets.

"The real challenge is that humanity can become completely irrelevant. The rise of the useless class, as author Yuval Harari calls it. It is important to find ways not only to compete, but to find ways to cooperate with AI.

She said the problem is that the current educational systems are relying on teaching based on patterns and algorithms, and you can't compete on algorithms with machines. "The good news is that algorithms that AI relies on are, however, limited, so humans need to make more emphasis on creativity, not only technical skills, and continuously reinvent themselves, change careers, acquire broad education and right-hemisphere thinking," she said.

Culture and innovation

In summing up, Hopkinson said that "cultural norms are responsible for shaping a variety of choices, behaviours and beliefs that affect innovation and the competitiveness of entire countries." For example, South Africa as a country lies halfway between traditional vs rational values and halfway on the axis of survival vs self-expression values, according to the culture map developed by Ronald Inglehart. Another relevant system of measuring cultural dimensions was developed by G.Hofstede that looks at such important aspects of cultural norms and beliefs as power distance, uncertainty avoidance, masculitity/femininity, individualism/collectivism, indulgence and long-term/short-term orientations, all of which affect capacity for innovation and entrepreneurship.

This expert said: "By changing the educational system and by changing the values (that the university is supposed to change), the culture that the university is supposed to share and pass on, it will be possible to produce a new type of human capital."

She outlined the three key areas of focus in education, to that effect:

  1. Multi-disciplinary and balanced approach to education (left and right hemisphere intelligence, with wide areas of knowledge and creativity)
  2. Long-term orientation, ability to look 20 years ahead. "We need people to think well ahead, beyond their own generation."
  3. Humans of the future are socially motivated people, interested in social and environmental gains, not just growth at any cost, but growth that is sustainable, inclusive and smart.

These are the key cultural human capital challenges and opportunities for the educational system in digital economy.

Hopkinson concluded with a brief introduction of the EU-funded project on which she is working in South Africa (Ecosystem Development for Small Enterprise, EDSE) – further information is available on (https://edse.org.za/about/ .

The annual EDHE Lekgotla has become a premier event on the calendar of the EDHE programme. It facilitates information exchange and the sharing of thought leadership and best practices in entrepreneurship between experts, trail blazers in business, academics, policy makers and the budding student entrepreneurs. The virtual 2020 edition was the 4th Lekgotla since the establishment of the EDHE programme in 2016.

The EDHE programme is one of Universities South Africa's flagship programmes funded mainly from the Department of Higher Education and Training's University Capacity Development Programme.

The author, Charmain Naidoo, is an independent writer commissioned by Universities South Africa.

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