Jeremie Averous | The Fourth Revolution Blog

What we can learn from complex systems to understand today’s world

In this follow-up post on the topic of complexity (read “How the Fourth Revolution brings us from the complicated to the complex” if you’ve missed it), we’ll examine in the world that surrounds us, how complex systems behave, to take some lessons of what we can expect of the Collaborative Age.

Do you know that erosion does not happen regularly across time? In the blink of an eye geologically speaking, major events, floods, storms, change the shape of the rivers thousand of times more than years of normal flow!

Colorado river canyon: how do you think erosion really works?

99% of the shaping of the Grand Canyon probably happened during short, abnormal events. The gradual shaping of the canyon, sand grain after sand grain, is a myth!

When I was studying hydraulics some years (ahem…) ago I learnt this lesson which seemed strange to me at the time. Today as I know more about complex systems it is not surprising anymore, it is normal. But it really shows how our perception of the world around us has been shaped by the Industrial Age.

Industrial Age mindset wanted us to believe that changes happened progressively. A famous controversy among naturalists in the first half of the 19th century opposed the ‘catastrophists‘ to the ‘gradualists‘. Consistent with the Industrial Age mindset of a mechanistic, predictable world, the ‘gradualists’ won finally and their view imposed to the world for the next 150 years or so. (Funny enough, earlier wisdom was rather ‘catastrophist‘ (eg the Bible)). It is only recently that science re-discovered that the evolution of species, the erosion of rivers, and many other natural phenomenons do not evolve progressively over time. There are some climax periods where evolution happens thousand times faster, separated by relatively quiet periods.

The theory of complex systems, and in particular all the works on risk, show that variability in most systems follow a ‘long tail’: the probability of events significatively out of normal range is much higher than we think conventionally. And when they happen, they change the situation dramatically. In fact, they shape the entire system, dwarfing all the progressive change that could have happened before.

What can we take from all this science and knowledge?

It is not because a situation, an organization, a market etc seems stable for some time that a major event will not happen that will reshape completely the surrounding world
we always underestimate the possibility of a significant freak event (and underestimate also its power to change our environment)

Freak events will happen sooner or later. They will change completely the balance of a situation we thought was stable and secure. The reality is that freak events are those that drive the changes in our world, not progressive ‘gradual’ change.

Would you agree that the attack on the World Trade Center in 2001, the tsunami in Japan 2011, etc are freak events that were totally outside the normal? And that they shaped the world more than any other event in the previous decade?

We need to be ready for freak events, because they create the real change. Not only that: we need to be ready to grab the opportunity.

Discover next week in the last post of the series how the successful K.E.E.N. can grab the opportunities offered by freak events.

What the failures of Kodak and GM can teach us personally

Crisis are always moments of accelerated changes. Recently, some key icons of the Industrial Age collapsed, bankrupt: General Motors in 2009 and Kodak in 2011.

General Motors was the icon of manufacturing, producing the most coveted american symbol – the car. Kodak was the icon of modern broadcasting, with the film – motion and still pictures.

It is the end of the Industrial Age they represented for sure, but some of their competitors have survived the crisis and are even thriving. These two companies did not manage to change their mindset. They did not manage to let go of the milk cow before it would be aged and dry out. They did not manage to go global. They did not see all the good ideas that were created in their organizations. Here they stood arrogantly in their fortresses, misunderstanding the evolution of the world.

There have been some enlightening posts on the case of Kodak lately – read for example “What’s Wrong with This Picture: Kodak’s 30-year Slide into Bankruptcy” from Wharton school.

What can these failures teach us personally?

Both cases are somehow a failure not to recognize sunken cost. They held to their precious traditional assets (which they had already paid for many times) and did not recognize that they needed to move on.
They failed not because they were not able to create the new products that the people wanted or needed (Kodak people did invent digital photography!) – they failed because they were not able to try those new products, even at small scale. They were possibly scared that it might put into question their entire model. And so what?…

Thus two questions for us on the way to become successful in the Fourth Revolution:

Aren’t you holding right now to something just because of the work and effort you’ve put in it? Isn’t it time to move on?
When you have a project that might change dramatically the way you live and the way you receive your income, do you put the project back into the drawer or do you try it first small scale?

Let’s not become like GM and Kodak. Let’s let go of sunken effort and let’s experiment with new things. When do you start?

