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In 1914, Winston Churchill declared business as usual “the maxim of the British people” in the face of the First World War. This was the era when late modernity had just started. Business as usual was a remedy for the threat of the times. And it was emblematic for the Industrial Age: business was predictable and followed a linear path, with low uncertainty. And that held true, despite of the disruptions of war.

In 1987, Black Monday heralded the end of business as usual, with the largest stock market drop in a single day so far. Jay Schmiedeskamp, back then the director of economic surveys at Gallup, commented:

This introduces uncertainty, and uncertainty is the enemy of business as usual.

Two years later, the Iron Curtain fell, and late modernity ended. But uncertainty remained, and today it’s just a basic condition of the world we live in. Business as usual has turned from friend to foe. In 2016, Martin Zwilling wrote:

In this era of accelerating change, business-as-usual is the enemy of every business, new and old.

When uncertainty is the norm, it spells the end of business as usual. The late sociologist Zygmunt Bauman characterised this world, in contrast to post-modernity (a concept he rejected), as liquid modernity, where

change is the only permanence, and uncertainty the only certainty. A hundred years ago ‘to be modern’ meant to chase ‘the final state of perfection’ — now it means an infinity of improvement, with no ‘final state’ in sight and none desired.

Hence, work has turned from business as usual to temporary projects; from repetitive industrial labor to ever-changing assignments. Uncertainty is built-in. Bauman describes liquid modernity as software-based, and that is both an apt metaphor and an accurate description.

The business world is now software-driven

Not only is software eating the world, it is also the tool of choice for our liquid modern societies. Since software can be adapted and changed fast, it responds to uncertainty while creating more of it. Much of the business world is now software-driven and itself drives software.

To a large extent, software and machines now carry out what once was business as usual. This way, it vanished from our sight. Work has changed tremendously. It now means dealing with uncertainty. What once was the responsibility of management is now spread over the whole company, and beyond.

Everyone needs to deal with uncertainty. We now get paid for it. Management in its classical, industrial shape is obsolete. We need to answer questions wherever they occur, instead of delegating answers to a hierarchy of decision makers. This simply takes too much time. We must make decisions in real-time. Every employee is now a decision maker.

Thus, we counterbalance uncertainty with ad-hoc, temporary, volatile and fugitive certainty that changes as fast as we need it to change. Keeping this balance is now our business as unusual. We are creating uncertainty, and we are dealing with it.

Everything turns into services

This can only work within and through systems, with and through communication. These systems are constantly reproducing themselves, and they are constantly changing. Change and reproduction depend on each other: no reproduction without change, no change without reproduction.

Systems reproduce and change themselves through communication, the basic process of social systems. Communication is always selective, as a synthesis of information, message and understanding. To deal with uncertainty, selection is key.

Selection reduces uncertainty through the reduction of complexity, at the price of introducing new uncertainty. A selection is uncertain since it may fail to reach this synthesis. Communication is inherently risky. But risk is uncertainty we can measure and thus manage.

Software and uncertainty in combination turn everything into service(s), including products and work itself. Software and machines take over whatever can be automated and thus made a service. Hence, they reduce uncertainty to risk. What can’t yet be automated is the uncertain part: imagination, creativity, care, social and emotional intelligence, to name a few.

Services are predictable for their users, since uncertainty is absorbed by the service provider. Work turning into a service means the same for the workers: they have to absorb uncertainty, in their daily work as well as with regard to their role, career, status and income.

That’s the end of business as usual.

Photo by Evelyn Mostrom on Unsplash

Change comes either too fast or too slow, depending on what’s changing and whom you ask. If you ask Fridays for Future about reducing carbon dioxide emissions, you’ll learn that it’s not happening fast enough. If you ask commuters who drive Diesel cars and struggle to pay the rent, they’ll probably hesitate to welcome a quick rise of energy prices.

Our world seems to change fast, but is it changing too fast or not fast enough? Depends on whom you ask.

It’s now widely accepted that our world is shaped by volatility and its siblings uncertainty, complexity and ambiguity, or short: VUCA. Volatility is considered high, and this means rapid change, though not necessarily progress. It can also mean the pendulum swinging back and forth faster, or with greater amplitudes.

In the political sphere, volatility increased dramatically over the last years. The middle ground is shrinking, while the extremes on both the left and the right, as well as authoritarians, are gaining steam. Globalisation and tribalisation put pressure on our political systems.

Low volatility implies higher risk

At the same time, the financial markets have shown relatively low volatility. This is commonly measured by the VIX, the CBOE Volatility Index. In times of financial crisis, like in 2008/2009, the VIX peaks. But for most of the past decade, it has been surprisingly low. Or maybe not surprisingly, since we’ve seen a very long bull market now, with stock prices rising to new all-time highs.

Paradoxically, this low volatility implies higher risk ahead. At some point, the bulls will cave in, ending the rally.

Financial markets trade the future. Every investor expects returns on his investments. How quick these expectations change is a key factor for volatility.

In general, volatility isn’t well understood. That’s another paradox in a supposedly volatile world. It can mean two things: either we don’t understand our world, or our world isn’t as volatile as we think it is.

A third possible explanation is that we live in a bubbly world. Overblown expectations lead to bubbles, and at some point these bubbles burst, leading to sharp market corrections, like the bursts of the dotcom bubble in 2000/2001 or the housing bubble in 2007/2008.

Deflating the carbon bubble

These days, there is a growing notion of a carbon bubble, with the assumption that public companies based on fossil energies are still overvalued. Since the threat of climate change will enforce a quick decarbonisation of the industrial world, assets like oil and gas and the corresponding infrastructure will quickly lose their value.

If we look at the market capitalisation of Exxon Mobil for example, this has already started to happen. In the second quarter of 2013, Exxon Mobil was still the most valuable public company in the world. In 2018, Exxon Mobil left the Top Ten.

We can even attribute the fact that Saudi Aramco is now the most valuable public company to the foreshadows of decarbonisation. With the IPO of Saudi Aramco, Saudi Arabia started to unload some of its inherent risk and to build up new sources of wealth for the oil-rich country.

If there is a carbon bubble, a lot depends on whether it will deflate slowly and orderly, or quickly and chaotically. A quick and chaotic burst of the bubble will provide for another spike of volatility, and probably a big one, since our Western civilisation pretty much depends on fossil energy.

The world definitely can change too fast. But will it change fast enough?

Another hockey-stick

The financial markets are quite good at anticipating future changes. And they also drive these changes, since they allocate capital where expected profits are reasonably balanced with the associated risks.

The anticipated risks of climate change already lead to reassessments and disinvestments, like Saudi Arabia beginning to sell their big oil company, or US coal companies going through chapter 11. It was always clear that oil is a product with limited shelf life, think peak oil. The same is true for coal and gas.

In his latest book, Jeremy Rifkin cites studies showing that the carbon bubble is likely to burst by 2028, causing the collapse of the fossil fuel civilisation. This is a major sustainability problem. Rifkin advocates a Green New Deal, an idea that the new leader of the European Commission, Ursula von der Leyen, now also pursues.

We’ll probably see another hockey-stick, or S-curve in the long run, on the way to a low-carbon future. For the last 50 years, change was slow. But at some point, it will tip. The carbon bubble will burst, either gradually or with a great shock and high volatility.

In either case, the digital revolution will look tiny in comparison.

Photo by Marc Sendra Martorell on Unsplash

A business that’s not sustainable is worthless, at least in the long run. Over the last couple of years, the business world came to a better understanding of this maxim. The classical family entrepreneurs were always motivated by a long-term perspective, since they aimed to create value for their children and grandchildren, not only for themselves.

But the regime of shareholder value led to a breathless short-termism, since value was predominantly measured by the stock exchange and by quarterly results, at the expense of long-term interests. Since none of the digital giants were short-term plays, their stellar rise contributed to the downfall of the shareholder value ideology.

Jeff Bezos, for example, continues to explain to his shareholders that Amazon is investing in long-term business value. 25 years after he founded his company, Bezos thinks it is still in its early days. Apple, Microsoft and Google have been around for a while, and even Facebook, despite its scandals, focuses on long-term success.

Profit with purpose

In business, sustainability is now a thing. First and foremost, it’s about business sustainability, and rightly so. But through this lens, more and more questions have risen to the top of the business agenda: environmental, resources, societal, to name a few. Capital is abundant, but other resources are getting increasingly scarce.

For example, the capacity of our planet to absorb and cope with carbon dioxide emissions.

The new quest for business sustainability is one of the drivers leading to the rise of purpose. Last September, the Financial Times announced their New Agenda, stating that

the long-term health of free enterprise capitalism will depend on delivering profit with purpose.

The FT has published a whole series on this subject, headlined The Company of the Future: Profit and Purpose. These questions go to the heart of what business means to different stakeholders. This becomes clear if you take a look at Fjord Trends 2020, published just this week. Fjord is part of Accenture Interactive, which also is host of NEXT and of this blog. My favourite quote:

Capitalism is having a mid-life crisis.

Indeed. Thirty years after the fall of the Iron Curtain, capitalism needs to be reinvented. When even the Financial Times acknowledges this, we know that it’s now common sense. This is part of what Fjord calls a major realignment of the fundamentals.

It’s tempting to misinterpret this as a gloomy picture – instead, we think this is a once-in-a-lifetime chance to innovate in business models, services and products around new definitions of value.

Capitalism is about creating value. What’s value is determined by the user and the customer. The digital world has reinforced this simple truth, through the elimination of transaction costs and incremental costs, as well as increased transparency.

A major reassessment of risk

In a world where capital is abundant, we should expect the price of capital to fall. And that’s exactly what’s happening. Interest rates are falling or even disappearing and tilting into the negative space. At the same time, stock prices are rising (and thus dividend yields are falling).

We already see the first glimpses of market forces kicking in when it comes to sustainable investments. Worries are that the current financial markets are mispricing climate risk. In the long run, these risks will be priced in. Regulation will contribute to this.

We are in the midst of a major reassessment of risk. The rise of the VUCA world has led to a scarcity of risk-free or even low-risk investment opportunities. Investment grade bonds are in high demand, leading to the decline of interest rates. The same is true for blue chip stock.

The world is looking for sustainable value. As Fjord Trends 2020 puts it:

We’re anticipating a watershed moment when the cost of a product or service is redefined to incorporate sustainability factors (often called externalities) as well as the financial cost of generating it.

This watershed moment could well lead to another major financial crisis, since it would lower the value of many assets. The reassessment should be done gradually over a certain period of time. This would avoid shocks and give financial institutions some time to adapt.

This is not to say that it shouldn’t or couldn’t be done quickly. But for the sake of sustainability, we all would be better off if this time we could avoid a major shock like the financial crisis of 2007/2008.

Photo by Koushik Chowdavarapu on Unsplash

There is an ongoing political conflict between individualism and collectivism, between me and we. The 20th century has seen both rising to new heights. After the 2nd World War, Western individualism and Eastern collectivism divided much of the world. Around the same time, Western societies developed a mass culture with mass communication, mass production and mass consumption. This had its own kind of built-in collectivism.

With the new rise of Parallelwelten, technology has amplified both individualism and collectivism. On the one hand, collective structures like the nation state, mass communication and hierarchical, siloed organisations started to crumble, while digital means empowered the individual. On the other hand, new collectivist, tribal or networked structures emerged, and the digital power houses started to enslave the individual to a new digital serfdom.

Obviously, the relation between individualism and collectivism needs to be readjusted. In the business world, we have seen the rise of the team and the slow, agonising downfall of hierarchies and corporate silos. By contrast, a new authoritarianism arised in the political sphere, fueled by tribalism and polarisation. Hierarchies were reinforced, and Twitter became for Trump what the Volksempfänger was for Hitler. (No, this doesn’t mean Trump equals Hitler.)

A sense of community

While the Californian Ideology that stood at the cradle of the internet was shaped by a radical individualism, it also came with a strong collective element of community. There is a sense of community prevailing on the web and the net from the very early days. Platforms like Twitter and Facebook, despite their shortcomings, still derive their social aspect from this. However, it turned out that the so-called social networks foster polarisation and tribalism.

These social and collective phenomena are leading to the detriment of the individual and of individualism. They are also weakening our collective democratic institutions. So far, technology spectacularly failed to create the electronic direct democracy promised by the Californian Ideology. Increasingly, it looks as if we’re about to fall back to authoritarian dictatorship as governance model. Trump and Zuckerberg are closer to each other than they appear.

Paradoxically, while the business world resorts to teams and networks as modus operandi, the political sphere moves in the opposite direction. And technology drives both developments, at least partially. Tech fragments and polarises the political sphere, a collective entity by definition. The business world, more individualistic meritocracy than collective democracy, empowers its workers and distributes responsibility more evenly.

A more individualistic approach

Pure business objectives, rather than good intentions, spur the latter development. The classic command and control system simply can’t cope with a world stricken by volatility, uncertainty, complexity and ambiguity (VUCA). Decision making needs to be distributed and networked to be efficient and effective. This leads to a more individualistic approach of business organisation. Self-organisation is the name of the game.

For the political sphere, plagued by the same vices of VUCA, it is way more difficult to adapt. To an extent, it always had local and regional substructures that governed itself within the framework defined by higher entities like the nation state or the European Union. Political parties used to unite different groups, and parliaments were the common ground where compromise was produced when necessary. With parties and parliaments fragmented and polarised, politics gets difficult.

This in turn can lead to a strengthening of local and regional structures. The separatism in places like Scotland, Catalonia or South Tyrol, albeit very different, shares a sense of subsidiarity. This is the principle that a central authority should only perform tasks that can’t be done on a lower level. A local community can be stronger than a regional, national or continental community, at least for some kinds of political questions.

What’s new is that local communities now also compete with virtual, global communities, or sometimes tribes. These provide a sense of identity to people who define themselves rather by some arbitrary choices than by the place or the family they come from. Identities are more fluid than they used to be, and have become political forces to be reckoned with. Identity politics represent a new combination of individualism and collectivism.

Photo by Osman Rana on Unsplash

For NEXT, the year 2019 was dedicated to the topic of Parallelwelten. We’ve written a lot about various parallel worlds, exploring them from different angles. Some of these texts now end up in a real, printed book that’s going to appear in December. It might be something you want to consider as a Christmas present.

The book publishing industry is a parallel world in its own right. It has a history dating back to the times of Gutenberg, and you can smell the odor of the past at every corner. Over the last couple of years, we’ve accidentally walked into the book publishing business. Our books are printed by Kösel, a company that has been in business for more than 425 years.

Compared to that, the parallel worlds we explore in the new book are quite recent phenomena. Book publishing itself led to the formation of the modern age. The economies of scale introduced by Gutenberg’s movable type printing helped to unify language for the masses, beyond the reach of ancient Latin and Greek.

The mass societies of the 20th century needed mass communications as well as other scalable institutions. Today, we see the world of the modern age crumble into different parallel worlds. The unifying forces are fighting with differentiating and separating forces, and the outcome is uncertain.

Divide and rule

In this epic fight about the hegemony of late modernity, digital technology plays an ambiguous role. On the one hand, tech enables a global village, where new connections are feasible beyond every border or limitation. On the other hand, tech leads to a new round of differentiation, polarisation, and tribalism.

Not only are nation states weakened, with the GAFA companies we also see new multinational powers arising. The big digital players dominate the digital world, which in turn also increasingly dominates the old analogue world and its traditional power structures. The maxim divide et impera (lat. divide and conquer, or divide and rule) comes to mind.

It’s easier to rule a multitude of parallel worlds, which lose touch with each other, than larger concentrations of power. Viewed this way, the call to break up the GAFA giants is the reverse of the medal. It is the attempt to restore either a balance of power or the supremacy of the old power structures.

I keep coming back to the plea to democratise digital, not to be confused with digitising democracy. Democracy is a power arrangement that allows for different parallel worlds to peacefully coexist and balance their interests. It is a compromise engine. Democracy leaves no room for a single dictatorship like Facebook’s governance structure does.

One of the key strengths of democracy is that is forces different people, cultures, groups, opinions and world views to meet on a democratic agora. This is the public sphere, and to thrive, it should be as free as possible. This freedom needs some rules, to save it from toppling into anarchy. Democracy also requires democratic institutions, with delegates and leaders elected for limited terms.

A Congress of Vienna for the 21st century

Just this week, Tim Berners-Lee released the Contract for the Web, an ambitious rulebook for internet governance. Since it tries to bring governments, companies and citizens to the same table, it could possibly serve as a Congress of Vienna for the 21st century. Of the digital powerhouses, Microsoft, Google and Facebook already support the initiative. The governments of Germany, France and Ghana are also on board.

The Contract for the Web works with nine principles, three for each group of stakeholders (governments, companies and citizens), from which it derives 76 clauses. It remains to be seen whether this agenda will be implemented or not. Commentators are sceptic:

The same governments and companies that have allowed the bad practices to proliferate now will behave differently, Twitter’s howling mobs will be shamed into silence and Facebook’s fake-news-targeting machine will grind to a halt. Not going to happen.

Three years after the election of Donald Trump as President of the United States, the fight for digital freedom and democracy still is in its infancy. Ironically, it is a sign of hope that Angela Merkel, who famously called the internet “Neuland”, i.e. “new land” or “uncharted territory” in 2013, now calls for a free internet as a global public good.

Publishing a book about Parallelwelten is itself an act of contribution to a larger debate that’s going on in the public sphere. A book is a physical item (and as e-book, a digital one as well) standing in the long tradition of publishing that helped to create the public sphere in the first place. This public sphere is now in danger.

And this makes the act of publishing itself a statement.

In 1962, philosopher Jürgen Habermas published his book Strukturwandel der Öffentlichkeit. It took almost three decades until an English translation appeared under the title The Structural Transformation of the Public Sphere in 1989. This book is still important today, as it analyses the change of the public sphere from its beginnings in the Renaissance era till the 20th century.

Of course, in the sixties Habermas could not foresee what would happen in later decades. But he, now 90 years old, continues to write, and just recently produced another 1,700 pages of work. In 2013, he issued a warning about technocracy and the danger that technocratic elites could take power and trim democracy to market conformity.

What kind of structural transformation of the public sphere is going on today? Is there a digital public sphere emerging? And what does this mean for democracy and politics?

The digital public sphere isn’t free

In fact, we see a digital public sphere, albeit still in its infancy. The web ignited an explosion of public forums, blogs, publishing platforms and social networks. Public dialogue and debate were unbound from almost all restrictions, be it geographical distance, cost limitations or language barriers. English became the lingua franca of the digital sphere.

Still, the digital public sphere isn’t free. We’ve written a lot about Facebook and its tremendous power under the single dictatorship of Mark Zuckerberg. Moguls of the press like Rupert Murdoch or Michael Bloomberg pale in comparison to the CEO of Facebook. Ben Thompson keeps writing about what’s wrong with this:

In the long run, though, it is very problematic that such a powerful player in our democracy has no accountability. Liberty is not simply about laws, or culture, it is also about structure, and it is right to be concerned about the centralized nature of companies like Facebook.

Alas, we’re far from Facebook being the only threat to democracy and a free public sphere. Other digital giants pose similar challenges. And in general, the questions of governance and power over the digital sphere remain unanswered. We haven’t yet seen a full-fledged revolution.

Digital will be democratised

Without wanting it, today’s autocrats like Trump or his smaller siblings could well pave the way for a real digital revolution. This revolution isn’t going to come from the Democrats, them being the epitome of the new elites. The Trumps of today are pocket editions of Napoléon Bonaparte, who ruled France after the French Revolution.

Napoléon paved the way to a new political order, formulated at the Congress of Vienna. It would last for a century. Similarly, a digital congress could formulate a political order for the digital sphere. The dominant digital powerhouses, as well as the great powers of the non-digital world, need to convene and develop a peaceful balance of power.

This of course would not be the end of history. The users still won’t be in power until digital will be democratised. How could digital democratic institutions look like? As of today, we’ve only seen attempts to digitise democracy. This is similar to what Matthias Schrader calls electrification: existing processes (or products) are recreated in digital form.

Opposed to that are new products, created in digital form from scratch. Digital democracy didn’t yet arrive at this stage. Granted, there are some early prototypes here and there. But nothing that scales. Digital is not yet democratised.

A new serfdom

French philosopher Gaspard Koenig describes our relationship with the great digital powers of our times as a new serfdom. Like serfs in the age of feudalism, we are deprived of ownership with regard to our data, just to get access to the services our overlords graciously provide to us. The solution he proposes and explores with his think tank Génération Libre: a system of personal data ownership.

Just as the industrial revolution made intellectual property rights necessary, the digital revolution should create an ownership right on personal data. If data is the oil of the 21st century, is it not time to ask who owns the oilfields?

Koenig views data as capital, rather than labor: data simply is there, like land, and producing data doesn’t require work. In his view, data ownership would be a logical next step after GDPR, which already treats companies as guardians of data, not owners, and guarantees the portability of personal data.

The real digital revolution will, like every real revolution, change the ownership of the most important assets.

Photo by José Martín Ramírez C on Unsplash

NEXT owes a lot to Steve Jobs and how he saw the world. There’s a famous quote that gets to the heart of it:

It is in Apple’s DNA that technology alone is not enough—it’s technology married with liberal arts, married with the humanities, that yields us the results that make our heart sing.

We’ve long hold up the notion of NEXT being focused on the intersection of business, culture and tech, rather than just tech. Technology is the culture. Or at least a culture. But we’ve written surprisingly little about culture in general and the parallel worlds of culture in particular. Especially in a year dedicated to Parallelwelten.

Different cultures tend to live in their own parallel worlds, with little or no contact to others. While in the past primarily geographical distance and language barriers divided cultures, these days cultural distance itself has replaced geography and language as main differentiators. Digital technology allows people to build and maintain cultures over geographical distance, and English as the lingua franca of the internet is a major building block of digital cultures.

Digital culture in its tribal phase

Cultural distance manifests itself through politics, ethics and moral, beliefs, habits or arts. Digital culture currently is in its tribal phase, and that means we’ve a long way to go. The mass societies of the 20th century are crumbling under the pressure of digital tribalism, and the new elite defines itself through moral superiority. According to philosopher and publicist Alexander Grau:

To be an elite becomes a question of attitude and lifestyle.

Their characteristics are openness, interactivity and creativity – all moral categories in his view. As Grau points out, we see a new kind of culture clash where not only values collide, but also incompatible concepts of value resources. Communication between the new elite and the rest of the world is difficult. On the surface, both camps still speak the same language. But in fact the two milieus use their own idiom, which can no longer be translated into the idiom of the opposite side.

With this analysis, Alexander Grau holds a mirror up to us. The digital industry and we, who happen to work in it, are clearly part of this new elite. We are creating and sustaining the cultural distance to those who aren’t part of it.

Digital cultures are pluralist

Perhaps the parallel worlds of filter bubbles and multiple realities are better understood as different cultures. Mass communications and its unifying forces shaped mass societies, mass culture and national cultures. By contrast, digital (or hybrid) communities, platforms, tribes and their differences shape digital cultures.

Digital cultures are pluralist. They are about difference and distinction. To an extent, digital cultures disrupt the pillars of mass culture and nation states. Since culture is a strong mode of integration, political and public institutions are weakened, at least with regard to discoursive practices and symbolic interaction.

As long as nation states retain the powers to impose taxes or provide security, they won’t disappear. But in the global digital sphere, both powers have come into question. Nation states struggle to tax the digital behemoths or ensure digital security. And while consensus was the modus operandi of mass culture and mass societies, it has now been replaced by polarisation and division.

And this means more fighting and less compromise.

The decolonisation of cyberspace

Digital cultures will probably develop a new kind of public sphere, with their own political institutions, taxes and security regimes. The late John Perry Barlow declared independence of cyberspace as early as in 1996. But until today, very little governance emerged in this space. To a great extent, cyberspace effectively has been colonised by the digital giants that are now on top of the global economy.

This is likely to change. For a playbook, look at the history of colonialism. The decolonisation of cyberspace will require a revolution, which means a change of elites. The dictatorships of the Zuckerbergs need to end.

I’d like to borrow the closing words from Ben Thompson:

The fact of the matter is that the world is fundamentally changing, just as it did five hundred years ago. At the same time, that change will take time — the printing press was invented in Germany in 1440 and yet German unification did not happen until 1871 — and will be guided by choices we make along the way. The sooner we recognize that transformation is coming, the more readily we can reject authoritarian attempts to hold onto the world as it was, and create the world we want to see.

Photo by Marius Masalar on Unsplash

Innovation might well be one of the most used words on this blog, and perhaps in the whole industry as well. The tech industry is obsessed with innovation. Since Clayton Christensen coined the term disruptive innovation, it has risen to the ranks of the most popular concepts in business theory. In the past, we’ve argued for different types of innovation: besides disruptive innovation, we also need sustaining and sustainable innovation.

While disruptive innovations create new products and markets, these products then need to be continuously refined and improved, in incremental steps on a sustainable path, until they finally get disrupted themselves. This would amount to a two-step cycle of product innovation. But at NEXT19, Efosa Ojomo drew a cycle with three different types of innovation: market-creating innovation, sustaining innovation and efficiency innovation.

