Industrial Age | The Fourth Revolution Blog

Why the Disappearance of ‘Middle Class’ is Linked to the Fourth Revolution

There are more and more converging papers, posts and books about the disappearance of the ‘middle class’. The ‘middle class’ actually is quite a specific concept linked to the Industrial Age – it did not exist before: employees of corporations with a significant buying power and certainty in future revenue and position, that could hence spend in a number of consumption goods and invest in property, own their own house…

It seems quite visible from the available statistics that in effect, the wealth of the ‘middle class’ is diminishing; that less and less people can be described as being part of this group (as shown by the graph above); and that the very characteristics that described it – job security, relatively good buying power etc – seem to be disappearing.

As many authors today, I believe it is a structural change brought about by the Fourth Revolution – and not just the result of increased inequality that would be due by globalization (low salaries elsewhere…). It is due by a shift in value creation. The relatively repetitive and often bureaucratic work of the middle class is increasingly being taken up by automatic systems and soon by robots. Value concentrates in the creative work that gives life to these systems and tools.

This will pose a number of problems to our societies:

the consumption economy is in great part based on the buying power of the middle class
value creation will concentrate on a smaller percentage of the people, which will require a revamp of the redistribution policies to maintain social harmony.

This shift is probably the most critical societal shift created by the Fourth Revolution. Are you ready for it?

Why career management is like riding an absurd merry-go-round

A little useful etymology I stumbled upon – and which explains why career management is about riding a merry-go-round!

marry-go-round with adult — Do you feel you are going in circles on a never ending race? Maybe are you ‘managing your career’ Industrial Age style?

‘Career’ comes from the Middle-Age French carriere (race-course), itself a deformation from Latin. It thus means ‘racing’, a competition in scarcity where the few top positions are reserved to those who will be fastest or the strongest.
‘Manage’ comes from the Middle-Age French ‘mesnager’ or Italian ‘maneggiare’ which was used to mean ‘drive a horse’ or ‘hold the reins of a horse’.

I don’t know why and I associated the two ideas and suddenly I was looking at Industrial Age career management as people riding wooden horses on a merry-go-round, always racing and never getting anywhere. Just going around on an absurd race.

Strange thought?

Where is your current racing on the ‘career ladder’ really taking you?

First hand evidence that our traditional schools are obsolete (Video)

For those of you interested by education or training, the following video is a MUST-WATCH. It explains from where our current education comes from, why “schools as we know them are obsolete, why we don’t need them anymore”. It shows how children can learn collectively from a computer in a brick wall in India, and how a school can be built in the cloud with grand mothers and passionate adults to collaboratively educate millions of children.

It also shows how we can collectively learn much better than by ourselves! “In 9 months a group of Indian children left alone with a computer will reach the level of an office secretary in the West“. Amazing? Scary? How fast do you guess will tamil-speaking children in a remote village in South India learn the techniques of DNA replication in English by themselves? Watch out!

The next time you want to teach a group something completely new, dig a hole in the wall, put a computer with the topic and let them play with it until they get it!

For further insights on the issue of education, TED is curating a page dealing with the educational revolution (Re-imagining School), grouping all the talks about the topic.

Why Conventional Organizations Are Not Adaptable

The basics of the ability of decision-making in uncertain environment is “confidence in the people and the flexibility of systems“. That’s the feedback from decades of military wisdom.

Did you realize that it is exactly the opposite of what large organizations do! They typically:

remove responsibility and initiative from the individual in the bureaucratic and hierarchical organization
build very inflexible systems (anybody has experience with an ERP system?) for the sake of ‘discipline’

It is amazing how much of my consulting work in the field of large complex projects can often be summarized in giving more confidence and empowering the people; and releasing them from the tyranny of complicated and inflexible systems.

I am almost keen to see a bit more of shake-up throughout the world to destroy those organizations of the Industrial Age that won’t be able to adapt because of these two basics principles which they have forgotten. Systems in particular are often used in such a complicated manner that organizations lose all agility to face unpredictable circumstances.

Maybe those organizations thought they could shape the world as a predictable world.

Luckily giving back power and leadership to people is what worked and what will continue to bring us to the next Age. Why did people forget such basic principles during the Industrial Age illusion of scientific management?

Quote from General Vincent Desportes in his book “Decider dans l’Incertitude” (in French)

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.

