How Value Shifted from Tangible to Intangible in 30 Years

One of the most visible effects of the Fourth Revolution is the shift of value from tangible to intangible. It can be measured, and it is tremendous. Organization’s value today is 80% intangible, while before 1970 it was the reverse.

shift tangible to intangibleIn the Industrial Age the value of organizations was machines, and other tangible assets. It is actually what is measured by traditional accounting in balance sheets. Nowadays, most of the value is intangible assets – people, knowledge, brands, ways of working. The shift has been measured and this revolution is quite impressive. It is a real indicator of the Fourth Revolution in action.

The fact that traditional accounting has not adapted to this shift (people are still a cost and not an asset..) is a major issue that will necessarily lead to problems of valuation very soon. Accounting maintains an illusion that can’t reflect the actual value of an organization. The market does somehow, but does not account for intangible benefits either (such as, allowing connections between people in the world).

The shift from tangible to intangible is a tremendous change and its aftershocks will still be felt for the decades to come in many areas.

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Why We Would Have Smartphones Today Even Without Steve Jobs – and the Inevitability of the Fourth Revolution

We do hail Steve Jobs for inventing the smartphone in the shape of an iPhone (and other marvels of modern technology). Yet today we see that this technology is becoming mainstream and ubiquitous. So, would this invention have happened even without Steve Jobs’s genius? The answer is yes, and probably not too late after it happened thanks for Apple.

Steve Jobs with an iPhone
What has Steve Jobs really invented?

There are a lot of pointers in the form of past inventions occurring simultaneously (such as for example, the telephone, the theory of evolution etc) described for example in the excellent book ‘What Technology Wants‘ by Kevin Kelly. This shows that when the technological environment is mature, key inventions tend to happen naturally. If one does not invent it, so does another. Not everyone can bring a new technological invention to effective realization, but the world is big enough that several organizations can come simultaneously to similar results.

The great expansion of Android devices shows that the technological ecosytem was about ripe when Apple came out with the iPhone. The conversation about the convergence of cameras, phone and computer features was around already since the early 2000’s. The genius of Steve Jobs was to be the first to bring everything together in a well designed solution; but simultaneously many were not very far from a workable product with similar features. Technology was simply mature for the change. Steve Jobs brought its realization forward by a few months or years, but it would have happened eventually.

The same happens with the Fourth Revolution; as our long distance interactive communication capability has been created, the transformations of the Fourth Revolution are inevitable. We can’t predict who will be the first, where, but we know they will happen – and sometimes take shape simultaneously in several places.

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How Battery Technology is the Unrecognized Key Collaborative Age Enabler

We take for granted the small parts that power most of the devices we use – long lasting, rechargeable batteries. Still in some sort, battery technology is a key enabler of our modern way of life, and technology progress has been dramatic in that field. And more is to come as the total capacity of batteries increase and could change electrical power distribution overall.

battery
Batteries, the unrecognized heroes of the Fourth Revolution

Batteries power all our portable devices, giving us freedom of movement like never before. Our devices become increasingly long-lasting and powerful, allowing us to work, entertain ourselves, and communicate from wherever we are. In a way they enable the Fourth Revolution by removing the constraint of localization close to a wired network. In Africa they power mobile phones which are the only way to communicate effectively. Battery-powered cars also become increasingly a possible mainstream technology for moving around.

There is more: Industrial Age electricity generation technology did not involve storage of power which required to maintain at all times, equal production and consumption on power grids, leading to issues as daily consumption is highly variable depending on the time, weather and day of the week. This is today a limit to the development of ‘green’ power sources as wind and solar power is highly variable and somewhat unpredictable. Increasing their share on the grid leads to substantial issues for the grid managers – sometimes adding more windmills requires adding more fuel and coal power stations to have extra capacity to cater for peaks in demand and slumps in production!

tesla battery
Batteries in everything – the Tesla car battery

With ambitions to build megafactories for batteries, that may change as well. Elon Musk’s announced strategic move to build a ‘Gigafactory’ is controversial. But the fact that the idea to increase production capacity (one single factory to produce more battery capacity than the current total worldwide production!) to lower the cost of batteries is in the air – and, provided the availability of raw material follows, will change significantly the landscape of power generation as well.