Now this makes a ton of sense.

The three types of innovation

The first type, market-creating innovation, is broader than disruptive innovation. This way, Efosa avoids some of the pitfalls disruption theory suffers from. If we look back to the quarter-century of digital innovation ignited by the web in the nineties, we see a lot of market-creating innovation, and not everything turned out to be disruptive to the incumbents. This is especially true in places like Africa (Efosa was born in Nigeria) and Asia, where technology often needs to create its own infrastructure first, since there is not much to disrupt in the first place.

The second type, sustaining innovation, is about making good products better. This kind of innovation has been a boon to the German economy for decades. It’s also what Apple does to the iPhone and its other products, in varying degrees. (Not all Apple products are treated equally.) This kind of innovation doesn’t create much growth. But it’s important to keep the economy vibrant.

The third type, efficiency innovation, is the missing piece of the puzzle. It is about making good products cheaper. This translates into job losses, outsourcing, and freeing up capital, cash flow and labour. Efficiency innovation is associated with rationalisation and commoditisation. It sits at the end of the product lifecycle. And it is about creating or freeing up the resources you need to fund the next wave of market-creating innovation.

Goto 1.

An error by definition

Just a few months ago, we’ve stated that innovation per se is never about efficiency. This was an error by definition. Efosa’s typology of innovation is not only broader than the disruption theory of his teacher, Clayton Christensen. It also includes efficiency as another type of innovation. Efficiency innovation is defensive by nature. It paves, at least in theory, the way for market-creating innovation, that is then superseded by sustaining innovation.

So, we need different types of innovation for every stage of the product cycle. Products in the third stage of innovation may be ripe for disruptive (i.e. market-creating) innovation, for example when a new technology comes along. But they might also linger on as commodities, simply fading into the background. They resemble the cash cows in the classical BCG Matrix. This strategic planning technique divides product portfolios in four groups, with stars, question marks and dogs as the other three.

The iPhone on a sustaining innovation trajectory

To reconcile Efosa’s theory of innovation with the BCG Matrix and its two axes, market growth and market share, we could roughly map market-creating innovation to question marks and sustaining innovation to stars. But neither market growth nor market share make a lot of sense when it comes to creating new markets. Too much depends on the definition of the market.

Think of the iPhone back in 2007. The market at the time was the mobile phone market, Apple’s market share was tiny, and the market grew at little more than 10% per year. The iPhone clearly was a question mark. But what it did over the next couple of years was redefining the product category and then capturing the great majority not of market share, but of profits. It created a new market and disrupted the old mobile phone market at the same time.

More than a decade later, the iPhone is on a sustaining innovation trajectory. It’s no longer a growth story, but it’s not going to get cheaper anytime soon. Apple, and other premium brands as well, withstand the forces of commoditisation. They keep the customer experience and thus differentiation as well as product price constantly high. Apple routinely sells older versions of its products at lower prices. But cheaper versions, like the ill-fated iPhone 5C, often failed.

The lesson for the rest of us

To sum things up: The Clayton Christensen school of innovation theory, if we put Efosa and his teacher in the same basket, still doesn’t come to grips with Apple’s premium strategy. You can of course treat Apple as an exception that proves the rule. But that leaves us with the desideratum of a proper innovation theory that includes Apple, one of the greatest innovators of our times.

For the rest of us who are not Apple, Efosa has an important lesson: know where you are in the product lifecycle. And use efficiency innovation to free up the resources you need to invest in market-creating innovation. Especially the last leg is oftentimes the missing link, when companies employ efficiency innovation and free up resources, only not to invest.

Failing to invest in market-creating innovation is what leads to the demise of great companies.

Do the Right Thing is a Spike Lee movie that’s already 30 years old. It is what the title says: a call to do the right thing. In the case of the movie, it’s clear what the right thing is. In the business world, it’s not so easy. There was a time when maximising shareholder value was considered the right thing to do. But in 2019, this time finally seems to be over. It’s now way less clear than it was before, and the newfangled focus on purpose only thinly veils the underlying confusion.

On an abstract level, we could return to the great Peter Drucker, who famously stated that the purpose of business is to create a customer. That was in 1954, and 65 years later it sounds like an early version of the customer centricity mantra of today’s digital era. On a similar note, Timm Richter asserts:

The main aim of any company is to offer a product or service such that it generates user value.

Are we doing the right things?

Thus, we arrive at creating customers and generating user value as the main purposes of any business. And indeed, that’s what the great digital companies of today do all the time. In countless battles with incumbents, they prevail through better customer experiences. Create better customer experiences and win – is it really that simple? At NEXT19, Brian Whipple said something that stuck in my head:

It seems we can do anything, but are we doing the right things?

Let’s have a closer look. We can do anything refers to the incredible power of digital technologies. It’s hard to understate its impact on our world and its capability to create new realities. It is a disruptive force to existing businesses, to our societies and to all kinds of structures. With technology, we can do almost anything.

This quasi almighty power poses an urging question: Are we doing the right things? This is, by its nature, an ethical question. It’s the age-old question what we should do. And beyond that is another question: Why should we do what we do in the first place? The why is the purpose, and thus we come full circle.

The rise of purpose marketing

The digital revolution has replaced shareholder value with user value. Shareholders and the other stakeholders, like employees, suppliers and society, are best served when the user gets value through better customer experiences. This is how Steve Denning puts it:

If the customer’s needs are met, then the shareholder’s needs will in due course also be met. When customers are delighted, the firm makes more money and can afford to pay workers more and meet the needs of other stakeholders. Moreover, customer capitalism is intrinsically moral: human beings are creating value for other human beings.

In today’s business reality, we are not there yet. At least not entirely. We’ve seen the rise of purpose marketing, but this approach is often in danger of putting lipstick on a pig. In that case, the purpose is attached to the brand on a superficial level, like any old-school marketing campaign. It may work for a while, but ultimately customers will see through it.

Done properly, purpose sits on a higher level than vision (goals) and mission (how to reach them). Purpose answers the question why a company exists in general, beyond making money, maximising shareholder value, creating customers or generating user value. It is a bigger why, and also a more specific why.

In a world of overwhelming complexity, it is hard to find the right answer to this question. Digital technology is powerful, and the more powerful it gets, the more important becomes the question: Are we doing the right things? We should freely admit our confusion, and that we don’t yet know the answer.

Photo by Gary Butterfield on Unsplash

The digital is political. This is probably anathema to the diehard digerati. They don’t want to acknowledge that the digital sphere increasingly defines, controls and governs the analogue world. But there is no real democracy in the digital sphere. Big Tech creates the rules others have to follow, with little or no democratic checks and balances. For quite a while, it has been a standard line of defence to say that existing law applies to digital as well.

While that’s undeniably true, it leaves us with a lot of questions, for example: which law? The EU already has a track record of legal and political fights with the tech behemoths of the Valley. There are, of course, countless other initiatives, acts of regulation and civic responsibility, to name a few. But all these are attempts to control and govern the digital sphere, while in fact it’s often the other way around. We need a new set of rules for this. As Jamie Susskind puts it:

to what extent should our lives be directed and controlled by powerful digital systems—and on what terms?

To the dismay of my fellow blogger Adam, I keep coming back to a great drama of our days, called Brexit. Contrary to a widely held opinion, I actually think that the House of Commons is a fine example of a democratic institution working just as intended. In fact, it does a tremendous job of checking and balancing the government. Both the governments of Theresa May and Boris Johnson have, so far, failed to secure a majority in the house for the deals they negotiated with the EU. And that’s fine, since Brexit is such an important and far-reaching endeavour that it should require a broad consensus to move forward.

The public can only exist in singular

However, broad consensus is in short supply where the general public is divided into the Parallelwelten of micro- and nano-publics, each neatly sitting in their own filter bubble. While the parliament does its job, it is under massive pressure through our newfangled digital publics. From the very beginning, the Brexit campaign was a digital creation. Brexiteers masterly played the digital fiddle, the emotions and dynamics of the Twitterati working well in their favour. The digital platforms have put the well-known mechanisms of the tabloid press on steroids.

The public can only exist in singular. It’s a great achievement of democracy to create a single public sphere, where everything concerning the people as a whole can be debated and decided through democratic institutions. After several decades, the EU still lacks a single European public, for a lack of common language. That’s a major weakness of the European project. And there is no single digital public for the digital sphere as well, albeit for different reasons.

Through the ginormous influence of the Valley, the digital sphere is pretty much an American project. But with China and Russia, other world powers already weighed in. Russia even goes so far as to turn the digital weapon against their creators, with their troll agency set up to manipulate US elections. We are right in the middle of a power struggle. But that’s only a meek foreshadow of future battles.

It’s not about digitising democracy, but democratising digital

We are in deep need of digital democracy, with a single digital public sphere and digital democratic institutions. The internet is still stuck in the early, chaotic stage of a new medium. Those often come with political consequences. The printing press was a disruptive technology, helping to bring down a centuries-old world order. The radio was important for the rise of early 20th century dictatorships. Television massively changed election campaigning.

The internet and digital technology have far broader consequences and might well turn out to be disruptive for democracy and modern societies. No one is obliged to like the democratic process or its outcomes. But at least it’s a proven way to produce generally binding decisions. That’s better than having these decisions made by engineers and written in code, without public scrutiny or even a remote chance of influence.

Thus, engineers would comprise a new feudalist elite, a closed shop to rule the world on their terms. This digital feudalism may well last for a while. It is already deeply rooted in Silicon Valley groupthink. However, in the long run I’d expect digital feudalism to show the same signs of weakness that led to the demise of feudal societies over half a millennium.

To be clear: it’s not about digitising democracy, but democratising digital.

Last updated on June 12, 2024. Photo by David Dibert on Unsplash

It’s more than complicated. It’s complex. We yearn for simplicity, and populists of all colours cater to our yearnings with simple answers and narratives. Keep it simple. Simplify your life. Digital technology has both made our lives easier and added new layers of complexity. Simplicity and complexity can be seen as a kind of yin-yang that are both present, feeding each other.

In the political sphere, the compromise is the way to reduce complexity and unite the antagonisms of diverse Parallelwelten. A compromise isn’t an easy answer, and often hard to fit into a simple narrative. Look no further than to Brexit and its bunch of dilemmas.

While complexity fosters our cravings for simplicity, simple human interfaces hide multiple layers of complexity. The price we pay for simplicity is complexity. The simplicity paradox, also known as Bonini’s paradox, seems to be inevitable. It says that any model or map of reality becomes less useful, the more details are added. A theoretical 1:1 map is useless, a 1:1 model is either an abstract, a prototype or a duplicate.

Complexity is powerful

Could it be that the digital realities we’ve created over the past decades are getting bigger than our good, old analogue reality? Digital realities are no longer models of the analogue, but the real thing themselves. They are getting increasingly more complex. The notion of a digital twin encompasses every analogue detail replicated in digital form.

At some point, digital twins are growing more complex than their analogue siblings. If we define a model as less complex than reality, this means digital is now real, and the analogue world reduced to a mere model. Complexity is powerful. Digital and analogue interact with each other. George Dyson describes large hybrid analogue/digital systems as today’s most powerful forces.

They come with both new degrees and new kinds of complexity, and on a truly global scale. These are non-linear systems, and non-linearity makes them both powerful and hard to predict. This is the reason why complexity tends to come in a bundle with volatility, uncertainty and ambiguity. This bundle is called VUCA. In our VUCA world, the old-world order based on Fordism and Taylorism is quickly dying.

The first glimpses into a post-agile world

Organisations built for the old world work best with low levels of volatility, uncertainty, complexity and ambiguity. When things are linear and predictable, they can manage, control and plan as they always used to do. To be fair, these organisations can in fact deal with certain levels of complexity. But the combination of complexity with the other three VUCA characteristics makes things difficult.

To an extent, the agile movement came into being to deal with the VUCA world – a world that digital technologies helped to create in the first place. Since software is now everywhere, agile development has spread to industry after industry, sometimes even losing its original meaning and spirit. (But that’s a topic for another posting.)

Agile development and associated methods like Scrum are now widely adopted to work under VUCA conditions. These days we start to get the first glimpses into a post-agile world – that is of course still agile, like post-digital is still digital. Agile is a necessary, but not a sufficient condition for the next step.

The next step is to reassess what it means to be human, in contrast to be a machine. At NEXT19, David Mattin came up with three points: Humans are (1) socially constructed, (2) environmentally embedded and (3) embodied. Nothing of this is changed by the rise of the machines. No machine can replace a human being’s social identity or their bodies, and it shouldn’t.

A reassessment of what it means to be human leads to the rise of purpose, value(s) and empowerment in the business world. What’s still missing though is the step to shared power, decentralised networks, self-management, emergence and wholeness. Think of Frederic Laloux and his seminal work Reinventing Organizations.

Complexity and its VUCA siblings will continue to drive this change.

Photo by Pierre Châtel-Innocenti on Unsplash

It seems we can do anything, but are we doing the right things? This was the question Brian Whipple, the CEO of Accenture Interactive, posed in his keynote at NEXT19 last week. It is a deeply philosophical question, a question of the human condition in the early 21st century and the digital age. We have almost unlimited power, but with great power comes great responsibility. In the face of overwhelming complexity (David Mattin), it becomes even harder to do the right things.

We must admit that we don’t know what the right things are. A global threat like climate change may lead to goals like those set forth in the Paris Agreement, but how to implement them without wrecking our economies, which would in turn lead to political disruption and ultimately endanger the very same goals? Climate change is now clearly on the agenda of the digital industry, as NEXT19 has shown. It is a profoundly political question. There are no easy answers, despite what Greta Thunberg might think.

In Germany, we’ve had especially bad experiences with the dictatorships of the seemingly easy answers. Both fascism and socialism collapsed with devastating results. By contrast, post-war democracy wrote a huge success story. Why throw away democracy when faced with new challenges?

It has been said that democracy is the worst form of government except all the others that have been tried. (Winston Churchill)

Tech as an easy answer

The fragmentation of our societies brings people like Donald Trump, Jair Bolsonaro or Boris Johnson, who thrive on polarisation, into top positions. Their success is the reduction of complexity to simple narratives. But it seems that Greta Thunberg has more in common with Donald Trump than you would expect. Both resort to populist, easy answers to overwhelmingly complex questions, be it climate change or migration. Both appeal to the fears and anxieties of the masses.

And we as tech industry are guilty of the same offence: For decades, we touted tech as the solution and the benchmark everyone and everything simply must adapt to. Tech was our easy answer to every question. If you only have a hammer, every problem looks like a nail. We didn’t realise that we’re writing the rules others have to live by.

The digital is political, stated Jamie Susskind. This is something our industry still needs to get used to. It means increased public scrutiny on our actions and omissions. It also means responsibility in the classic sense of the word: the ability to respond to the questions of the general public. No longer can we get away with ridiculing the oh so stupid politicians who don’t seem to get digital. We need to answer their concerns.

But the ongoing shift is much broader, because of increasingly capable systems (think AlphaGo), increasingly integrated technology (the physical and the digital world are merging) and an increasingly quantified society (with loads of data). This transition has a massive impact on power, freedom, democracy, and justice, Jamie Susskind reminded us.

Finding out what the right things are

We can read the ongoing political struggles, be it in the US, the UK or elsewhere, as a fight about these four pillars of Western liberal societies: a fight for power, freedom, democracy, and justice. Tech plays an important rule in that fight, since software engineers are hardcoding the rules others must follow. They are becoming social engineers, as Susskind puts it.

We, as tech industry, are engineering reality in a so far unknown way. Political players like Trump, but also Thunberg, are using our tools to further their agenda. This process of both engineering and using technology changes, many would say endangers, democracy and society.

In a democratic society, the process of finding out what the right things are is tedious and takes time. What’s right and what’s not is up to continuous debate, inside a constitutional frame that rules out extremism and violence. But people providing easy answers to complex questions get their tailwinds through tech.

We are facing a tough question that has been in the air since the dot-com craze: The old rules no longer seem to apply, but the new rules aren’t very clear yet. We still have to write them. Our world looks like a kind of Wild West scenario. It’s a good thing that tech has empowered us to do anything. Now let’s find out the right things to do.

For most people, politics is hard to understand. This probably doesn’t change much over time. But in the last few years, it has become even harder to understand politics. This is due to the fact that the Parallelwelten of politics and tech have clashed. Politics is now influenced and fragmented by tech in an utterly new way, and vice versa.

In the introduction to his book Future Politics: Living Together in a World Transformed by Tech, Jamie Susskind writes:

Politics in the twentieth century was dominated by a central question: how much of our collective life should be determined by the state, and what should be left to the market and civil society? For the generation now approaching political maturity, the debate will be different: to what extent should our lives be directed and controlled by powerful digital systems—and on what terms?

In the past, the state has been the grand unifier, through the idea of nations with common heritage, language, values, culture, society, economy. Globalisation drove unification even further, through global travel, communication, and trade. At first, Big Tech contributed its fair share to globalisation, and it still does today. But Big Tech has also given rise to a new round of societal disruption and fragmentation.

It is now widely recognised that both the Brexit vote and the Trump election in 2016 have been decided through the use of technology. But Obama had won both terms of his presidency with clever digital campaigns before Trump came into office. The polarisation and fragmentation of our Western societies didn’t come over night.

A deeply apolitical stance

Increasingly, the nation state is under pressure from the opposite forces of globalisation and fragmentation. And both forces are amplified through tech. Politics basically is the art of compromise, of balancing clashing interests. In our day and age, compromise is being replaced by a new furor of absolute priorities.

At least since the financial crisis of 2008/2009, politicians started to talk about decisions as being without any alternative. If this was true, we no longer needed democracy. We could return to dictatorship or absolute monarchy. Or move on to a new technocracy, and put our faith in science.

In essence, this is what Greta Thunberg proposes, all for the sake of fighting the one big enemy, and to the enthusiasm of many people: abandoning the laborious process of balancing diverse priorities, of finding common ground and achieving compromises between competing issues, of carefully allocating scarce resources to solve different problems.

This is a deeply apolitical stance, to put it politely.

And it is also similar to what is happening in the UK since the Brexit referendum. The art of compromise is almost lost, replaced by a fragmented parliament unable to get to a decision about the future of the country. At least three different scenarios – deal, no deal, or remain – are more or less still on the table. And each side is trapped in their own filter bubble.

A fragmented political system

The current cycle of hysteria, polarisation and fragmentation concerning climate change (and Brexit in the UK) is not the first. In fact, it directly replaced the refugee crisis of 2015/2016, which also contributed to Brexit. And before Brexit, there was Grexit and the Greek debt crisis. Which in turn contributed to the refugee crisis, as Greece lost control of the EU border.

Another case in point is the Fukushima disaster in 2011. It caused a cycle of hysteria in Germany that led to an early nuclear phase-out. This now in turn aggravates the carbon dioxide emission crisis: most of the German electricity production is still driven by coal plants. And there is no plan on how to replace the base load power plants after nuclear and coal plants will have been shut down.

The cycles of hysteria are deeply interconnected. They are amplified by tech. And a fragmented political system increasingly looks unable to find sustainable solutions, beyond short-term fixes that already lay the foundation for the next crisis, and the next cycle of hysteria.

Fragmentation as a threat to democracy

We’ve been at a similar crossroads before, namely at the dawn of the modern era. The Protestant Reformation led to a fragmentation not only of the church, but also of the states and the societies (that back then of course weren’t like our modern states and societies). Ultimately, this splits led to wars. In a recent essay, Jonathan Franzen asserts:

In times of increasing chaos, people seek protection in tribalism and armed force, rather than in the rule of law, and our best defense against this kind of dystopia is to maintain functioning democracies, functioning legal systems, functioning communities.

Tech has become a threat to democracy. To the extent it undermines our democratic institutions, it needs to be and will be regulated. The biggest empires in history – Google and Facebook – are clashing with nation states and multinational institutions.

We need a better understanding of politics and democracy to avoid falling back to tribalism and authoritarian regimes.

Jamie Susskind will share his views next Thursday in his keynote at NEXT. Join the fireside chat on Thursday afternoon to discuss how we can help to build a future that can inspire hope and optimism.

Photo by Tom Athawes on Unsplash

How we perceive our world is to a certain extent shaped by the times we grew up in. People who reached adulthood with newspapers and radio are different from those who grew up with TV, which are different from those growing up with the PC, the internet, or the smartphone. The distinction between digital natives and digital immigrants can roughly be mapped to the common landscape of generations: Generation Y and Generation Z are considered digital natives, while Generation X, Baby Boomers and older generations belong to the digital immigrants camp.

In some respects, each generation lives in their own Parallelwelt.

I am a member of Generation X. Or Generation Golf, named after the Volkswagen car. At the time the internet appeared in my life, I was 25 years old. But the first personal computer – in my case, a Commodore 64 – had come into our house already a decade earlier, when I was still a teenager. And obviously the smartphone came up more than a decade later than the web. Back then, I had been an employee for years. So basically my generation learned to use a PC in their teenage years, saw the internet arriving in their twenties, and the smartphone in their thirties.

Each generation looks at new technology from their own background

People tend to take everything for granted they grow up with. Up to a certain age, most people will adopt and learn to use new technologies. The older they get, the harder this adoption gets, often leading to resistance and dismissiveness. That’s why it makes sense to distinguish different generations when it comes to tech and innovation. Roughly, Gen X could be seen as Generation PC, Gen Y as Generation Internet, and Gen Z as Generation Smartphone. This already shows that the binary concept of digital natives vs. immigrants might be oversimplified.

The pre-digital media landscape was defined by mass communications and broadcasting. Its primary usage model was reading, listening and watching. The PC already introduced media production into the mix, at the time known as desktop publishing. As PCs got more powerful, people started to produce audio and video as well. But media distribution for the masses was only enabled by the internet. Media became social, so to speak. And with the smartphone, we now basically carry a media production and distribution tool in our pockets.

Each generation looks at new technology from their own background. Members of Gen Z – the first truly post-digital generation – view newspapers, radio and TV as more or less outdated, since their media consumption is defined by the smartphone. But new generations also have a tendency to distinguish themselves from their predecessors: they closely watch their behaviour, trying to learn what they should do different. And also develop different behaviour just for the sake of generational distinction.

Cultural codes and distinctive work habits

Thus, newer generations tend to avoid the media platforms of their parents, develop their own cultural codes and distinctive work habits when they enter the workforce. Gen Y, for example, probably brought us the rise of purpose in the business world. And Gen Z shows a tendency to demand clear boundaries between work and life, knowing how digital technology blurred these boundaries for Gen Y and Gen X. When it becomes possible to work always and everywhere, new rules are needed to avoid that work eats up the whole life.

Up until the early 2000s, work was tied to the office. When we left office these days, work was almost impossible. We could log into our work email from home, but that required a PC. There was VPN, but not for regular use. Flat rate internet access and wifi at home were introduced less than two decades ago. The concept of email-to-go only appeared with the Crackberry. Mobile data plans became affordable with the proliferation of smartphones not more than a decade ago.

Generation Alpha probably won’t use Facebook

Generation Alpha (or whatever comes after Gen Z) will probably view the smombies of their preceding generations with a critical eye and establish new rules for the proper use of smartphones. Likely, they will also demand better algorithms for the curation of their media feeds – less slot machine, more relevance. Generation Alpha almost certainly won’t use Facebook, but new platforms we might haven’t even heard of so far. A similar phenomenon occurred with traditional TV that is now almost a medium for older generations, while younger generations watch video and TV on digital platforms.

Gen X was the last generation that came of age in the pre-digital world, and the first that had to adapt to the digital world, as well as to the post-digital world we now live in. Exciting times.

Photo by Don Fontijn on Unsplash

Parallelwelten are scary, for a variety of reasons. They come with big questions, and for some of them there might be no answers. But should we stop exploring these parallel worlds and asking those big questions, out of fear that we might get no answers, or maybe answers that wouldn’t please us?

Angela Merkel is said to have chosen physics as the subject of her studies in East Germany because the laws of physics apply across political systems, regardless of ideology. This attitude also coloured her style of leadership and led her to some unexpected changes of political course.

The idea of a multiverse may sound like science fiction, but really is more science than fiction. It is a possible solution to some of the greatest questions physics has to deal with. For example, what’s beyond the universe? The Standard Model of particle physics doesn’t answer all questions, at least not yet.

We are all in the same universe

And maybe those question will never be answered. In fact, it may well be the case that with each answer new — and possibly bigger — questions arise. Scientific progress would then generate more, and hopefully better, questions than it answers. This is exciting and terrifying at the same time. But there is one thing to keep in mind, as James Beacham reminds us:

We are the method the universe asks questions about itself.

This puts humankind as a whole — and every single person — in a special position. In the words of James Beacham:

We are all in the same universe. And we are all in this universe together.

Which means that, while we fearlessly ask the big questions, we also need to care for our common home. Housekeeping is often underrated and ridiculed, but there is a certain art to it. It is no easy task to keep a house and a household in order.

