Institutions and Revolutions | The Fourth Revolution Blog

Why Higher Entrepreneurship Activity is Not Good News

The statistics about entrepreneurship in the US as brought together by the Kauffman foundation are clear: there is more people creating businesses when people have difficulties to find a job. Or, in summary, entrepreneurship is in majority a defensive move, contrary to what popular lore would tend to spread.

KAUFFMAN-INDEX — The Overall Entrepreneurship index shows that there is more entrepreneurs in tough economical times

The data is clear: it is in a bad economy that the entrepreneurship ratio is higher, such as between 2009 and 2013 (see figure).

Similarly, immigrants have entrepreneurship ratios that can be twice as high as people born in the US, and people with high school education or less are also more frequently starting their own business, etc. In particular industries that go through tough times such as currently the Oil & Gas industry, the rate of business creation seems to increase significantly.

If a large amount of business creation is thus defensive, there is no surprise that many fail, due to the lack of preparation of the owner, or simply due to the fact that when times get better, business owners come back to more traditional employment.

Contrary to what most people think, the dynamism of entrepreneurship is not necessarily the sign of a dynamic economy; it could be the contrary. Some healthy level of entrepreneurship is necessary for economic development, but a higher ratio might not be good news.

All figures in this post from the Kauffman report.

What Collaborative Age Education Should Concentrate On

Education requires a major revamp nowadays with the Fourth Revolution. We don’t need anymore the Industrial Age schooling that was designed to educate the resources needed by the industry (in summary, compliant and literate).

Collaborative Age requires people that are collaborative, creative and know how to deal with the vast amounts of data and information available at everybody’s fingertips. This excellent paper from ParisTech review ‘Education Series – 2 – New knowledge, new know-how: skills for the 21st Century‘ summarizes some essential traits of future education:

Managing data to find useful information
Maintaining and developing creativity
Navigating diversified knowledge spheres

I think this paper forgets about a very important aspect of future education, which are the soft skills require to collaborate effectively. Industrial Age education promoted individual excellence (for example though the typical exams); Collaborative Age education needs to promote teamwork and team success.

In any case, “Developing a culture like this requires that the learners be not afraid to fail. […] If you want to discover new ideas, you must be prepared to take risks and to make mistakes. […] In the same vein, schools today do not value differences. In many instances, there is only one right answer to a question, whereas a creative approach enables students to propose new answers to a given problem, seen from a totally different angle or point of view. Conformity must be abandoned and intellectual curiosity stimulated“.

How Salaried Work in Large Corporations was a Historical Exception

We need to remember that salaried work in large corporations as we know it is an invention of the Industrial Age. Before that, most craftsmen were on their own, selling their services. They learnt by being an apprentice for a while and by travelling around places to gather the best practices.

craftsman middle-ages — Like the craftsman in the middle ages, the KEEN is nomadic independent worker

What is happening now on the labor market can be seen in fact as a return to a situation quite akin to the previous Agricultural Age for learned ans skilled labor: independent craftsmen that move from project to project and learn through experience and travel.

Of course there are quite a few differences: many valuable crafts are now intellectual and not necessarily manual, a much larger proportion of total population is sufficiently learned to enter the category, apprenticeship still exists in a somewhat less formal way in the form of years of experience and mentoring, etc.

The interesting part is the similarities: craftsmen need to know how to market themselves and not just be good at their craft; their value increases with international exposure and nomadic habits; they are engaged on a project basis rather than a continuous basis; and this creates a higher inequality in compensation, where common skills become a commodity and rare skills are highly valued.

Salaried work in large organizations governed by scientific management methods is what we consider normal employment. In fact it will just be a blip in the history of labor relations. Let’s make the best of it and look in the future of the independent craftsmen that join to realize incredible projects like the cathedral builders of old!

You can continue this exploration of the new labor contracting approaches in a very interesting paper in ParisTech review about the new forms of employment (in French or English).

