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The Fourth Industrial Revolution is Still About People and Trust

This week, I’ll navigate Davos with hundreds of global business and government leaders to tackle the opportunities and obligations we have to improve the state of the world. The theme for this year, “Mastering the Fourth Industrial Revolution,” could not hit closer to home. Klaus Schwab of WEF has defined the Fourth Industrial Revolution as the “fusion of technologies across the physical, digital and biological worlds, creating entirely new capabilities and dramatic impacts on political, social and economic systems.”

These conversations about the almost infinite potential of technology are ones we have on a daily basis at Cisco. We believe in the power of technology to transform industries and lives, and we see it moving faster every day. Our conversations, however, go far beyond the technology. They are about the people, the relationships, and the trust necessary to execute against the opportunity in front of us.

Even in a digital world where machines can now learn on their own and mimic our intelligence, it is still about people. It is people who build and benefit from the technology, and it’s also people who must adapt in order to participate in this world where technology is pervasive across every aspect of our lives.

We have much to learn from the past three industrial revolutions. In each case, the disruption of the various industries has led to a disruption of the workforce where new skills were necessary for economic survival. Often times, the reskilling of workers lagged far behind the revolution, creating significant societal challenges and even leaving much of an entire generation stranded. I know we can do better this time. In the last year, we have committed – together with the local leaders – to train nearly one million new students in countries around the world such as France, Italy, Australia, India, UK, Saudi Arabia and Germany. These public-private partnerships are immensely powerful – a country can lower unemployment while creating new, higher value jobs, and a company can address talent gaps in critical areas and train a loyal base of future employees. The time to move is now, the opportunities are significant, and the obligation is ours.

Another important focus area is the significant global shortage of security talent. As technology connects everything, the amount of data generated is growing exponentially – and it’s only going to increase. In this new world, data becomes one of the most critical assets that any organization has, and we need to start thinking of it relative to its importance to our future. This data is incredibly important, therefore protecting this data is more critical than ever. Read More »

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Cisco Joins Global Problem Solvers at 2016 World Economic Forum Annual Meeting

This week, more than 2,500 leaders from business, government, academia, and civil society will convene at the 2016 World Economic Forum (WEF) Annual Meeting in Davos, Switzerland. As one of those attendees, Cisco will collaborate with other global problem solvers in strategic discussions about the political, economic, social, and technological transformations reshaping the world.

This year marks Cisco’s 14th as a WEF Strategic Partner, putting us in a group of 100 companies committed to changing the world. Our annual inclusion in WEF gives us the opportunity to build and strengthen the relationships that help us address some of the world’s biggest challenges. One of the key challenges being discussed as this year’s summit is “employment, skills and human capital,” with a focus on how to create 470 million new jobs in the connected economy by 2030.

More than 2,500 leaders from around the world will convene in Davos, Switzerland this week for the 2016 WEF Annual Meeting

More than 2,500 leaders from around the world will convene in Davos, Switzerland this week for the 2016 WEF Annual Meeting

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The Paradox of ICT’s Impact on Growth and Inequality

Thirty years ago a UN commission published the Maitland Report, proposing that by the early 21st century, every individual on the planet should “be within easy reach of a telephone” given the economic benefits. That was interpreted as being within a one day walk of a phone. Anyone suggesting back then that over 90% of the global population would be covered by mobile cellular signals, and over half of the world’s population would have a phone in their pocket, would have been labeled a crazy optimist. Yet, today it’s all about high-speed broadband connections, which total over 3.4 billion as of 2014 – nearly half of the world’s population.

This year’s Global Information Technology Report, and chapter 1.2 in particular, details this history of ICTs as a powerful driver of economic growth, and discusses the remaining barriers to more inclusive prosperity. While ICTs have a multiplying effect on income and growth, unconnected countries and people are being left behind. To address a widening income gap, particularly within countries, more needs to be done to increase broadband adoption, particularly through policies that focus on universal access, affordability, digital skills and the gender gap.

Evidence from the last two decades demonstrates that ICTs, particularly broadband Internet, are an income multipliers. At the country level, macroeconomic data links fixed telephony, mobile telephony, Internet use, and broadband use to gross domestic product (GDP) growth in a causal relationship across developed and developing countries. , And increasing the intensity of data use also drives per capita income growth. This growing body of evidence highlights the fact that we are long past the days of the “Solow paradox,” when, in 1987, Nobel Prize–winning economist Robert Solow noted, “you can see the computer age everywhere but in the productivity statistics.”

At the microeconomic level, emerging analysis highlights the impact that ICTs can have on driving income growth at the bottom of the economic pyramid. Mobile phones in particular, have spread across the developing world and this ‘mobile miracle’ is contributing to income growth as handsets act not only as a communications device for sharing public and private information, but also as educational tools delivering learning content, and as a financial transfer and savings device.

A direct result of ICT adoption is the steady decline in absolute poverty across developing regions. The global extreme poverty rate (those individuals surviving on less than US$1.25 per day) dropped from 1.9 billion people in 1981 to 1.3 billion in 2010 according to the World Bank: extreme poverty rates in developing countries dropped from more than 50 percent to 21 percent. This decline in extreme poverty has been driven by long-run economic growth in China and India, recent growth across Africa, and the impact of social programs in Latin America.

