Institutions and Revolutions | The Fourth Revolution Blog

Just change the work environment to release the potential of your organization!

Being now an independent entrepreneur I forget how many people still live in organizations that are still deep into the Industrial Age. Lately I was visiting an organization in the US and I was struck by the lifeless office.

Long, dull corridors. Light grey walls and dark grey carpets. People each in an individual office with standard furniture, padding away at their keyboard, eyes stuck on their screen. Silence. Few interactions save the weekly shared breakfast. Don’t know who my neighbour is.

Discussing about the next possible pay raise, about the pay grade, moaning about the work conditions and the boss. Moaning a lot.

Stuck in a box, doing the work from 8 to 5. Gone Friday at 1, exactly.

Bureaucracy as soon as I ask for something out of the ordinary (why on earth would you want two colors of post-its?).

I felt like I suddenly was in another world. I was so used to dynamic project open spaces with people moving around, discussing freely, interacting constantly!… Used to people working hard and passionately, where time flies!

Ouch! The worst is, the office I just described is normal to a majority of people. That’s normal to a large number of organizations. Actually it is the norm, anything different is looked at suspisciously.

Hey, there is another life out there! And as I was discussing with the senior management what to do to make the organization more dynamic, it was obvious: break the walls. Put in some color. Do everything you can to increase interaction. Get project teams to sit together instead of having its members sit in their respective departments at the other end of the building. Is that so complicated? No. Is that scary? Yes. That’s probably why I was served the argument of the budget as an apology not to change.

Release the potential of your people. Just create a conducive environment, and you’ll see the change. And above all, don’t be scared!

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 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?

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“

100,000 people are ‘online game laborers’ today, and growing!

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.

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!

And a definite market for “microwork” develops where people implement simple tasks like tagging pictures, removing double pages at Amazon, and get paid a few cents per task, . More on microwork in this interesting article from the Economist on “Jobs of the Future”.

These are not necessarily jobs people would dream of, but they start to provide, and will provide more an more livelihood to developed countries.

Who doubted the Fourth Revolution was not happening?

Another institution under siege from the Fourth Revolution: Universities. Will they reinvent themselves in 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.

stanford university campus picture — 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).

This post has been published early February in a slightly different version on Social Media Explorer: How Google is on the Way to Take over the Higher Education Market, where it has been viewed more than 700 times.

Today, the freelancing market is without borders. Did you realize it?

Today, for relatively simple services (graphic design, translation, virtual assistant, all sorts of website development etc) that can almost be called commodity services, the market is… worldwide. You can hire easily, from your desk, a service provider at the end of the world, North America, India or South America.. it does not really matter. Did you realize it?

Not convinced? Visit Elance or Freelance.com to see how those platforms propose to connect buyers and service providers, and what are all the possible jobs that can be done. Like E-Bay, these companies provide a platform that secures transactions, and they allow to examine the track record of buyers and sellers and the evaluations by previous users. Service providers can also show some samples of their work.

Those platforms for e-freelancing started typically in the early 2000s. Elance mentions a 100% increase of activity in this market in the last year and foresees another doubling in 2012. The overall market can be estimated to be far more than 500M$ in 2011, and will thus pass the billion $ mark in 2012.

Moreover, these services allow talented artists and individuals from emerging countries to take part to the worldwide market and benefit directly from the economy. Clearly that puts also pressure on the prices that can be proposed by service providers from developed countries. This is a fact today: for commodity services, the market is worldwide and that won’t change. The only way to charge higher prices is differentiation and creating longer term, emotional connection with the buyer. And career or business development can also be considered from home, using only internet to sell your services!

I remember how in Europe, a proposed regulation by the European Commission to allow the liberalization of services across borders was a big political issue in the middle of the last decade. Well, it looks that this debate has been made completely obsolete by the Fourth Revolution, at least for those services that don’t need physical work or presence.

