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Looking back on what I wrote about some time ago I found a text I wrote in 2005 about how the European project might crash. The context then was the French riots which sent an echo throughout Europe.

I often find it interesting to read foreigners who observe and comment on your own behavior. In Peter Schwartz’s recent book Inevitable Surprises there is a chapter on the great flood of people who are moving and challenging societal systems everywhere. Among other things he is contrasting United States which is built around immigration with Europe which is not. He notes that Europeans have much more trouble with assimilation of immigrants and suggests that one of the reasons for this is the basic social model which is built around the idea of a small closed society, not unlike a large family, where everybody is involved, via the state, to help the less fortunate members. Immigrants are then shifting the balance and change the gameplan and are consequence not viewed as being part of the society. Most European countries keep immigrants separate from the balance sheet for as long as possible. Maybe hoping that the problem will disappear by itself. This has resulted in large groups of sometimes even well educated people not being able to enter the labour markets, which in turn has created a massive segregation.

Dramatically increased immigration into a society which is regarded as a balanced and closed system is shifting the balance and is therefore predetermined to generate a lot of problems. Schwartz points at the possibility that the immigration problem could be one of the biggest uncertainties when it comes to keeping EU together. A possible sequence of events for an EU collapse could look like this

  1. The tension between immigrant groups and society increases to the point that violence erupts (terrorism or civil unrest)
  2. Quick and firm police action aiming for a quick end to violence
  3. Negative reactions to police brutality increase the violence
  4. The ultranationalist forces gains support and suggests drastic measures against immigrants – which will gain support in many camps
  5. The reactions spread across borders to other groups in similar situation who will react in sympathy
  6. One or two countries will vote for closing their borders to immigration
  7. If one country closes the borders others are soon forced to do the same thing unless they want to have all the immigrants from their neighbor countries – it will cause a chain reaction
  8. When this happens the trust between the countries is damaged to a point where EU negotiations break down

Maybe we could rewrite this with some more details now when the Brexit phenomenon is playing out?

A digitalization strategy is dangerous and mainly wrong approach.

Why?

Because it draws the attention to today’s models, structures and systems and how they can change and become digital.

And why is that wrong?

Just ask yourself these questions:

  • Would the bookstores have survived if they pursued a digitalization strategy?
  • Would the newspaper industry thrive if they succeeded with a digitalization strategy?
  • Would the film developing industry have boomed if they just pursued a digitalization strategy?
  • Would the video rental business kept up with a digitalization strategy?

...continue reading "The folly of digitalization strategy"

What is Blockchain and what are the possible consequences for the future?
Blockchain is the key innovation behind the cryptocurrency Bitcoin and have lately come in focus almost everywhere. Blockchain itself can be described as a technology with the ability to displace the need for other (e g human, legal, governmental…) layers of trust between any numbers of globally distributed endnodes. We can compare it to how e-mail and messaging is displacing the need for mailmen and postal services. Or putting it another way: it is a global distributed platform for implementing algorithm based trust relations.

Ok, but what does all this mean for the world in the longer term?

...continue reading "The possible long term potential of Blockchain"

We are drowning in news about new technologies every day. Technologies that are solving difficult problems as well as opening new possibilities. It is easy to see them as the most powerful forces transforming our world. But we forget one important aspect. We perceive these technologies through the stories of our time. These stories are much more important factors shaping our future than any technology. It is the stories by which we explain ourselves, our situation, our role in the world and our future that determine our thinking decisions.

...continue reading "It is our stories, not technologies, that shape our future"

When I hold lectures and speeches about the future I have recently built the talks around the concept of "transition society" as an framing image. It is really hard not to overemphasize the increasing uncertainty and turbulence during this transition and quite often I get the question about if I really am optimistic about the future, and if that is the case, based on what.

In my answers I almost always refer to the inherent human ability to adapt and recreate the world wherever it seems to break apart. In fact we humans are much better at creating order than we are at maintaining it. It will most likely not be the same order, so for the institutions it will be really turbulent times ahead, but for humanity in general I am confident that new, adequate and probably better structures will emerge.