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The picture is more mixed, however, when looking at ICTs’ impact on income inequality. At the global level, the latest available data from the World Bank show income inequality (the distribution of income across all people in the world) to be on the decline. The most recent analysis finds that global income inequality has fallen steadily from a Gini coefficient of 72.2 in 1988 to 70.5 in 2008 with the decrease attributed to the large overall income gains of the global median (around the 50th percentile) of the population.

However, the decrease in global income inequality masks the income inequality increases observed within individual countries. With-in country income inequality appears to be rising in many countries (developed and developing) and one analysis by the International Monetary Fund suggests that technological progress, measured as the share of ICT capital stock, has a statistically significant impact on inequality. The available evidence presents a paradox where ICTs are driving economic growth and decreasing global inequality while at the same time contributing to rising within-country income inequality.

While this paradox appears, the full benefit of ICTs has yet to accrue to lower income groups. For example, network effects and externalities that multiply the impacts of ICTs require minimum adoption thresholds before those impacts begin to materialize. One analysis finds a positive impact of a 2.8% increase on GDP resulting from a 10% increase in telecommunications infrastructure, but only once a minimum threshold density is reached. In this case, the threshold was at 24% of the population. In other words, countries will only experience the full growth impacts of ICTs once penetration passes that point. Similarly, a 2009 analysis determined that increasing returns to broadband investment occurs when a critical mass of penetration—above 20% (20 subscriptions per 100 people)—is reached. Greater access and adoption of ICTs in lower-income groups will further accelerate income gains at the base of the economic pyramid.

To counter the disparity in the utilization of ICTs between lower- and higher-income groups, immediate actions should focus on closing the disparity in ICT adoption/penetration. To ensure that benefits of ICT accrue to lower income populations, more needs to be done to increase broadband availability and adoption, particularly through policies that achieve universal access, increase affordability, increases digital skills and close the gender gap. These include:

1) Focusing public resources and incentives for building broadband Internet access out to rural and underserved communities
2) Connecting schools and libraries to broadband Internet service and ensure widespread connectivity within schools
3) Removing excessive taxation on devices and access, and consider targeted subsidies for certain populations
4) Developing robust ICT training curricula and programs
5) Focusing on closing the gender gap in ICTs

The data in this year’s Global Information Technology Report leave no question that the adoption and use of ICTs has a positive effect on income and growth on lower-income countries and populations. However, the challenge to accelerate ICT adoption, particularly among lower-income groups, remains. Combining the positive economic growth impact of ICTs with targeted interventions focusing on alleviating poverty, will improve the well-being of citizens everywhere, especially those in absolute poverty at the bottom of the pyramid.

 

On Wednesday, April 15, at 10am US EDT, please join me and colleagues from the World Economic Forum to discuss the findings of the 2015 Global Information Technology Report. 

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John Chambers: “What does the Internet of Everything Mean for Security?”

Last week, Cisco CEO John Chambers attended the World Economic Forum in Davos, Switzerland. A major theme of the week was security and the implications of the Internet of Everything…the topic which John focused on in his contributed article to the WEF blog, Agenda. You can read the full article here.

In the article he stated:

WEF graphic - John Chambers on Security 2014

WEF graphic – John Chambers on Security 2015

Additionally, last week, Cisco issued our Annual Security Report which includes data about the number of breaches, attacks and how to mitigate these increasing threats. Cisco SVP and Chief Security Officer John Stewart blogged on this report here. A key call to action of the report is for corporate boards to take a more active role and focus on security as they help run their companies. He also talked to BloombergWest’s Cory Johnson. You can view that interview here.

In Davos, John Chambers talked to a few reporters about the implications of more things being connected…overall, of course, the impact will be very positive. As we move from 14B connected devices to 50B by 2020, John argues that each of those end points cannot be trusted to be secure, therefore you need to focus on security from an architectural approach…something, of course, where the network has a distinct advantage.

See John’s interview with USAToday Editor-in-Chief Dave Callaway.

See John’s interview with New York Times reporter David Gelles.

And, see here, for how many devices are connected to the Internet. Right. Now.

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Cisco Joins Global Problem Solvers at 2015 World Economic Forum Annual Meeting

This week, the World Economic Forum (WEF) Annual Meeting will convene 2500 leaders from business, government, academia, and civil society in Davos, Switzerland. There, these global problem solvers will engage in strategic discussions about the political, economic, social, and technological transformations reshaping the world.

Cisco has been a WEF strategic partner for 17 years, putting us among a select group of 100 global companies committed to improving the state of the world. Being part of WEF gives us an opportunity to build and strengthen the relationships that help us address some of the world’s biggest challenges.

Cisco Chairman and CEO John Chambers speaks during the session 'The Global Business Context' at the WEF Annual Meeting in 2012. Photo: World Economic Forum

Cisco Chairman and CEO John Chambers speaks during the session ‘The Global Business Context’ at the WEF Annual Meeting in 2012. Photo: World Economic Forum

On Wednesday, January 21, Cisco Chairman and CEO John Chambers will participate in a livestreamed panel on The New Digital Context at 9 a.m. CET (midnight PT). He will discuss how regulatory, behavioral, and technological changes are transforming the digital landscape with Liu Jiren, chairman and CEO of Neusoft Corp.; José María Álvarez-Pallete, chief operating officer of Telefónica; Max Levchi, co-founder of PayPal and CEO of Affirm; and Pierre Nanterme, chairman and CEO of Accenture.

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