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.

Old Industrial Age Cliches Die Hard. Kill them Faster to Transform the Economy!

As I was travelling in France a few weeks ago I was repeatedly struck by how Old Industrial Age cliches die hard – and in particular in ‘developed’ countries.

Lets' Reindustrialize France (2012 Union poster) — Lets’ Reindustrialize France (2012 French trade union poster)

Trade unions claim that the country should be re-industrialized (poster on the right I saw on a building). That would be fine if they did not mean rebuilt large manufacturing complexes.

Authorities and traffic forecasters still believe that people take their leave all together when the factories close (which is of course, less and less true – no wonder traffic predictions are less and less accurate!).

In the midst of the crisis, the government plays with the idea of creating large manufacturing giants, the key to wealth and prosperity. Is it really?

I have two main objections to this:

First, in the Fourth Revolution, as argued repeatedly in this blog, a nation wealth and prosperity will not come from its manufacturing proficiency, but from its creativity, networking and knowledge enhancement capabilities. There will always be cheaper places to manufacture. There won’t be so many places to create value.
Second, frankly after I spent as a student a one-month experience in a car manufacturing plant, I don’t see working in a manufacturing environment as the dream of my life where I would encounter the development opportunities I dream of! So I don’t necessarily wish this to be the future of the entire next generation.

Diving into the Fourth Revolution is not easy. It is not easy at a personal level because instead of waiting for someone to give instructions we need to find out how to create value for others. It requires to change one’s mindset.

Durations of bankruptcy by country (the Economist)

But it is not by dreaming of rebuilding smoking stacks of large manufacturing plants that the economy of developed countries will be saved. It is by releasing the creativity potential of the people!

One of the best papers I read on that lately was from the Economist, “les Miserables“, or how Europe consistently discourages entrepreneurs (published July 2012).

Do you really release the potential of your people when they get a life sentence when they fail (see the graphic on the average duration of bankruptcy)? Do you think they will take the risk to fail – a risk inherent to any creation?

Stop dreaming about going back in time to the Industrial Age. Step forward into the Fourth Revolution or you’re doomed.

Allow people to fail. Allow people to be flexible with their life. Create the infrastructures and institutions that will free people while giving them a guaranteed minimum safety net at a reasonable price.

The opportunity is now. Crisis are time where things can change, where things will shift. The current crisis might be the one opportunity for developed country to do the transition. Don’t miss it.

The Hospital – another Institution that will not survive the Fourth Revolution without a deep transformation

The modern hospital is a Health Factory, and Institution of the Industrial Age. We seek there maximum effect of scale for producing a product called “health”. It is centralized, and even more so that the increasing complexity of modern healthcare, coupled with easier transportation, leads to a concentration of facilities and the disappearance of smaller, more local healthcare centers.

Hospital, the health factory — The hospital, the health factory, will be replaced by new institutions

Hospitals are there to solve situations where the sickness or the trauma is already declared. Without asking its opinion to the patient, because doctors have the knowledge of what needs to be done, it brings people into a system designed to be as efficient as possible in healing them. Tools designed by science – efficient medicines- are used.

How will healthcare transform through the Fourth Revolution? Like in other institutions of the Industrial Age, many of its foundations will be shaken and buckle:

through internet, patients know a lot about their conditions and doctors cannot handle patients like they did before – today they need to open a conversation with the patient, listen and convince
the ability to record data on iPads and all sorts of modern communicating devices makes home monitoring much easier than before
the same apps on ubiquitous devices can play an increasing role in prevention and monitoring, thus preventing cases to become so severe that hospitalization is unavoidable.
soft medicines, traditional medicines and other aspects of everyday life like one’s diet are recognized as increasingly important and powerful in preserving health; and they do not happen in hospitals

Where the Industrial Age concentrated health production in a factory called an hospital, the Fourth Revolution will again decentralize the production of health in the palm of everyone’s hand.

The medical world is one of the most conservative. Will they realize that this wave of change is coming to them before the hospital institution succumbs to the crushing forces of the Fourth Revolution?

Stop disseminating the image of the factory worker as a representation of the economy!

Right now there are a lot of articles and communication in the media about employment and unemployment. I’m really struck how this topic is presented.