Digital technology has redefined our common home

The point is that everyone in the house can live well, that everything is there that they need to live. Shopping, cooking, washing, cleaning, tidying up, taking out the garbage, repairing broken things, looking after the garden, keeping things tidy – there is a lot to do in a house.

A house has a certain order, it has its own beauty, it gives warmth in winter and perhaps also coolness in summer. Residents and guests should feel at home in the house. If we view the Earth as our common home in the universe, these things are getting more complex on a global scale. But the basics remain the same.

Over the last few decades, digital technology has redefined and reshaped our common home, creating a multiverse of different realities. This has lead to a whole slew of new questions. For example, the new tribalism, fueled and amplified by digital media, has driven the UK into a chronic crisis.

The digital industry doesn’t need to be shy when it comes to the big questions. Quite the contrary, since we are a big part of the problem, we need to become part of the solution as well. That’s still a long way to go. But at least, there are already some sights of hope.

• James Beacham will give the opening keynote of NEXT19 on September 19.
• Later that day, there’s a chance to ask him anything about the universe.

Photo by Greg Rakozy on Unsplash

Light and darkness are powerful metaphors. We tend to associate light with good and darkness with evil. Italian scholar Petrarch coined the concept of a Dark Age in the 1330s. He compared the dark post-Roman centuries to the light of classical antiquity. With the Renaissance era, this light was then recovered, ending the Dark Ages and ultimately paving the way to modernity. The Enlightenment later draw on the same metaphor.

The internet came with its own set of utopias, echoing the Enlightenment. But in classical dialectic style, these turned into darkness. This is how James Bridle, who will speak at NEXT19 next month, explains it:

We find ourselves today connected to vast repositories of knowledge and yet we have not learned to think. In fact, the opposite is true: that which was intended to enlighten the world in practice darkens it. The abundance of information and the plurality of worldviews now accessible to us through the internet are not producing a coherent consensus reality, but one riven by fundamentalist insistence on simplistic narratives, conspiracy theories, and post-factual politics. It is on this contradiction that the idea of a new dark age turns: an age in which the value we have placed upon knowledge is destroyed by the abundance of that profitable commodity, and in which we look about ourselves in search of new ways to understand the world.

Let’s dissect this sentences a bit. It’s absurd and ridiculous that our educational institutions still primarily insist on knowledge (which is abundantly available through digital means) instead of teaching how to think. This could be, in part at least, a reason for the darkening Bridle observes. The art of thinking is drowning in the deep waters of available knowledge.

Humankind always lived in Parallelwelten

What Bridle describes as a coherent consensus reality was in fact the hallmark of Western societies in the second half of the 20th century. After World War II, mass production, mass consumerism and mass communication formed this reality. It probably didn’t exist ever before in known history. And even in the 20th century it remained far from being universal. Humankind always lived in different Parallelwelten, divided by geographic distances that only started to lose significance with modern communication and transportation technologies (which developed in parallel, each driven by the needs of the other).

Fundamentalism itself is also a deeply modern phenomenon. Christian fundamentalism, for example, developed in the early 20th century as a reaction to Modernist theology. What really changed through the internet in general and social media in particular: wacky narratives and theories now find bigger audiences, since social media platforms are willingly designed to amplify what generates more usage (i.e. engagement), and thus profits.

Reality has been turned into another resource that is mined and exploited to extract value.

History as a sequence of light and dark periods

Historiography can tell us that these metaphors of light and darkness are itself overly simplifying. The Dark Ages is a misnomer for a period of history that had, like others, its unique blend of light and darkness. Likewise, the Enlightenment came with its own dialectic forces of darkness. And the 20th century saw the industrialisation of mass murder. This was darkness at industrial scale.

It’s inaccurate to narrate history as a sequence of light and dark periods, where dark ages are superseded by a renaissance that paves the way to enlightenment, which then turns back into a new dark age. But this doesn’t devalue James Bridle’s brilliant analysis of the digital dialectic.

We are still mourning the death of the early internet utopias. We already tried hard to fix the digital mess we’ve created, but we still find ourselves in many parallel worlds which are increasingly losing touch with each other. What we really need is a new Renaissance: a break from the past, a new (digital) humanism, a cultural movement that takes the best from the past and translates it into our day and age. Or even better: into the next age. Whatever that will be.

Photo by Tobias van Schneider on Unsplash

Africa is a fascinating continent. There’s always something new to learn, and some surprises. Africa seems to be bustling with energy. It doesn’t carry as much legacy as the developed countries, thus allowing fresh approaches to solve old problems with new technologies.

One of the most prominent examples is M-Pesa, the mobile money transfer, financing and microfinancing service. First launched in Kenya in 2007, M-Pesa is now active in other countries as well, not only in Africa, but also in other parts of the world. Mobile phones (and electricity) are the key enablers to bring banking to the unbanked.

Kenya’s tech hub in Nairobi is well-known as Silicon Savannah. And in a recent report by the World Intellectual Property Organization, Kenya has been named the second most innovative country in Sub-Saharan Africa, after South Africa.

The start-up continent

But the African tech and start-up ecosystem isn’t limited to a few countries like Kenya. Last year, $725.6M in venture capital was invested across 458 deals in Africa – a whopping 300% increase compared to 2017. Observers have named Africa the start-up continent.

There is tremendous promise in the dynamism of young African students and entrepreneurs; in Africa’s vibrant, growing cities; and in countries on the continent that have dramatically improved their leadership and institutions. The region’s abundant world-class innovation and talent are increasingly being harnessed to improve lives and generate wealth.

In 2015, Jake Bright and Aubrey Hruby published a book titled The Next Africa: An Emerging Continent Becomes a Global Powerhouse. They tell a story of growth and innovation that, in part, have exceeded and impacted the West. Bright and Hruby argue that the old narrative of doom should be replaced by a more nuanced view. The next Africa is neither the hopeless continent (The Economist, 2000) nor is it simply rising (The Economist, 2011).

Above all, let’s keep in mind that Africa isn’t a single country, but consists of 54 countries with very different profiles. This heterogeneity can easily be lost in superficial generalisations. Africa comes with its own share of Parallelwelten. There are many Africas.

Leapfrogging legacy technology

It’s enticing to listen to an evangelist like Marcello Schermer (who will speak at NEXT19 in September). It leaves me with the impression that some of the original promises of the internet have been fulfilled in Africa: making information available everywhere and to everyone, giving people access to digital technology and a global marketplace, regardless of geography.

What Marcello calls the African start-up revolution can have a global impact: these start-ups often find local solutions to global problems, that can then be applied on a global scale. He points out that these problems often aren’t seen by first-world people, and the solutions are sometimes pretty simple and low-tech. In addition, they leapfrog legacy technology.

Another white African worth paying attention to is Erik Hershman, the co-founder of Ushahidi, iHub Nairobi, BRCK and Savannah Fund. With BRCK, he works hard on solving the connectivity issue, which is tricky for a continent of this size. Therefore, he tries to apply web-scale economics to the network itself, another potential breakthrough with global impact.

And if you’re in the mood for a binge-watching session, check out TEDxEuston on YouTube. For a decade, TEDxEuston has done a tremendous job spreading African ideas.

Schermer quotes Hershman as follows:

We should stop thinking about how Africa can be more like us. We should rather think about how we can be more like Africa.

Photo by Nick Owuor (astro.nic.visuals) on Unsplash

Personal computing moves in cycles. After the PC cycle came the web. And now we’re about to witness the mobile cycle topping off, with virtually every person on the planet above the age of 13 owning a smartphone, sooner or later. But what will the fourth cycle be about? Which will be the technology to drive it? As of summer 2019, the picture is not very clear.

In the past, each cycle was driven by interface changes. The web browser became the graphical user interface for the internet, that itself traces its roots back to 1969, now 50 years ago. And the iPhone with its haptic touch screen became the interface for the mobile internet. The next interface will be different, that’s for sure. But how?

So far, we’ve seen a few possible candidates. Voice is hot, with smart speakers already starting to take off. Gesture and sensor input is another piece of the puzzle, and artificial intelligence or machine learning are driving forces on the technology layer. On the visual side, there is the VR/AR/MR/XR combo that still waits for a breakthrough into the mass market.

Hardware fades away from the user experience

Over the past few years, a new buzzword metaphor slowly started to gain steam: spatial computing. It reflects the notion that hardware fades away from the user experience, interaction and interface.

Spatial computing makes the hardware disappear. Not physically, but digitally: we only have the output of the machine, nothing else.

At NEXT, we’ve discussed the trend that technology gets transparent and thus invisible as early as 2013. More than six years later, this new paradigm is still nascent and far from mass adoption.

What spatial computing aims for is the replacement of monitors and other digital displays in our lives with all kinds of smart glasses and head-mounted displays. But even an enthusiast like Robert Scoble, who expects that literally everything we do will change in the next decade, admits that this will not happen in the next 24 months.

We need to figure out the UX/UI for spatial computing

While we’re waiting for new visual hardware to deliver on the spatial computing promises, the software is also challenging, especially when it comes to the UX/UI. What didn’t change during the first three cycles: user interfaces fit on 2D screens. Now we’re talking about 3D, and that is a different ballgame.

For each cycle of the past, this puzzle had to be solved. The industry needed someone to figure out the UX/UI. For the PC era, it was the GUI that Apple developed for the Macintosh and Microsoft consumerised with Windows. The web wouldn’t have happened without Marc Andreessen’s Mosaic/Netscape browser. And the iPhone came with a decent touch screen and the right GUI for mobile use.

For spatial computing, this case isn’t solved yet. That’s one of the main reasons why VR/AR is slow to take off.

The immersive technology consumer market shows signs of healthy growth, but compared to the smartphone market, it is still tiny. We can expect a similar ramp-up phase. For years, mobile had been something expected to happen soon. With the advent of the iPhone, mobile finally happened.

Spatial computing, possibly the fourth paradigm of personal computing, is today where mobile was before the iPhone. Over the next decade, this will probably change. But how exactly this paradigm will turn out to be defined in terms of hardware, software and UX/UI is still open.

Last updated on October 14, 2021. Photo by JESHOOTS.COM on Unsplash

The tech industry is buzzword-driven like few other industries. And these buzzwords come and go, sometimes quite fast. To an extent, the Gartner Hype Cycle does a good job covering this tech lingo development.

Do you remember the time when data mining was hot? In the early days of the web, the term web mining was then coined for what essentially became web analytics. Another few years later, a new mining metaphor appeared: reality mining. Now that was about sensors, like the early smartphones came with, which allowed to track the analogue world in a new way.

The common denominator is data, that is analysed to generate higher-value information. The mining metaphor implies a process to extract and generate value from mountains of otherwise worthless data. These mountains eventually grew into Big Data, another buzzword. Back in 2011, we considered Big Data big enough to dedicate a whole event to Data Love.

Data explosion

What has changed over the years and with these different buzzwords are the sources and the amount of data. Back in the olden days, data had to be typed into computer systems, or even punched into punchcards. This was tedious and generated only small amounts of data, compared to what we have today. Data, plural of the latin word datum (given), came into existence as a given, something that existed before it was captured in digital form.

With digitisation, the spread of digital systems and the increase of processing power and storage, the amount of data exploded. The internet, the web and the smartphone were milestones of this data explosion, each leading to more data generated, distributed and stored. The sensors that were first tied to computer systems and smartphones got a life of their own, spread into the wild and generated even more data.

Thus reality mining – an ever-increasing portion of our world is mapped by data, converted into data, or even generated through data. Data becomes reality, and vice versa. We are moving into cyberspace, to borrow another metaphor that has been around for decades. The Parallelwelten of the physical and the digital world are merging.

The proliferation of analytics

What was once limited to the relatively small realm of data is now almost without limits: we can analyse our reality with the same tools once invented for the use of specialists. Nothing wrong with that, but the proliferation of analytics has a bunch of consequences.

For example, with analytics came the definition and measurement of key performance indicators (KPIs), that were then used for optimisation. When it comes to things like revenue per user in an online shop, that’s not an issue. But we already saw that optimisation for engagement in social media can have serious consequences for our societies. We’ve discussed this at NEXT and on this blog for years now.

Our information ecosystem is heavily vulnerable to all kinds of manipulation, as the investigations following the 2016 US elections showed. And the next step is the automation of optimisation through machine learning, or artificial intelligence if you prefer. This automation will close the loop of human behaviour control, of reality control. If it hasn’t already done so. Keep in mind that web analytics was called web intelligence for a while.

Losses and waste are socialised

These days, we see a lot of new realities emerging: from augmented reality (AR) and virtual reality (VR) to mixed reality (MR) or cross reality (XR). The virtual world becomes real, and the real world is virtualised. Increasingly, the digital world defines, controls and governs the analogue world.

Mining is the process of extracting value, leaving behind waste. That’s exactly what we are doing to our reality these days. What Big Oil does with planet Earth, Big Tech does with our human reality. Both are generating enormous wealth for their shareholders. Losses and waste are socialised.

And that’s, in a nutshell, why we now have some serious discussions about new regulations for Big Tech.

Photo by Dominik Vanyi on Unsplash

People of my generation grew up with a bunch of tech-related visions of the future. Some of them turned into reality, like the computer on every desk. But another, closely related vision so far failed to materialise: our offices are still anything but paperless. Even a digital agency like SinnerSchrader moves an astonishing amount of paper. Heck, we are even publishing books (but that is another story).

New employees typically get two notebooks, one of them made out of paper. In the digital age, it still makes sense to take notes or scribble on paper. Nothing wrong with that. But why is the worldwide production and consumption of paper still growing? Why is office work still closely related to paper? Why is document management still largely paper-based, and not digital? What happened to the paperless office?

Part of the answer is that digital technology made the creation and copying of documents easier and more efficient. With typewriter and carbon paper, you could produce only a few (carbon) copies of a document. After the Xerox machine arrived, copying already went crazy. But with the dawn of PCs and cheap office printers, the number of documents per office employee exploded. All of a sudden, it was easy to type and print.

Word processing led to an explosion of paperwork

In the old office world, the number of secretaries and typists limited the number of documents an office could produce on any given day. In the PC era, everyone is able to create papers. Typing capabilities and distribution became the new bottlenecks. The internet basically removed both: people learned how to type, and the internet took care of distribution. With email, everyone can send around as many documents as desired.

Computer monitors needed quite a while to catch up with paper (and printers) when it comes to display quality. This led many people to print out things they needed to read, and it still does today. Even in this day and age, companies produce digital documents that are best suited to be printed out, and often hard to read on the screen. Silly, but true.

In summary, while word processing increased the efficiency of paperwork, this didn’t lead to cost savings but to an explosion of paperwork – more paper for the same price, or still more, since cheaper paperwork allowed for the creation of documents that otherwise were prohibitively expensive to produce. The office is a peculiar world.

Digital document workflows are still broken

Did I already mention the fax machine? This was another culprit for the increase of paper usage. People printed out letters and sent them via fax to the recipient who got literally another copy on another sheet of paper. For a business letter via snail mail, only half the amount of paper would be needed (but hey, most of the time carbon copies were made anyway).

Like email, fax speeded up business communication, and this led to more messages. Email then further increased both speed and number of messages. And yes, people started to print out emails. In many footers, I still get the advice to consider the environment before printing out this message.

Many digital document workflows are still broken these days. At some point, printouts are necessary, or at least considered helpful. And the longer a workflow gets, the greater the chance of one or more of these breaks. This can lead to several printouts of the same document at different locations, and to more paper usage than in a pure-paper workflow, where only one piece of paper would be moved around physically.

Paper is the universal medium. Through letters, even people without phone or email can be reached. Paper is the classic example of old media that don’t die after the appearance of new media. The emblematic office machine of the early 21st century is the combined printer, photocopier, scanner and fax. In a truly paperless office, it wouldn’t be necessary.

Will the paperless office ever arrive? I doubt it.

Photo by Samuel Zeller on Unsplash

We’ve already seen some innovation in the mobility space, but the problem no. 1 of urban mobility isn’t even addressed so far: commuting. The reason: It’s very hard to solve.

Electric cars, shared mobility, autonomous vehicles, electric scooters, bike sharing, smart mobility – there’s a lot going on. But if we take a closer look, most of the new mobility products and services are limited to urban city centres. Even suburban areas and outskirts don’t see these innovations arriving, let alone the rural surroundings of metropolitan areas.

If you happen to live outside of a city like Hamburg, progress in the mobility space is slow and limited. Take a bus to the train station and hop on a train, or stick with your car. That’s it. Both trains and streets are operating near capacity limits, so this is the choice between scylla and charybdis. And it’s almost impossible to upgrade the infrastructure, since the bottlenecks are near the centre.

How did we end up with this mess in the first place? Thanks to the car, the 20th century saw the separation of work and living. While jobs were concentrated in urban centres, living spreaded to suburban areas and the countryside. Today, it would be impossible to find enough housing for everyone who has a job in a city like Hamburg. The result: Almost every third employee is commuting into the city, the vast majority by car. For a variety of reasons, commuting distances tend to increase over time, thus only aggravating the problem.

Electric cars won’t do much for commuters

Of all the current mobility innovation trends, which are at least pulling into the right direction, electric cars won’t do much for commuters, since they still need road capacity. Sharing would certainly help, at least in theory. But in practice there are almost no sharing services for commuters so far.

What about autonomous vehicles? If and when they arrive, they will be a relief for commuters, giving them back two extra hours of their day. In the long term, this probably will further increase the distances people travel to work. For comparison, after the fast train connection between Cologne and Frankfurt was established, people started to commute between the two regions, despite the 200 kilometres distance. It takes the fastest trains only slightly more than 60 minutes from one city to the other.

While autonomous vehicles will probably make the commuting problem even worse, scooters are almost completely useless for commuters. Perhaps for the last half mile to the office, like bike sharing. But nothing for greater distances.

So all our hopes rest with smart mobility. Now this is a very broad concept, encompassing everything from data and connectivity to analytics, information and green mobility. Basically, it is about the digital transformation of the mobility industries. This isn’t anything like a single solution to a complex problem.

The experience-led transformation of mobility

Lukas Neckermann defines smart mobility (and smart cities) as follows:

We propose that a smart city is one that combines its data, its resources, its infrastructure and its people to continually focus on improving liveability. A smart city is an aggregation of power and creativity, but also a body of data and live analysis. It has a soul; it sets goals and shares its passion. And if a smart city can so be equated with a human, smart mobility is a city’s circulatory system. A smart city, in combination with smart mobility, offers residents, visitors and stakeholders a quality of life and an ease of experience that pre-emptively addresses their needs, desires and transport requirements.

Again a very broad definition, but in line with the trend towards mobility as a service. On the user side of mobility, this translates into the experience-led transformation of mobility made possible through digital technology. Think for example Uber or Lyft. On the business and network side, there is still a lot of potential in the digitalisation of infrastructure and rolling stock. For example, Deutsche Bahn has plans to increase track capacities by 30 per cent, in part through digitalisation.

A Picnic for smart mobility

Perhaps what’s needed in the mobility space is a company like Picnic that doesn’t start operations in city centres of metropolitain areas, but instead chooses smaller cities for its first steps. Picnic completely rethought and rebuilt the grocery shopping process, coming up with a far better experience than its competitors, both stationary and online. So far, this model proved to scale very well.

Commuting is, like grocery shopping, both a pain point for commuters and a huge problem for cities that’s worth solving. Smart mobility concepts, if applied well, could lead to a breakthrough. Not as a single solution, but as a multi-faceted approach.

Photo by Viktor Forgacs on Unsplash

There is a fine line between theory and ideology. Both inform practice, but while a theory is preliminary and subject to change, an ideology is persistent and hostile to modification. Theories can easily turn into ideologies, and this can be damaging. Oftentimes, the distinction can be seen through the addition of the suffix -ism. In our case: science becomes scientism.

Scientism elevates a reasonable method – science – to the one and only acceptable way of doing business. It rules out everything that’s not scientific, in a hard science way. Science becomes something absolute, like the French king in the age of absolutism. This can of course work well for a while, but only until the French Revolution degrades the king.

These inevitable revolutions have a tendency to throw the baby out with the bathwater.

Scientism in product teams

Ben Sauer, who is scheduled to speak at NEXT19, posted a Twitter thread early this year to discuss the problem of scientism in product teams. He observes that agile and devops seem to be working, teams are getting better at iteration, organisations are improving delivery and coping with uncertainty. No doubt these are good news.

What Ben dubs scientism is the overstretched application of these modern toolsets and mindsets to situations where they don’t really make sense. It’s the old bias that comes with every tool: if you only have a hammer, every problem looks like a nail. With agile methods and quick iteration, you can build things fast. But you can’t make sure you’re building the right things.

Ben has some ideas about why scientism apparently has taken over. The first reason he gives is the widespread practice of measuring everything blindly. Only digital technology made this possible, since in the past it would have been prohibitively expensive to measure everything. The level of surveillance that’s feasible today was a wet dream of East Germany’s Stasi thirty years ago.

Measuring everything easily leads to a mindset assuming that everything that’s not measured or not measurable doesn’t even exist. Or at least doesn’t need to be taken into account. Key performance indicators are becoming the real thing, as opposed to indicators that point to something else, and something greater. For example, in the agile world velocity is important, but worthless if the team is racing towards the wrong goal.

New products are not about efficiency

How to find the right goal in the first place is another important question. There is a certain kind of uncertainty involved that needs to be reduced, while efficiency, speed and numbers should be increased. But new products are not about efficiency – new value is king. This new value must be discovered first, and this discovery process inherently comes with high uncertainty and low efficiency.

Ben’s bottom line: We need both qualitative and quantitative research. Quantitative is about the what, but not about the why. It is tempting to bring up Simon Sinek at this point. In the product world, the why is critically important. The why is the purpose. And the value as well. While purpose is qualitative, value can also be quantitative, at least when it comes to money be made.

So money and the bottom line can be key performance indicators for value created, but we should not confuse money with value. Products make money in exchange for the value they create.

Turning the modern toolsets into the citadel of scientism fits well with the tired old world of the industrial age, their corporate silos, their command and control mindset. But that’s not where the real value is. The real value drivers are creativity and imagination. Both are hard to measure. Both are deeply rooted in the liberal arts.

We are at the intersection of technology and the liberal arts, as Steve Jobs famously put it. We might as well add science to the mix. But we shouldn’t fall into the scientism trap.

Photo by Devon Rogers on Unsplash

How many messengers do you have installed on your phone? In my case, it’s WhatsApp, iMessage, SMS/MMS, Hangouts, Signal, Telegram, Threema and Facebook Messenger. Slack, Skype, Instagram and LinkedIn all have messaging functionality as well. I’ve probably missed a few apps, and some of them I rarely use. I also have accounts on other platforms, but didn’t even bother to install the apps.

This abundance of messengers provides me with a challenge you probably reckon with as well: how to contact any given person? Which messenger do they really use? For people you chat with on a daily basis, this is not a problem. But what about the other 1,000+ contacts you may have on all these platforms?

In the history of telecommunication and other networks, this is a common issue of the early days. After the telephone was invented, it was impossible to call anyone who used to be on the wrong network. Early in the 20th century, more than half of the US population lived in areas where there were two unconnected telephone exchanges.

Railways had similar problems: track widths varied, carriages could not be coupled. Lawmakers had to solve this and ensure interoperability. And that turned out to be a good thing, ensuring both growth and positive network effects.

Opening up the walled messaging gardens

So why don’t we have messenger interoperability today? We have, at least when it comes to SMS/MMS. The ITU has standardised these services to a point where phone users can send messages to everyone who has a cell phone. And Facebook has announced plans to make FB messenger interoperable with WhatsApp and Instagram, both owned by Facebook.

But Apple, Google and Microsoft (which owns Skype) don’t show any intention to open up their walled messaging gardens. Apple’s iMessage at least is somehow integrated with SMS/MMS, allowing to exchange messages with people outside the Apple universe. Skype can send SMS as well.

There are a few possible ways to achieve messenger interoperability. As a first step, the integration of SMS/MMS should be made mandatory by regulators. This would bring a kind of basic message exchange between different platforms. Users would need to configure how and where they want their messages, like they need to do with iMessage today.

But what about groups, the killer feature of modern messaging? It will be interesting to watch if and how Facebook is going to implement cross-platform message groups. From a UI/UX point of view, this could be a challenge.

Regulators need to step in

It is about time to throw off the chains of the WhatsApp group tyranny. There should be a way to participate in message groups without being forced to join a specific company’s walled garden.

Messenger interoperability has been a topic for years, if not decades. Ten years ago, we had more interoperability than we have today. The IETF, which has been working on internet protocols for ages, has discussed and proposed different solutions over all those years. In 2001, the FCC imposed measures after the AOL Time Warner deal to ensure interoperability.

The early days of messaging are long past. It is ridiculous that we still don’t have interoperability after so many years. Regulators clearly need to step in. With interoperability finally ensured, there is still ample room for product differentiation: through innovative features, better UI/UX, or integration with other products and platforms, to name a few.

