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.


How Luxuries Tend to Become Necessities and Span Obligations

In the excellent book ‘Sapiens: A Brief History of Humankind‘, Yuval Noah Harari writes: “One of history’s few iron laws is that luxuries tend to become necessities and to spawn new obligations. Once people get used to a certain luxury, they take it for granted. Then they begin to count on it. Finally they reach a point where they can’t live without it.

Contents of an American Home
Typical Contents of an American Home

In the book he applies this law from the very start of the Agricultural Age to all sorts of new belongings and constraints imposed by the sedentary lifestyle linked to having fields to care for. But of course it is also widely applicable today to all sorts of modern life items, from cars to mobile phones. They were initially luxuries and have become things we can’t live without.

Today we can’t live without a number of contraptions that impose on us a tremendous burden in terms of maintenance and replacement. We can’t live without them because society also takes them for granted. For example, not having a mobile phone nowadays for professionals is something of an heresy!

It is at the same time the result of progress, and it comes also with obligations and constraints. The thing is to keep some balance so as to not become hostages to all those luxuries. How do you fare?



How Individualism Returns after a Short Industrial Age Parenthesis

Paul Graham in his (controversial but thought provoking) post ‘Refragmentation‘ gives an interesting overall view of how the Industrial Age may have just been a short parenthesis in the history of humankind when it comes to lesser individualism and more even spread of wealth.

How Rockefeller was wrong. Individualism only collapsed for the Industrial Age.
How Rockefeller was wrong. Individualism only collapsed for the Industrial Age.

He states: “The late 19th and early 20th centuries had been a time of consolidation, led especially by J. P. Morgan. Thousands of companies run by their founders were merged into a couple hundred giant ones run by professional managers. Economies of scale ruled the day. It seemed to people at the time that this was the final state of things. John D. Rockefeller said in 1880: “The day of combination is here to stay. Individualism has gone, never to return“. He turned out to be mistaken, but he seemed right for the next hundred years.”

With the Fourth Revolution, large companies are not any more the most effective way of creating value. Individualism is enhanced by our capability to broadcast to the world, and the contribution of everyone is enhanced.

In many ways the Industrial Age was an exception to the way the world had been moving along, and it may have been a short exception in many ways regarding individual life, employment and our social contract.


How the Rate of Violence Worldwide Is As Its Historical Lowest

During the summer I read a great book by Steven Pinker, ‘The Better Angels of Our Nature: The Decline of Violence In History And Its Causes‘. Basically it demonstrates how the rates of violence in all categories have dramatically decreased over time.

decrease of violenceThe emotionally-laden coverage of today’s news hides the fact that homicides and wars have reached an historical low point. Steven Pinker shows that this observation that violence has decreased dramatically has happened simultaneously in many dimensions:

  • wars (civil wars and wars between entities)
  • homicide and other day-to-day violence
  • punishment by the power in place
  • family-related violence
  • violence against minorities, gays, racial etc.

In our societies, it is 50 to 100 times less probable to be the victim of a homicide than a few centuries ago. In many primitive societies, 50% of people die violently.

I think we need to put in perspective the continuous flow of atrocious information that is fed on us. Of course, what is happening in Syria or elsewhere is terrible, but it is bloated out of proportion by manipulations from all sides.

The world is becoming a better place, Europe has never had 70 years without war for ages, and this will continue to be the trend in the Collaborative Age, with increasing networking and trade between us.

The book is quite long and detailed, alternatively, a video presentation by Steven Pinker is available on Youtube.


How We Are Becoming Much More Intelligent With Each Generation

I discovered recently the Flynn Effect, the fact that our average intelligence (as measured by the IQ test) has increased dramatically in the last decades in developed countries.

flynn effectThe IQ test is periodically calibrated to have an average of 100 and a standard deviation of 15 points. In many developed countries, the average IQ has increased by 20-30 points over the 20th century: measured as of today, our ancestors one century ago would have been considered mentally retarded (and so possibly also our grandparents).

There are many reasons proposed for this change, the most convincing being better formal education. Also, we now know that IQ only measures one kind of intelligence, and there are other forms which are as important for predicting success and social abilities.

Some recent observations would tend to show rather a stagnation of even a diminution of the average IQ in the last decade, still to be confirmed, and still to be linked with the kind of questions that are asked in the IQ test which only measure a partial side of intelligence. Still, 20th century schooling has shown a dramatic ability to improve the capability it intended to improve!

