I had the pleasure of joining SAP’s Coffee Break with Game Changers Radio Show on August 5th. This was my third appearance on the show, and I was joined by Futurist Gray Scott and SAP Global Innovation Evangelist Timo Elliott. The show titled “Emerging Paradigms and the Future of Business” was part two of a series that was expertly moderated by Bonnie D. Graham. Part one of the series was a discussion on Decentralization.
The show abstract: The pace and scale of change is hitting unprecedented levels. This presents unique challenges for the future of business. We’re seeing new and emerging paradigms, exciting innovations in energy, challenges due to resource scarcity, big implications for the climate and environment, an increasing blurring of physical and digital boundaries, growing business decentralization, exponential progression, and many more global drivers – all contributing to an uncertain future. Futurists worldwide, including our panellists, are examining these factors and assessing their potential business impact. Some of the critical questions to address:
- What factors will shape our future?
- What new leadership skills will be needed?
- How will leaders deal with challenges and implications outside of their base of experience?
Bonnie kicks off the show by analyzing a quote provided by each panelist. The following are our quotes and their relevance to the topic:
Frank: “We are entering a world where everything we know and understand about the purposes of business and the mission of our own organization will be challenged.” (Rohit Talwar)
The source of my quote was a new book titled The Future of business. The book collected thoughts from over 60 Futurists, providing a glimpse into a number of fascinating topics that could alter the future of business. When viewing the world through this lens, your perspective almost has to change. It becomes clear that the rules of the game – and our belief system – will be reframed. The trick for every organization is connecting this future view to actionable steps today.
Gray: “We are becoming a digitized species. We are heading toward a crunch in digitization. We are crossing the computational event horizon into a digital black hole.” (Gray Scott, contributor to The Future of Business)
Every time we upload information into the Cloud, we are digitizing our information and creating a computational event horizon which we are about to cross. Crossing the computational event horizon means there is more information that is digital than exists in the real world
Timo: “Any intelligent fool can make things bigger and more complex. It takes a touch of genius and a lot of courage to move in the opposite direction.” (British Economist E. F. Schumacher)
Schumacher was asking questions about automation in the 1970s and would have really enjoyed today’s topic. A lot of people think that innovation and improvement are about adding complexity, but increasingly it’s the opposite, it’s about subtraction. The real innovation is in making the job-to-be-done as simple as possible
Each panellist provides Bonnie with four or five discussion statements that drive the dialog. The 30 minute panel discussion started with me, and the discussion statement focused on the session’s topic: emerging paradigms. The Statement:
Emerging paradigms will challenge everything we’ve known about society, business, government and economies. Shifts like centralization to decentralization, linear to exponential, vertical to horizontal, scarcity to abundance and others, will drive a re-imagining of just about everything
It’s not the fact that we have a paradigm shift, but that we have multiple shifts happening at the same time and converging on one another. This convergence creates an amplifying effect. As the world goes exponential, our foundation remains linear. We think linearly, we are structured linearly and therefore ill-equipped to deal with this exponential pace. If you were to pick one thing that makes the future massively transformative, it’s the sheer number of concurrent paradigm shifts that are beginning to converge.
Gray Scott added, that exponential digitization is occurring in all fields and is now turning the lens on nature and our bodies. Finding cures, increasing food harvest, harvesting food with LED lighting, and others are driven by digitization. Exponential change is bleeding into every aspect of our lives. Timo Elliott added that exponential change has caught us by surprise, and equated it to the second half of the chessboard, where each doubling starts slowly but then takes this huge leap. I added that in my travels, the year 2007 stands out as the year where exponential progression accelerated.
The second discussion statement also came from my list and focused on this acceleration:
The information enablement of everything and the convergence of nanotechnology, biology, information technology, and the cognitive sciences create an exponential progression that accelerates everything. That which leaders expect to happen in 10 years is likely to happen much faster. Our future predictions are now too conservative
There are considerable implications for leaders and organizations as acceleration changes our traditional view of the future. What does it mean to planning horizons, how we develop strategy, the speed to obsolescence, and a critical need to be emergent. Gray Scott added that the first unmanned factory now exists in China, and its productivity will push other factories to do the same. This is an example of exponential change. If you had said a year ago, that unmanned factories are coming – a lot of conservative futurists would have said that it’s ten years off – but it’s here. Timo Elliot agreed, saying that we are seeing some huge gains in Robotics. He used an autonomous vehicle example to underscore the speed at which they went from idea to realization.
We then shifted to a discussion statement provided by Gray Scott:
Will corporations survive a decentralized automated future if everyone can harvest energy, food, and raw materials? Maybe, if these corporations change their core ideologies, namely: The future is not about acquiring wealth for CEOs and shareholders, it is about providing pathways to abundance for humanity. Today’s biggest companies may be dismantled by tomorrow’s automation if they continue to use outdated operational models
Gray talked about how exponential change enables individuals to harvest energy, food, and raw materials. Although harvesting raw materials is not there yet, it is coming. The individual becomes a decentralized supply chain for themselves by using self-replicating machines that harvest raw material. If we can change the supply chain to do it ourselves – why do we need the corporation? As such, we really need to rethink the idea of supply chain. Bonnie asked for an estimate of when leaders need to start worrying about this, and Gray responded that companies that don’t already have a digitization and decentralization plan are already in trouble. He used the current state of 3D printing as a way to describe that we are already there; it just has not been commercialized and pushed to the mass market yet. He’s worried that big companies think they are untouchable and used Uber to describe how decentralization is already chipping away at their market.
Timo Elliott believes that to survive, companies absolutely need to start thinking about these things in practical and pragmatic ways. What does a digitization plan look like? The game is changing in all of these industries and everyone is struggling to figure out what the new game looks like, and how to play. The rules have changed, but we waste time complaining about the new rules. Companies need to spend a lot of time trying to understand what the rules of the new game are. What business are they actually in – because it might be different than their legacy business.