How the Concept of Citizenship Is Shifting

I explained in the Fourth Revolution book how the concept of citizenship would have to evolve to face the reality of the onset of the Collaborative Age. The news from Estonia last year about the launch of the e-citizenship program is one step in that direction.

e-citizens get registered and can then use their pass for a variety of purposes including relation with the public service, authentication of documents, running a business in Estonia from abroad… (more on the current benefits on e-estonia.com!).

Of course that status cannot be used to enter Europe physically or vote in Estonia, but the experiment – which Estonia probably believes will be extremely beneficial to its economy – basically creates a virtual country with a much large citizenship, and possibly significant value creation.

This is just the start of the blurring of the lines of the nation state as it was formalized by the Industrial Revolution. I can’t wait to see what this experiment will lead to!

Some more links for those of you who are interested: E-citizens unite: Estonia opens its digital borders (New Scientist) and a detailed link about users on the official website.

How Public Services entered a Competitive Market with the Fourth Revolution

We used to think of public services as activities outside of the competitive landscape. That’s maybe true in a country, but the new situation brought by the Fourth Revolution is that’s not true anymore: public services are in competition between countries.

Tax rates OECD 1981-2012 — This schematics of effective corporate tax rates in the OECD shows the effect of competition between public services in the past 30 years (source: taxfoundation.org)

Effectiveness, performance of public services is today the most important competition parameter when it comes to economic performance. Countries that are not good at it do already suffer on the global market. In addition this competition puts a lot of pressure on tax rates (in particular at the corporate level) impacting further those countries which public services are ineffective.

The problem is that because this competition is somewhat remote, public services often do not realize this new situation. Finding a way to show them how competition is impacting the national welfare should be a great incentive for improvement. Unfortunately, defensive reactions against globalization often impede these discussions.

Yes, public services are now on a competitive market. They need to increase their effectiveness for the sake of national welfare. Let’s not shrink from it, and just realize that this situation will be even more real in 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.

“About 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.

How the Collaborative Age Requires Global Political Action

I very much enjoyed reading the popular book ‘Capital in the 21st Century‘ by the French economist Thomas Picketty. Of course, I really enjoy the historical approach as I believe that historical perspective can give us really valuable insights into the major changes in our societies – that is quite a similar approach to the approach in followed in my book, although of course I had less time to dwell and research into historical economics series!

I really recommend this book for learning about inequality changes throughout the Industrial Age, and in particular in the 20th century. The book clearly demonstrates that our societies are facing today a particular political challenge regarding both rewarding success and entrepreneurship, and minimizing inequality, in particular when it comes to inter-generational inequality.

One point of the book which is particularly controversial is that the solution for Picketty is clearly some worldwide action on the tax structure. Today it is not possible any more for a single country to develop a tax system that would resist the tendency to inequality, as the financial system is so globalized (re-read our post on When will governments finally realize that the interconnected economy is already here?). There lies precisely one particular issue that I noted in the Fourth Revolution book – political action now needs to be global. We can hide between a super-power that tries to do all the work by itself (with some noticeable success even on the tax side, but limited to its citizens only).

Our political systems need to grow. Nations are outdated. Europe is necessary, and not even sufficient. Global policies must be put in place to be successful in our transition in the Collaborative Age.

Why We Underestimate the Change Brought by The Fourth Revolution

It all fits into an interesting quote by Bill Gates: “We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten“.

That quote takes a particular taste coming from a person that is deemed to have missed, when it comes to Microsoft’s strategy, many of the key changes brought by technology in the last decade.

Our forecasting ability is exceedingly limited. Change takes it time to transform the world, but it will roll on inevitably. Today, I believe we totally underestimate the changes in our daily life, our institutions, our organizations, that are being brought by the Fourth Revolution. These changes will be tremendous. As Gates says, let us not being lulled into inaction, but let us anticipate what is coming. It is only at this condition that we will benefit from it.