Did you remark how much this communication is reinforcing the “Industrial Age” view of employment? And, be it on TV or in the press, the images and videos associated are always showing factory workers.

For example the enclosed picture is just extracted from the New York Times. It was a paper about the Italian economy. But – the Italian economy is never going to recover through more factory employment!!

Let’s stop it! Factory workers are now becoming a minority. It’s not where the value lies, nor where the good paying jobs lie!

The media is still reinforcing the Industrial Age mindset of jobs being factory employment jobs. When will the media show people in a service environment, when will the media show K.E.E.N. at work without a tag mentioning how these are strange animals?

Solutions to the national debt crisis 2/2: reviewing our tax base

Our current tax base will soon be obsolete. It needs to be replaced by taxation of our new collaborative capabilities.

During the Agricultural Age, tax was based on a share of the crops. When the Third Revolution came – which would eventually lead to the Industrial Revolution, a new value system was created that soon dwarfed Agricultural value: Industry. The governments which had relied since centuries on agricultural tax became weaker and weaker. They had to get money lent to them by the new ‘bourgeois’, who created value by trade or industry. The system became less and less stable as the traditional governing elite became relatively poorer and poorer, as industrial value increased orders of magnitude above agricultural value.

Today in developed countries, agriculture represents 2 to 3% of the GDP. Even if it was taxed entirely it would not represent much of the 30-50% which is swallowed by taxes and social security payments!

Today, we are again in the same situation. Our tax system is mostly based on Industrial Age value. A new value production system has been created with the Fourth Revolution that is expanding and that will eventually dwarf the Industrial Age value. The only way to get out of this conundrum is to change our tax base to effectively tax the Collaborative Age value! This is going to be difficult immediately because our accounting systems which date from the Industrial Age do not account for it.

The Agricultural Age example also reminds us that tax is not necessarily only money, it can also be in kind, including the time of people doing certain activities for the public good.

The solution is thus not to increase tax the Industrial Age way. It is to create new ways of deriving a share of the tremendous value created by collaboration for the public good. Because collaborative value is not linked to geography, countries will find it difficult to create such new taxes on their own. The solution needs to be internationally agreed. But that is the only possible way forward to avoid our governments to become relatively poorer and poorer.

The challenge is huge but so important for the stability of our societies that it should be taken upfront. Do you have ideas on the matter?

The bureaucratic entanglement (part 1)

Bureaucracy is stifling entrepreneurship. While it looks like rampant redtape is there for all the good reasons, it is stifling bureaucratic companies to death. Entangled in their procedures they will one by one topple over.
Open, fluid organizations based on decentralized accountability will take over.

In the industrial age, where communication was scarce and large companies based their competitive advantage on information management, bureaucracy was all about making the organization more efficient. Bureaucracy was the essence of the corporation.
Today where information management is inexpensive and can be done by anyone with an internet connection much more effectively than any bureaucratic organization, it is obsolete. The quest for efficiency of commodity production has been replaced by the quest for effective creative solutions.

As often with Fundamental Revolutions, what was the life-giving system of the previous age has become gangrenous.

Every day we meet bureaucracy: “sorry, that is not the standard operating procedure“… “I need to ask permission first higher up“… “that’s a good idea but it does not fit in the box“…

Sorry, but the game is over. Get rid of the bureaucracy or you’ll die. And slow death is generally the most painful.

Wake up. Reject bureaucracy. Do something today for others in your company without asking permission first. You’ll see. It’s great.

The 21st century enlightenment – the Fourth Revolution in action

Have a look at this very good video on the 21st century enlightenment by RSA. The approach is very much aligned with the Fourth Revolution concept and approach.

It is also a very interesting view point on the need for an empathic civilization and what are the institutions that are needed beyond the Fourth Revolution.

The video shows very clearly the limits of many values and assumptions of the Industrial Age. Beyond materialistic possessions, what makes us really happy? Are our Industrial Age quests for progress, justice and freedom really what we need?

The video finishes on this quote from Margaret Mead: “A small group of thoughtful people could change the world. Indeed, it’s the only thing that ever has.”
Margaret Mead lived before internet and cheap long distance interactive communication. Today, a small group of people can assemble beyond the oceans and the continents in the virtual world. More than ever before, thoughtful people can get together. And change the world.

When do you start a group of thoughtful people?

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