Anyway, what I find very interesting here is that it appears that our modern habits of mind and education seem to have made us much more adapted to dealing with certain kind of problems that require abstract thinking. What is amazing is the magnitude of the change over 2 generations!

For more information, watch the TED talk by James Flynn on YouTube


How the Fourth Revolution Definitely Made Reductionism Obsolete

Antireductionism “advocates that not all properties of a system can be explained in terms of its constituent parts and their interactions” [Wikipedia]. It stands opposed to reductionism, the approach typical of the Industrial Age, which considered that the behavior of entire systems can be explained completely by a description of their individual constituent parts and their interactions.

In the 18th century people thought animals could be described as a mechanical apparatus
In the 18th century people thought animals could be described as a mechanical apparatus

Already the philosophers of Enlightment struggled a bit with reductionism that was contradicting our free will. Still, the mechanistic view of reality dominated science and our understanding of the world until far into the 20th century.

Today in many areas such as chaos, systems biology, evolutionary economics, and network theory, we know that complex, unpredictable behavior arises from large collections of simple components.

By the mid-twentieth century, many scientists realized that such phenomena cannot be pigeonholed into any single discipline but require an interdisciplinary understanding based on scientific foundations that have not yet been invented. Several attempts at building those foundations include (among others) the fields of cybernetics, synergetics, systems science, and, more recently, the science of complex systems.” writes Melanie Mitchell in ‘Complexity: A Guided Tour‘.

The study of complex systems is an emerging and still very incomplete science. It is the hallmark of the Collaborative Age.


Are We at the Edge of Another Spiritual Awakening?

Kevin Kelly notes about the birth of the religions we know today that they have all appeared around the same time, when agriculture was sufficiently developed to generate abundance.

SpiritualAbout 2,500 years ago most of humanity’s major religions were set in motion in a relatively compact period. Confucius, Lao-tzu, Buddha, Zoroaster, the authors of the Upanishads, and the Jewish patriarchs all lived within a span of 20 generations. Only a few major religions have been born since then. Historians call that planetary fluttering the Axial Age. It was as if everyone alive awoke simultaneously and, in one breath, set out in search of their mysterious origins. Some anthropologists believe the Axial Age awakening was induced by the surplus abundance that agriculture created, enabled by massive irrigation and waterworks around the world

When the Industrial Revolution came with printing, these religions branched somewhat with for example, Protestantism for the Christians.

He continues: “It would not surprise me if we saw another axial awakening someday, powered by another flood of technology“. The conclusion of that observation should shake us.  Is the spiritual awakening we can observe around us just a trend or is it a deeper movement linked to the Fourth Revolution? I tend to believe in the latter, and I am excited to see how that will materialize in the years to come as we move into the Collaborative Age.


We Can’t Find Anybody Else In Space (and Why It Matters)

Although loosely related to the Fourth Revolution, I want to share the link to this very interesting summary of the issues around the search for extra-terrestrial intelligence, also called the Fermi Paradox – ‘Where is Everybody?’.

Where is everybody?
Where is everybody?

The issue is the following: we know there are zillions of other planets that should be able to support life out there (the low estimate in the article is 1 billion in our galaxy alone); that our own Earth is quite old by space standards, hence our technology probably not so advanced, so… why do we not see any sign of other life?

There comes the concept of the “Great Filter” – i.e. there would be some stage of technological advancement where civilizations get wiped out; a filter that almost no planet and species manages to overcome. Would we be the chosen ones (we would have overcome the filter in the past), or is that Great Filter somewhere in the future? Would there be a stage of civilization development where it inevitably destroys itself?

The question is not so innocuous as it seems. As we create highly connected technology, the chances of unexpected disruptions that could quickly spread to the entire system do increase. Would there be any chances we’d create such a situation in the Collaborative Age?


How Nature Always Reminds Us That Rare, Short Catastrophic Events Shape the World

In many natural science domains, we increasingly become conscious that in nature, 95%+ of the change we observe comes from short and intense phenomena such as storms, floods, earthquakes.

train_floodFor example in the study of erosion, rivers shapes and material that is then transported by rivers such as boulders, it is very clear that rare storms and floods are the main contributors to the shaping of the riverbed (and sometimes, to the destruction of some man-made structures that tempted to tame it). While most textbooks still present erosion as the continuous work of air and water over millenniums, in reality, most of the work has been done during much shorter periods -days- of intense flow.