Change starts now. When do you start?

Why the Job Market Transformation Requires You to Develop Your Online Reputation

The value of inter-mediation for job search is moving towards reputation management. While before it was mainly making the job or the applicant visible and creating the connection, today’s platforms allow the potential employer to check the applicant’s reputation. This explains why once-major site posting players such as Monster.com etc are now being overtaken by sites that add reputation measurement.

Job postings board — Old-fashioned inter-mediation: a job posting board

That is one of the most interesting conclusions from Valeria Maltoni’s excellent post where she summarizes what is happening now on the front of job posting and job search, with different types of web-based sites and engines.

This reputation check happens in several ways:

on social-network based sites like LinkedIn, through the person’s network and reputation; and possibly on what the person published or linked as well.
On freelance hiring sites, reputation is acquired through the successive feedback from clients at the end of the jobs, which in effect rates the reputation of the person.

While providing the reputation data was once a service provided only by a few head-hunters for executives, this value of inter-mediation is now expected by most future employers and for most types of jobs.

Enhancing once’s reputation on the web is thus not any more an option, it is mandatory if you want to be successful in tomorrow’s marketplace – and even for conventional jobs!

How Scientific Publishing Gets Deeply Disrupted by the Fourth Revolution

Scientific Publishing – the system whereby scientific papers are peer reviewed and published by specialized publishers, is being deeply transformed by the Fourth Revolution. “Watch This Multi-Billion-Dollar Industry Evaporate Overnight” says Dylan Tweeney on a post, describing how open publishing and reviewing is profoundly revolutionizing the scientific paper publishing industry.

scientific paper and journals published by a handful of intermediaries - soon a thing of the past? — Scientific paper and journals published by a handful of intermediaries – soon a thing of the past?

One of the main issues for the interested dabbler in science is that it is almost never possible to access important scientific papers without paying significant fees. I am not a scientist, merely an interested member of the public, and this barrier is a barrier to spreading knowledge in the wider society. And more – why would a small number of publishers benefit when most writers and peer-reviewers do the work for free? Scientific publishing sometimes looks like an oligopoly held by a few entrenched publishers.

Sites like Academia.edu propose to change fundamentally the balance of power in this industry, and basically to wipe out the intermediaries – publishers – which added value is now squashed by the internet. In their latest blog post about reaching the bar of 10 million users, the founder states “It would be a great thing if we could get every science PDF ever written on the internet, available for free. There is a lot of work to do before we make that vision a reality, but this 10 million user milestone is a good start”. A good start – we can already predict that within a few years, the entire system for producing, reviewing and making science available will be transformed for the better of humankind!

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.

For 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.

Why Internal Stability is So Important in an Unpredictable World

Following up on an idea from Robert Branche in ‘Les Radeaux de Feu’ (only available in French), living organisms have organized themselves in the face of the inevitable increase in unpredictability of the world by increasingly developing internal stability.

penguins — Penguins maintain internal stability (homeostasis) independently from the external conditions – which can be very unpredictable

This is the case very visibly in mammals: they are clearly the dominant species, they have resisted to many cataclysms, and they are at the same time the animals that maintain the most stable internal environment with a constant internal temperature, glucose levels etc. This is called homeostasis.

Robert Branche takes this observation in the realm of organizations, and concludes that homeostasis is a necessary condition to thrive in an ever more unpredictable world: internal stability is necessary to properly manage external changes. It is important to maintain that internal stability and not let oneself be too much driven by external conditions.

This comes with a warning however – according to Robert, “the existence of internal order and rules must not reduce uncertainty, but make its development and acceptance easier“. The organization should not disconnect itself from reality for the sake of maintaining its internal stability.

Still I find this idea very valid that the most successful organisms and organizations thrive in an evermore unpredictable world by maintaining internal stability, which gives them the capability to respond instead of just reacting. How stable is your organization internally in the face of external changes?

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