Some basic level of interoperability should be feasible: SMS/MMS integration is a first step, and group interoperability a second step, that could follow after Facebook’s big switch to messenger interoperability later this year or maybe in early 2020.

Cory Doctorow, who spoke at NEXT a few years ago, recently called for interoperability to be applied to all kinds of monopolistic and oligopolistic big tech behaviour, not just in the field of messaging. It is true: interoperability is deeply rooted in the internet’s basic design. The term internet itself is shorthand for interconnected network.

Time to interconnect the messenger networks.

Photo by Pavan Trikutam on Unsplash

For a while, we’ve written on this blog about the idea that the Industrial Age is over. This would have some serious consequences. In the long run at least, the industrial sector of our economies would then be marginalised, like agriculture was at the start of the Industrial Age. Where would our wealth come from? And what about the Fourth Industrial Revolution? Perhaps a misnomer?

The Fourth Industrial Revolution is often described as the digital transformation, after the steam engine, electrical power and information technology shaped the first three revolutions. Others argue that with information technology we have already entered the Information Age. In this view, it was as early as with the Third Industrial Revolution that the Industrial Age ended, in the second half of the 20th century.

And the early 21st century would then be the beginning of the Imagination Age. This isn’t far from what David Mattin once described as augmented modernity. It is the age of creativity. Of imagination as the key mode of thinking, rather than knowledge work. Of social and emotional intelligence. Sounds appealing, doesn’t it? However, could it be too good to be true?

Four ages of civilisation

Let’s sort out things a bit.

• Civilisation started with the Agricultural Age. The main task was producing food. Most people worked in agriculture, as farmers.
• The Industrial Age changed this picture dramatically. Now we got factories with machines producing commodities. The factory worker became the new norm. Products were physical goods.
• In the Information Age, workers became clerks and moved to the office, doing knowledge work and using computers. Analysis and thinking were the main activities. Products became services.
• And finally, the Imagination Age delegates knowledge work, thinking and analysis to the machines, leaving human workers with everything that can’t yet be automated: creativity, imagination (hence the name), social and emotional intelligence, to name a few.

Machines can be efficient, so that humans don’t need to be.

We’ve got a lot to do

In this view, each epoch (or age) has successfully applied new technology to old tasks. Agricultural tools allowed humanity to settle down and grow food, instead of hunting and gathering it. Industrial machines produced more output and reduced the need for agricultural work. Computers further automated the factory, work could shift from the assembly line to the office. And finally, office work gets automated. Clerks can now move out of the office, becoming digital nomads and creative artists (in theory at least). Studios are the new offices.

If all that’s true, we’ve got a lot to do. In some respects, we are still stuck in the Industrial Age. We teach our children in schools that are organised like factories. We structure our work after the models of Henry Ford and Frederick Taylor. Knowledge work and computer literacy are underweighted (but they belong to the Information Age anyway). Creativity, imagination, social and emotional intelligence are undervalued. All the fuss about new work is simply a derivative of the discrepancy between how we structure our world and our work today and how we create new value in the Imagination Age.

So what the Fourth Industrial Revolution and the digital transformation really are about is a seminal shift to creativity and imagination as primary creators of value. Now this a real new Renaissance.

Photo by Thought Catalog on Unsplash

The post-digital world comes with a number of other post-isms, like post-modern or post-industrial. If we follow Tim Leberecht, post-efficiency is one of them. To get a common misunderstanding out of the way: a post-digital world is still a thoroughly digital one, a post-modern world is still modern, and a post-industrial world still industrial. In the same way, efficiency won’t go away. But like digital is no longer a differentiator, modernity is giving way to a new phase of history, and the industrial revolution enters a fresh round, efficiency has lost its vigor.

These days, most things are already optimised to a point where almost nothing is left to gain from further optimisation. And since optimisation always comes at a cost, its return on investment is shallow. Efficiency looks at the cost side, it’s basically about cost-cutting. But there are two areas where cost-cutting doesn’t work the same way: marketing and innovation. You can of course lower your marketing spendings or your R&D budget, but this doesn’t guarantee efficiency gains, since in worst case you may lose even more in revenue than you saved in costs.

Innovation per se is never about efficiency

So how can we improve the efficiency of marketing and innovation? Or can’t we? Innovation per se is never about efficiency. The new is never efficient. It requires time and scale to reach a certain level of efficiency, and by the time a new product reaches scale it loses its innovative appeal. In today’s tech world, a lot of capital flows into digital innovation, into start-ups and their products. Time to reach scale is shortened through massive amounts of capital.

In best cases, this approach can be tremendously efficient. Google for example only needed $36.1M in funding and has been highly profitable ever since. Amazon raised $108M, but Facebook already pocketed $2.3B. Apple’s seed round in 1977 was $250k. And Uber so far needed $24.7B. So over time, these numbers obviously are rising. The later you come to the party, the more expensive it gets. But in general, it’s not capital that is scarce, but talent and user attention. (Your mileage may vary.)

Marketing has always been inefficient

This brings us to the second point, which is marketing. The traditional marketing system has always been inefficient, and despite the promises of digital advertising, it still is today. Many start-ups are applying a growth hacking approach to their marketing. With growth hacking, efficiency is certainly part of the game, but the focus is speed and, well, growth. It doesn’t carry legacy baggage from the marketing of the past. It strives to be effective, rather than efficient.

Growth isn’t a question of efficiency. As long as you’re growing, you can always postpone your worries about inefficiency. Top-line growth allows for a certain amount of lightheartedness. You can improve the bottom line later by cost-cutting, if that ever should become necessary. (It probably will, sooner or later.) But in the meantime, it’s about creating new value. Acquiring users and talent are top priority, capital will follow if you have both.

Perhaps the current era is best described as a kind of Wild West scenario. The digital pioneers of our day and age are conquering the vast digital continent. The digital frontier is literally moving westwards, from the Valley and Seattle over Asia to Europe and Africa. A cowboy doesn’t worry about efficiency, as long as the prairie is spacious and cattle is abundant.

Photo by Mahir Uysal on Unsplash

Designer Erik Spiekermann once coined the phrase: Alles ist fertig, es muss nur noch gemacht werden. Roughly translated: Everything’s ready, it just has to be done. That’s exactly the state of digital in 2019: Everything’s digital now, it just has to be digitalised. Welcome to the post-digital world! The future is already here – it’s just not very evenly distributed, as William Gibson put it. That everything’s digital now has a number of grave consequences.

First, digital is no longer a differentiator. It’s just the way it is. And how everyone expects things to be. Like tap water, or electricity. Ubiquitous, needed and necessary. It still requires a certain amount of attention, work, maintenance and money. And of course there are places on this planet that lack water, electricity or digitalness. But in general, we are talking about commodities and fungibility. Digital has been successfully commoditised.

We only notice tap water, electricity or wi-fi, for example, when and where they’re missing. Otherwise, they’re just part of the background.

Late adopters are in danger

Second, consumer expectations have flipped. They perceive not being digital an annoyance, or worse. This puts late adopters into a dangerous position. Getting digital no longer gives them a competitive advantage. It only lessens a dire disadvantage. This makes the investment no less necessary, but harder to justify, since the return on investment probably will be lower. Investments are inevitable only to keep current customers and revenues, while growth can’t be taken for granted.

But there’s neither a choice nor an alternative. Invest in digital, or go out of business. In the long run, at least.

Third, every business is now a digital business, and that means: a tech company. Software is eating the world. The investments mentioned above are first and foremost investments in software. And software means: shorter product cycles, frequent updates, better customer experience. It means disruption, and agile mindsets. It’s a totally different ballgame. For incumbents, there are two remaining assets that they possibly can still leverage: the customer base, and the current revenues.

Digital has been commoditised, but it commoditises everything else as well. Classic brands are in danger.

Welcome to the post-digital world

Fourth, the customer experience is now the dominant differentiator. Brands are built through experiences, and experiences are built through software. A better customer experience warrants a premium price. This helps a lot in a world where prices are under the pressures of commoditisation. Where the experience is the product. Consumers are going for experiences, rather than services or physical goods. Investments in digital transformation and in software ultimately are investments in experiences.

The rule of thumb is: invest in better experiences to thrive in a world where everything’s digital.

This world is a post-digital world. Digital technology is the platform upon which new value is built. And existing, old value is absorbed by, and thus commoditised.

To be clear, there’s still a lot of work to do. Post-digital doesn’t mean everything’s done. It might be ready, in the Spiekermann sense, but nevertheless, it has to be done.

Photo by Raphael Schaller on Unsplash

Remember the days when things were happening one after the other? When interruptions were rare? From time to time, your landline phone or the doorbell were ringing. In the office, you would occasionally talk to your colleagues, and mail was something physical that arrived only once a day. The evening news on TV and the morning paper would give you a brief summary of what happened outside of your immediate surroundings. You would hear breaking news on the radio, the fastest medium at the time. But even radio would rarely interrupt its programming to report something that couldn’t wait until the next full hour news broadcast.

This basically was the world I grew up in. When my father came home from work, he would almost never get a call from his boss. Heck, until the late seventies my parents didn’t even have a phone. People had to call our neighbours if necessary. Otherwise, my parents corresponded with our relatives and friends through handwritten letters and postcards. Today, you still can find some traces of this romantic world in rural areas where cellphone coverage is low. But even with EDGE only (which was considered high-speed back in the days), your messenger still works, more or less. You don’t have the full digital experience, but you’re still far from offline.

A peculiar paradox

In today’s world, things are happening all at the same time. Interruptions are frequent. You carry a device that can interrupt you all the time, and it does if you let it do so. The office world has changed dramatically, and not only mail arrives every second, but also other messages on myriads of different platforms. News, both real and fake, is everywhere and always available, spreading like wildfire. The whole communications process has sped up to a point where everything happens at once, simultaneously. It’s now up to the individual how to filter the constant maelstrom of information that’s pelting down on us day in, day out.

In and by itself, this simultaneousness is neither a bad nor a good thing. But it certainly demands some reflection. There is a peculiar paradox at work. Communications technology is supposed to save time, and it definitely does. You don’t need to wait for handwritten letters arriving to your physical inbox after some days. Via messenger, the answer can come immediately. But technology also eats up time, not only through the explosion of messaging in all flavours that needs to be managed. Science has found evidence that we perceive time differently through the use of technology: Time is running faster. We feel more pressured by time. Our brains are speeding up, which is again neither a bad nor a good thing, but ambivalent.

Time is not what we think it is

Simultaneity blurs the once clear distinction between work and leisure time. When we are at the office, we’re constantly distracted from work. On the go and at home, we’re constantly distracted by work. This simultaneity makes it hard to maintain the distinction – and also to properly measure work hours. Time spent at the office is at best a proxy for real productive work time. Employees de facto get paid not for their time, but for the results of their work. Last week, the Court of Justice of the European Union declared that EU member states must require employers to set up a system enabling the duration of daily working time to be measured. This might be a bigger challenge than expected.

But what is time, anyway? Albert Einstein famously theorised that two distinct events don’t happen at once in an absolute sense if they happen at different points in space. Simultaneity depends on the observer’s reference frame. Spacetime is a four-dimensional continuum, in theory at least. If these theories are right (and physics has found ample evidence), then time is not what we think it is. Without delving into physics, let’s do a thought experiment. Simultaneity is something we perceive. In modern physics, it depends on the movement of the observer in relation to the observed events. In our daily lives, it depends on how we deal with time. It is a social construct. Modern time was invented not earlier than in the 19th century with the proliferation of railways.

Technology has changed our experience of time

The railways required time to be synchronised over distance to avoid crashes and secure operations according to a timetable. Synchronisation of time over distances was only made possible through the invention of the telegraph. Time zones followed even later and were fully adopted only as late as 1956, when Nepal switched to a standard UTC offset (UTC+5:45, still a bit odd). Before the arrival of railways and the telegraph, or modern transport and communications technology, nobody really cared if two events at different places would happen simultaneously or not. The answer wouldn’t have any practical relevance whatsoever. Also, there was no way to find it out.

With the acceleration and proliferation of modern transport and communications technology, we have basically accelerated time up to a point where it almost collapses into a single simultaneity. At least that’s how we increasingly perceive time. But at the same time we know there is no absolute simultaneity. At least that’s what physics tells us. Thus, we run into age-old questions regarding the existence or non-existence of past, present, and future. The past has already ceased to exist, the future doesn’t yet exist, and the present, well, is subject to relativity. Time remains a mystery, but at least we experience time.

Technology has changed our experience of time, and this change requires a new understanding of time. Like railways and the telegraph did, digital technology will again change how we experience and understand time. In the future, or what we call so.

Photo by Heather Zabriskie on Unsplash

So marketing is best suited to drive the digital transformation, at least in theory. But what about the CMO? How can he turn into the Chief Digital Transformator or Chief Innovation Officer role? This transformation isn’t going to happen overnight. Today, the CMO role has different characteristics: it is about brand, growth, digital, or community. But it should be about value(s). The CMO should be the Chief Value Creator, or Chief Value Officer. In fact, the role of the CMO has seen the most tinkering in recent past.

More important than what’s on the business card is what the role is about in daily business. All too often, the CMO is still thinking in campaigns and classic marketing plans. While there’s nothing wrong with that, it’s not sufficient. Promotion is an important part of marketing, but what about the other Ps – place, price and product? The digital transformation has changed all of them profoundly. And there is a bunch of CMOs who got the memo and started changing themselves.

Digital marketing is still dominated by what I would call a copy-and-paste approach from classic marketing of the past. Soon after the first online banner was invented, there was the original promise that everything could be tracked way better than ever before. The rise of Google came with the second promise: that everything could be targeted way better than before. And to a certain amount, these promises held true. But tracking and targeting, especially in combination, really annoyed a lot of consumers.

CMOs need to throw away almost all of their conventional wisdom

Tracking and targeting made digital marketing very efficient, and thus the share of online marketing spendings rose and still rises today. The CMO has a new toy, not as glamorous as the other toys, but still. However, from the early days of online marketing till today, most CMOs missed the second boat: e-commerce, or place in marketing lingo. While online marketing was adopted as just another channel (also questionable), electronic commerce went to the sales department, or even IT, but not to the CMO.

Thus, many companies treated e-commerce as just another distribution channel, and created the multichannel or omnichannel ideology, with mixed results. The Parallelwelten of the legacy business and the digital business drifted apart, creating all sorts of problems, ranging from surging capital needs to a fragmented customer experience. And now the third boat, which is called product, makes things even worse for the incumbents and the old-school CMO. The digital product world is a far cry from the old marketing world.

For CMOs to thrive in this new world, they need to throw away almost all of their conventional wisdom. Digital products start with the customer experience – something traditional marketing never really cared about. Quite the contrary, most online marketing sucks most of the time. It is applied at the end of the product pipeline, when everything is already set in stone. That’s not how things work in the digital world. Marketing must be tried and tested early on, even before there is something called a minimum viable product (MVP). Marketing is inseparable from innovation.

The CMO must own customer data, front and center

What the CMO really needs to do, besides the mind shift, is a budget shift – take budget away from the end of the pipeline and invest it in new products, in innovation, in new value. Granted, that’s easier said than done. In fact, it requires increased efficiency of the current marketing spendings. The amount of waste must be reduced, to free a significant part of the budget. The most promising way to do this is through the better use of data. Now that’s where we are back at tracking and targeting.

The CMO must own customer data, front and center. Customer data equals customer access. Marketing can no longer afford renting customer data and customer access from Google and Facebook. It’s getting too expensive, since the auction model puts margins under pressure. But how to come to grips with the data play? This requires services (or products) your customers subscribe to, i.e. relevant services with a free tier that people sign up for and log in to. In a way, the CMO faces a chicken-or-egg problem.

But the path is clear: Take a cut from your marketing spendings, invest it in products with great user experience and high relevance to your actual and potential customers, let them subscribe and sign in to your own platform and gather the data you need to improve the efficiency of your marketing. The more efficient it gets, the more budget can be shifted towards new experiences, products and services that generate value and thus revenue over time. And the CMO owns the whole machine.

How does that sound?

Photo by Clark Tibbs on Unsplash

Corporate silos have been the fruit of functional differentiation. And this again is the result of growth at scale, of mass production, mass consumption and mass communication. Your barber shop doesn’t need a marketing department. In any small start-up with, let’s say, five people, there are no silos, and functional differentiation is low, albeit it is present. You may have a developer or two, a designer, a product manager, and a marketing guy, who is probably more of a growth hacker. Some or even all of them are founders and thus their own bosses.

They work as a single team. No need for boundaries, hierarchies, org charts and all that jazz. They may do Scrum, but at this size, even a lightweight method like Scrum might be overkill. The whole purpose of the start-up is innovation and marketing. They are looking for a new product and the new market for it. Innovation and marketing aren’t separated, because they are inseparable. No product without market, and vice versa.

With growth and scale, and over time, this simple, one-team organisation slowly turns into a siloed power structure, with the top positions – for a classic example, CEO, COO, CIO and CMO – abstracted from the business on the ground level, adding overhead to the company. Each of the c-suite guys commands a growing hierarchy of ever-increasingly functionally differentiated units, with specialists for everything you could possibly think of. Decision making gets slower and more complicated.

Marketing and innovation can’t be controlled like costs

Marketing and innovation might then still be the purpose of the enterprise, but they become embedded into a complex environment. As it grows, the enterprise absorbs complexity from the outside into the inside. This is to mitigate risks. But the greatest risk is that marketing and innovation, which produce results, get treated like all the other corporate functions, which are costs. In any enterprise, big or small, costs must be closely controlled, since costs are what a company really can control in the first place.

Marketing and innovation can’t be controlled in the same way. And thus they need to be treated differently. Treat them like costs, and both go down the drain. They are first and foremost about quality, not quantity. You may increase your marketing spendings or your R&D budget, just to get even worse results than before.

This happens in fact with the bulk of investments into digital transformation. IDC expects that in 2019 alone, $1.25 trillion will be spent on digital transformation worldwide. At the same time, only 6% of all transformation efforts result in completely revolutionary experiences that are unique in the industry. What happens to the other 94%?

Digital transformation needs to focus on innovation and marketing. Everything else, the costs of doing business, already have been transformed or, if not, easily can be transformed, given enough time and money. Digital innovation and digital marketing are the fiery nucleus of today’s digital superpowers. Both also drive the engines of successful challengers. And yesterday’s incumbents, the heroes of the Old Economy, are today’s challengers in a world dominated by digital giants.

Marketing is best suited to drive the digital transformation

Digital transformation is not about technology, at least not in the first place. In a classic Jobsian sense, it needs to start with the experience and work back toward the technology – which is of course important, but not as a starting point. Marketing in general and the CMO in particular hold the keys to the kingdom, because marketing is greater than promotion and also includes the product, which is another name for innovation. And the CMO already has a seat at the c-suite table, or at least should have.

Marketing is best suited to drive the digital transformation, since it knows from past experience how to deal with the inherent insecurity of creativity. Remember the old Wanamaker quote?

Half the money I spend on advertising is wasted; the trouble is I don’t know which half.

For digital transformation, probably even more than half the money is wasted. But you need to waste it anyway. Otherwise, the required learning wouldn’t occur. Cost-cutting and efficiency won’t help when it comes to creating great experiences.

Last updated on August 26, 2021. Photo by Hal Gatewood on Unsplash

When the first music on compact discs appeared in the early eighties, people claimed it sounded awkward. They could effectively hear the ones and zeroes their music was encoded into. In reality, the argument goes, music is something analogue, and there is a certain loss occurring by encoding it digitally. That loss is something audiophiles pretend they can hear.

And they may be right, though algorithms for encoding music have become better over time, and inevitably there is also a loss going on with analogue media, like the vinyl record. But what we are dealing with here is the fundamental schism between the analogue and the digital world. In the former, there is more than just ones and zeroes – namely everything in between.

That’s where quantum computing comes in. It replaces the bit – the binary unit that can be either one or zero – with the qubit, the quantum bit, that can be both at the same time, and also everything in between. In a way, quantum computing is closer to reality than classical digital computing. Depending on our definition of reality, of course.

Quantum computing will redefine our world

The digital revolution tried to impose a digital definition of reality, a reality defined by bits. Our systems are governed by bits and everything that can be build upon bits. So far, this project has been incredibly successful. It has redefined our world, our societies, our economies and all the other systems we rely on.

Quantum computing may well do it again, and at another scale.

The funny thing is that quantum reality is itself an awkward entity with a lot of counterintuitive features. The many-worlds interpretation of quantum mechanics is perhaps only the best known of them. So if and when an upcoming quantum revolution will take over, the result may be even weirder than the digital revolution.

The promise of quantum computing is manifold. It is intended to solve all kinds of problems that cannot be solved by digital computing in a finite amount of time, paving the way to innovation in medicine, transportation, or computer security, for example.

Ordinary computers think in certainties, digitizing every aspect of the world to well-defined numbers. Quantum computers probe all possibilities, constantly updating the probabilities of multiple scenarios.

The quantum revolution might happen faster

Quantum computers probably won’t replace digital computers, but rather leash off another computing revolution with possibly even greater repercussions. It still has a long way to go, since quantum computing is now where digital computing was back in the fifties or sixties. But it might happen faster, since the preconditions are much better these days, with major digital players like IBM, Google and Microsoft heavily investing.

And besides the digital incumbents, there are also upstarts like D-Wave, founded in 1999, as well as others, which might end up leading the pack and winning the race, even if only after a feared quantum winter. It is a fascinating technology, moving beyond the digital, binary logic that has dominated the world of the early 21st century.

Digital computing and binary logic fostered a binary, black-and-white, good-vs-evil world view and the resurgence of tribalism. Will quantum computing and quantum logic change that? It may be too early to judge, but it appears clear that quantum physics requires a new view of reality.

Given the vast realm of possibilities, should companies now heavily invest in quantum computing? Not so fast. Gartner has an excellent overview for CIOs. It concludes as follows:

It is time to learn more about quantum computing.

Though it’s heavy stuff and loaded with physics, it nonetheless is captivating. And mind-boggling.

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Innovation is a tough beast. On this blog, we’ve written about what it is, whether it is always good or not, and why we need both disruptive and sustainable innovation. But the question still (and maybe always) is: How do we do it?

There is a famous quote by Peter Drucker, who wrote back in 1954:

Because the purpose of business is to create a customer, the business enterprise has two–and only two–basic functions: marketing and innovation. Marketing and innovation produce results; all the rest are costs. Marketing is the distinguishing, unique function of the business.

So, innovation is one of the only two basic functions of any business, along with marketing. And it’s not by accident that big consultancies like Accenture (which owns the majority of SinnerSchrader, a host of NEXT and of this blog) these days are tackling both digital marketing and innovation: they’re basically done with all the rest, which are simply costs. The game of efficiency and cost-cutting is over. Now it’s all about the product, and this means marketing and innovation. It means new business models.

A different approach

This also reflects a shift on the client’s side of the table. The big, global corporations have not much left to gain from increasing their efficiency and reducing their costs through the application of digital technology. This plot played out very well over the course of the last few decades. But now, they are outgrown by the digital champions. These are either digital natives, like Amazon and Google, or pioneers of the digital age, like Apple and Microsoft. And the incumbents face challenges from countless pure-digital players, whose marketing and innovation capabilities don’t carry legacy from the analogue past.

So there are two areas left for efficiency and cost-cutting, the basic ones: marketing and innovation. But this time, a different approach is required.

The huge bet that’s going to reveal its outcome over the next decade is: can we make the marketing of the big legacy players more efficient and thus less costly, freeing up the money needed to invest in innovative (digital) products, to again be competitive with the pure-digital players? And how can innovation save them? How can they build innovative products and the appropriate marketing, while still running their legacy business? How can the Parallelwelten of the legacy systems and the new digital universe not only coexist but be transformed?

This is, in a nutshell, what all this digital transformation is about: the need to digitally transform marketing and innovation.

Innovation is a systematic practice

Since we are talking about innovation, the question still remains: how can we do it? Later in his career, Drucker wrote another famous article on The Discipline of Innovation, in which he discussed seven possible sources of innovation:

There are, of course, innovations that spring from a flash of genius. Most innovations, however, especially the successful ones, result from a conscious, purposeful search for innovation opportunities, which are found only in a few situations. Four such areas of opportunity exist within a company or industry: unexpected occurrences, incongruities, process needs, and industry and market changes. Three additional sources of opportunity exist outside a company in its social and intellectual environment: demographic changes, changes in perception, and new knowledge.

Drucker is very clear in his assertion that innovation is a systematic practice. (Consultancies are quite good at systematic practices.) So it’s not about fancy sticky notes, or agile teams, or copying the digital champions and their business models. He defines innovation as the effort to create purposeful, focused change in an enterprise’s economic or social potential.

A new model

Let’s take a closer look at this definition.