How the Fourth Revolution brings us from the complicated to the complex

Complex is not the same as complicated. Industrial Age got us used to the complicated mindset. Collaborative Age is the the era of complexity. And here lies a fundamental difference overlooked and misunderstood by so many people.

This is the first of a series of 3 posts about complexity and how we can thrive through it.

watch gears: complicated but not complex! — Watch gears: complicated but not complex!

A watch is very complicated, as are numerous appliances we are using everyday. Yet, its outcome is highly predictable (it’s a watch after all!). We can rely on it to run precisely for days or months in a row. Each component fits nicely, mechanically in a single system. Each component does not have the choice of doing whatever it wants. It is driven by the system to perform reliable its single function.

While in a complex system is also an intricate buildup of many interrelated contributors, there is one main difference: each contributor has the choice, follows its own interest.

Afghanistan powerpoint: image of a complex system — Afghanistan: example of a complex, unpredictable system

Like the situation in Afghanistan, the outcome is difficult to predict, more difficult even to steer in the expected direction if we are one of the players.

Science added another category of complex systems: some purely mathematical systems that include retro-action and multiple iteration loops can have results that become unpredictable (chaotic systems), even if the initial mathematical formula was simple. It is the case of weather and other important systems around us (ref the famous analogy of the butterfly flying in Brazil that can create a storm in the US).

The Industrial Age viewed the world as complicated; it meant that there was supposed to be a way to understand how it worked and there after, predict where it was going. As such, predictability of your behavior and your results in the vast system of production was expected; in exchange there was some predictability in your career development, based on your formal education.

Alas the mechanistic view of the Industrial Age did not resist to reality. We now know that the world is undoubtedly complex. Totally interconnected. And as such, forever unpredictable. Forever impossible to divide in small parts, cogs, that would nicely fit together to create a perfect, predictable world.

Of course, the ever accelerating development of connectivity in the past decades has dramatically increase the complexity of today’s world. We are all now fully inter-dependent, part of a large complex system.

We know now that we are in a complex world, and that just being a cog following instructions is not a sustainable way to success. That major unexpected events are drawing the picture of the world much more powerfully than the succession of daily small changes. That an idea in remote Afghanistan can create a storm in New-York and change forever the lives of billions of people.

Let go of the mindset of the Industrial Age. The world is not complicated, it is just complex!

In the following weekly posts, we’ll examine some properties of complex systems, before finally discussing what we can really do today to thrive in a complex system. Check out next week the followup post on complexity!

How crowd-knowledge dwarfs the obsolete institution of encyclopedia

This is the end of another institution that started with the Industrial Age: news spread a few days ago that the Encyclopedia Britannica stopped its printed edition, having sold only a few thousand copies per year in the last years. It will continue to make its database available online.

encyclopedia britannica 1st edition - 1768

Let’s do some fun maths. In 244 years of existence, around 7 million copies of the precious encyclopedia were sold (or, on average 30,000 per year). During that time approximately 17 billion people have been born and became adults (see for example this article of Carl Haub, the specialist in historical demography). Thus on average, there was one copy of the encyclopedia available for 2,500 people.

In 2008 Wikipedia saw 680 million visitors in the year and aims at reaching this level every month by 2015. 14% of internet users (14% of 2 billion = 280 million users) go on the Wikipedia site according to Alexa.com. That’s one person for 22 living people, or probably approximately one person for 15 adults.

The English version of Wikipedia ONLY contains 50 times more words than the latest Encyclopedia Britannica, or 2 billion words, in roughly 4 million articles (the Encyclopedia Britannica boasts 65,000 articles).

The Encyclopedia Britannica counts less than 5,000 contributors; whereas more than 300,000 editors edit some part of Wikipedia every month.

Crowd-knowledge is here, orders of magnitude more powerful than centralized edition of a paper encyclopedia. In less than a decade, the institution of the encyclopedia has been toppled and made obsolete.

Who said the Fourth Revolution wasn’t here?

How we finally realize that Human Capital is worth much more than Physical Capital

In the Fourth Revolution book we argue that traditional accounting is obsolete. On of the arguments is: it does not measure human capital.

human capital stock in the USA — How human capital weighs more than physical capital (in trillion USD)

Some economists have tried it though at the national level and here is the result, in this figure. Amazing, isn’t it?

There is some debate among economists on the derivation of the human capital value. This one was derived in this article, Human Capital Accounting in the United States 1994-2006. The article is a bit dry, so let’s summarize the basis for the calculation. The Human Capital is measured as the present discounted value of lifetime incomes (market and non-market) of the entire population. Interesting is that in the US, human capital does not increase as a result of higher education, but only as a result of population growth, which is mainly driven by immigration. Education levels remain relatively constant at the moment.