It is really nice to get scientific backing for ones beliefs so I felt really invigorated when I found this interesting paper by Ruben Durante (RISK, COOPERATION AND THE ECONOMIC ORIGINS OF SOCIAL TRUST: AN EMPIRICAL INVESTIGATION) via the Swedish blog Ekonomistas. This article correlates the evolution of trust to historic weather instability over a 500 year period from 1500 to 2000:

I find that regions characterized by higher year-to-year variability in precipitation and temperature display higher levels of trust. Furthermore, variation in social trust is driven by weather patterns during the growing season and by historical rather than recent variability. These results are robust to the inclusion of country fixed-effects, a variety of geographical controls, and regional measures of early political and economic development.

Since trust is the raw material from which social structures are built, when someone scientifically shows that trust grows when environmental uncertainty increases I become even more confident that humanity is going to manage this transition period as well.

Since we can trace the birth of many of our defining concept of this society back to the end of the middle ages, why not try to mirror what is happening today in how the world looked like then? Here is X things that I have collected which sometimes seems to be rewinded: Organizing The decline of the nation state as the dominant organizing principle Hierarchical structures are challenged by the open spaces and market way of organizing things - innovation Knowledge and world view Increasingly relativistic view of knowledge - broadcasting model is challenged and is losing it's politically and socially defining qualities The decline of the idea of a better future - the idea of progress The text-based knowledge society is challenged by a world of verbally told stories and images Breakdown of the quantitative perspective and re-emergence of a qualitative world view and geographical perspective - death of distance, valuing the people and the experience of a specific place without so much romancing about how far away it is from home' Re-emergence of the risk society - the world out there is a dangerous place and we need to be protected Value creation Re-emergence of a non money value exchange systems - open source, make, prosumtion Break down of the immaterial ownership logic, where   

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To be able to say something about the future in turbulent and redefining times as we are now, you have to revisit history. Since we can trace the birth of many of our defining concept of this society back to the end of the middle ages, why not try to mirror what is happening today in what the world looked like then? Can we weave the threads back and forth in an intelligent way in order to create new knowledge??

Here are 9 things that I have collected, which to me seems to be rewinding our society (back to normal?) in one way or the other. Think of them as threads or aspects or images to be used as a foundation for (re?)framing a discussion about the future.

Organizing

1 - The decline of the nation state as the dominant organizing principle is occuring on many levels. Historians date the nation state dominance back to 1648, a point in time when it became clear that almost all other organizations claiming power needed to relate to the nation. Since the fertile ground of the nation states have been so effective in providing testing grounds as well as long term investment opportunities many organizations have now outgrown the national borders. Another aspect is that new communication technology supports forming of networks and communities regardless of national borders. A third aspect is that many of today's challenges are to big for any single nation state to manage - global collaborative efforts and e perspective beyond borders are necessary ways of approaching these.

2 - Hierarchical structures are challenged by the emergences of networks, open spaces and market model of organizing things. In a time when a stable environment allowed for big, long term investments in repeatable tasks, the hierarchical model for organizing things became the dominant one. Since some time individuals have gained organizational powers for themselves which have made problem solving and value creation following more direct connections between people, often completely bypassing the hierarchies. Resilience and adaptivity have stepped up to be more important than productivity and efficiency which is creating deep challenges to most traditional organizations. Since some time it have become evident that innovation simply doesn't happen in stable, hierarchical organizations. It rather happens in spaces and markets where skills, knowledge areas and people meet in new ways.

Knowledge and world view

3 - We are returning to a subjective and relativistic view of knowledge, which is more obviously socially constructed and culturally defined than we have admitted since the era of enlightenment. The driving forces behind this change lies in the increasing educational levels together with a revolution in communication technologies which have made the broadcasting model obsolete and therefore is losing it's politically and socially homogenizing powers. Together with that the knowledge explosion and the emergence of the modern man who is more critical and have a strong need to create and defend consistency in his own situation.

4 - The decline of the idea of progress and a better future. When we can't imagine a better future and everything is leveling or is pointing downwards we are returning to a world view based on what exists here and now and flocks around what we think is stable and fundamental truths in order to live our lives.

5 - The text-based knowledge society is challenged by a world of verbally told stories and images. Technology today, and increasingly in the future, provides us with tools and infrastructures that enable us to express ourselves and spread knowledge without learning to master reading or writing. Even if some of us already have basic literary skills it is often perceived to be so much more convenient (more natural?) to consume information in the form of images, video and audio form, that we seems to prefer this before books and articles. That these forms also allows multitasking, something increasingly more important in a more stressful society also adds to the equation.