An effort means that innovation requires commitment and investment. It has a creative side, which implies that we should involve a certain kind of personality: entrepreneurs and designers, for example. The purpose needs to be clear – making money or increasing shareholder value is not enough. We need something beyond that to guide both the enterprise and the consumers. Focus is also important. Investing randomly, without proper knowledge of users, markets and technology, doesn’t make sense. It doesn’t get the returns everyone wants and needs.

We are dealing with change. And change isn’t always convenient, even when it’s about economic or social potential – the dent in the universe, to quote a great innovator of the digital age. Innovation increases a potential. And then marketing tries hard to turn the potential into business results, creating new customers and upselling to existing ones.

In the digital age, innovation requires a relentless focus on the user and his true problems, needs and desires. Marketing must be dynamic and closely aligned with product development. What all this translates into: a new model is called for. It’s not there yet.

Last updated on October 7, 2021. Photo by Justin Veenema on Unsplash

Digital technology adds layer upon layer to our lives. Artificial intelligence creates a whole new world of possibilities and possible dangers. Augmented reality (AR), virtual reality (VR), mixed reality (MR) or cross reality (XR) all show, by their names alone, that there is more than one reality. Reality becomes just another word for world (or universe).

Increasingly, our reality is defined through digital products, which afford us infinitely more freedom than in the analogue past. Filter bubbles, fake news, and alternative facts: they‘re just bits after all, bits that can be easily and cheaply manipulated. We now live in multiple realities that are increasingly losing touch with each other. That’s typical for serious epochal breaks. And so the common world view of the past 500 years – what we know as modernity – is fundamentally shaken.

Reality has been turned into bits

In the infancy of the web, back in the early nineties, there was a clear distinction between real life and life on the internet. Real life was defined as not on the internet. Over 25 years on, this distinction appears naive, even quaint. Real life and life on the internet have merged, but have spawned multiple realities in the process. Reality has been turned into bits. Or is it the other way around?

The digital world, aptly named so, follows its own rules of operation, which are quite different from those of the analogue world. But, as Hal Varian and Carl Shapiro pointed out twenty years ago, while technology changes, economic laws do not. If the global stock market is right, then value creation is moving from analogue to digital at a rapid pace, so much so that the digital world already seems to be dominant. It turns the analogue world into data, which it then processes into information.

Increasingly, the digital world defines, controls and governs the analogue world. Tech companies take human experience and turn it into a raw material that can be bought and sold. In her book on Surveillance Capitalism, Shoshana Zuboff describes how companies like Google and Facebook, by reengineering the economy and society to their own benefit, are perverting capitalism in a way that undermines personal freedom and corrodes democracy.

Information defines reality

They’ve effectively closed the loop of behaviour control. Our human behaviour is turned into data, which is processed into information and then manipulated and fed back into our information diet to control our behaviour. Data is the raw material, and information – not content – is king. Information even defines reality.

The Matrix might not exactly turn out to be as the Wachowskis imagined, but instead materialises as the digital superstructure we imposed upon ourselves with a little help from the internet, the smartphone, the cloud and the markets.

Hence, digitisation is the process of incorporating analogue stuff into the digital superstructure, to make it computable, i.e. manipulable through digital means. The next step is digital transformation: the creation and capturing of value in the digital superstructure. Through digital transformation, analogue stuff is devalued, converted into data and processed into information, which then has value.

Data as the new oil? Well, not really data, which is an almost infinite resource, but information, which is processed data and thus valuable.

…

This leaves us with a paradox. If we follow Wheeler, reality and information are the same thing. Thus, information technology is the powerful force to rule reality. It is reality technology. How can we then have multiple realities, or Parallelwelten? Are they mere illusions? Is this a feature of our Matrix – a simulation? Have the machines already taken over?

What is real – the human perception, or the digital code?

It all comes down to another key term that has been almost beaten to death: experience. In all its different flavours, from user experience (UX) and customer experience (CX) to human experience (HX), it is about perception. So now we face a tough decision: what is real – the human perception, or the digital code?

On the surface, this is a philosophical question. But in practice, it’s about which defines what. It’s a question of power. Power is real. In a recent essay, George Dyson asserts:

There is now more code than ever, but it is increasingly difficult to find anyone who has their hands on the wheel. Individual agency is on the wane. Most of us, most of the time, are following instructions delivered to us by computers rather than the other way around. The digital revolution has come full circle.

Models are no longer models

Dyson’s essay provides an elegant solution to the question of power: large hybrid analogue/digital computer networks. This is how he describes the digital giants of our time.

Their models are no longer models. The search engine is no longer a model of human knowledge, it is human knowledge. What began as a mapping of human meaning now defines human meaning, and has begun to control, rather than simply catalog or index, human thought. No one is at the controls. If enough drivers subscribe to a real-time map, traffic is controlled, with no central model except the traffic itself. The successful social network is no longer a model of the social graph, it is the social graph. This is why it is a winner-take-all game.

When the digital world merges with the analogue world, there’s little room for the second social network, traffic map or knowledge base.

These new hybrid organizations, although built upon digital computers, are operating as analog computers on a vast, global scale, processing information as continuous functions and treating streams of bits the way vacuum tubes treat streams of electrons, or the way neurons treat information in a brain.

This is an excerpt from a recent essay on Parallelwelten, the main theme of NEXT19. Photo by xandro Vandewalle on Unsplash

Our societies are fragmented into tribes which increasingly separate themselves from each other, each tribe residing in its own Parallelwelt. Via social media, especially Facebook, these parallel universes can easily be addressed, and mental or digital filter bubbles preserve the integrity of their respective world views.

The tribe is a powerful entity. An analogue tribe manifests itself in the digital world, and vice versa. But, as Michael Marinaccio put it in November 2016, under the fresh impression of the Trump election: “What happens as our offline lives (led by institutions) take a backseat to online lives (fueled by tribalism)?” And he continues as follows:

What if every single person in the world used one social media platform that allowed them to instantaneously communicate text, photo and video for free all the time; and they used that platform for nearly every thought that popped into their heads. What would be the effect on politics and institutions? The answer is straight-forward to me: offline life and interactions with institutions would largely cease to exist. Instead, fickle tribalism would randomly and wildly fluctuate major policy interests like a broken polygraph needle. The whims of the masses would destroy politics because politicians would no longer be able to keep up in any meaningful way. Lawmakers, reacting to culture, would have to accommodate by also shooting from the tribal hip. It would be total chaos all the time. If this seems like this is already happening, that’s because it is.

Bear in mind: this was written before Trump was sworn into office. Tribalism has taken over.

Human beings always gathered in tribes

When Seth Godin wrote his influential book on tribes a decade ago, he was quite optimistic about all the good things tribes and their leaders could do for us. A mere ten years later the world has flipped to a more pessimistic view. To put things in perspective, let’s keep some of these aspects in mind.

First, human beings always gathered in tribes. In a way, tribes have been living in their own Parallelwelten since time immemorial. Second, the compulsion to create one single, commonly shared world, and corresponding world view, is a quite recent phenomenon. It can be seen as a by-product of 20th-century mass production and mass communication, 21th-century globalisation, and the collapse of the bipolar post-war order after 1989.

Francis Fukuyama captured this moment in his book The End of History and the Last Man (1992), in which he argued that Western liberal democracy would be the endpoint of history. More than 25 years later, we still haven’t reached this point. Globalisation and digitisation led Thomas L. Friedman to his bestseller The World Is Flat: A Brief History of the Twenty-first Century (2005). But viewed from a different angle, the world doesn’t look flat at all, but spiky.

Tribalism has taken its toll

This leaves us with the question whether the long-term trend is geared towards globalisation, i.e. one world, or towards tribalisation, i.e. Parallelwelten. And indeed there is data that points to a flattening of globalisation, while tribalisation is on the rise. Shortly after Friedman launched his opus, the globalisation trend started to slow down. Since 2015, it has been flat.

Tribalism has taken its toll.

Like every -ism, tribalism overamplifies something that is not inherently bad. The tribe as organisational principle is powerful and probably part of the human condition. By contrast, tribalism introduces black-and-white, good-vs-evil, exclusive and authoritarian thinking and behaviour into the equation. So why do people resort to tribalism?

Because they have lost confidence in governments, security services, the free market and the banking system, Koert Debeuf argues. These institutions, pillars of globalisation, left too many people behind. When those people are traumatised, the (long-term) line of globalisation breaks down. According to Debeuf, whose reasoning is pretty much in line with Samuel P. Huntington’s work on the clash of civilisations, this breakdown eventually may lead to war.

The world is not flat

Parallelwelten at war – this looks like the main conflict of the 21st century. The world is not flat. At least not yet, as even Thomas L. Friedman himself concedes.

The Parallelwelten of our VUCA world, which is characterised by volatility, uncertainty, complexity and ambiguity, are highly (and sometimes strangely) interconnected. Thus, the despair of a Tunisian fruit seller can lead to groundbreaking events like Brexit. Maybe, globalisation and tribalisation aren’t opposites, but rather the two sides of the same coin.

This is an excerpt from a recent essay on Parallelwelten, the main theme of NEXT19. Photo by Lena Bell on Unsplash

Silicon Valley and its offspring ruled the first waves of the digital revolution. As a result, the digital world pretty much looked like a unilateral world. There was a recipe for easy success: look at what’s happening in the Valley, copy and adapt it fast to your local market, and move on. The Samwer Brothers almost perfected this approach with a combination of German efficiency and entrepreneurial ruthlessness.

But the time of digital unilateralism is over. Look no further than to the list of publicly traded companies with the largest market capitalisation. As recently as two years ago, the top ten was an All-American endeavour, dominated by four digital companies. Till then, two Chinese digital superpowers have entered the elusive ranks: Alibaba and Tencent. Both are now battling with Facebook over the fifth position in the digital champions league.

Rising stars from China

Granted, Microsoft, Apple, Amazon and Alphabet are still way ahead in terms of market cap. This may change over the course of the next few years. There are only three non-digital companies left in the top ten. And even Berkshire Hathaway, currently number five on the list, holds a significant stake of Apple stock. The digital revolution goes on, but the rising stars are from China these days. Baidu, the Chinese number three, is the smallest of the BAT crowd (Baidu, Alibaba, Tencent), but its prospects are just fine:

Baidu has been on the leading edge of everything from self-driving cars to short and flash video platforms. Baidu’s DuerOS is becoming the voice assistant operating system of choice for a growing number of smart devices and other applications.

Will the rise of China eventually lead to a bipolar (digital) world order? If we look at the bigger picture, this may eventually be the case. China is well positioned to take advantage of the emerging digital automotive industry. China is already Africa’s most important economic partner, and this isn’t going to change anytime soon. The tech industry plays a significant role here. Technology has already transformed life in Africa. There is an African tech generation rising.

Africa as a role model for innovation

And there’s also the notion of leapfrogging over now-obsolete technologies and going straight to modern fixes. It certainly has some limitations, nonetheless it can turn Africa into a role model for innovation, be it digital or analogue. Blockchain is only one example for this. The spread of mobile and digital technology is seen as the key to leapfrogging – in Africa as well as in India.

Broadening our view beyond the borders of the Valley certainly makes a lot of sense. The Parallelwelten of China, Africa or India warrant increased attention when it comes to the globalised future of the digital world. News platforms like Tech in Asia, TechNode, ChinaBriefs (launching soon) or Tech in Africa make it easy to follow what’s going on. Somehow, the Valley feels a bit tired, compared to the vibe of upcoming regions.

Photo by Brett Zeck on Unsplash

There’s so many different worlds
So many different suns
And we have just one world
But we live in different ones
–Mark Knopfler, Brothers in Arms (1985)

For decades, the many-worlds interpretation of quantum mechanics has puzzled even the greatest minds. But before digging into quantum mechanics, let’s halt for a second. Aren’t we talking about the digital versus the analogue world (or universe), for example? Or the digital divide between those who have access and those who don’t? About filter bubbles and corporate silos? And about the future that is already here – just not very evenly distributed, to quote author William Gibson.

Different parts of our world develop at very different speeds, in different directions, with different outcomes. Digital technology adds layer upon layer to our lives. Artificial intelligence creates a whole new world of possibilities and possible dangers. Augmented reality (AR), virtual reality (VR), mixed reality (MR) or cross reality (XR) all show, by their names alone, that there is more than one reality. Reality becomes just another word for world (or universe).

Increasingly, our reality is defined through digital products, which afford us infinitely more freedom than in the analogue past. Filter bubbles, fake news, and alternative facts: they‘re just bits after all, bits that can be easily and cheaply manipulated. We now live in multiple realities that are increasingly losing touch with each other. That’s typical for serious epochal breaks. And so the common world view of the past 500 years – what we know as modernity – is fundamentally shaken.

Reality has been turned into bits

In the infancy of the web, back in the early nineties, there was a clear distinction between real life and life on the internet. Real life was defined as not on the internet. Over 25 years on, this distinction appears naive, even quaint. Real life and life on the internet have merged, but have spawned multiple realities in the process. Reality has been turned into bits. Or is it the other way around?

For millennia, arts, media, philosophy and physics have all dealt with Parallelwelten, so we should be well equipped for what’s happening in this day and age. But are we?

Per definition, parallel universes don’t communicate with each other. They are separated. But there are traces that lead us to believe they might exist. Quantum mechanics has made some predictions that could be proven correct by experiments. While this is no proof of the existence of parallel universes, it nonetheless supports the many-worlds interpretation.

So there is hope, even for the Parallelwelten of quantum mechanics. By comparison, our own parallel universes are tiny, and not entirely parallel. But at least we know they exist.

Our societies are fragmented into tribes which increasingly separate themselves from each other, each tribe residing in its own Parallelwelt. Via social media, especially Facebook, these parallel universes can easily be addressed, and mental or digital filter bubbles preserve the integrity of their respective world views.

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Parallelwelten don’t exist without a reason. Their raison d’être is coherence and segregation. It’s making sense. Systems theory tells us that the basic process of social systems is communication. And communication is always selective, just as information is. With information technology, we’ve encoded our world, and this encoding facilitates the segregation and, up to a certain point, disintegration of our societies.

Value creation is moving from analogue to digital

The digital world, aptly named so, follows its own rules of operation, which are quite different from those of the analogue world. But, as Hal Varian and Carl Shapiro pointed out twenty years ago, while technology changes, economic laws do not. If the global stock market is right, then value creation is moving from analogue to digital at a rapid pace, so much so that the digital world already seems to be dominant. It turns the analogue world into data, which it then processes into information.

Increasingly, the digital world defines, controls and governs the analogue world. Tech companies take human experience and turn it into a raw material that can be bought and sold. In her book on Surveillance Capitalism, Shoshana Zuboff describes how companies like Google and Facebook, by reengineering the economy and society to their own benefit, are perverting capitalism in a way that undermines personal freedom and corrodes democracy.

They’ve effectively closed the loop of behaviour control. Our human behaviour is turned into data, which is processed into information and then manipulated and fed back into our information diet to control our behaviour. Data is the raw material, and information – not content – is king. Information even defines reality. Quantum physicist Anton Zeilinger postulates that reality and information are closely related:

I often say that quantum theory is information theory, and that the separation between reality and information is an artificial one. You cannot think about reality without admitting that it’s information you are handling. So we need a new concept that encompasses the two. We are not there yet.

This idea was introduced by John Archibald Wheeler, who famously stated:

Every physical quantity, every it, derives its ultimate significance from bits, binary yes-or-no indications, a conclusion which we epitomize in the phrase, it from bit.

In other words: bits, or binary digits of information, are first, and they give function, meaning, even existence to every particle, field of force, and even the spacetime continuum. If that’s true, the consequence bears a great irony: since our reality is just bits, and we have mastered the art of manipulating bits, our reality is now prone to manipulation in a way that was inconceivable just a few decades ago. Welcome to the Matrix.

Quantum physics requires a new view of reality

Wheeler first presented his it from bit notion at a conference in the spring of 1989, the same year Sir Tim Berners-Lee invented the World Wide Web, now thirty years ago. Even more mind-boggling is the fact that a qubit – the quantum bit in quantum computing – can exist in superposition of two classical bit values. According to Wheeler, quantum physics requires a new view of reality. Indeed.

While the theory might still be missing, in practice there already is information technology, which does just that: define reality. The Matrix might not exactly turn out to be as the Wachowskis imagined, but instead materialises as the digital superstructure we imposed upon ourselves with a little help from the internet, the smartphone, the cloud and the markets.

Hence, digitisation is the process of incorporating analogue stuff into the digital superstructure, to make it computable, i.e. manipulable through digital means. The next step is digital transformation: the creation and capturing of value in the digital superstructure. Through digital transformation, analogue stuff is devalued, converted into data and processed into information, which then has value.

Data as the new oil? Well, not really data, which is an almost infinite resource, but information, which is processed data and thus valuable.

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This leaves us with a paradox. If we follow Wheeler, reality and information are the same thing. Thus, information technology is the powerful force to rule reality. It is reality technology. How can we then have multiple realities, or Parallelwelten? Are they mere illusions? Is this a feature of our Matrix – a simulation? Have the machines already taken over?

What is real – the human perception, or the digital code?

It all comes down to another key term that has been almost beaten to death: experience. In all its different flavours, from user experience (UX) and customer experience (CX) to human experience (HX), it is about perception. So now we face a tough decision: what is real – the human perception, or the digital code?

On the surface, this is a philosophical question. But in practice, it’s about which defines what. It’s a question of power. Power is real. In a recent essay, George Dyson asserts:

There is now more code than ever, but it is increasingly difficult to find anyone who has their hands on the wheel. Individual agency is on the wane. Most of us, most of the time, are following instructions delivered to us by computers rather than the other way around. The digital revolution has come full circle.

Dyson’s essay provides an elegant solution to the question of power: large hybrid analogue/digital computer networks. This is how he describes the digital giants of our time.

Their models are no longer models. The search engine is no longer a model of human knowledge, it is human knowledge. What began as a mapping of human meaning now defines human meaning, and has begun to control, rather than simply catalog or index, human thought. No one is at the controls. If enough drivers subscribe to a real-time map, traffic is controlled, with no central model except the traffic itself. The successful social network is no longer a model of the social graph, it is the social graph. This is why it is a winner-take-all game.

When the digital world merges with the analogue world, there’s little room for the second social network, traffic map or knowledge base.

These new hybrid organizations, although built upon digital computers, are operating as analog computers on a vast, global scale, processing information as continuous functions and treating streams of bits the way vacuum tubes treat streams of electrons, or the way neurons treat information in a brain.

The tribe is a powerful entity. It can itself be seen as a hybrid organisation in Dyson’s sense. An analogue tribe manifests itself in the digital world, and vice versa. But, as Michael Marinaccio put it in November 2016, under the fresh impression of the Trump election: “What happens as our offline lives (led by institutions) take a backseat to online lives (fueled by tribalism)?” And he continues as follows:

What if every single person in the world used one social media platform that allowed them to instantaneously communicate text, photo and video for free all the time; and they used that platform for nearly every thought that popped into their heads. What would be the effect on politics and institutions? The answer is straight-forward to me: offline life and interactions with institutions would largely cease to exist. Instead, fickle tribalism would randomly and wildly fluctuate major policy interests like a broken polygraph needle. The whims of the masses would destroy politics because politicians would no longer be able to keep up in any meaningful way. Lawmakers, reacting to culture, would have to accommodate by also shooting from the tribal hip. It would be total chaos all the time. If this seems like this is already happening, that’s because it is.

Bear in mind: this was written before Trump was sworn into office. Tribalism has taken over.

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When Seth Godin wrote his influential book on tribes a decade ago, he was quite optimistic about all the good things tribes and their leaders could do for us. A mere ten years later the world has flipped to a more pessimistic view. To put things in perspective, let’s keep some of these aspects in mind.

Tribalism has taken its toll

First, human beings always gathered in tribes. In a way, tribes have been living in their own Parallelwelten since time immemorial. Second, the compulsion to create one single, commonly shared world, and corresponding world view, is a quite recent phenomenon. It can be seen as a by-product of 20th-century mass production and mass communication, 21th-century globalisation, and the collapse of the bipolar post-war order after 1989.

Francis Fukuyama captured this moment in his book The End of History and the Last Man (1992), in which he argued that Western liberal democracy would be the endpoint of history. More than 25 years later, we still haven’t reached this point. Globalisation and digitisation led Thomas L. Friedman to his bestseller The World Is Flat: A Brief History of the Twenty-first Century (2005). But viewed from a different angle, the world doesn’t look flat at all, but spiky.

This leaves us with the question whether the long-term trend is geared towards globalisation, i.e. one world, or towards tribalisation, i.e. Parallelwelten. And indeed there is data that points to a flattening of globalisation, while tribalisation is on the rise. Shortly after Friedman launched his opus, the globalisation trend started to slow down. Since 2015, it has been flat.

Tribalism has taken its toll.

Like every -ism, tribalism overamplifies something that is not inherently bad. The tribe as organisational principle is powerful and probably part of the human condition. By contrast, tribalism introduces black-and-white, good-vs-evil, exclusive and authoritarian thinking and behaviour into the equation. So why do people resort to tribalism?

Because they have lost confidence in governments, security services, the free market and the banking system, Koert Debeuf argues. These institutions, pillars of globalisation, left too many people behind. When those people are traumatised, the (long-term) line of globalisation breaks down. According to Debeuf, whose reasoning is pretty much in line with Samuel P. Huntington’s work on the clash of civilisations, this breakdown eventually may lead to war.

A new renaissance

Parallelwelten at war – this looks like the main conflict of the 21st century. The world is not flat. At least not yet, as even Thomas L. Friedman himself concedes.

On a slightly more positive note, we could well be at the early stages of a new renaissance. Technological breakthroughs and exciting discoveries not only dislocate a lot of people, they also create rapid progress in areas like health, literacy, wealth and education. Optimists like Steven Pinker never tire of reminding us of that.

And quantum mechanics, the harbinger of Parallelwelten, may well have already provided us with another breakthrough, quantum computing, which is about to leave the R&D labs and move into the production cloud. It is a fascinating technology, moving beyond the digital, binary logic that has dominated the world of the early 21st century.

The Parallelwelten of our VUCA world, which is characterised by volatility, uncertainty, complexity and ambiguity, are highly (and sometimes strangely) interconnected. Thus, the despair of a Tunisian fruit seller can lead to groundbreaking events like Brexit. Maybe, globalisation and tribalisation aren’t opposites, but rather the two sides of the same coin. Like wave and particle in quantum mechanics.

After the Christchurch massacre, Facebook said it deleted 1.5 million copies of the terror attack video from its platform in the first 24 hours. This is only a short glimpse into the sheer scale of problems the huge digital platforms face these days. Facebook and Google are now the biggest empires in history, and with great power comes great responsibility. The tech giants look ill-equipped to deal with these challenges, and thus politicians step in.

The economies of scale have been the hallmark of the industrial age. Mass production and the corresponding ability to split fixed costs among huge numbers of product units generated great wealth. The digital revolution has propelled this economic effect to new heights, since for digital products the share of fixed costs is higher, while the marginal costs are lower or even zero.

This has not only allowed digital products to scale much faster, but also further than physical products. These new digital dominions created a bunch of problems the world never had before, at least not at that scale. The ginormous prominence which terrorists can gain through the use of social media is only one, but perhaps one of the most abhorrent of them.

The unleashing of man in the masses

To put things into perspective, the sheer mass of people has always been a problem, wherever they appear. In his book Masse und Macht (engl. Crowds and Power), published in 1960, Elias Canetti analyses and describes the unleashing of man in the masses and the rule of sociopathic rulers over the masses. The digital age has amplified this kind of phenomena, and we don’t know yet how to manage it.

Now we see that it is very hard to effectively police the huge digital platforms, because of their sheer size. Enforcing the law always requires the potential to apply drastic measures, including the exertion of power. In deleting 1.5 million copies of a maleficent video, Facebook now clearly shows its power over the users. But how is this power controlled, if at all?

Facebook is no democracy. It is a business, and thus has the checks and balances of the business world. But we aren’t talking about business questions. It is not about economic power, but social, political, judicial power. Basically, there are two possible ways to resolve this: Either the political system takes over, or the users themselves start a revolution and dethrone Zuckerberg.

In the physical world, economies of scale reach their limits at a certain tipping point, beyond which marginal costs increase again. In the digital world, the limits to growth are not economical, at least not yet, but rather social. These external costs could be re-internalised, in theory at least. This would be a job for regulators. Through a clever tax mechanism, the new digital behemoths could be limited.

Can we limit the pitfalls of scale, while keeping the benefits?

Whether big is beautiful or small is beautiful is a question we can leave open to debate. But so far, we’ve always had both: many small entities, and a few big ones. And I would always argue that we need both. As far as possible, tasks, actions and problem solutions should be undertaken by the individual, the smallest group or the lowest level of an organisational form. Only where necessary, higher levels and bigger groups should step in. This principle of social organisation is called subsidiarity.

We’ve repeatedly cited Dunbar’s number on this blog. If we accept it as an anthropological constant that human beings cannot maintain meaningful relationships with more than around 150 people, what does it mean that we now have way more friends and followers on social media? Well, these are by definition weak ties, and there is a certain strength in weak ties.