The issue of human capital is thus related to the issue of immigration, as discussed for example in this article, “The human capital imperative, bringing more minds to America“.

In this area, Singapore has gone one step further: faced with a declining local population due to low birth rates, the Singapore government actively scours the schools of South East Asia for clever kids and offers them a fully-paid scholarship, up to their university studies included, under the condition that they stay and work for the first few years of their career. They even enroll a large contingent of Continental Chinese students that way. They certainly hope that these young people will stay and found a family in Singapore. Note that as a country, they actively go and seek gifted kids in remote schools of China! It is thanks to this proactive human resource policy that Singapore constantly increases its Human Capital, the key to the Collaborative Age.

In some other countries, the debate about immigration seems to be from another age. Japan declines because it does not culturally accept immigration.

In the Collaborative Age more than ever, Human Capital is key to economic development. It needs to be increased, both through education and number. It’s the key to prosperity.

Note – this article was initially inspired by Alex Tabarrok’s blog post Human Capital.

The best change programs are simple and applied ruthlessly

Yourself or your organization needs a drastic change? How can you do that?

Too many change gurus and consultants will engineer and recommend large, complex programs. Yes of course, you need to re-engineer processes, communicate, engage with people.

My take: any change effort is 0.1% decision, 10-20% engineering, 80-90% implementation.

Don’t exhaust yourself at the engineering stage. Spend less time designing the perfect change program. Focus on the one thing that needs to change, and design a very simple incentive system to get yourself or your organization moving in the right direction. Remember the elephant and the rider. You want to be emotionally engaging, capitalize on the elephant’s hot buttons to get it moving, and easy.

Then, however, be extremely disciplined and consistent in applying the new, simple system. It is simple, easy to communicate. Repeat, repeat, repeat; communicate, communicate, communicate; act consistently, act consistently, act consistently.

Remember: don’t consume all your energy devising the change. Keep it simple, and emotionally engaging. Keep your energy for the implementation stage. And there, be ruthless in your discipline and how you apply it throughout the organization.

Be more elegant when you ride your elephant!

I love this metaphor from the book “Switch: how to change things when change is hard” by the brothers Heath:

We are like an elephant with a rider on top. Our elephant represents our bodily needs, our emotional pulsions.

The tiny rider on top represents the rational mind.

How does the rider get the elephant to move in the intended direction, without too much frolicking around? That’s certainly not by any large action involving all its strength, by pushing the elephant around (which would be quite impossible). It is by building a relationship with the elephant, by knowing intimately what are the elephant’s hot buttons. And then, it is by providing the small impulses that are needed to show the right direction.

We are so much influenced by our rational Industrial Age approach of action and reaction that we often look for change actions that are as large as the final intended action. The best change actions are those small actions, requiring a small energy but emotionally engaging, that will create incredible, massive change. It is an art to engineer those actions. There are many examples in the book how massive change actions finally had very limited results, while sometime small change actions completely redefined an organization or a community.

Ride your elephant more elegantly. Do not try to force it to move in a direction. Find the right small, emotionally engaging move that will create sustainable, incredible change.

The Education Revolution: a crisis is coming already!

Education is a key institution that will necessarily be fundamentally changed by the Fourth Revolution. Traditional education was created during the Industrial Age to produce people for Manufacturing. Still, today, the education model is already changing, deeply and more quickly than we think. And voices start to be heard on that topic.

Students graduating from conventional education: an institution already obsolete?

Lately, high education had become a very profitable market and some countries like Australia openly develop Higher Education as a great activity sector that also serves to attract foreign currency and talents. Advertisements for Universities is at an all-time high in all South-East Asia countries! At the same time, the cost of education has soared, leaving many youngsters in deep education debt in countries like the USA.

How much is higher education a good investment? The model used to be that investing in a great university would be greatly profitable on the long term, over one’s career. That it would be the safest investment of all. It is not so straightforward today, of course. Some people like Peter Thiel announce that we are in a ‘higher education bubble‘ where education is overrated and its cost will collapse soon. In this article on “the education bubble has popped“, Doug French argues that the profitability of investing in (formal) education becomes more and more elusive as tuition soars and under-employment looms. He also gives some interesting numbers: tuition increasing four times quicker than inflation, more and more credit-based funding (education debt would have outgrown credit-card debt!).