6 - Qualitative and subjective aspects challenges quantitive and objective views of geography. If you look at medieval world maps, Mappa Mundi, they are usually geographically incorrect and rather mirror people's world views rather than what the world really looks like. Since the emergence of science and global business the quantitative qualities e g distance, terrain and relative location have since the exploration era of the early 1500:s become extremely dominant way of looking at the world. With the communication and transportation revolutions we got trains, TV, airplanes and now Internet which all have contributed to the death of distance, which rendered many of these geographical aspects less relevant. At least relatively. Today it is not as important where you produce things, where you live or go to vacation in a geographical sense, but rather from a qualitative perspective. We rather talk about if the oranges are tasting better if they are from Florida or if they are from Spain, how you experienced your trip to Bangkok or Mumbai and if the quality of the systems are better if they come from Silicon Valley than from Bangalore.

7 - Re-emergence of the risk society. After having lived in a relatively stable world where many of the earlier threats have been taken care of by the nation state we again regard the world out there as a dangerous place which we need to be protected from.

Value creation

8 - Re-emergence of value creating without changing money - since the middle ages and though the industrial revolution the society have increasingly been permeated with the concept of money. With dramatically lower transaction costs due to new communications technology, have suddenly been able to communicate, share ideas and information almost free. The result is that we have found that a long row of other values can compete with the pure monetary values. This have created a wide variety of value creating processes which almost not involve any money at all. Major examples are the popular open source/open content movements which today produce much more than just software, a vast array of global innovation, idea sharing and DIY communities, citizen journalism and the spontaneous emergence of catastrophic aid activities when people are in need.

9 - Immaterial ownership logic under siege. When knowledge and education increases, information and data can spread freely to virtually no cost, and almost everyone have the capacity to participate in the innovation and value creating processes the artificial construct of immaterial rights are becoming much less valid than before. Focus seems to gravitate back to more down-to-earth physical and service values which are expensive to produce and distribute.

Comments or ideas?

What about the future of the automotive industry? It doesn't look good from an American (or Swedish) horizon, but where is all this going and how are we going to transport ourselves tomorrow??

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Yesterday I held a speech at a local conference of entrepreneurship. As usual I talked about scenario planning and it's virtues of creating a better understanding of the business environment, especially when it comes to understanding the underlying driving forces shaping the environment as well as assessing the critical uncertainties of how these will play out.

I also met a former colleague from Volvo and we started to discuss the state of the automotive industry. Suddenly I found myself retelling some of the ideas about the future of the car industry and mobility I spoke about at Volvo almost 10 years ago. Thoughts I had a problem getting people to grasp then... but maybe something has happened since? These are a new remix version of what went on in our minds then, and what is occuring inside in my head these days.

Three futures of personal mobility

Today's car industry is since long stuck in a mature and until recently slowly, but now rapidly braking market. The key reason for this have been, and still is, the unwillingness/inability to reinvent the concept of the car to something else than a increasingly complex, functionality loaded, emotional, status-boosting and expensive entity.

A number of driving forces in the business environment coincide to create the business situation where this reinvention is absolutely necessary:

  • overall diminishing economic growth due the approaching maturity of the industrial markets slowly decrease the customers available money
  • the urbanization continues which
    - decrease the need for a car in daily life
    - increase the cost of land and thus the cost for owning/parking a car
    - increase the awareness of the air pollution as a problem
    - increase the traffic congestions
    - increase the number of people who have a different economic situation with an uneven income that is dependent on projects, cultural consumption and other idea driven short activities
  • increasing global awareness of the climate situation
  • increasing/uncertain cost of energy
  • people are experience, meaning and identity driven in a different way than before which makes them more discontinuous and unpredictable in their behavior and choices

A certain indicator of this development is the continuous increase in the use of bicycles and small personal motorized vehicles (e g mopeds) in modern cities. The situation have since 10+ years become more and more critical so the problem isn't new. What is starting to occur is that the automotive industry is running out of both buffered resources and there is still no signs of proactive ideas.

What we now can be almost certain of, judging from the period from the different crisis from 1972 until the present, is that the ideas and innovations with a potential to change the situation will not come from inside the automotive industry itself. But where will they come from?