In the next post I will describe my experience in using Elance, recruiting a… Argentinian (!) designer to produce the characters I needed for my next book, “Project Soft Power”.

Stay tuned! The Fourth Revolution has not finished to astonish you!

Leave alone the academic executive programs. Go and learn real life leadership! It’s cheaper and better!

What is cheaper? What is better? Going through an academic program to learn how to lead a company or just… do it yourself? Turns out, going out in an entrepreneurial project is less expensive and brings higher value!

I just received an advertisement for an exciting program at Tuck executive education center at Darmouth.

Tuck executive education at Darmouth — Tuck college

It is a nice color booklet including a lot of testimonies from high-ranking Vice-Presidents of large companies. The programs also features some well-known speakers.

Price tag for 3-weeks seminar? 33,000 USD including accommodation; include travel and some costs on top and it comes to a nice 36,000USD or so.

Thing is – that’s quite cheap! Want to go for INSEAD executive MBA? That’s even more hefty – quite more than 100,000 USD!

Companies around the world seem to be sponsoring these programs by registering their promising employees – it is also for them a way to retain them, of course. Isn’t it also a way to keep them in the Industrial Age?

Now let’s look at it in another way. Wouldn’t it be better to give these 100,000 USD to the person and tell them that they have 1-2 years to create a startup and learn by themselves, hands-on, what they need to learn about themselves and building a great company?

When I did my financial projections for my start-up service company, I figured out what my financial risk was, compared to staying in my cozy employed status. I am still relatively young, and I believe the entrepreneurial experience can only increase my visibility, my network and my employability; thus I suppose that I can find a job easily if I decide so. This taken into account, I will earn less, at the start, than being employed; and I have had to commit some funds as start-up capital. So I calculated that my exposure over 2 years (the time I give myself to decide whether that will work for me or not) was 50,000 – 100,000 USD, maybe worst case 130,000 USD – in relative terms, compared to a situation where I stayed employed and I save some money.

So, for the same kind of investment – and it is not money out of my pocket, but the possibility that I might get a bit less money than if I stayed in my executive career – I get a fantastic hands-on education. It is also a similar type of time-investment as most executives MBAs are one year full-time or two years part-time.

And there is a bonus too… if my entrepreneurial venture works, the sky is the limit: not only do I get the education and the experience, much more fun on a daily basis, I might also get a positive return in the form of a great value creation for my clients, myself and my company!

So, my conclusion was simple: dump the academic executive education. Go instead in the real world and figure out how to create and run a company from scratch. For the same price you’ll learn more about yourself, about leading, marketing, selling, networking, than in any kind of academic environment. You’ll be more engaged, focused. Just read books by the teachers of these executive programs to complete your education, that’s all!

It won’t cost you more money. It will bring you much more value in all its dimensions. Do it – get the experience in the real world!

The Fourth Revolution wrecks the society in which it occurs

The title of this post is directly inspired by this quote:

“The major advances in civilisation are processes that all but wreck the societies in which they occur”

– Marshall Mc Luhan, in “The medium is the massage“, 1967

This prescient quote by a visionary author is directly applicable to the Fourth Revolution, a major advance in civilization. The storm of the Fourth Revolution is upon us. Society will undergo a tremendous change. Are you ready?

[source of the quote: “thinking about the social enterprise”, a blog post by JP Rangaswami]

When will governments finally realize that the interconnected economy is already here?

The world acts today as if governments still lived in the good ol’ days of powerful national economic policy.

That’s just obsolete.

The crisis in the Euro zone shows that economies are truly interconnected, even between continents. We know that there will be soon a dollar crisis as there is currently a euro crisis (the same causes, debt, necessarily causing the same effects). The rest of the world can’t just watch doing nothing. We are too interconnected today.

This extremely interesting piece of research about how interconnected private companies really are gives another highlight. Unfortunately the “Big Brother” pitch of the article is I believe, wrong. It is not that a small number of companies would control the world; it is that a limited number of companies are central nodes in the network through the quality and density of their connections. In the terminology of Gladwell, they are ‘mavens’.

