The Price of Innovation

In San Francisco, there’s not much standing between a near-term future in which office vacancies spike to 40% or higher.  By not much, we mean demand for office space.  What’s interesting is the cause.  Many focus on the battle between employer and employee in which employers want the employee back in the office and the employee wants to work remotely.  But it’s not that simple.  Post-pandemic, employees (especially younger generations) are more inclined to embrace the benefits of technology which enable work to be done from anywhere and make it less compelling, even illogical, to commute to the office.  No, this isn’t just about whether you like or don’t like being in an office.  It’s about the ways in which tech has advanced to change work and generational differences in the adoption of and comfort with such technologies.  Technology changes things.  It’s changing the construct of white-collar work, and in the midst of such change there will be winners and losers.  The fate of office markets, indeed of the office building as a product, hinges not on resolution of the remote work debate; but, rather, on the pace at which we adopt existing technologies and innovate new ones.
 
The cycle of technological innovation is unstoppable.  It goes against human nature to ignore something which stands to create competitive advantages, and tech is the primary medium through which we create such advantages.  Notwithstanding our ability to perceive near-term advantages, we’re not as good at forecasting the potential for longer-range negative societal impacts.  Technologies, generally, are designed to replace something with something better, and in many ways, the outcome is often better.  In the context of the workplace, voicemail replaced the receptionist, email replaced other forms of written communication, and eventually replaced most phone calls and virtual meetings replaced in-person meetings.  Technologies have been eating away at the need for an office for some time now.  When adopting technology, first movers gain advantage, enjoy more profit until the rest catch up.  Once one company adopts tech and gains advantage, others follow.
 
I remember how concerned people were by the idea that a customer might call the company and be greeted by voicemail, not a live person.  It was just too impersonal.  How charming that debate seems today, as we contemplate far more extensive changes in how, where and when we work.  Technological innovation has advanced to point in which the next generation of white-collar workers is thinking about work very differently.  In the end, this may result in a better future.  But we’re now in the messy, disruptive phase, the time when we’re left to figure out what to do with that which has been replaced.  As we’re seeing in the debate over generative AI, once a new technology is discovered, it’s difficult to pump the brakes.  Corporations race to bolster and protect their competitive position in relation to the tech, and innovators innovate, even as many acknowledge there may be significant downsides.  I’m reminded of a quote by Henry Ford, “If I had asked the people what they wanted they would have said faster horses”.  Few would argue against the many benefits humans have enjoyed because Mr. Ford didn’t ask the people.  Yet for all the benefit, there is a price to pay.  As we replace one thing with another, something faster, something better, there is always a price to pay.