Indeed as we have argued in this blog (see the post “Leave alone the academic executive programs. Go and learn real life leadership! It’s cheaper and better!“), it might be much more relevant today to seek education by creating one’s own startup rather than paying a high range MBA.

Good education was supposed to lead to good jobs, at least at the beginning of a career. More and more authors argue that 1) “jobs” in the traditional meaning of “slots inside an organization that provide a steady income” are disappearing; 2) to find good income in one’s occupation, other skills are needed than those that are supposed to be learnt at school. Daniel Jelski in this post “the three laws of future employment” states that

Law #1: People will get jobs doing things that computers can’t do.
Law #2: A global market place will result in lower pay and fewer opportunities for many careers. (But also in cheaper and better products and a higher standard of living for American consumers.)
Law #3: Professional people will more likely be freelancers and less likely to have a steady job.

As a consequence his advice to students is quite different from what conventional education would advice: follow your passion, work your way into mastery (the 10,000 hours practice), and work on emotional connection and beauty.

The crisis in conventional education can be seen coming. If that is really a bubble, it will hit hard when it will burst. The Fourth Revolution is at work!

Thanks to Laurent Riesterer for pointing out the post “the three laws of future employment“

Educate people, don’t train them anymore

“How many of you believe in training?

You train animals but you educate people”

I found this thought in one book by Alan Weiss, a consulting guru. I noted it because that’s quite deep actually, and it relates perfectly to the Fourth Revolution transformation.

chain production — train for mass production efficiency

Training was appropriate for the Industrial Age. People got trained to do their job more efficiently.

You trained people to do their individual task more quickly, with better quality… And you used carrot and stick incentives to help.

Alas, training is not any more appropriate for the Collaborative Age. Education is much more. Because value is not anymore in people following a written, predictable process to produce something. Now, you need to give people the background, the thinking tools, the inner game to produce effective things, that are worthwhile and of high value.

Education (as in general, higher cultural education) was reserved to a small portion of society. It needs now to be made available to everybody.

And ‘training course’ needs to change in ‘educational event’. And the content focused on getting people to developing their thinking and creative abilities.

When will you change your people’s development strategies to fit into the Fourth Revolution new needs?

A day’s activity in the internet… what will we do of all this power?

Even after my research on the Fourth Revolution I am dazzled by the expansion of the internet. See this infographics by MBAonline.com:

Created by: MBA Online

Did you remember the time where there was no email, no internet, no wikipedia, no facebook, no skype? At the moment I write this post I am sitting in an airport terminal in Doha, Qatar to change flights on a long trip between Singapore and Houston, TX and (for free) I can Skype with my family back in Singapore, exchange with the world, watch an educational TED video and… write by blog on my internet server located in the US (or so I believe…).

I can’t stop to be amazed. What will we do of all this new power?

Successful launch of Project Soft Power concept: having fun around the Fourth Revolution

During a talk given on 6 March, 80 members of the Singapore project management community discovered my new concept of Project Soft Power™!

Project Soft Power and the Fourth Revolution

It is basically a cross over from the Fourth Revolution and Emotional Intelligence applied to Project Management. Do you recognize the slide at the back?

This talk sponsored by the Singapore Chapter of the Project Management Institute was very well received. And more over we all had fun through the exercises that were designed to have the participants discover more about themselves! See here the summary report on SPMI website. Click here to access the Project Soft Power slides on slideshare.

The Project Soft Power book is now in the last stages of production for a publication in May of this year. Or, you can also ask us for a keynote speech. In any case, stay tuned!

Project Soft Power presentation in action - having fun!

Fourth Revolution literacy: do you follow the basic rules for social networks?

The Fourth Revolution is a great opportunity. Social networks are fantastic communication and creation tools. As with all powerful tools, social network can be used the wrong way.

A new literacy for the Fourth Revolution is needed; it will without doubt be widespread in a few years time. Let’s just remind us of some rules that need to be followed when it comes to using social networks.

Mitch Joel in his blog post “keep yourself alive” reminds us about a few:

Don’t link to spouses and children
Don’t publish anything private
Be careful of groups you join (groups are not more private)
Make your acquaintances as close as your friends
Be leery of platforms with open APIs (they give third parties access to the data)

These are already advanced rules, beyond some obvious ones: don’t put your address or phone number, don’t post all your personal data like social security number or bank details…

Some schools start discussing these rules with children. When will they be part and parcel of all basic education?