It is an open question whether we can limit the pitfalls of scale, while keeping the benefits. But it is unbearable to socialise the downsides and privatise the upsides. We cannot allow the big platforms to pocket the gains, while offloading the problems to the rest of the world. The current situation is not sustainable.

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If you have been following NEXT over the last couple of years, there is a chance you first heard the term VUCA world around 2014. That year, Peter Hinssen introduced the audience at NEXT14 to the idea. Watch his talk here. Around that time, the buzz about VUCA, which stands for volatility, uncertainty, complexity and ambiguity, started to take off.

I suspect two trends as possible offspring from the VUCA craze. The first is the rise of purpose in business. A position as Head of Corporate Purpose is now a thing. Purpose is greeted as the North Star to guide actions and decision-making in a VUCA world. Why do we need a higher purpose as a business, other than making money?

Because under VUCA conditions, making money is not so easy, at least in the long term. And perhaps even in the short term, since other players might disrupt your business any time soon. User value has superseded shareholder value. If you don’t put user value first, forget about shareholder value.

Making money is a means to an end

Purpose is now what vision and mission statement have been not so long ago. Is there a difference beyond mere wording? It’s important to note that purpose is even more abstract than vision and mission. It’s the reason why a company exists in the first place. Making money is a means to an end, not valued in itself. It follows from fulfilling a purpose.

But not in all cases. For example, I’ve yet to see a public library that’s profitable. It doesn’t make money, but it clearly serves a purpose.

In times of rapid change, the purpose is what is supposed to stay. While a car manufacturer manufactures cars, a mobility provider provides mobility. Toyota knows the difference. At some point, a mobility company could stop producing cars, if that makes sense. (Without producing cars, it could still be a mobility company, but not a car company.)

Which literally brings me to my second point: sensemaking.

How sensemaking answers the VUCA challenges

Defined as the process by which people give meaning to experience, the concept has been developed in human-computer interaction, information science and organisational studies over the past few decades. Meaning is, like sense, closely related to purpose. Sense can be made, meaning can be given, and purpose can be set.

It is very hard for a company to come up with a meaningful purpose statement, one that makes sense. Most of such statements sound naïve, or simply laughable. And even Google’s mission statement clearly has its flaws. But it makes sense, like in sensemaking, since it tells Googlers at least the Why of the experiences they create for their users. Sometimes, it might be misleading. But at least it is leading at all.

Sensemaking is about turning raw data into information through framing. The frame needs to be continuously adapted for new data to fit in, but it also shapes the data.

Let’s see how sensemaking answers the VUCA challenges:

• Sensemaking helps riding the waves of change (volatility), like navigation for a ship.
• It lowers uncertainty, since it provides a framework for acting with uncertain knowledge.
• By uniting different perspectives, it reduces complexity.
• It deals with ambiguity, through the search for meaning and plausibility.

I’m tempted to define sensemaking as the process of setting a purpose, but that’s probably to narrow. In a way, sensemaking is what we human beings always do. It’s part of the human condition, and one of the ways we deal with it.

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Germany as a country defines itself, to a certain degree, by its automotive industry. Think BMW, Daimler, or Volkswagen. Over the past decade, their relative weight increased tremendously, as a recent Accenture study found out. (Full disclosure: Accenture is the mother company of SinnerSchrader, one of the hosts of NEXT.) How can the German car giants keep their top position in a peak-car world? Or are they doomed?

Over the last couple of years, this blog and the accompanying conference have repeatedly been stricken by a touch of apocalypse. The sky is falling. Dance on the volcano. Or is it Twilight of the Gods? Richard Wagner’s opera Götterdämmerung ends with Valhalla in flames, and the gods burning. Is this the fate of the German car industry?

Bloomberg provides a lot of data, painting a bleak picture of the peak-car era. Recently, BMW and Daimler announced to pour more than €1 billion into ShareNow, their car-sharing and ride-hailing businesses. Volkswagen opens up its MEB electrical construction kit to external manufacturers. All the car manufacturers are trying to reposition themselves as tech/software companies.

We live in exciting times, to say the least.

The convergence of three major trends

What makes the car industry so interesting is the convergence of three major trends: digitisation, electrification, and autonomous driving, the latter driven by artificial intelligence and machine learning. This paves the way for platform business models, for a shift from hardware/product to software/service (e.g. from car ownership to mobility service), and thus for better integration with the mobility ecosystem.

Today, car manufacturers probably aim to become the Apple of automotive: strong brands with profitable hardware products and a growing software/service business on top of that. But they might end up being more like the OEMs of the PC era, providing commoditised hardware for other companies’ lucrative software businesses.

There is one company that played an important rule during the PC era and later ditched their PC hardware business to focus on higher-value, more profitable markets: IBM. It is hard to imagine Volkswagen oder Daimler spinning off their car factories and focussing on mobility services. But in a peak-car world, that might be an attractive option.

Value creation shifts away from the classical car industry

The reasons for the decline in automobile usage are manifold, and not all of them may prove valid in the long term. And another, closely related summit reminds us to be careful about these kind of predictions: peak oil. Last year saw another record high for global oil production. So, maybe we are at peak oil right now. Or maybe not.

Only in hindsight we’ll see whether we reached peak car in the second decade of the twenty-first century or not. But whenever we enter the peak-car world, the consequences will be dire. Since value creation shifts away from the classical car industry, jobs will be lost. Look at Detroit to get a glimpse of what could happen.

Parts of Germany have been hit hard by economic decline in the past. However, the decentralised setup of the German automotive industry poses a significant difference to the Rust Belt. The gods of the German industry aren’t colocated in a single hall, unlike the gods in Wagner’s drama.

And instead of fighting each other, the car guys already cooperate when it comes to digital value creation: Besides ShareNow (BMW, Daimler), there’s also HERE (Audi, BMW, Daimler), the mapping and location data service provider. And furthermore, Volkswagen now targets micromobility, another market that can eat away market share from the incumbents.

To be sure, that won’t be enough to survive in the long run. But we haven’t yet reached the final act.

On January 1, George Dyson published an essay on Edge.org, in which he proclaimed an analog revolution. According to him, it will soon take over from the digital revolution, which would then be over. The result: hybrid analog/digital systems. The essay is fascinating stuff, definitely worth reading. It made me think about the very nature of our reality, or maybe realities, in case there is more than one.

Modern quantum physics is confusing and poses questions even the best physicists can’t always answer. Is our world, when we view it on a quantum level, built up out of ones and zeros? Or is there more, since a qubit, contrary to a classical bit that can only be in the state of one or zero, may be in a superposition of both states?

It gets even weirder when we take quantum computing into account, which deals with qubits instead of bits. It turns out to be even more efficient than classical computing. At least in theory, but increasingly also in practice, since quantum computing is already leaving the lab, moving into commercial use.

The former models become the things themselves

George Dyson views the digital behemoths of our times as large hybrid analog/digital computer networks, and this insight is a bit more practical than the metaphysical questions we mentioned above. He describes a shift which transforms the former models of knowledge, traffic, or social networks into becoming the things themselves:

What began as a mapping of human meaning now defines human meaning, and has begun to control, rather than simply catalog or index, human thought. No one is at the controls. If enough drivers subscribe to a real-time map, traffic is controlled, with no central model except the traffic itself. The successful social network is no longer a model of the social graph, it is the social graph.

Our reality is no longer divided between analog and digital, as it used to be. It is one single, hybrid reality. The flip side of the coin is that it’s comprised of systems that are beyond human control. And also beyond programmable control.

Systems are reproducing themselves

Think systems, e.g. ecosystems, that are autopoietic, i.e. reproducing themselves. Artificial intelligence, or machine learning, is just that: a self-reproducing system. These systems are structurally coupled with their environment, but not controlled by it.

Autopoiesis isn’t necessarily a bad thing. Think of the living cell – biologists describe their chemistry as autopoietic systems. The identical concept has also been applied to cognition, systems theory, and sociology. If we reuse it to describe hybrid analog/digital systems, we can probably draw lots of valuable conclusions from that.

For example: Systems change all the time. They are not static. And they aren’t more important than their environment. Nature itself is comprised of autopoietic systems, like the biological cell. And maybe it’s just the modern project of humanity that’s ending with the rise of hybrid analog/digital systems: the project to conquer the whole world and put it under human control.

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This is a plea for systems thinking.

Design thinking has made an astonishing career over the last couple of years. It has now probably arrived at even the last company that could make any use of it. But what about systems thinking? It’s far less famous, although its impact, if properly applied, could be far greater. How comes? Not enough colourful sticky notes involved?

The success of design thinking may well be the last foray into the parallel world of linear thinking. That world is doomed to failure, because linear models no longer work in a globalised world driven by exponential change (and growth). Design thinking and its notorious post-it wars allow for pretty, feel-good innovation theatre that doesn’t produce any tangible business results.

Besides of course the warm, fuzzy feeling of being innovative. It is the perfect tool to simulate innovation. As such, it is widely used in future camps and innovation centres all over the world. Design thinking can be nicely packaged into the early stage of product development, the ideation phase.

The results are then handed over to the same old, linear product development process that has been in place for decades. Its main feature is that it is linear. Think waterfall. This linearity makes it predictable. After the VW Golf VII comes the Golf VIII. Nothing wrong with that. As industrial societies, we’ve gained great wealth through linear industrial processes at scale.

But in this day and age, linear thinking increasingly looks like a risky bet.

Many successful start-ups are non-linear

To be clear: This is not at all design thinking’s fault. The method itself is valid and can lead to valuable outcomes, if it’s not misused for purposes described above. Ironically, the reason for this common misuse is itself systemic. The corporate system is linear. As such, it can incorporate all kinds of new methods, like design thinking.

But it cannot change itself into being non-linear.

This is a fundamental, systemic difference between industrial companies and start-ups. Many successful start-ups are non-linear, at least to a certain degree. Granted, some of them tend to fall back into traditional, linear patterns as they grow beyond the initial, tribal size. But at least in some vital aspects they think different, to borrow Apple’s famous line.

They think in systems.

These systems are often described as loops. The feedback loop is a primary example. Or take the OODA loop (observe–orient–decide–act). A similar loop – see, judge, act – can be viewed as a simplified version of the OODA loop, with only three steps, and traced back to the 16th-century Spanish Basque Catholic priest and theologian Ignatius of Loyola.

Nir Eyal’s hook model – itself an extension of the habit loop – is a blueprint for digital, habit-forming products. The Experience Loop by Matthias Schrader expands this model significantly. All these are examples of non-linear systems. Thinking in loops helps understanding the interrelationships between all the variables in a system.

Loop models foster learning processes

Given that we now live in a VUCA world, a world defined by volatility, uncertainty, complexity and ambiguity, it certainly makes a lot of sense to focus on the interdependencies between many variables. The important thing here is learning. Loop models foster learning processes.

They allow for faster learning than their more linear counterparts. Faster iterations. Shorter development cycles. To be honest – that’s not a given. But systems thinking provides a framework for building, changing and maintaining systems that work this way. A linear corporate system is of course a system as well. However, non-linear systems appear to be more capable these days.

Systems thinking is more abstract, and feels more theoretic than design thinking. And there are significantly less sticky notes involved. But it has the power to be a boon for innovation.

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The tech industry is obsessed with innovation. Mostly disruptive innovation. We’ve written about disruptive and sustainable innovation before, but failed to include a proper definition of innovation itself. How dare we! So, what is innovation?

Interestingly enough, there are myriads of definitions out there. It doesn’t seem to be easy to agree on a single one, besides basic platitudes, acknowledging the fact that innovation has something to do with the new – new technologies, for example. But that’s already in the semantics of the word: the introduction of something new.

Value is determined by the user

In the business context, innovation is always about creating new value. And in the digital world, value is always determined by the user (who is also a co-creator of value). Only what the user deems valuable can be used to capture value for other stakeholders as well, including shareholders. Timm Richter goes as far as generalising this for all kinds of companies:

The main aim of any company is to offer a product or service such that it generates user value. It is the job of any employee, in particular management, to create user value. This is the way a company does its service to society. If there is indeed user value, then it can be monetized to a certain extent. This is the oxygen a company needs in order to survive.

From this definition, it follows that new value needs to be greater than what the user currently has and values. Thus, innovation is about introducing products that are better than what’s already there. What’s better and what’s not is, again, determined by the user. Is slightly better enough? That depends on the market. In some saturated, low-innovation markets you might get away with incremental innovation only.

And it’s also important to quickly and incrementally iterate on highly innovative products. But precisely saturated, low-innovation markets are often markets that are ripe for disruption, especially if some new technology comes along that only waits to be applied to a customer’s need, pain point, or desire. To really move the needle, more is needed. Thus, there is a school of thought that refers to the 10x value idea.

10x Value

In 1997, management consultants Charles E. Lucier, Leslie H. Moeller and Raymond Held published a paper, 10x Value: The Engine Powering Long-Term Shareholder Returns, arguing that the only way to create lasting shareholder value was by improving customer value by a factor of 10. Innovation, they believed, was the key to reaching tenfold improvement, which could be achieved either through strategy, products or services. A single “big idea” wouldn’t be enough; you needed a whole slew of innovations.

This kind of thinking is deeply entrenched in the Silicon Valley way of doing business. From there, it has now spread all over the world and to all kinds of industries. Digital technologies, for a variety of reasons, provide a significant lever to achieve 10x value, but innovation of course isn’t limited to digital.

Remember, value is what the user values. Not the shareholder. In this day and age, user value has superseded shareholder value. Only if and when the user gets value, the shareholder can capture value as well. In some respect, that’s the antithesis to Milton Friedman’s concept of shareholder value that ruled our Western economies for some decades.

Another innovation cycle

This turn reflects the shift of power from the corporation to the consumer, thanks to the internet. But now, with tech companies being at the top of the economy, power falls back to a new generation of titanic corporations. The consumer has no choice but to succumb to the likes of Google, Amazon, Facebook, and Apple. The big crunch of the digital universe stifles innovation.

On the other hand, this may ripen the Big Four for a new round of disruptive innovation. And so, another innovation cycle starts. There is still a lot that can be redesigned with the user experience as a starting point.

You’ve got to start with the customer experience and work backwards to the technology. You can’t start with the technology and try to figure out where can I sell it.
–Steve Jobs

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As the second decade of the twenty-first century nears its end, we find our societies increasingly fragmented and polarised. Only slowly and through thorough research, we start to understand how this phenomenon is related to digital media like the internet and its offspring. Digital more and more defines reality, but our once unified, single, analogue reality is now fragmented into many different, competing realities.

Hence filter bubbles, fake news, and alternative facts. Filter bubbles, a concept coined by Eli Pariser, separate the world views of different groups from each other. Fake news go one step further, creating not only opinion but also deliberate disinformation. And finally, alternative facts introduce ambiguity on the level of basic evidence. When groups of people disagree not only on opinions, but also on facts, they are more effectively shielded from each other. It gets harder to come to an understanding.

Digital media facilitate these divisions in many ways. It is easier and cheaper to manipulate and move bits than atoms. On this foundation rests the entire digitisation as well as the digital transformation. But if bits are our reality (or at least define it), this means reality can be easily and cheaply manipulated. It can be manufactured and sold in new and since unknown ways, on a global scale. We witness a transformation of quantity into quality.

Globalisation or fragmentation?

Fragmentation of reality is nothing new, but has been a dominant theme of modernism in the early twentieth century. The well-known Rashomon effect, named after a 1950 film of the same name, happens when an event is given contradictory interpretations by different individuals involved. In this day and age, fragmentation hits especially hard since it seemingly contradicts the long-term trend towards globalisation.

For thirty years, since the fall of the iron curtain and the invention of the world wide web, we lived in a world that was increasingly becoming one, with communication, trade and travel spinning a web around the globe. Now we see the flip side of the coin, with fragmentations also occurring on a global scale. Digital amplifies both globalisation and fragmentation. We find ourselves in a VUCA world, which is characterised by volatility, uncertainty, complexity, and ambiguity.

Like it or not, the VUCA world is a world where digital has taken over. By its very nature, the digital world is volatile, uncertain, complex, and ambiguous. But it yearns for zeros and ones, black-and-white, yin-and-yang, either/or. The binary logic of a digital world forces fragmentation between ins and outs, haves and have-nots, illuminati and hoi polloi. In Silicon Valley groupthink, the universal basic income serves as instrument to tranquilise the unwashed masses, the digital have-nots.

To a certain extent, fragmentation is healthy and nothing to worry about. It only becomes problematic when and where societies lose their basic coherence – where it doesn’t make sense, in the literal meaning of the word. Fragmentation needs to be counterbalanced by integration and globalisation. But the opposite is probably also true: Globalisation must be counterbalanced by fragmentation, by the niche, and by the local.

Photo by Fancycrave on Unsplash

Earlier this week, German politician Robert Habeck announced that he’ll leave both Facebook and Twitter. He cites twofold reasons for his decision that both sound familiar: having repeatedly “unconsciously adjusted to the polemical nature of Twitter”, and facing a hacker attack on his personal data, facilitated through Facebook. It is a tough decision for a man in his position, since he had close to 50,000 followers on each of this channels. But also worth noting that other German politicians have way bigger audiences on social media.

Habeck is not alone. In fact, he nails the zeitgeist right on the head. In December, Walt Mossberg, a veteran tech journalist, left Facebook (but stayed with Twitter). And yours truly, switching to a new iPhone right before Christmas, installed neither Facebook nor Twitter on the fresh device. And it feels good. True, I still face some withdrawal symptoms. But what I really don’t miss is watching grumpy old men getting older and grumpier, while turning older and grumpier myself. For reasons both professional and personal, I won’t delete my accounts anytime soon, but I’ll drastically change my media diet.

A strong feeling of social media fatigue

For quite a while, Facebook – and Twitter, to a lesser degree – effectively selected most of what I read. I managed to ruin my Twitter experience by myself quite early on. Twitter further deteriorated my experience by adding advertisements, distorting my feed, and showing random notifications, all for the sake of what is called engagement in social media lingo. Facebook had messed with my feed for years, feeding me content which neither made me happy nor provided useful information about relevant things.

I have a strong feeling of social media fatigue. So for the time being, I’ll go away to sleep for a while. Maybe I’ll wake up from time to time, have a look at the mess and even post something. Or maybe not. Perhaps a strong dose of sleep will cure my fatigue. We’ll see.

The web giants have become toxic

Both platforms have become toxic over the years. Addictive. Especially Facebook looks like a black hole, sucking up our time and attention with such strong gravity that nothing can escape from inside it. The same is true for the other web giants, be it Google or Amazon. Along with black holes, cosmology also maintains the notion of a Big Crunch, with the universe recollapsing. That’s an even more drastic metaphor for the current state of digital, as we enter the year 2019.

The web in its early days resembled a Big Bang of creativity, expression, and commerce. The digital world of today (with web and mobile) looks like a universe that is recollapsing into the black holes of Amazon, Facebook, and Google. From cosmology, we can only tell that this won’t end well. But if we look back at the history of the internet, we also see that it’s highly unlikely for dominant platforms to keep their dominance forever. In the long run, they’re all dead.

Or maybe not really dead, but at least no longer dominant. Ebay and Myspace still exist. AOL and Yahoo are leading a shadowy existence as a subsidiary of Verizon, with most of their former value written off. Skype is now a Microsoft product.

The hope for innovation

On this blog, we’ve repeatedly written about the ginormous concentration of power that the once decentralised web has enabled. Umair Haque (who spoke at NEXT09, almost a decade ago) draws a dark picture:

The Amazon — Facebook — Google future is a weird, gruesome, outlandish, freakish dystopia. People work in warehouses where their bosses are algorithms — but don’t have decent healthcare, incomes, savings — all so that other people can have stuff delivered in two hours, versus two days. Then they come home, where their ‘communities’ are also algorithms — algorithms tell them what to think, who to befriend, whom to date, what to read, what to buy, and so on. In this future, people aren’t really human beings anymore — they are just interchangeable commodities, just ‘information’, whose digital representations are endlessly ‘arbitraged’, bought low and sold high — who are exploited at every turn. First for their physical labour, then for their intellects and creativity, then for their emotions, relationships, sexuality, curiosity, empathy, and sociality. All these are strip-mined, and what’s left is a smoking, carved out wreck — of a society, democracy, planet, person, future. In this future, people are a little deader, crazier, angrier, dumber, meaner — doesn’t it feel that way a little bit already?

It’s interesting that Umair sheds a very different light on Apple. In his view, the first trillion dollar company, currently only number four after Amazon, Microsoft, and Alphabet, appears like the Rebellion against the Galactic Empire in A New Hope. But, to drive the Star Wars analogy even further, where are we right now in the saga? Will we see a New Republic? Who will destroy the death stars of the Empire? And what will we see next?

Our hope is that innovation, which brought us into the current mess, will also get us out of it again. Not innovation alone, but with a little help from regulation, social responsibility, consumers, education, and humane design. This brings me to the question: What is innovation? But that’s something to discuss in another post.

Photo by chester wade on Unsplash

Sci-fi has a long-standing history of becoming science fact, perhaps because freakish creations inspire real research. But over the past few years, all kinds of dystopias also became reality. As 2018 draws to a close, this leaves us with mixed emotions. The Facebook scandal (that is more a continuous saga of scandals, with lots of episodes) shows in its latest iteration just how Mark Zuckerberg’s company is rotten from within. We are not talking about your typical start-up here, but about one of the largest public companies the world sees today and an empire without any precedence in history.

Has Facebook lost touch with reality? Or is it the other way around? As reality is more and more shaped through digital products, we see more degrees of freedom than in the analogue past. Fake news, filter bubbles, and alternative facts are only the tip of the iceberg. Let’s try an intellectual game: Recast fake news as virtual reality, and alternative facts as augmented reality. Granted, it’s not a perfect match, but I hope you get my point: We now live in different realities that increasingly lose touch with each other. In a way, that’s typical for great epochal breaks. The common world view of the past 500 years – in one word: modernity – is fundamentally shaken.

Parallel universes

The trillion dollar question is: Will we ever return to a shared world view, or will we from now on live in parallel universes? Physics has an opinion about that.

These epochal breaks typically come at a huge cost. A whole world order, including value and values, gets destroyed in the process. In Silicon Valley parlance, this is dubbed disruption. To an extent, it’s the flip side of the innovation coin. At its core, innovation is the introduction of something new or different. To really make a difference, it needs to be dramatically, e.g. ten times, better. If that’s the case, consumers flock in droves to the new offering, leaving the old category leaders behind. They are disrupted.

Or don’t they? Do the incumbents really strike back, as IBM proclaimed earlier this year? At least, they invest tons of money in digital transformation. According to IDC, more than $1.1 trillion was spent this year alone. But where are the results of all these investments? Huge amounts of money is flowing into customer experience (CX), but Forrester notes that almost all CX professionals see the ROI of CX as not well established.

There is a strategic and structural mismatch between what CX needs to do and what CX is allowed to do or is capable of doing. 2019 will see that mismatch continue to play out.

And:

25% of firms will decelerate digital efforts altogether and lose market share.

Valhalla burning

That’s a grim outlook. Is there a Götterdämmerung on the horizon? Will we see Valhalla burning in 2019?

Not so fast. True, innovation is very hard, especially in a corporate context with all its silos, with marketing focused on the brand instead of the product. With design and engineering not really integrated. With innovation labs living on different planets, detached from their motherships.

At the same time, the GAFA/FANG giants have almost become death stars or black holes, stifling real innovation, i.e. innovation that doesn’t fit their business models. They’ve created their very own reality, far away from everything else – despite their user-centricity that made them tremendously successful.

It will be interesting to watch where the next wave of innovation will come from. Consumer expectations and consumer behaviour will continue to change, and business models along with them. That’s for sure.

Last updated on August 31, 2021. Photo by Marc-Olivier Jodoin on Unsplash

The tech industry, and we’re of course a part of it, is a crazy beast. There’s always a lot of talk about tech itself, and people still listen to Apple’s keynotes, hoping for one more thing to revolutionise the world one more time. True, tech trends change fast, but what changes even faster and with more profound consequences are human behaviour and consumer expectations. This change in turn is enabled by tech, and it also drives tech.

It’s the time of the year when tech trends have their high season. By the way, some people now publish their trend forecast for the new year as early as in May, which is a bit funny. While browsing through the predictions for next year, I found lots and lots of the usual suspects that have been on the hype cycle for years now, like artificial intelligence, blockchain, the cloud, or VR/AR. Not to mention voice interfaces, chatbots, and smart speakers.

A certain disconnect

While all of this is still relevant, there’s a certain disconnect from the debate we had for at least two years now. In hindsight, the election of Donald J. Trump as 45th President of the United States marks the end of tech’s innocence, foreshadowed by the Brexit vote in June 2016. And it’s not only tech, but also marketing that lost its innocence, since both Brexit and the Trump election have most probably been enabled by the (ab)use of marketing tech in general and Facebook in particular.

Granted, neither tech nor marketing was ever really innocent, but I hope you get my point.