Batteries – the small, discrete technology that is changing our world more than we would ever realize!

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Video of the quarter: Don Tapscott on the Collaborative, Open world

Revise your knowledge of the Fourth Revolution by watching this entertaining video by Don Tapscott that covers most of the basics (Don Tapscott is the author of Wikinomics: How Mass Collaboration Changes Everything and Macrowikinomics: New Solutions for a Connected Planet). It even speaks of the transition between Agricultural, Industrial and Collaborative Age!

I like how he considers the younger generation to be ‘natives’ of the collaborative Age while he is only an explorer!

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How the Fourth Revolution transforms our view of Earth

Working in the field of large, complex projects, I can’t see a project file nowadays without great pictures coming from Google Maps adorning the file: pictures of the site, of the present facilities…

Industrial Facility seen from Google Satellite
Industrial Facility seen from Google Maps

And indeed it is so easy from any computer to have precise satellite pictures of any place on Earth that we just don’t think any more about the miracle that is… ten years ago only, this privilege was reserved to government authorities and large corporations who could pay to get the picture taken by an aircraft or a satellite.

And today in developed countries most roads in large cities are also visible through Google’s StreetView.

This unprecedented democratization of earth imagery has far reaching consequences. It changes fundamentally the concept of ‘public space’ (which can now be observed from anywhere on Earth) but also the concept of ‘private space’ (you can’t hide what you have in your garden from your neighbor any more!). It changes fundamentally how we perceive the physical space around us. This transformation is as strong as when we saw the blue planet Earth for the first time from space, floating in emptiness, in the 1960’s.

Some people argue that because only a limited number of actors manage this data (Google being the most prominent), we are exposed to possible manipulation of the data for commercial purposes, showing us only what they want to show us (see the paper “The Dark Side of Commercial Mapping”). We are not so pessimistic, because there will always be competitors and the crowd will denounce abusing behavior. But certainly our view of the geography that surrounds us has been transformed and this has already changed our decision making when it comes to property or project management.

Today, our perception of our immediate and distant geography has been transformed. Like our new vision of Earth transformed our mindset in the 1960’s, how will our action taking relative to geography, in particular in the field of ecology, change?

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Why the Fourth Revolution is the Era of the Exponential, and How this Changes Everything

The Fourth Revolution is the era of the exponential – whereas the Industrial Age was the era of linearity. And that changes everything in the way we live our life:

Moore's Law 1971-2011
Moore’s Law 1971-2011 (from Wikipedia)
  • the complexity of the products we use every day increases exponentially. For example the Moore’s law states that microprocessors density on chips doubles every 2 years; and that’s the case for many other products we use every day without realizing it;
  • Successful companies and services grow exponentially, soon dwarfing existing players (the revenue of Apple was multiplied by 11 in 10 years… not to mention the even more exponential growth of the Facebooks of the world)
In the Industrial Age, things were more linear. It was easier to extrapolate the future from the past. Of course a factor is that things go faster today so that it is easier to watch exponential change in action. Yet the Moore’s law rate did not change in the past 40 years or so. Microprocessors’s density still double in the same number of years. So speed of change is not the discriminant. The fact that things grow visibly exponentially and have higher ceilings than before makes the Fourth Revolution different.

 

story of rice on chessboard
Are you sure you want to get to the end of the chessboard?

The problem is that we are not geared to feel intuitively the power of the exponential. It is very difficult to seize how fast it can grow. Do you remember the tale of the wise man that told the King who wanted to thank him: “only put a grain of rice on the first square of a chess board, then on the next square put two, then on the next square put four, then double for each square until the end of the chess board…” The King never realized that at the end of the 64 squares the quantity of rice needed would vastly exceed his available supply – and the world’s supply and even more!

This explains why so many people today have difficulty understanding what happens in the world. In their linear Industrial Age mindset, they can’t grab how the exponential is changing our lives faster and deeper than ever before.

Are you ready for a world full of exponential change?

