What does it look like to work and close deals in the metaverse
In the 1930s, Nobel Prize-winning economist Ronald Coase wrote a seminal essay on the nature of corporation, explaining why corporations came into being and grew.
He argued that companies are what they are because of transaction costs. It is not cost-effective to go to the market to conduct transactions every time one needs a particular task, such as an accounting activity. Therefore, we create organizations in which these functions are internal.
While this principle has remained true, the transaction costs of various activities have changed over time. As a result, the shape and nature of the company has also evolved. For example, in the 1920s, Ford operated its own rubber plantations because it was not practical to go to the market for materials every time they were needed. But now, with increased information and access to global markets, it is more cost-effective to purchase rubber from wholesalers.
Just as the global supply chain has changed the nature of auto companies, so technological changes are changing the look and feel of companies and how they operate.
The company’s standard path was to open an office in the founders’ home, hire employees, acquire some clients, and then gradually expand city by city, country by country. However, this approach is no longer the default.
Increasingly, we are seeing global companies virtually hiring people anywhere in the world to work remotely based on where talent is located. COVID-19 has been an influential function of this shift. However, it has persisted and will continue to be accelerated by the global talent shortage, a shortage that the World Economic Forum estimates to represent a $11.5 trillion gap in GDP.
Companies that expand the field of recruitment and search in locations where their competitors are not present will have a comparative advantage over companies that limit their search for talent to their city or country.
This transformation means that countries and cities will compete to provide increasingly needed talent and infrastructure, such as legal services, banking and payments and real estate. With excellent connectivity to the world, digital infrastructure, local talent pools, and government focused on the digital economy and next-generation skills, the Kingdom is particularly well positioned to seize the opportunity.
As the physical location of the talent becomes less restrictive, we can begin to see the exciting potential of metaverses. In the future, we will work, do business and socialize in it. We will use digital currencies for payment. We will hold digital assets, such as non-fungible tokens that represent artwork or tokens that represent our ownership of some physical assets, such as a stake in certain real estate or a business.
We will engage and transact using avatars and digital identities that will allow us to solve one of the intractable problems of the digital age; How to manage identity and privacy between our professional and personal lives.
The ability to create realistic avatars that abstract our physical appearance may, in the future, prove to be one of the most powerful solutions to the systemic challenges of workplace or employment discrimination.
We can see how the convergence of real-time machine translation with metaverse-based interactions can change the way we bring together global workforces and markets across language barriers.
As we move into the metaverse, so much of the physical world will be. Digital twins are digital representations of a physical object, such as a factory, building, human, or vehicle, that someone can interact with in a digital context. The digital twin is constantly updated to reflect the state of the physical object. For example, one can check a patient’s physical health via a digital twin or diagnose a problem with factory equipment.
The economic value of all of this will be enormous, with some economists estimating that it will reach $13 trillion in opportunities by 2030 and amass more than 5 billion users.
Technology lowers transaction costs and allows us to reimagine the nature of the company and the business. While there have been incremental changes, such as the advent of enterprise resource planning systems, we are now on the cusp of much more systematic evolution. New technologies such as blockchain allow companies to be reimagined in new ways, such as decentralized autonomous organizations.
These new forms of organization are completely decentralized and connected to the Internet. Usually the members do not necessarily interact with each other physically and sometimes they may not even know each other’s identity. The organization’s rules and objectives are encoded in smart contracts running on blockchain technology, ensuring a permanent and reliable recording of activities.
Corporate governance structures are defined programmatically so that members or stakeholders can direct the economic activities of the enterprise. Participants will contribute funds, such as buying shares in the organization through digital tokens or donating money. These funds will be pooled, and shareholders can vote on how those funds will be allocated and used.
These decentralized organizations can engage people to do work for them, own intellectual property rights, generate revenue and enter into contracts, with some jurisdictions already recognizing these decentralized organizations as valid forms of enterprise.
Some of these foundations could have a single purpose, such as ConstitutionDAO, which raised $40 million from 17,000 people to purchase an early copy of the United States Constitution. Like some emerging biotech DAOs, it can focus on broad funding for pharmaceutical or biotech innovations, such as VitaDAO’s focus on life extension research.
In a world where economic activity is increasingly decentralized and in turn, the availability of talent, depth of skills and ability to work in this emerging digital world will increasingly become a source of comparative advantage for countries and cities.
With a digitally indigenous and young population, a top-down focus on human capital development and massive investments in technology-driven transformation, Saudi Arabia is uniquely positioned to seize this opportunity.
The Kingdom can provide talent and skills for this new digital economy by adopting emerging institutional and regulatory forms and providing digital infrastructure, including regulatory frameworks supporting the emerging reverse economy.
• Anthony Butler is currently the CTO of IBM in the Middle East and Africa. Headquartered in Riyadh, he is currently leading the company’s work on emerging technologies, with a particular focus on the application of artificial intelligence, blockchain and metaverse technologies to address significant challenges at a national level.
Anthony Butler is currently the CTO of IBM in the Middle East and Africa.
The opinions expressed in this article are those of the author.
Disclaimer: The opinions expressed by authors in this section are their own and do not necessarily reflect Arab News’ views
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