FARGO - The Fargo-Moorhead area has the software talent to be well-positioned for the merger of cyber and physical industries, but companies will have to embrace the goal of staying at the forefront of technology if they want to prosper, Rich Karlgaard says.

Karlgaard, a futurist, pundit, entrepreneur, author and publisher for Forbes magazine told attendees at the Fargo Moorhead West Fargo Chamber of Commerce’s Economic Outlook Forum that the next five years promise to be an era of “explosive change.”

"There's going to be tremendous opportunity" and "tremendous attrition,” Karlgaard said Wednesday, Feb. 20.

The right decisions “will be rewarded,” Karlgaard told the gathering at the Delta Hotels by Marriott Fargo. But firms that “get it wrong” will be punished swiftly in the marketplace.

Karlgaard cites John Chambers, the former CEO of CISCO, who predicted that 40 percent of the Top 500 companies will fail within five years.

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“The winners will do really well,” in the “two-speed economy” that Karlgaard said is developing.

And while some losers may fade into obscurity, others will find that they make a mistake at a decision point, then watch as their revenues, profits and recruitment suffer.

Karlgaard said there are some “megatrends” that everyone in business should keep in mind.

First, technology is not slowing down, it is speeding up, Karlgaard said. Annual gains of 30 percent in efficiency, miniaturization, speed and memory in the tech field helped create the technologies such as the internet, smart phones and personal computers.

Those technologies transformed lives and industries between 2000 and 2015. For example, newspapers migrated to the web, and retail is now dominated by online giant Amazon.

Improvements in computing power, storage, analysis of data, artificial intelligence, high-speed wireless communication networks and an explosion in the use of sensors throughout supply chains, are creating an ever-improving “digital bang for the buck” and giving managers “insight in real time,” Karlgaard said.

He predicts that agriculture, manufacturing, transportation and the oil, gas and energy sectors are all ripe for disruption as the cyber world melds with this physical industries.

Companies will have to make sure they are at the top of their game when it comes to technologies that can change their industries, he said.

With a 20 percent annual improvement in “organizational smarts” in a few years, a company can be “twice as smart” as today. To not dedicate yourself to digital transformation, means risking “getting smarter at a slower rate” than your competitors and losing your edge, Karlgaard sad.

Karlgaard points to the value that venture capitalists are placing on technological innovators, rather than more established firms.

For example, he said when ride-sharing innovator Uber goes public later this spring, it could be valued at $120 billion, while GM has been recently valued at just shy of $56 billion.

Uber’s investor base “tells them to take chances,” Karlgaard said. Similarly, Facebook has been run with the philosophy of “move fast and break things.”

GM, meanwhile, is a favorite of retirement funds for its steady returns, Karlgaard said.

That asymmetrical access to venture capital can take a toll on legacy firms, he contends.

Karlgaard said business leaders will also have to be digitally fluent themselves.

CEOs will have to be able to work in the world of data, and keep an eye out for young digital talents.

“You have to build a culture that adapts well to the increasing change,” Karlgaard said.

Preston Braathen, a loan officer with Dakota Business Lending, said he liked the “focus on people with intangible” qualities, such as resilience and tenacity.

Bill Schwandt, the general manager of Moorhead Public Service, agreed with the emphasis on keeping up with technology.

“I think the new technologies coming out, people don’t realize how fast its coming,” Schwandt said. “What they are doing in artificial intelligence, it’s amazing.”

Schwandt also liked the idea that firms should give themselves permission to fail on the way to improving.

“You’re going to make mistakes, but keep trying,” Schwandt said.