Thanks to Mitch Joel and his post on “The Era of Exponential Marketing” – a specific area where most people also don’t realize we are in for exponential growth of product sales- for the inspiration.

The great picture of the rice on the checkboard is by Paul Starkey on Flickr

 

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Publishing A Book is Not Any More a One-Way Broadcast

If you are a e-book reader you might have noticed that you can type in your notes and share your text highlights with other readers, the world… and the publisher.

Publishing a book is not any more a one-way broadcast. And the role of the distributors has increased dramatically. Since a decade, readers can easily speak their mind on all books on most e-bookshops (the distributors) – which in effect is a sort of crowdsourcing of opinions. I now look at who recommends the book and what the opinions of readers are before buying.

ebook interactive reading
Ebooks add a layer of interaction and can spread your notes and highlights

Now an other layer of feedback has been added with e-books. Distributors like Amazon or Barnes & Noble can also get feedback from the inside of the book when you read them. On most e-book reading devices you can take notes and highlight quotes – and share them with the wider community – and the publisher.

This paper in the Wall Steet Journal, “Your E-book is Reading You” explains that the distributors have only started analyzing that huge pile of data.

And because of this huge trove of data, and the insights that will be derived from what the readers like or don’t like, the power of the Publisher will vanish while the power of the Distributor will soar – and we can predict that soon Publishers will be taken over by Distributors, like Amazon is already doing.

Publishing books started the Industrial Revolution, the era of Broadcasting. Today, publishing books enters the Collaborative Age in full, allowing almost real-time interaction with the readers. And as with other industries, publishing will be put upside down by the Fourth Revolution.

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VIDEO OF THE QUARTER: Kevin Kelly on the next 5,000 days of the web

In this stunning video from TED, Kevin Kelly describes the revolution of the last 5,000 days of the Web and what is coming in the next 5,000 days. Knowing that the video was shot in 2007 we can already see some predictions coming true!

Fasten your seat belts, the world is now changing amazingly!

How the web will become a ONE machine and we will all be the ONE. How in 2040, the processing capability of the web will exceed the combined processing power of 6 billion individuals. And more insight about the tremendous changes that are happening in the world!

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The Great Convergence of the world economy is happening NOW

The economical convergence of the world has started. This graph is extracted from an article by Robert Branche (in French): “Facing the convergence of the world economy”.

OCDE vs emerging countries: GDP per capita 1972-2010
OCDE vs emerging countries: GDP per capita over time

It shows the evolution over time of the ratio of the GDP per capita of a choice of emerging countries (Brazil, China and India) over the OECD average. There is no doubt in this graph that a convergence starts around 1994 – around the time the Fourth Revolution started, at least for India and China. This happens at the same time than the significant shift in the value creation chain in the 1990’s (see the post “Visualizing the demise of manufacturing“).

This convergence will continue. Ultimately the GDP per capita of China and India will be close (on average) to the OECD countries.

What will be the final outcome? For Robert Branche the outcome will be necessarily, a decrease of the standard of living in the OECD countries by about 50% until 2050. The reason stated is that the standard of living in the OECD is artificially high thanks to low-cost importations from China and India – which will become more expensive. Is that so problematic? It would mean that the standard of living would be back to say, the one the OECD had in the 1980’s. Is that a big issue?

While the worldwide economic convergence will probably accelerate thanks to the Fourth Revolution, the outcome, in terms of standard of living in developed countries, is more debatable. Developed countries will see significant changes in their economy; whether they lean into them or resist them will decide on their ultimate fate. Countries can go down in terms of standard of living very quickly (as in Argentina in the 1970 to 1990’s for example). On the other hand, if developed countries adopt the Fourth Revolution early enough, there is no reason why the standard of living, and the quality of life, should be significantly lowered.

In any case the world will see more shifts of wealth and standards of living in the next 50 years than in the 20th century.

Listen to the warning: let’s lean into the Fourth Revolution. That is the only way developed countries can preserve their future.

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The time spent on social networks by users went up by 30% in one year

According to Nielsen studies, the time spent on Facebook on average in the US is now (August 2011) almost 8 hours per month –  up from a bit less than 6h in August 2010.