It does similarly happen in the world that surrounds us. Most of the changes come from unpredictable, short and intense moments, which we often call crisis (or also, in the field of society, revolutions). Crisis create the conditions for re-shaping our society, our economy, our organizations. Our duty is to protect ourselves and our loves ones against those crisis, and also to take advantage of them when they happen – because ultimately it is those rare events that shape our environment.


Historical Perspective on the Development of Weak Ties

Following on our previous post on “How the Fourth Revolutions Enhances the Power of Weak Ties” I find interesting to observe the history of weak ties throughout the different periods we have identified in the Fourth Revolution book: the Hunter-Gatherer Age, the Agricultural Age and the Industrial Age.

In the Hunter-Gatherer Age, Weak Ties were inexistent

As clearly exposed by Jared Diamond in his latest book “The World Until Yesterday: What Can We Learn From Traditional Societies“, in the Hunter-Gatherer Age, weak ties did not exist. You were part of the tribe or not. If you were not part of the tribe we had to fight you as a basis (before any attempt at discussion). This is still observed with tribes that had never any contact withe the outside.

In the Agricultural Age, with the advent of Writing, Empires and Cities, weak ties developed, mainly within the wider urban community. Still the extended family (the ‘blood’) and unions between families remained extremely important and essential, before considering any additional relationships.

In the Industrial Age, with the advent of printing and long distance communication of ideas, weak links became much more important. There are a number of instances where weak ties played important roles in particular in the community of scholars, who were exchanging correspondence and ideas all over Europe. It also extended to the skilled workforce and artisans. However, because of the technical limitations, long distance weak links were still difficult to maintain and communication infrequent.

Finally the Fourth Revolution and the Collaborative Age will allow us to fully leverage our weak ties to a much wider and dispersed community of people.

Ideas are breeding through chance encounters with other ideas. They breed through our weak links. With these weak links becoming easier, more global and prevalent, how can the Collaborative Age not be an Innovation Age?


How the Fourth Revolutions Enhances the Power of Weak Ties

The Fourth Revolution value creation is all about releasing the power of weak ties. In our social environment we have strong and weak ties, depending on how frequently and tightly we maintain our relation to other people.

strong-weak social ties representationApparently the statistics is that we maintain on average a dozen very close contacts, about 150 medium to strong ties, and about 500 to 1,500 weak ties. Identification of this structure of our social network is not new, for example this paper on ‘The Strength of Weak Ties’ in the American Journal of Sociology in 1973.

The paper is a bit lengthy but the conclusion is clear: “weak ties […] are seen indispensable to individuals’ opportunities and to their integration in communities; strong ties, breeding social cohesion, lead to overall fragmentation“.

Weak ties create opportunities. This is repeatedly demonstrated for example by people looking for new work as testified for example in this post “the power of loose ties“. Or by our common experience that often, opportunities come from people with whom we are only remotely connected.

The successful social networks that define the Fourth Revolution are all about making the usage of weak ties easier, quicker and more frequent. Think about Facebook, Twitter, LinkedIn. Their power lies not in the direct connections but in the “friends of our friends”.

The Collaborative Age is the Age where we leverage our weak ties.

More information? Link to a general discussion of Interpersonal ties and social networks structure on Wikipedia.


Why our World’s Unpredictability Ever Increases

Robert Branche in his excellent new book, “les Radeaux de Feu” (in French) makes an extremely interesting point about the fact that entropy – the natural evolution of the universe – is not about increasing disorder, but is all about increasing unpredictability.

random unpredictable dicesHis thesis is then that all of nature’s invention – life, first cells, then plants, then animals and ultimately humans – is all about increasing dramatically unpredictability of the world. And it is true that at each step, the number of possible future states increases dramatically. Today humans have transformed the world at a much higher and unpredictable pace than plants have ever done, or than the mineral world has ever achieved.

What lesson does it bear for us? It is clear that unpredictability of our life, of our world will ever increase at an accelerated pace – that is a physical law. And the Fourth Revolution, this inter-connection of humans, will accelerate that transformation even more. We should not be looking for any stability soon. So instead of complaining, let’s rather enjoy the transformation!

Visit Robert Branche’s blog (in French) for more about the author and his latest book.