Two major long term driving forces shaping the future entrepreneurial landscape seems to be:

Simpler functions are are on the rise, not increasingly complex services - In the area of Internet and Web 2.0 we seems to have found a really important insight, which is slowly finding its way to other areas. When decreasing the complexity in an offer, as well as the process paying for it, the potential for rapid success through a high market penetration seems much better. The important advantage is that you can still be rational and efficient on the inside without having to internalize the understanding of complex and continuously changing customer behavior. Reducing complexity in an offer means that there is a better chance of finding a more natural interface between customer logic and production logic. A really important achievement in an increasingly complex and transparent world. This means basically that instead of trying to increase the service content in order to increase the value of a service, many of the successful companies are actually doing the opposite and reducing the width of the service, but instead excel in providing a simplistic but high quality function with global reach.

The rise of low end and distributed innovation - Increasing abilities of innovation among the other 4 billion people is changing the focus of innovation from exclusive and advanced top end innovation, which describe the majority of development in the West, to inclusive low end innovation for the masses, which is what seems to emerge elsewhere. Companies are slowly starting to realize that in the low end of innovation lies both the future for the rest of the world, but also a pretty huge untapped market. One really interesting effect of this is that a lot of our advanced western innovations, which are adapted to our situation, will be re-innovated in other parts of the world and under completely different circumstances and cost pressure. And when people realize that great many of these new innovations solves basically the same problem as we have here, but to a fraction of the cost, we are going to import these in great quantities in about the same fashion we today import a lot of produced goods from the rest of the world.

We can talk about the last one in more general ways as the rise of mass-collaboration, mass-amateurization and mass-innovation as well, but for my purpose here this description level suits me.

Another development that could be mentioned here is the Open Source/Open Content/Open X development, but as I see it is just a way of organizing innovation which of course will have a huge impact on how the different innovations will be developed, but will make less of an impact on how the future of personal mobility will develop.

If we consider these driving forces as important, but yet uncertain in how the might impact the automotive industry, how will they play out. What might happen??

Scenario 1 - The car (industry) is slowing down - to crash

The legal system is reinforcing the inertia in the western traditional industrial mindset when it comes to change how we transport ourselves. In the rest of the world a vast palette of new low cost transport technologies are seeing the dawn of light. Many of them builds on the bicycle and different kinds of individual vehicles propelled by solar powered electricity. We in the west shows again that we are simply unable to adopt innovations coming from outside of our own ranks.

Due to no alternative working transportation solutions, people in the western cities are being forced to increasingly use their bicycles and public transportation systems. One reason is that many of them will not even own a car. This development will reveal a number of problems with our current city planning when it comes to both managing bicycles as well as public transportation.

The automotive industry will continue it's slide downward and will basically crash. Maybe some of the leftovers will be reconfigured to smaller companies selling their increasingly expensive cars in the rural and niche markets that will remain.

Scenario 2 - The low end reinvention of the car - "The car is dead! Long live the car!!"

In this scenario the car is reinvented through the innovation powers that rise among the other 4 billion. Instead of an expensive car that is intelligent and safe, the new car is small and comes in many (but smaller) varieties. Some of them will more resemble a concealed moped with place for one person, while others will have room for both a family and a few bags. The main point is that these vehicles are both light, simple and cheap to buy and drive. They will most likely also be very rugged to survive in a crowded city as well as adapted to small parking areas by being foldable in different ways.

The automotive industry at last realize that if the want to survive in the market of mobility, the will have to enter the new emerging market by buying moped manufacturers and invest in different innovation models and market in the developing world. It means that they will radically widen their view of what a vehicle is and by using what is left of their financial muscle they will have maybe have enough resources to invest in the development of these new cars. It will be bad, but they will at least have a plan and an industry to compete in!

Scenario 3 - Personal mobility is reinvented - mobility as function

In this world the concept of mobility is changed from being based on vehicles, on to other ways of moving people and goods. By taking the perspective of how functions (rather than products or services) can solve the problem of urban and trans-urban mobility in more efficient ways, the breakthrough comes from a completely other direction. Instead a vast numbers of new public transportation innovations see the light of day. Old science fiction ideas like moving sidewalks and different kinds of light and continuous train-like systems are being experimented with in different places.

Suddenly people understand that one of the major competitors to today's car manufacturers are companies like Otis, who have the advantage that they understand how to transport people both horizontally and vertically. By getting rid of the mental connection between mobility and owning/driving a vehicle and regard mobility as a function new possibilities of transportation is opened up.

