In this blog, we’ve argued that companies ought to adopt social media to release the creativity of their organization. That it is difficult (see for example “why organizations don’t implement virtual social networks“) but companies that will succeed in this transformation will reap fantastic results.
BASF success story in adopting social media
There start to be numerous stories of large companies being very successful at engaging their employees into internal social networks. Dion Hinchcliffe is writing a series of short case studies: see the case studies for BASF, Yum! brands, Alcatel-Lucent, Cemex. You’ll note it is not just companies at the cutting edge of IT technology but real brick-and-mortar companies. In each case, after due preparation, the engagement of employees has been noticeable. These companies are still to experience fully employee’s self-organization and initiative, but they are becoming close. How will they react when employees will take significant initiatives? Time will tell. For sure, they are well in advance compared to others and that should give them a significant competitive advantage.
And what’s the status in your company? Have you already setup and spread your internal social network? What are you waiting for?
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.
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.
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.
In the Fourth Revolution book we argue that traditional accounting is obsolete. On of the arguments is: it does not measure human capital.
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.
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.
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.
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?
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?
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!
The Fourth Revolution also creates revenue opportunities for the citizens of emerging countries in more surprising ways than being service providers for commodity services that still require creativity and intellectual initiative.
A game parlor in China
According to a World Bank report, the market of gaming-for-hire, where people get hired to play games and earn rewards or virtual money on behalf of richer players living in developed countries, was worth… 3 billion $ in 2009. In China and India alone, more than 100,000 “game laborers” would be playing day-in, day-out to be able to earn precious tokens, levels and virtual treasures to resell them to richer players that don’t want or cannot put in the time!
Two Google-related university teachers have just done a mindblowing experiment that overturns conventional university education.
We know that the Fourth Revolution will overturn most institutions we’ve inherited from the Industrial Age. The latest to date: Universities.
It’s still only a precursor, still it gives us the direction for what will happen in the next 10-20 years: the first online course from Stanford University, a course on Artificial Intelligence, has been given late 2011. The mindblowing detail of this experiment that ended up being a revolution is given in this post by Eric Salmon, “Udacity and the future of online universities“. Unexpectedly, more than 160,000 students from all over the world registered and the professors had to setup a dedicated website!. Extracts from the post:
“There were more students in his course from Lithuania alone than there are students at Stanford altogether. There were students in Afghanistan, exfiltrating war zones to grab an hour of connectivity to finish the homework assignments. There were single mothers keeping the faith and staying with the course even as their families were being hit by tragedy. And when it finished, thousands of students around the world were educated and inspired. Some 248 of them, in total, got a perfect score: they never got a single question wrong, over the entire course of the class. All 248 took the course online; not one was enrolled at Stanford”
WOW. WOW! And it’s not finished:
“The physical class at Stanford, which dwindled from 200 students to 30 students because the online course was more intimate and better at teaching than the real-world course on which it was based”
Read the rest of this mindblowing post! And right now, these teachers have decided to create a new online university, Udacity, which will propose soon online courses on a number of subjects, IT-related mainly.
So, what is really new? For some years already, large universities have made their courses accessible on the internet (see for example, Stanford Engineering Everywhere or MIT opencourseware); by this we mean the course material.
An institution under siege: University; here, Stanford campus
However, the lectures have never been given online, nor have students be graded or have taken exams exactly like if they were in the class. Sure it just got tried – and it works!
As many Industrial Age institutions, the classical university institution is now under siege. Sure, there will be a few more years before we’ll see macroscopic effects: this experiment has been done by IT-savvy professors who also work at Google, for IT-savvy students; it will take time before this spreads to the entire faculty and all subject matters.
Still, the university institution is in question and will soon be exactly in the same conundrum like physical newspapers or the publishing industry are today. Their economic model will become unstable because it is funded by big Industrial Age corporations that seek to produce commoditized degree-holders (see the blog post on “Leave alone the academic executive programs. Go and learn real life leadership! It’s cheaper and better!“). The logic of geographical concentration of university to enhance communication is obsolete as we have just seen demonstrated. So, be ready to see big changes. And Google is at the forefront of the new online university (the two teachers of that particular course are also working at Google), so that we can expect that Google will see the interest of reinventing the business model, leveraging lower fees to a much larger number of students.
Should the current universities not reinvent themselves in time (which is probable in view of the fate of most institutions when comes a fundamental revolution), other players will replace them, and they will disappear in the heap of Industrial Age institutions that did not manage to transform themselves…
If you want more in-depth analysis, more comments on this revolution in Alex Tabarrok’s blog: The Coming Education Revolution (August 2011) and Udacity (January 2012).
In high-tech, breakthrough technology appears to be negatively correlated with R&D expenditure. In this amazing article, how Apple disrupted its market on a shoe-string R&D budget, we see how R&D expenditure (relative to the revenue of the company) does not correlate at all with market breakthrough, on the contrary.
R&D as percentage of net income for technology companies
Here is the curve given in the post. Other examples are developed in the post itself like Microsoft – high expenditure, low results.
We know that with the Fourth Revolution looming, the conventional R&D system is broken. The “R&D factories” that were created during the Industrial Age can’t produce the disruptive output we need to make a difference in the world.
As an other example, pharmaceutical companies are also suffering from the obsolescence of the former model where pumping money in R&D would automatically deliver a blockbuster later on.
What is the appropriate new model for R&D and breakthrough innovations?
A first part of the answer could lie in the ‘lean startup’ movement which is currently very trendy. What is the concept about? It says, basically, that prototyping is cheap today. Don’t spend years developing a perfect product you believe the market wants. Come out as soon as possible with a workable product, test your product as soon as you can on the market, and iterate like mad. Apple does exactly that: their products are always missing something that will come in the next iteration. And in the meantime they get plenty of feedback on what to improve.
A second part of the answer will lie in “Open Innovation” or “Crowd Innovation” as soon as it will have found an effective model.
Here is the conundrum: effective R&D (in the sense of market breakthrough) costs 10 times less and is 10 times more effective that what you think.
Should you do more of what you’re doing now or seek a new model for R&D, a model that will bring you through the Fourth Revolution?
It is very simple: after opening an account for free, I put in a one-page description / specification of the job. After 72h I had already 15 to 20 proposals from contractors. Each of them had a link to their previous work so that I could see whether I liked the style; they also proposed a price. Contractors were from everywhere: Europe, USA, South America etc…
After a few days I finally made my choice for a contractor located in Argentina. After two weeks of collaborative work online (the graphic designer sending rough sketches, me commenting), I finally got what I needed, 5 characters to illustrate my book.
Project Soft Power characters
Elance.com secures the payment and delivery process and gives a lot of information on the contractor’s ratings on previous jobs, the comments of the previous clients etc, which is really helpful in selecting the contractor you need. Actually it appears there are many companies from emerging countries that seem to derive much of their income from platforms like Elance.com.
You are following this blog, so I know you understand what the Fourth Revolution is. Still even I can’t stop to be amazed at what we can do today with a computer and an internet access. Do you realize, I hired in less than one week a contractor who worked for me from the other side of the planet, in Buenos Aires, Argentina and it was like he was working close-by!
As I just arrived in Singapore I don’t have the network of local contractors yet. It is at a point where I won’t even look for a graphic designer or a translator locally! I’ll just go online and hire on the global market!
No profession is really protected anymore from the Fourth Revolution. Borders don’t really matter much.
And consider your own market, your opportunity field: it is worldwide, wherever you live. Did you realize it? When will you leverage on it?
PS: Wonder what these characters mean? I will share with you in a future post the five roles of Project Soft Power!
