Editor’s note: Geoff Woollacott is Senior Strategy Consultant and Principal Analyst, and Patrick M. Heffernan is Principal Analyst and Practice Manager at Technology Business Research. This is the second of a two-part report. Part one is available online.

HAMPTON, N.H. – Sea kayaks in the rapids of change: IBM and EMC

IBM, long a bellwether company for the U.S. economy in general and the technology industry specifically, has been in the news for several years as it invests heavily to develop cloud, cognitive and quantum technologies while combatting challenges from the shifts in external market forces eroding its core businesses. In short, IBM is out making markets and pivoting its customer-facing business units to capitalize on the anticipated ubiquitous demand for automated decision-support systems optimizing human activity in the economic value chain.

IBM has endured the early elements of the economic pivot better than most of its peers. Elliot Management Corp., as has been well documented in the press, has been instrumental in the shifts that took place with EMC Corp. and Citrix (Nasdaq: CTXS), for example.

Former EMC CEO Joe Tucci had a clear vision he articulated for several years on how EMC would weather the underlying economic transformation, which is very similar to Google’s Alphabet (Nasdaq: GOOGL) strategy. For industry historians, both the EMC and Google strategies are similar to Sun Microsystems’ (Nasdaq: JAVA) “Planetary Alignment” strategy of the late 1980s or early 1990s that measured emerging tech initiatives on RONABIT, or Return on Net Assets Before Interest and Taxes. Google receives accolades for its articulation, while EMC was somewhat panned for Tucci’s vision.

  • Can’t tame the waters, so build a better boat

Let’s bring this back to regulations and the changing economic environment. From a public policy perspective, the short-term orientation of the capital markets pressures company executives to provide more attention to the capital investors and less to the laborers they employ. As IP becomes a greater portion of how businesses generate their business value in the knowledge economy, more consideration must be given to the labor portion of the business. If capital investors continue to hold their current level of influence, then workforce dislocation will be exacerbated by the current investment considerations.

Do we want to remain stalled by inaction and then have government forced to react in crisis mode to assume the role of reskilling, or do we want businesses to more thoughtfully determine how to migrate their existing workers from one function to another as robotic process optimization reduces employment levels in traditional industries? As a society, we either must allow businesses to more thoughtfully plan for a long-term migration to the knowledge economy, or we must be prepared for more severe job dislocation and the resulting uptick in government transfer payments to the displaced labor force.

In theory, these can be separated, and we can argue the free market ought not be concerned. With faith in government currently at record lows, businesses regularly articulate to TBR that they cannot find skilled labor for the new jobs they are creating. Just as private colleges and private tutors have long filled an education gap for those who can afford them, private startups have arisen around new ways of educating and training semi-seasoned professionals. Further, services firms have been pivoting their employee training from knowledge experts to professional educators, given the complexity of the skills required to compete in a digitally enabled economy.

Recognizing that economic pivots will take time and humans typically need several decades to absorb massive societal change, technological innovation has the potential to bring massive business process and cultural change in short, five-year increments. This disconnect will roil the economy, with the investor community’s short-term view only worsening the inevitable dislocations.

The Long-term Stock Exchange may face challenges, but we have a moral obligation to consider how to mitigate the societal impact of what technology is bringing to bear on the global economy. And you thought you could skip talking about morals when we started talking tech and regulations.