Mark Zuckerberg’s company still doesn’t seem to get it, and so Facebook will very likely go down in history as the worst example of a tech giant that doesn’t take responsibility for the damage it does. Facebook and Google are now the biggest empires in history, and with great power comes great responsibility.

The quest for value(s)

Which brings me back to the topic. If there is one major (meta) trend, then it’s the quest for value(s), relevance, sustainability, responsibility, meaning, purpose, privacy, and ethics. Compare this list to the items mentioned above, and you’re witnessing a huge shift. This is brilliantly captured by Fjord Trends 2019. (Here’s the disclaimer: Fjord is part of Accenture Interactive, as is SinnerSchrader, who hosts NEXT.)

Tech has left the building. It’s the end of tech. We’re no longer debating the latest technologies, gadgets, social networks, or apps, as if they were an end in itself, and something the rest of the world simply must adapt to. At least, this kind of debate now sounds boring and deeply inappropriate. Instead, it’s about how tech can solve real problems and make the world a better place, and not a worse one.

In a way, that’s a return to the roots. But not with the same kind of naïveté. We’re now better informed from two decades of digital progress, that turned out to be retrogression in some respect.

It’s still day one.

We can write off two decades (since the dot-com craze) as a phase of building the foundation, of experiments and learning, and start again from scratch, with all these powerful digital technologies at hand, to build something meaningful. To an extent, the stock market has already done a write-off regarding big tech over the past months.

And if two decades are not enough – we can also write off three decades since the invention of the web, or five decades since the invention of the internet. The web turns 30 in 2019, and the internet turns 50.

To sum things up:

1. It’s all about value and values. Tech that doesn’t provide value, but only exploits it, will increasingly get under pressure.
2. The relevance question is growing in importance. Consumers will scrutinise brands and products with regard to their relevance.
3. Sustainability can no longer be ignored. This applies to all aspects of any business. Expect profound changes.
4. The tech industry needs to take its responsibility seriously, or it will be forced to do so through further regulation. GDPR was only the first step.
5. Without a clear purpose, your brand will get more and more in trouble. Consumers, employees and shareholders demand clarity these days.
6. Privacy and data are renegotiated. Consumers are no longer willing to give up their personal data for glass beads like they did in the past.
7. It all comes down to ethics. Pure lip service no longer suffices, stakeholders demand results.

We are now in a different world.

It’s terra incognita, unknown territory. In a way, and in retrospect, a certain German politician was exactly right five years ago:

The internet is new territory, uncharted territory to all of us. And it also enables our enemies. It enables enemies of a free, liberal order, to use it, to abuse it, to bring a threat to all of us, to threaten our way of life.

While that’s precisely what happened over the last couple of years, the trends now point in a better direction. The debate has reached a new level. Tech is mainstream now, and the real questions are on the table. In 2019, you’ll need some answers.

Photo by Emily Morter on Unsplash

In 2008, Maurice Levy, then Publicis Groupe chief executive, said the business model for the advertising industry is outdated. He was right back then, but the advertising industry is still around more than a decade later, despite their business model being no less obsolete.

Let’s first have a look at the reason why it’s outdated. From the very beginning, online advertising was built with classical advertising as its blueprint, only adding the promise that everything can be tracked (early) and better targeted (later). This way, a lot of underlying assumptions went into the foundations of the then-new industry.

It was designed with linear models like Shannon-Weaver in mind, which were developed for the age of mass media and mass communications. In this model, the medium (or channel) gets paid for delivering the message from the sender to the receiver. Media attract eyeballs through their content, and advertisers pay for them. Media channels were scarce and thus valuable – they could charge a premium, in some cases on both sides of the equation: the audience paid for (premium) content, and advertisers paid for (premium) audiences.

The web replaced scarcity with abundance

With the advent of the web, the scarcity of channels was replaced by an abundance, thus setting both revenue streams under pressure. The more content became available, the less consumers were willing to pay for it. And as online audiences grew, the rates for advertising to them fell as well. But this was only the first step. Enter Google and their famous Adwords business. Using a highly efficient auction model, Google undercut advertising rates drastically and increased performance even more dramatically.

With Adwords, the web began eating away market share from other advertising channels. Google had added an interactive element to the game, with the user providing a search keyword that could be auctioned off to the highest bidder. This was revolutionary and still is today. This model is now copied by Amazon, which is a huge product search engine in itself, amongst other things.

Facebook cloned the Adwords model early on, but cannot capture consumer intent like Google and Amazon can. Instead, they went down the demographic targeting route, with their treasure trove of user profiles. Demographic targeting reached new and unknown granularity through Facebook, allowing to address very narrowly defined target groups.

In essence, all three are now taxing advertisers on a global scale like no company ever before. The scarcity they monetise so effectively is consumer attention. In a world where both content and channels are abundant, attention becomes scarce and thus valuable. The three web giants mass-manufacture attention and sell it to the highest bidder.

A race to the bottom

But does it make sense for advertisers to pay Google, Facebook and Amazon for the consumer attention and intent they capture? No, it doesn’t – at least in the long run. We’ve seen a race to the bottom on many levels. This is not sustainable, for a variety of reasons.

First, the user experience suffered dramatically from advertising. Almost every product so far has been ruined by ads. Bad UX sends all parties involved into a downward spiral. Second, advertisers are losing their margins to the oligopoly of Google, Facebook, and Amazon. They are facing the tough choice between losing revenue (if they don’t advertise) or margin (if they do).

Third, demographics-based advertising is bullshit (and to an extent, has ever been). Lifestyles and consumer preferences are diverse these days. It makes way more sense to base messaging on ethnography than demography. I’m hesitant to call this advertising any more, so I’m switching to messaging here. Facebook has a point in this new game, since it also does ethnographic profiling.

In a world that is better described by ethnography than demography, it is wise not to advertise on foreign channels and platforms, but to build your own. Gather a tribe around your brand, provide them with valuable content and find a way to capture your share of the value you create.

By the way, should we continue to talk about brands? Perhaps yes, if we consider the origin of the term branding.

What will remain of advertising

To be clear, there are certain elements of advertising that will remain and be repurposed. Storytelling, for example, has been around forever, since the advent of language itself. Branding is also quite ancient. But the role of promotion in the marketing mix is changing a lot, as well as price, place, and product.

Media buying? Depends on the media budget, channel mix, and audience. Will probably decline over time. Creative? Will morph into design.

In general, marketing (and what remains of advertising) will be build into the product. It won’t be something that is applied at the end of the linear product pipe, to push the product into the market, although the need to push might still be felt and fulfilled.

The linear advertising models of the past won’t survive the digital transformation. Replicating them in digital form is futile. The new models take the shape of the loop, where the user (consumer, human) has an active role in the process of value creation. Advertising is a one-way street, but messaging is a constant back-and-forth.

Promotion that’s not broken or outdated looks more like messaging than like advertising.

Photo by Paweł Czerwiński on Unsplash

A lot is said and written about company culture. But in essence, it remains an oxymoron: while company clearly belongs to the business section of your favourite newspaper, culture is more feuilleton or even politics. The more politics and the less feuilleton, the worse your company culture gets, finally even hurting your business.

The classical command-and-control company structure was the product of hierarchical organisations. Classical examples are the military or the railroad companies. Both needed central authority and a chain of responsibility to achieve their goals. Matrix management added another dimension to the structure, but didn’t change the linear command-and-control approach.

Structure, processes, and culture are deeply interwoven. The digital age now poses a fundamental challenge to the old paradigm. One of the key drivers of this change is transparency. The classical company was not very transparent. Even the CEO got not much more than a highly aggregated overview of his realm, plus a carte blanche to dive deeply into the details as it pleased him.

In the digital age, there is no hard impediment against transparency. Through digital tools, a company can get as transparent as it sees fit. Management through obscurity and political gaming gets harder. Suddenly, the people at the bottom of the corporate ladder know better than their overlords what really matters for the business. Leadership changes, from issuing commands and exercising control to nurturing structures and removing impediments.

What does a healthy company culture look like?

Let’s look at four pillars:

• humans
• sense
• reality
• attitude

1. Culture is always about human beings and their behaviour. Structures and processes are important, but only as far as a living culture incorporates them. The success of the digital revolution is closely tied to the relentless focus on the user (user-centric), the customer (customer-centric), and the human (human-centric). And perhaps, hopefully on humanity (humanity-centric). A healthy company culture is liberating, supportive, authentic and oriented towards problem-solving.

2. Culture is about making sense. It’s about purpose. While numbers like revenue, bottom line, or paycheck are important, they are no end in themselves. Human beings are, and they shouldn’t be used merely as a means to an end. To make sense, a healthy company culture tackles fundamental human needs, seeks truths, and transforms more than only banal things.

3. Culture is part of reality. An artificial corporate world that has nothing to do with its surroundings is doomed. Culture always has a place, be it a physical space or a metaphorical one. It provides for safe spaces that people can utilise to innovate, and fail if necessary. Frequent reality checks are an important feature of a healthy company culture.

4. Culture is about attitude. It leans towards business sustainability, in the best long-term interest of all parties involved. It is concerned with responsibility for the whole thing, not only for a tiny fraction at the end of a command chain. And it puts things into question, thinks about consequences, and considers the price whoever has to pay. A healthy company culture has an attitude.

Culture is tribal

This raw scribble is by no means complete, we could say much more about company culture. It is important to note that there is no such thing as one, universal, standard culture, one size fits all. Each team, office, part of a company, and also company as a whole has their distinct culture. Culture is tribal, and that is a truth we Western liberals tend to forget.

A small company is a tribe, and a large company is a tribe of tribes. What makes some tribes more effective than others is culture.

Last updated on May 11, 2021. Photo by Nik Shuliahin on Unsplash

Here at NEXT, we are somehow obsessed with the near future, culminating in the question: What’s next? Since the future per se is unknown, we look at places where it has already arrived. But we still don’t know whether the future we see at certain places will ever be distributed, evenly or not. So we also need to assess the past, looking at long-term trends and comparing what really happened to what was promised early on.

That’s what fellow blogger Adam Tinworth did in his piece for our NEXT Book. It is sobering to be reminded of the idealistic euphoria of the mid-nineties.

We were, perhaps, the first victims of digital bubbles. We were trapped in our own little sphere of self-selecting early adopters. We hadn’t yet realised how homogenous that group was, or how different things would become when all the rest of humanity followed us into cyberspace.

Twenty years later, things have changed quite a bit, and now we are talking about possible fixes for the digital mess we’ve created. It has become very clear this year that some minor fixes here and there will not suffice. Instead, we need a major redesign. Pamela Pavliscak asks: Can we design for well-being? To achieve this, we need to fundamentally change the way we design technology. For the book, she has expanded her post, adding a lot of depth.

Since we now have learned at least something from the first waves of digital transformation, we could perhaps apply our insights to upcoming technologies, like augmented reality or artificial intelligence. David Mattin does the former, discussing what he calls Augmented Modernity, as a possible departure from central pillars of modernity, induced by technologies like AI, VR, robotics, and automation. (An earlier version of his article appeared at NewCo Shift.) His concluding question: What do we really want?

On a more practical level, Fifer Garbesi proposes a framework of an open-garden VR ecosystem, avoiding some pitfalls and traps we came across during the rise of the internet.

VR provides a powerful tool with which to shape our identity, a tool that could lead to powerful societal progress or terrible detriment. Now is the time for a discussion regarding ethical design, content, data management, and platform creation.

François Chollet scrutinises recent developments in the field of artificial intelligence. What deeply worries him when it comes to AI:

the highly effective, highly scalable manipulation of human behavior that AI enables, and its malicious use by corporations and governments.

His case in point: Facebook and the kind of manipulation they already do today, not to mention their massive investments in AI technologies. How AI can be done responsibly is then explained in great detail by Virginia Dignum. (See her posts on Medium for more, or buy the book.)

Besides these more practical questions raised by certain technologies, there is also a need to discuss political, economical, or philosophical issues. Stephan Dörner revisits the idea of an unconditional basic income. (Here is his article in German.) Nika Wiedinger documents a workshop discussion on “Democracy or Technocracy?”.

Tech companies are unbeatable in their self-confidence. Politics and the state are no longer needed; these companies are convinced that business and technology could do better.

Yours truly tries to summarise the dichotomy of digital fix – fix digital, concluding that

the direction of change is not predetermined by some integral forces of technology itself. We, the human beings, need to be at the helm of technological innovation, to understand what’s happening and to drive the change.

The final chapter of the NEXT Book was written by Tobias Revell. He asks the technology world

to think and create in a way that is neither doomy and concerned nor blindly optimistic.

We need a third option, and that is up to our imagination.

If you have made it to this point, you may ask yourself why you should buy a book which is in most of its parts available online for free. That’s an easy one: We’ve published this book, printed in German and as an e-book in both English and German, to spread some insights worth spreading. This stuff should be available as freely as possible. Thus, the book is licensed under CC BY-NC-ND 4.0.

On the other hand, designing, printing and shipping a book costs money, so someone has to pay the bills. If you buy the book, you pay for a better experience. (In case you prefer a printed copy or an e-book on your favourite platform, that is. Or you are looking for a nice Christmas present.)

Enjoy.

We are in the midst of the digital transformation, and that means we don’t fully understand yet what’s happening. Oftentimes, when we talk about what happens, things can get confusing. Take for example the whole mess of XYZ-as-a-Service. The term Software as a Service, probably coined in 2001, now has given birth to a long list of service models. Basically, it means that software is no longer sold as a packaged good, but as a subscription service, typically delivered over the internet.

So far, so good.

But now we see things like Product as a Service, or even better: Service as a Product. What the heck does this mean? In marketing terms, a service is a product, like a physical good is a product, be it packaged or not. It is true though that we have seen a seminal shift from an economy based on commodities and then goods to a service economy, where the service is the dominant model of value creation. Hence the service-dominant logic developed by Stephen Vargo and Robert Lusch.

So when a product is predominantly a service and vice versa, what’s the point of Product as a Service, or Service as a Product? The Wikipedia entry on the latter, while having some issues at the time of this writing, at least gives a couple of examples, like Airbnb, Elance, TaskRabbit, or Uber, for where a service provided by third parties is packaged and sold as a product via the internet.

Meanwhile, Product as a Service is a different animal, as defined here:

Product-as-a-Service fuses physical products, accompanying services and monitoring software to enable new offerings where the buyer may no longer own a physical thing—the product is delivered as a service or virtualized experience. Instead of a one-time-transaction the customer subscribes to the product and pays a recurring fee.

Now that is where things get interesting, for a variety of reasons. In principle, there’s nothing really new here. People have rented their apartments forever, instead of owning them. This model has some advantages, as well as disadvantages, that can be discussed forever as well. With the advent of car leasing, a similar model was applied to another product category. It is not by accident that these two categories are the most expensive things the average consumer tends to buy, or rent, or lease, in their life.

It is only a small step from leasing to a subscription model. We already subscribe to newspapers, magazines, (cable) TV, Netflix, telephone and internet service, e-mail newsletters, software, games, or Amazon Prime, but also to public transport, rubbish collection, water, electricity, or gas for heating. Subscriptions make things predictable for all parties involved, and we can simply cancel (or not renew) our subscriptions in case we no longer need them.

One step further, and we arrive at subscription to hardware. Apple already has an iPhone subscription model dubbed iPhone Upgrade Program, basically an annual hardware upgrade for a monthly fee. You can already subscribe to cars, if you live in certain places. Or to furniture. This way, physical goods are turned into service products.

But there is more.

The next step, and it’s already happening, is the shift from a service economy to an experience economy. B. Joseph Pine II and James H. Gilmore coined the term 20 years ago. Over time, things tend to get commoditised, that is, they become available always and everywhere in good quality and sufficient quantity – and thus interchangeable. This leaves not many options for differentiation. But there is one thing, and that is the experience.

Therefore, the product becomes the experience. Again, nothing really new here, but the insights of Pine and Gilmore took some time to sink in. Brian Solis wrote a book about customer experience that defines brands. Watch his talk from NEXT16. Product managers had the same debate for years. For example, Martin Eriksson wrote in 2016:

We tend to forget that the experience is the product we’re delivering.

And in 2018, even consultants seem to get it. This shift to experience has huge consequences for both product management and marketing. We’ll need an experience-dominant logic to grasp it. Danish academic Jon Sundbo has done some research on this, but the experience economy in general isn’t really well understood. Especially when it comes to digital products, services or, well, experiences. Sundbo writes:

In service management and marketing theory (the service logic), the service product that the customer buys is a solution of a problem. In the experience consumption there is no problem to solve. The reception of the delivered performance activity is the goal.

Think about your favourite apps, or the apps you use the most. Do you use them to solve a problem? Maybe. But what about the experience? How important is it? Sundbo again:

Experience can be seen as based on originality and safe[ty] as a kind of yin-yang that both must be present, but in different mixes. The more the original and element of surprise is present, the more the experience produces flow […]. The more the well-known and safe element is present, the more relaxing is the experience.

Digital experiences, through their interactive nature, can be both, though not at the same time. Sundbo also has some advice on how to do it:

The production and delivery of original, new elements of experience can not be done by ‘artistic momental intuition’, it demands a long-term business plan and strategy if it is to be more than small, semi-amateur business activities. The elements relating to experience must be planned and the customer segment defined, there must be systematic innovation that not only emphasizes artistic creativity, but also the market possibilities and marketing.

And:

Innovation of experience elements thus is characterised by two developments that seems to be contradictory: A strengthening of the creative laboratory push and a strengthening of the market- and customer-oriented pull. The contradiction seems to be solved by the strategic pull orientation becoming the superior, but the strategic framework is filled by artistic, technological and other creativity.

That is, in a nutshell, how digital experience products are done.

Photo by Alvaro Reyes on Unsplash

First of all, we are not talking about sustainability in the broadest sense of the word. We are talking about sustainable business innovation, as opposed to disruptive business innovation. I’d like to move away from the classic juxtaposition that can be traced back to Clayton Christensen’s seminal book The Innovator’s Dilemma.

My point is: We need both. And obviously, that’s no easy task.

Let me start with, well, Apple. You can always learn at least something from the best and greatest. Apple is the champion of both disruptive and sustainable innovation. Founded in 1976, the company has managed at least two major pivots and is now the most valuable public company in the world. As a pioneer of the PC era, their first product was truly disruptive. At that time, the disruptive potential of the PC was realised in full not by Apple, but by Microsoft, with some help from IBM and Intel.

As a pioneer of the mobile era, the iPhone was as disruptive as it can get in the business world. In the meantime between these groundbreaking successes, the company got almost disrupted itself by Microsoft and the Wintel platform. While still recovering, Apple developed some minor disruptive products like the iPod (2001), now almost forgotten, but still on sale.

Disrupt yourself

Apple does both: They develop truly disruptive products, launch them, and then iterate on a more or less yearly schedule of evolutionary steps. The iPhone is now in a boring orbit of annual updates, but Apple doesn’t launch new disruptive products every year – quite the contrary. After the iPhone (2007) came the iPad (2010) and the Apple Watch (2015), but the jury is still out whether to call these truly disruptive products or not.

The tremendous success of the iPhone overshadows everything else Apple does or could possibly do.

One thing we can learn from Apple: Don’t be shy to disrupt yourself. The iPhone clearly disrupted the iPod, at the time one of Apple’s blockbuster products. But the iPhone also disrupted the phone market, created the mobile era and a platform business (now dubbed services) that generates more revenue than the Mac or the iPad.

Another thing we can learn: Even disruptive products don’t turn into blockbusters overnight. It took years of sustaining innovation to get the iPhone from where it started more than a decade ago to where it is now. The same is true for the Mac (1984) and macOS (2001, then named Mac OS X).

The destructive forces of friendly fire

This brings us to the 1 trillion dollar question: How can the same company do sustaining innovation and disruptive innovation at the same time? In Apple’s case, there was always a culture of secrecy, even inside the organisation. When Steve Jobs set out to develop the first Mac, he gobbled up a small core team for the task, moved to a separate building that no one else had access to. Thus he minimised not only distraction but also the rejection reaction of the corporate immune system.

Disruption is something every business has to fear all the time. To avoid disruption, companies develop powerful immune systems. The downside is: this also destroys disruptive innovation inside the corporate organism. Disruptive products must be developed in a safe environment, shielded from the destructive forces of friendly fire.

What Apple seemingly doesn’t do is MVP, or minimum viable product. Well, in retrospect we can see the first iterations of their products, be it the Mac, the iPhone or the Apple Watch, as MVPs, for a very high-end definition of minimum. Just think of all the features Apple left out first and added later. The first iPhone had no 3G connectivity and no App Store, for example. Apple starts the public test-and-learn cycle later than your typical start-up does. They show high confidence in their first product iterations, but obviously do a lot of secret test-and-learn before launch.

The holy grail

The combination of disruptive and sustainable innovation seems to be the holy grail. Companies that manage to develop a pipeline of potential disruptive, innovative blockbuster products, while at the same time continuously improving their existing blockbusters, set up themselves for sustainable growth. The product pipeline needs to be sustainable as well. This probably means higher R&D expenses, thus lowering the bottom line. (Apple’s R&D expenses are steadily rising and reached $3.75 billion in the fiscal 2018 fourth quarter alone, which amounted to 6% of revenues. For comparison, Volkswagen spent €4.8 billion on R&D in 2017 – that’s an R&D ratio of 6.7%.)

You need funding for both sustaining and disruptive innovation, and you need to carefully allocate scarce resources. Even Apple neglects their minor products – some of them don’t get an annual update. Innovation costs money. A lot. And money can’t buy innovation. At least there’s no guarantee. But if you don’t invest in innovation, in today’s world chances are dim that you’ll survive. 52% of the companies that were included in the Fortune 500 in the year 2000 no longer exist.

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Last updated on June 3, 2021. Photo by Alexander Abero on Unsplash

Digital marketing sucks. It really does. Not only for users, who increasingly turn to ad-blockers, struggling to keep their digital experience from deteriorating further. But also for chief marketing officers (CMO), who have to deal with more categories – search, affiliate marketing, social media, and suchlike – while still carrying their legacy from past efforts at marketing – brand identity, advertising, direct marketing, customer relationship management, public relations, events, channel marketing and many more.

WTF?

Thanks to digital, all four marketing Ps (place, product, price, promotion) are now under massive pressure. Place was the first, with the rise of e-commerce since the mid-nineties. As smartphones spread, starting with the iPhone in 2007, the other three Ps quickly followed suit. We now have almost complete price transparency, which increases the pressure on many traditional businesses who still don’t seem to get it. Advertising (promotion) also needs to reinvent itself. Interruptive advertising, that worked so well for more than 150 years, is rapidly becoming obsolete.

For the product, the final P in marketing, all this poses a huge challenge. The existing tools like advertising (promotion), distribution (place) and pricing (price) offer little room for differentiation. Thus, chief marketing officers need to up their product game. In the past, the traditional chasm between marketing and product development might have made sense. Today, that’s no longer true. The product itself, product development and product management need to become front and centre.

The CMO becomes the chief product officer

Marketing, i.e. promotion and distribution, needs to be build into the product itself. The marketing legacy is replaced by a service layer that binds the user to the enterprise. The product shouldn’t need the stimulus of external marketing to persuade customers to use it. Marketing performance must be part and parcel of the thing itself. In a way, the chief marketing officer becomes the chief product officer. This means less dmexco and more Mind the Product (and of course NEXT), for example.

Chief marketing officers can learn from the skill sets of chief product officers, becoming adept in product management, strategy, user experience (UX), and development, to name a few. Today, strategy is the only skill the CMO has in common with the chief product officer. This highlights an important shift: marketing strategy needs to become product strategy.

This could pay off well for CMOs. If we believe LinkedIn’s data, the chief product officer makes more money than his CMO counterpart: While the median salary of a CMO is $218,000 per year, the chief product officer makes $261,000 – a whopping 19.7% premium.

This difference stems from a variety of factors, including supply and demand of suitable candidates, but first and foremost the amount of value these people create for their employers. Marketing all too often is boxed into the promotion corner, with advertising at its core, and therefore in many cases run as a cost centre, which it shouldn’t. Instead, it should be viewed and structured as an investment that produces compounding returns over time.

Products stands for innovation

Product, in contrast, often stands for innovation, and the overall willingness to invest in innovation is greater than the willingness to sink costs into marketing. Especially advertising suffers from the problem famously stated by John Wanamaker:

Half the money I spend on advertising is wasted; the trouble is I don’t know which half.

Of course, the same could be said about product innovation, or about investment in general. Digital marketing started back in the nineties with the promise that everything could be tracked, including the efficiency and effectiveness of marketing. These promises turned out to be only partially true. Marketing and innovation both have an aura of magic around them. Both are driven by results (outcomes) that are measurable (more or less), but how to get there is still a process of trial and error, sometimes driven more by gut feeling and intuition than structure and process. The late and great Peter Drucker once wrote:

The business enterprise has two – and only two – basic functions: marketing and innovation. Marketing and innovation produce results; all the rest are costs.