The world is fully interconnected — A fully interconnected world

The big economic powers of the previous century are not really economic power in the sense of imposing their will; they are well connected nodes in a worldwide economical network.

Our governments must stop behaving as if we were 50 years ago. The solutions to the 1929 crisis won’t apply today.

We are all interconnected. We not only need an economical coordination at the European level, we need one at the Global level. The Fourth Revolution will change forever the balance of power from the Industrial Age; adjustments will be difficult but necessary. Only with the right coordination of economic policy will their effects be more smooth, avoiding deep, damaging crisis.

Ladies and gentlemen in government, the Fourth Revolution is here. Be proactive. See that we are all interconnected and act in consequence. Will you?

The Great Convergence of the world economy is happening NOW

The economical convergence of the world has started. This graph is extracted from an article by Robert Branche (in French): “Facing the convergence of the world economy”.

OCDE vs emerging countries: GDP per capita 1972-2010 — OCDE vs emerging countries: GDP per capita over time

It shows the evolution over time of the ratio of the GDP per capita of a choice of emerging countries (Brazil, China and India) over the OECD average. There is no doubt in this graph that a convergence starts around 1994 – around the time the Fourth Revolution started, at least for India and China. This happens at the same time than the significant shift in the value creation chain in the 1990’s (see the post “Visualizing the demise of manufacturing“).

This convergence will continue. Ultimately the GDP per capita of China and India will be close (on average) to the OECD countries.

What will be the final outcome? For Robert Branche the outcome will be necessarily, a decrease of the standard of living in the OECD countries by about 50% until 2050. The reason stated is that the standard of living in the OECD is artificially high thanks to low-cost importations from China and India – which will become more expensive. Is that so problematic? It would mean that the standard of living would be back to say, the one the OECD had in the 1980’s. Is that a big issue?

While the worldwide economic convergence will probably accelerate thanks to the Fourth Revolution, the outcome, in terms of standard of living in developed countries, is more debatable. Developed countries will see significant changes in their economy; whether they lean into them or resist them will decide on their ultimate fate. Countries can go down in terms of standard of living very quickly (as in Argentina in the 1970 to 1990’s for example). On the other hand, if developed countries adopt the Fourth Revolution early enough, there is no reason why the standard of living, and the quality of life, should be significantly lowered.

In any case the world will see more shifts of wealth and standards of living in the next 50 years than in the 20th century.

Listen to the warning: let’s lean into the Fourth Revolution. That is the only way developed countries can preserve their future.

Would you guess that people read more or less with digital books?

Today Amazon sells more digital books than physical books. This is a dramatic shift in this industry and publishers struggle to adapt. The struggle of an industry – an institution – seeing its Industrial Age business model crumble should not hide the most important: the actual dissemination of information.

people read more books with e-readers like Amazon's Kindle — e-readers like Amazon's kindle make people read more books

Overall, do people read less or more books than before?

According to this MediaPost detailed article and statistics, people who have bought e-books tend to download and read more books than before. It appears to be statistically significant.

Why is that? For sure, clever marketing by Amazon makes it easy to download and consume more. When it comes to reading, my own experience is that the small, lightweight and convenient size of e-books allows to read in many places like the underground train or whenever there is a short break. And I definitely read even more since I have an entire library inside my Kindle, making a switch from a book to another easy.

So, the introduction of e-books did not kill reading. It increased it, at the same time as it made many non-mainstream or old books available to everybody. And, taking into account the vast amount of other information we read on other media, such an availability of high quality information is unprecedented. It will necessarily be the source of many creative innovations.

Think about it. I can download on my e-reader in less than 1 minute any title available worldwide without the bother of the logistics of sending physical books over (and I am living in Singapore, so this problem is particularly sensitive!). WOW.

Who said the Fourth Revolution is not yet here?