Traditional car manufacturers realize that they have to engage in the development of transportation systems rather than vehicles. Cars will not disappear but will have a smaller market share and will be thought of as an urban complement to the integrated city system.

200810152232.jpgIn July this year HBS published a working paper by the name: Communication (and Coordination?) in a Modern, Complex Organization where the authors analyzed e-mails from 30.000 employees in a large company over a 3-month period. It is really interesting that this has been done, even if I wonder why it wasn't done before (or am I wrong?).Their conclusions are really interesting, especially in present times of the social networks, where horizontal communication is growing rapidly.

Communication patterns were extremely hierarchical: Executives, middle managers, and rank-and-file employees communicated extensively within their own levels, but there were far fewer cross-pay-grade interactions in the firm.

Junior executives, women, and members of the salesforce were the key actors in bridging the silos.

[From the executive summary: The Silo Lives! Analyzing Coordination and Communication in Multiunit Companies — HBS Working Knowledge]

To those people who believe in the strong transformative power of technology this may sound surprising or even depressing. Because it basically means that in spite if all this wonderful technology that creates transparency and breaks down borders people are still communicating within silos.

To me this just underlines one of the important lessons from the research area of diffusion of innovations: it is our social connections that are the vehicles for the spread of innovations, and first in the next step technology changes social patterns. Social patterns doesn't change over night, because they are based on human behavior which follows much longer cycles.

Another way to put it is that the people as both employees and as company culture members embodies values and mental structures that in practice regulates e g who is invited to which project or who to contact to get a problem solved. In 1990 Paul A. David published an article called The Dynamo and the Computer: An Historical Perspective on the Modern Productivity Paradox where he tried to explain why the productivity gain of computers didn't showed up in the balance sheet. His point is that productivity doesn't rise until the whole system is redesigned in a new way, a process that may take decades because of the built in inertia in a working systems consisting of both people, machines and information structures in complex interrelation with each other.

What I think lacks in this research is how these social communication patterns changes with age, education and the individuals earlier experience of e g social software. I don't doubt that physical, geographical or organizational barriers creates this effect, but I am curious what is happening what is happing to people which are heavy users of communication and have a wide reach before they enter a large organization. Are they changing their behavior? And how much??

It would also be very interesting to compare companies of different age and maturity to understand how and how fast these silo patterns are emerging.

My comment as a futurist about this is (as usual): think s-curves! A lot of communication patterns on this planet haven't changed a bit yet, but they are about to. We are just inflating our expectations about this horizontal and social communications.

Many of you readers know that I am skeptical to to future of traditional hierarchies. I believe the huge change that is happening now (again) is that new communications technology is simply creating another playing field for the basic human capacity to organize and solve problems at hand. A field where the model of traditional hierarchic and static institutions is not the given answer for solving problems, as we have been assumed for some years (read "hundreds of years") now.

Maybe this thought is at last coming through in a more traditional context? Or am I just exaggerating what my mother recently pointed out to me in the latest issue of Time Magazine? On the question on the chaotic situation in the Japanese government Michael Elliott asks:

Yet on Japan serenely sails. It makes you wonder if most of us have still not figured out the question of 1962 [How do they do it?], or if the answer to it is so radical that we miss it. Could it be that an old society is leading us into a postmodern age, one where the world of politics, something that we have assumed for 200 years was the wellspring of national success or failure, is somehow just not that important?

[From The Moment -- Michael Elliott -- TIME]

I am aware of that there are (at least in theory) other angles of attack for questioning the relevance and impact of the national political governing system, but Elliott is pointing at an important issue here. We are assuming that the national political system still is a wellspring of national success or failure. I would say that it is much worse than that: we can't even use the word society today without bringing along a complete system of assumptions containing the dominance of the nation state model and it's constituting institutions. In all writing that I read, regardless if it is in an academic context or not, I can track these underlying and implicit assumptions. Assumptions that effectively clouds the discussion of how we should go about organizing the society of tomorrow. A society where the nation state may or may not be the fundamental organizing model.

Is publication of Michael Elliott's short essay a weak signal that this line of thought is on it's way to breach into the mainstream discussion? Is it just a call in the dark? Or am I filling in too many blanks myself?