That’s the average for 163 million US Facebook users. Or, in total, an astonishing cumulative 54 million days spent by all US Facebook users during that month. Communicating, chatting, sharing, collaborating.

It’s a flood of collaboration. Is that time wasted or time used appropriately? Some bloggers seem to think it is time wasted: see for example  http://mashable.com/2011/09/30/wasting-time-on-facebook/. The name of the link is revealing of the mindset of the writer, although the post itself is just named “You spent 8 hours a month on Facebook [STATS]“.

Well people obviously find an interest and prefer to go on Facebook rather than watching TV. And although many Facebook posts are quite superficial, no doubt there are nuggets there ready to be harvested.

The Fourth Revolution is just kicking off. Time spent on Facebook and other social networks generates value. How do you benefit from this value?

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Still skeptical about the Fourth Revolution? Read this post, and experience it firsthand!

Have you seen this video on TED? “What we learned from 5 million books” video on TED.

The idea is dead simple but only the Fourth Revolution would allow it. Based on Google’s now huge and unprecendented database of scanned books, researchers have setup a tool that looks for the frequency of words depending on the date of publication.

The 5 million of books they use as a basis is quite a representative sample (4%) of the 129 million books ever published.

Not only that, but the tool is available online at http://books.google.com/ngrams, an interactive tool that lets you test your own words or combination of words, and look at how they evolve over time. I can testify that you can spend some time playing with it (and that’s an understatement). I just put here three examples I have done myself – all graphs range from 1800 to 2008

In the first example, using the frequency of the words “farmer”, “worker”, “employee”, “servant” and “slave”, we see how the concept of servant (yellow) disappears over time, while “workers” (red) and “employees” (green) are newer concepts.

n-gram from servant to employee
n-gram from servant to employee

In the second example, with the words “spiritual”, “intellectual” and “emotional”, we see how the frequency of “spiritual” diminishes after 1860, while “emotional” is quite a new word growing through the 20th century.

n-gram from spiritual to emotional
n-gram from spiritual to emotional

In the third example, we just watch the Fourth Revolution ignite, with the words “collaborative” and “networking”:

collaborative networking n-gram
collaborative networking chart

The incredible thing is that you can yourself do your own research, because the data from the 5 million books (approximately 500 billion words!!) is there, at the reach of your mouse, anywhere in the world.

I write about the Fourth Revolution but that does not mean I am not WOW’d by it regularly. WOW! Try it yourself on Google n-grams interactive site. And watch – the more this tool will become known, the more people will use its graphs to illustrate historical tendencies. Private people will do their own research. Humankind’s collective cognitive capability will be unleashed.

What a better illustration of the Fourth Revolution? This would have just been impossible 2 years ago. WOW.

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How patent litigation cost half a trillion dollar inefficiency in the last 20 years!

Following the popular last blog post on patent trolls, I have found very interesting data and reviews on arstechnica.com.

The first paper is titled: “Study: patent trolls have cost innovators half a trillion dollars since 1990”.

Let’s repeat: the cost of defending innovation has been 500,000,000,000 (500  billion) dollars for publicly traded defendants since 1990! And it has increased over time to a staggering 83,000,000,000 (83 billion) dollars per year in the last four years!

And some researchers (Bessen and Meurer in their book Patent Failure) have shown that showed that, outside the chemical and pharmaceutical industries, the cost of patent litigation had already begun to exceed the rewards to inventors by the year 2000. Their new work suggests that the problem has gotten much, much worse since then. And that the intellectual property system is definitely broken. It is supposed to bring wealth to society; actually is stymies it!!

The book “Patent Failure” is reviewed here. I can’t help copying in this post – with all due respect to copyright – a stunning graph from the book (other industries refer to other than chemical and pharmaceutical – mainly software):

Patent litigation costs explosion
Patent litigation costs are now far higher than benefits

No doubt. The intellectual property system is deeply broken and needs to be mended. Otherwise innovation might just be scared away by a bunch of parasites.

And… what better illustration for the Fourth Revolution ignition?!?

No doubt – that’s an area where the Fourth Revolution is already there and deep institutional changes are required, and fast.

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