I added as I had stated earlier that the rules of the game are indeed changing, and with it must come a change in our belief systems. But we will continue to see protectionist behaviors attempt to avoid or delay the inevitable. We witnessed this same type of behavior in the music and media industries as digital disrupted them – but it failed. Most executives struggle with the timeline. They are in business to make money and need to determine how they move towards these new rules without cannibalizing their existing revenue streams. More executives are indeed starting to question the business they are actually in – or will be in the future. Timo added that if they don’t cannibalize their own business – somebody else will. Every organization should have a plan to cannibalize their business – or they are going to fail. This triggered a thought around the void of digital talent in most organizations, and the new mechanisms (think crowd, community, staff-on-demand, etc.) that might be needed to fill that void.
Next up, Timo addressed one of his discussion statements.
As marketing guru Theodore Levitt famously explained in his book The Marketing Imagination, people buy holes, not drill bits. People don’t want a product. They want the benefits of a product: what it does and how it makes them feel
Timo explained that in order to figure out where you are going, you need to take a big step back to the basics – the core of what you do. People don’t buy products and services; they have a job to be done and they buy what they need to get that job done. Car manufactures must determine what job-to-be-done they support. Are they in the car business, luxury business, transportation business, or other? These are really tough questions to answer, but until they do, they don’t have a hope of knowing where they are going. The conversation shifted to the notion of unbundling. Timo described how products that were monolithic have been broken into much smaller agile products. He used the newspaper business as an example of artificial bundling, in that they were a collection of different jobs to be done. We’ve obviously seen the unbundling of that monolithic product into individual jobs to be done (e.g. news, classifieds, entertainment, etc.). This phenomenon is happening with every type of product.
Bonnie asked about traditional companies and who has the mindset to understand what is being discussed on the show. Timo answered that there are clearly blind spots. Those that truly get it are the ones creating these new niche products – he used the unbundling of banking products by niche players as an example. The notion of a bank is rapidly going away. On this mindset question, I responded that there are two challenges: whether the leadership is equipped to address these issues, and is the core business structured to deal with it. Traditional businesses just do not exhibit the key characteristics of exponential organizations. When asked by Bonnie if traditional companies will disappear, I shared projections by a Washington University study that forty percent of the Fortune 500 will disappear by 2025. Unless traditional companies can exhibit the speed, adaptability, and responsiveness of Uber-like companies, those estimates could indeed be realized. Gray Scott offered that corporations need to change their core ideology. He sees the past in three stages: 1) companies were in the business of providing supplies and core objects 2) we moved away from that to a convenience economy where we make it convenient for you to get what you need 3) now we are moving to the empowerment economy. It’s no longer about providing an object or convenience; it’s about giving them the power to supply themselves. Gray does not believe corporations understand this. Google and Uber get this circular idea of empowering people, which he believes is the future of business. The companies that embrace this empowerment economy are the companies that are going to succeed.
The Uber example had me asking Gray a question about the linkage to empowerment. If Uber’s end game is a driverless fleet where no driver is required, how does that map to empowerment? Gray responded that we are building a bridge to the new paradigms and there is no sustainability in the corporate identity. Any corporation that believes the same corporate model will exist in a hundred years doesn’t understand decentralization. This phase that we are entering is just a bridge to the decentralization paradigm. Bonnie wanted to know who out there gets this – who would resonate with what Gray described. Gray responded that millennials and the new generation of children that are moving towards higher education get it, because they grew up in a world where they could push a button and get whatever they wanted. You can’t tell this generation that you can’t do something – they believe in the impossible. Timo interjected that an area where we see empowerment at work is creativity and sharing. People have a strong urge to make things and share. He used YouTube, open source and Wikipedia as examples. Organizations that leverage that form of empowerment are thriving. Looking forward, he sees companies leveraging this creativity through co-innovation.
Crystal Ball Predictions
At the close of each program, Bonnie asks for our 2020 or beyond predictions. Here are mine:
I focused on 2020, because you won’t need to look much further to see dramatic change. We will have more evidence-based discussions around these paradigm shifts as opposed to speculation. A lot will have played out, driving more intelligent conversation about their impacts to business, society, government, and economies.
Our time horizons will continue to shrink, as everything comes to fruition sooner than we envision. Some estimate that between 2014 and 2025, there could be 7 Moore’s Law cycles potentially driving a 128-fold increase in raw computing power. Think about the implications to an already exponential world if that plays out.
Gray Scott’s predictions focused on the year 2025, with the notion that it looks very different than it does today. As we move towards decentralization, we are building a bridge to a new paradigm. He focused on the world after an empowerment economy has been realized and questioned what that world might look like. A world where everyone has the power to supply themselves with food, housing and clothing.
Lastly, Timo Elliott offered this. He brought us back to people, and the fact that innovation is all about people. The biggest problem in todays organization is not a lack of ideas – but execution. Current employees should be helping with innovation – not resisting it. He used another E.F. Schumacher quote: “To organize work in such a manner that it becomes meaningless, boring, stultifying, or nerve-racking for the worker would be little short of criminal.” Creating something new must include customers. Bonnie’s last question for Gray was: if you were to write a book about the future of business while in that future, what would the title be? Gray responded the future of humanity.
We are in the early days of this journey towards an exciting but uncertain future, and rehearsing it is the best way to create it in a way that solves some of humanities biggest challenges. Spending time with people like Gray and Timo is a great way to rehearse, and it has been both energizing and enlightening. A special thanks to Bonnie D. Graham for the platform to rehearse, and her expert moderation.