Digital marketing that doesn’t suck would stick to this sound insight.

Last updated on October 7, 2021. Photo by McDobbie Hu on Unsplash

Remember Web 2.0? In those good old days, things seemed to be remarkably easy. Give everyone a voice and an identity on the web, and a thousand flowers could bloom. That was the mood in 2006, when we started the NEXT Conference. A mere twelve years later, and we are discussing how to fix the digital mess we have created.

How could this happen?

In some respect, it is the aftermath of Web 2.0’s own success. The second iteration of the web, combined with the mobile platforms that emerged after the iPhone launch in 2007, propelled all things digital right into the center of our lives, thus changing almost all aspects of our societies: politics, economy, culture, education, even sports.

In this process, ginormous value has been created. And the stock markets expect that this value creation will continue in the foreseeable future, propelling the GAFA crowd to the top of all publicly listed companies. The downside of this can be summarised in one word: disruption. More and more things got disrupted – not only outdated business models, but also the fabric of our societies.

That’s why we suddenly talk about such a broad range of topics at a tech conference like NEXT (which was not your typical tech event from the beginning). In economic terms, disruption is called negative externalities. A negative externality is a cost that is suffered by a third party as a result of an economic transaction.

Innovation creates negative externalities almost by its nature. Some new thing not only replaces the old, it also consumes scarce resources that cannot be used otherwise and produces waste, in many cases even toxic. Value is exploited in new ways. Innovation takes out more than it puts back into society, the environment, and the global economy.

This is, by the way, why venture capitalists invest in innovation: to reap the surplus value it creates.

This needs to be fixed, and typically that’s the aim of regulation. Regulators step in to fight negative externalities through policies that internalise them, so that only the parties involved in a given transaction are affected. To an extent, this it what GDPR did. Companies extracting value from data had to deal with some of the negative side effects caused by their business.

Regulation is of course never perfect, but it is an important step towards mitigation of these problems. Done well, regulation can contribute to a net positive effect, with companies putting more back into society, the environment, and the global economy than they take out. That’s how it should be.

In his opening keynote of NEXT18, Andrew Keen reminded us that while regulation is important, we still need innovation, consumer power, citizenship and education to fix the future. Watch the video. Since digital now affects all aspects of our lives, we must rely on non-digital means to fix digital. This has broadened the debate significantly.

The good thing is: A lot of useful concepts are already there, some of them quite ancient. Andrew Keen quotes Thomas More, who published his notable work Utopia 500 years ago. Amber Case evangelises the concept of calm technology developed by Mark Weiser and John Seely Brown more than 20 years ago. The Copenhagen Catalog presented by Thomas Madsen-Mygdal is a more recent example, but stands on the shoulders of giants as well.

Digital innovation is different, hence the need for different fixes. (We are publishing a book about this.) Disruption needs to be counterbalanced with a conservative approach to protect things that shouldn’t be disrupted. Which of course needs to be discussed, but I would put society, culture, democracy, mental and physical health, or the environment on that list. This does not mean these should be immunised against digital change, quite the contrary, but damage and exploitation should be avoided.

Since the digital revolution has made things abundant that once were scarce (basically everything that can be scaled through software), new scarcities have arrived: first of all our attention. We can no longer afford the big guys to cut our attention into tiny slices they then sell to the highest bidder. Our relationship with these companies has become exploitative and detrimental to our health. The toxic waste of digital is the damage it does to our heads.

Digital is now woven into all aspects of our live, hence the interconnectedness of things. We can no longer afford to play with our digital tools in a sandbox, waiting for mommy to call us for dinner. We need to grow up.

Are we building a society that unleashes our humanity, or that makes us into bad robots?

–Indy Johar, closing keynote of NEXT18

When it comes to possible fixes for the digital woes our societies suffer from, regulation is always an option. To be clear, the digital sphere isn’t really unregulated, and never was. Even the most fervent critics of any new regulation argue that existing law also applies to the internet and its offspring. The topic of sometimes hot debate is then whether this law is fitting or not. In some cases, existing regulation stifles the development of new products. In other cases, new products call for new regulation.

Today, the EU Parliament voted on a proposed copyright reform. While this vote is only one step in a process that will take some more months to complete, there was a lot of heated debate. In today’s digital world, there are a few big guys, especially Google and Facebook, making tons of money from advertising, while at the same time being platforms for content other people have created. In the past, for example in the TV world, those content creators would license their stuff to the platforms and thus get paid.

A new balance needs to be found

Not so in the digital age, at least not when it comes to Google and Facebook. In general, they don’t pay for content that’s distributed through their platforms. With some exceptions, their business model is different. But content creators and traditional publishers want their piece of the advertising cake, and they don’t like their content be distributed via Google and Facebook without proper license deals, read: without being paid. Fair enough. Regulation can deal with this.

And then, there is the very American notion of free speech, First Amendment and all that jazz. The coalitions we see these days are a bit funny, with freedom activists fighting side by side with web giants like Google and Facebook, who are threatening the same freedom through their sheer size and power. It’s a typical value conflict, where a new balance needs to be found between copyrights and freedom of speech. But also between the giants and the rest of the world.

Google and Facebook can afford more regulation

We no longer live in a world where Google and Facebook are tiny upstarts that shouldn’t be stifled by tough regulation. They can afford more regulation, and they probably should be regulated to reduce negative externalities. Of course, regulation needs to be balanced (freedom of speech etc.) and feasible for smaller companies as well. And regulation will have negative side effects, regardless how well it is done. That’s the price we have to pay. For example, some business models will be invalidated or at least less profitable through regulation.

With the current EU copyright reform as an example, we clearly see that regulation is messy, takes time, and has unintended consequences. But come to think of it, the same is true for digital innovation: it’s messy, takes time, and has unintended consequences. I don’t think Mark Zuckerberg’s intention was to build a machine that can decide elections, but that’s what he did. And there’s still no regulation in place to fix this. Will Facebook itself fix it? You bet.

With great power comes great responsibility. That’s a classic. The digital sphere has risen to great power, but still needs to cultivate the appropriate sense of responsibility. Where self-regulation fails, the political system will step in and regulate, like it or not.

Last updated on April 29, 2021. Photo by Piron Guillaume on Unsplash

In January, Mark Zuckerberg pledged he would fix Facebook’s biggest problems this year. Well, turned out that a year is not enough. As early as May, after the Cambridge Analytica scandal, he increased the amount of time he needs to three years.

The big question is now: Will he be given three years to fix the digital behemoth he has created? Personally, I don’t think so. But I may be wrong.

This week, news came out that more than a quarter of Americans say they’ve deleted the Facebook app, including almost half of 18- to 29-year-olds. Even if they didn’t really remove the app, at least it shows a growing negative sentiment towards Facebook.

People start to realise that Facebook is probably the worst example of a digital product that doesn’t really improve our lives, but instead isolates us in filter bubbles and divides society. And that’s not the only problem Facebook has created.

Is the Facebook death spiral Nick Bilton saw in January now taking shape? The stock market seems to be sceptical: Compared to early January, the stock price is down and moving further downwards. This is a sharp contrast to Apple and Amazon, the two most valuable public companies of the world. Apple is now worth more than a trillion dollar, and Amazon also touched the trillion dollar mark this week. Facebook? Less than 500 billion.

While that’s still a lot, to be sure, at the same time the case to split up Facebook is fleshing out. Tim Wu, who coined the term net neutrality, pleaded for this break-up in a recent podcast. He doesn’t limit the scope to Facebook – Google and Amazon are also on his list. For Facebook, breaking off WhatsApp and Instagram could be a start.

Long-term, this could also be in the best interest of the shareholders. Even Rockefeller, the owner of Standard Oil, became the richest man in the world only after Standard Oil was split into 34 companies in 1911. It turned out these individual companies would generate more income than a single one.

Meanwhile, Washington was busy discussing with Facebook and Twitter executives (and would have loved to hear Google testify as well). Prepare for some kind of regulation further down the road.

And Washington is not the only player. The biggest threat to Google and Facebook may well be regulation by the EU authorities. Commissioner Margrethe Vestager is not shy when it comes to tackling the big guys from Silicon Valley (and Seattle).

So the race is on. If Mark Zuckerberg can’t fix Facebook, Washington and the EU surely will. And their respective agenda differs, obviously. While Zuckerberg still wants and needs growth, i.e. more power, the regulators aim to limit both.

The example of the Philippines clearly serves as a warning sign. This country has every element from a dystopic playbook: a Facebook penetration of 97% – and an autocratic president who uses Facebook as a weapon.

But besides regulation (that will very likely come, sooner or later), there is another trend working against Facebook: the shift away from a one-size-fits-all network to special interest. Facebook co-founder Eduardo Saverin expects more niche networks in the near future. And he invests in them, putting his money where his mouth is.

It might make sense to undo the great unification of user profiles that occurred only a decade ago with the rise of the big platforms. Even an ancient platform like LinkedIn (owned by Microsoft) with its clear focus on business feels increasingly better than Facebook or Twitter with their toxic mix of every aspect of our lives, be it private or professional.

Facebook is simply ripe for some good old disruption, like MySpace was in the middle of the last decade.

Photo by Marc Steenbeke on Unsplash

When it comes to China, the sheer size of the country is always puzzling. And given its current economic growth path, it will soon be the largest economy of the world. This also translates to different markets, like digital or automotive.

Since China is not a Western-style democracy, the country poses some hard challenges to the Western world. For instance, the Great Firewall separates the Chinese internet from the rest of the world, despite all the early internet enthusiasts claiming that this would not be feasible.

Western companies have to play by the rules set by the Chinese government. While the same is true for other countries as well, it is different in China, since the country is run by a Communist Party that combines capitalism with a centrally planned economy.

The digital China has pretty much resisted the colonialisation by the giants of Silicon Valley and Seattle. With Baidu, Alibaba, and Tencent, or BAT in short, China has its own breed of GAFA-like companies, aiming for internet domination, at least in the long run.

As Westerners, we often expect that the Chinese people will someday demand freedom of speech and other freedoms we take for granted. But in reality, not too much has changed since the Tiananmen Square protests of 1989, almost thirty years ago. Comparing the Chinese internet with the Western one comes close to an A/B study. The jury on the long-term success is still out.

The ginormous size, combined with fast growth, provides for lots of opportunities. China is simply too big to ignore. To give a simple example: Despite China being the homeland of a new, mobile internet, the smartphone penetration is still lower than in Germany: 55.6%, compared to 71%. But with 775,028,000 smartphone users, China already boasts the world’s largest mobile market.

Both the economies of scale and the network effect are quite strong in China.

The same applies to the automotive market. China has been both the world’s largest automotive market and automotive manufacturing country for years, with a global market share of 30%, and Volkswagen as the dominant market leader. While China already has almost as many cars on the road as the US, the car penetration is still low, with 151 cars per 1,000 people, compared to 910 in the US (and 572 in Germany). This leaves room for growth.

The current fuel-based business model obviously has some scaling issues, like air pollution, climate change, and oil supply. China is moving into new energy vehicles, including but not limited to electric cars. The Chinese automotive industry is on the brink of globalisation. For example, the Geely Group now owns Volvo Cars, Lotus, London Black Cabs and the largest stake in Daimler.

Meanwhile, digitisation already shows some early signs, with Tencent owning 5% of Tesla as a prominent example. Over the next decades, we will see a battle for the new order of mobility, with China as a major player, shaping the future. Don’t forget that China already manufactures almost all Apple products, as well as other smartphones.

The strength in hardware development and manufacturing, for which Shenzhen stands as almost an icon, is another advantage for a future of digital cars and automotive digitisation. The car is, and always was, the ultimate mobile gadget. And it probably will remain. There are already promising large electric vehicle manufacturers like BYD, but also start-ups like NIO, backed by Tencent and Baidu.

Digital and automotive markets are going to merge, with digital going automotive and automotive getting increasingly digital. And China is well positioned to take advantage of this megatrend.

Photo by Anton Strogonoff on Unsplash

It’s always astonishing to recognise how far some smart people can think ahead. In hindsight, things once unfathomable now look simple and straightforward, but more than two decades ago? If we think about calm technology today, the concept is obvious and evident. But in 1996, who would have even thought this far?

Mark Weiser and John Seely Brown did, since they published their original paper on calm technology 22 years ago. Here is the 2014 revision. In 1996, there was no mobile web, and even the web itself was still nascent. (And the earliest papers date back to 1989, the year when the web was invented.) However, the authors anticipated a future that is now contemporary:

But when computers are all around, so that we want to compute while doing something else and have more time to be more fully human, we must radically rethink the goals, context and technology of the computer and all the other technology crowding into our lives. Calmness is a fundamental challenge for all technological design of the next fifty years.

It is probably not too far fetched to assume that a lot of issues with today’s mobile and social digital world could have been avoided if only enough people had followed their train of thought. Instead, we now have to deal with attention-grabbing devices and platforms. People are glued to their smartphones, like cyborgs. We are digital in a way that doesn’t enhance our lives. Our digital lives thrive at the expense of other activities.

Calm technology aims to minimise that. It only seeks our attention when necessary, and waits quietly for the rest of the time. But it is there when and if needed. Think of the tea kettle, a classic example of calm tech. Set and forget, until the water boils and the kettle demands your attention. In comparison, I’m not sure I need the annoying sound of my dishwasher, announcing he is done doing the dishes. Do I really want to know this? Most of the time, I don’t.

Amber Case has done a lot over the course of the last few years to popularise the concept of calm technology. After her famous 2010 TED talk (We are all cyborgs now), she has written a book on designing calm tech and given several speeches. We are excited to have her at NEXT18 this year, as she is clearly an expert on how to fix the digital. For a start, read her guest post on this blog.

It is a good sign that Google and Apple now have jumped on the bandwagon, applying some calm tech fixes to their attention vampires, err, devices. But, as Amber Case pointed out, they still have a way to go. Digital Wellbeing, the catchphrase Google uses for their initiative, is much more than minimising distractions.

In our upcoming NEXT Book, Pamela Pavliscak lays out what it means to design for digital wellbeing. In short, it is a much broader landscape. While calm tech dives deep into the attention economy, digital wellbeing takes a horizontal approach, aiming to change how we design technology from the ground up. Both have their benefits, and somehow they complement each other.

Pamela Pavliscak will speak at NEXT18. Watch the video from NEXT17 or read the live-blogging.

Photo by Harli Marten on Unsplash

In 2002, Baptist pastor Rick Warren published a book titled The Purpose Driven Life. It was a kind of sequel to his 1995 book The Purpose Driven Church. Another 15 years ago, in 1980 and as a young pastor, he founded Saddleback Church, his pastoral start-up. And boy, that scaled very well and became a huge megachurch.

Since it was not a tech start-up, scaling was not so easy. But what the church founder accomplished from day one was creating strong network effects. In a way, he created a platform that allowed for strong and sustainable growth. The book titles already imply that he insists on purpose as the driving force behind his success.

It was perhaps Simon Sinek who brought a similar kind of thinking to the business world, with his 2009 book Start with Why and the accompanying TED talk. The Why is the purpose, isn’t it? Every organisation needs to know why it exists. A school is for schooling, a car manufacturer manufactures cars.

While that’s obvious, there is also a need for a higher purpose. Over the last couple of decades, businesses started to articulate their visions and missions. While the vision is the goal, the mission is the way to reach that goal. True, in many cases those visions and mission statements are nothing more than marketing blah blah, but if done well, those can be helpful for all stakeholders.

In his 2014 book Exponential Organizations, Salim Ismail coined the term massive transformative purpose. He defines massive as audaciously big and aspirational, transformative as can cause significant transformation to an industry, community, or to the planet, and purpose as a clear “why”.

In marketing language, that kind of higher purpose is a differentiator. It’s what makes a school or car manufacturer special, and might even warrant a premium. If we follow Maslow’s hierarchy of needs, a higher purpose is something like belonging and love, esteem, or self-actualisation. Viewed from this angle, the idea of a Purpose Economy, popularised by Aaron Hurst in his 2014 book, is little more than an economy moving up Maslow’s pyramid.

Since more basic needs are fulfilled, attention and demand shift to higher levels. As you probably already suspect, the Purpose Economy is nothing new. Every economic activity serves some kind of purpose. Every industry moves up to higher levels after basic needs are covered. What’s more interesting is the timing. It is a sign of maturity for an industry to move up this ladder.

And so it’s worth noting that the digital industry now slowly starts to move in this direction. Whole Foods CEO John Mackey, whose 2013 book Conscious Capitalism is another example from the same breed of books, was on stage at SXSW this year, a mere five years later. If I’m not mistaken, this indicates that our basic digital needs are now fulfilled, making room for more advanced needs.

In general, that’s a good thing. It will make our beloved digital industry so much more interesting, ambitious, fulfilling, and significant. We can really serve our societies and their greater good. If we can deliver on that promise, of course. And if it is more than mere lip service.

Photo by Jamie Street on Unsplash

I fondly remember to be puzzled when one of my oldest friends started to pursue a career in public service, thus becoming a civil servant. To me at the time, that sounded boring. However, he was interested in a risk-free work life, to support his then future family. Civil servants don’t get fired, no matter what. Only if they steal silver spoons, as we say in Germany.

This is German failure culture in a nutshell. I don’t blame my friend for his career choice. But it is simply impossible to run a whole country with people you can’t fire. To prove that point, we set apart the Eastern part of Germany for a little more than 40 years. Trust me, it doesn’t work.

By the way, the Brits are starting a somehow similar experiment next year in March. I keep my fingers crossed for my British friends. Jacob Rees-Mogg at least gets the timeframe right when he is talking about 50 years to reap the benefits of the adventure. In Eastern Germany, the trial run was cancelled way before the 50 years milestone.

But I’m digressing.

Failure is the ugly sibling of risk. Taking risks includes the potential of failure. Avoiding risks reduces failure, but also limits possible outcomes. On the other hand, most if not all people need some kind of safety net to be able to take risks. The self-made man (or woman), still deeply rooted in the American Dream, isn’t very common in Germany.

When it comes to tech giants, Germany happily refers to SAP. Founded in 1972 and thus older than today’s top five (Apple, Microsoft, Amazon, Google, Facebook), it is a very German success story. However, the five SAP founders, all former IBM employees, could possibly be described as self-made men in the American sense.

Why is SAP still the biggest German tech company today, 46 years later? The answer has a lot to do with the other bigwigs, like Daimler, Siemens, or Bayer, not to mention the mid tier, the famous Mittelstand. The German industry as a whole still offers attractive careers paths for aspiring young people, with limited risk and reasonable compensation.

Compared to that, the German startup sector is still tiny. For example, in 2017 the overall investment in new companies jumped 88 per cent, but with 4.3 billion EUR in total investment it’s not really big. In comparison, Volkswagen alone spent 13.1 billion EUR on research and development in the 2017 fiscal year.

A small startup sector limits opportunities. You need at least some experience in the startup world to launch your own enterprise. Nowadays, we have some founder factories in Germany, that is, environments where people can learn how to start their own business. But the great majority of founders still founds traditional businesses, like plumbers, construction companies, or hairdressers. And why not?

No wonder that the biggest success story of the German startup scene still is the Samwer brother’s copy machine. They are famous for taking ideas proven to be working elsewhere and then executing them with razor-sharp focus and efficiency. Execution is something we are very good at. Looking up this word in the dictionary, there is a note of bitterness.

In Germany, failure in some way needs to be limited. We demand assurance (and insurance, also a big business in Germany) before we try something new. We spend enormous amounts of money to mitigate risk and failure. Just look at the tons of money used to recover from the 40-year experiment I mentioned earlier.

There is of course a word for that in German: Vollkaskomentalität, roughly translated as full insurance mentality. I don’t blame my country for this, it has served us well for the post-war era.

The only question is: Will it continue to work for the next couple of decades?

Photo by Catrin Johnson on Unsplash

On May 11, 2006, at what in retrospect turned out to be the very first NEXT, Johnny Haeusler took out his guitar. He played ‘London Calling’, a song by The Clash. It still is the theme song of his blog Spreeblick, that uses the line ‘I live by the river’ as its motto. Back then, I immediately understood that bloggers (as well as conference makers and party organisers) are part of the entertainment business.

Twelve years later, music has become an integral part of tech events. It’s now commonplace to have singers and bands performing on stage right between keynote speakers and panel discussions. No surprises here. But this trend also reflects a greater shift that Adam highlighted in a recent post.

Tech in the sense of chip-based connective technology is everywhere, and in everything. It’s a genuinely transformative technology, one that is rewriting the rules of our world. And I’m hard pressed to think of a field of life it hasn’t infiltrated.

At CEBIT last week, an event that has been very hardcore IT for decades, there was a band called Compressorhead playing on the main festival stage. The band members are robots, and the band could be considered an art project. But CEBIT having a festival stage in the first place is another indicator for the shift that’s going on.

In a world where tech is everywhere, it is hard for a tech trade show to maintain its focus and find its place. This year, CEBIT rebooted itself and adopted a new look & feel, positioning the show as the younger sibling of the more industrial-focused Hanover Fair, from which CEBIT was spun-off back in 1986. After the boom and bust of the dotcom era, CEBIT missed the Web 2.0 boat, i.e. topics like community, communications, user-centricity, or networking (not in the ethernet sense of the word).

And even after this year‘s remodeling, CEBIT still isn’t really about the product, at least not in the way we understand it. With this blind spot, the trade show closely mirrors the German industry, as Accenture’s top manager Frank Riemensperger pointed out at CEBIT last week. The newest bits and pieces of tech are all here, but the German industry is unable to create compelling new digital consumer products (and services) out of it.

How can that be? Germany is pretty much driven by an engineering culture and mindset. While this is not a bad thing at all, this culture often lacks design and product management skills and focus. We’ve seen the same pattern with the internet industry as a whole. First, it was all about developers (developers, developers). Then designers catched up, and now product management is the new kid on the block.

Without their relentless focus on the user and the product, Google, Amazon or Facebook wouldn’t have risen to the ranks of the most valuable public companies in the world. At the same time, their rise indicates a shift of the value creation to services (and away from physical goods). Digital products are services, which may have a physical component.

CEBIT‘s struggles with this transformation show exactly what needs to be done: follow the money. The money is where the value creation for the user is. I hate to iterate it, but content is king. Be it this tiny blog, a big trade show, a conference, or a party – it‘s all about what’s in it for the user. That‘s why we are all part of the entertainment industry. And that’s why we now have music at tech events. It’s part of our digital culture.

Disclosure: The NEXT Conference and this blog are co-hosted by SinnerSchrader, which is part of Accenture Interactive.

When I first came across something called a newsfeed, I was immediately fascinated. This encounter happened back in October 1992, at Funkhaus Berlin. I looked into a CRT terminal displaying the stream of news from all the major news agencies. You could even search for news from the past. Incredible. As an intern turned freelance radio journalist, I could spend hours sifting through the newsfeed.

With this experience in mind, I saw e-mail and Usenet newsgroups coming into my life. All of a sudden, everyone with internet access could write something and distribute it to the world. Awesome. That quickly led to an explosion of stuff to read. But you still needed to sit behind a screen, limiting the amount of time and attention you could possibly spend. That changed with the Crackberry which turned e-mail into an addiction. Then came the iPhone. The rest is history.

Fast forward to 2018, and I can still spend most of my days with newsfeeds. But now these feeds are ubiquitous and always in my pocket. The old gatekeepers, like dpa, AFP, or AP, have been replaced by new gatekeepers like Facebook and their mysterious algorithms. Their feeds have been designed to maximise the usage of my time and attention, because that’s what the new gatekeepers harvest and sell.

They are slicing my mind and selling the slices.

Digital mindlessness has been the design goal, at least implicitly, for these newsfeeds. They hijack our attention, while shortening our attention spans and leaving us with all kinds of negative side effects. That’s insane, to say the least.

But over the last couple of years, the tide slowly started turning. Digital mindfulness has gained more and more ground. While the concept of mindfulness itself is ancient and deeply rooted in Buddhist meditation, the digital branch is a more recent phenomenon, and often used in a broader sense. A bunch of mindfulness apps like Calm helped popularise the idea, while at the same time sharpened the perception of the mindless practices the attention economy’s oligarchs cultivate.

In the Valley, mindfulness and meditation have been on the rise for years. I don’t think that happened by chance. Instead, the digital pioneers felt the need to counterbalance the effects of their own creations. The same impetus led to initiatives like the Center for Humane Technology, née Time Well Spent, and thus in turn to self-help guides on digital mindfulness.

But digital mindfulness, understood as a countermeasure for digital mindlessness, has a business aspect as well:

Now, brands will have to rethink how emotional connections are made in a time where people demand time well spent. The main question will be how can I better support people in achieving their goals as human beings, rather than how can I capture their attention? The brands that do this will be able to generate orders of magnitude more value from customers over the long term.

In tech, this debate takes place under the term ‘Time well spent’, rather than digital mindfulness. But regardless of the term, it is about human values as the central design goal, and the basic hypothesis is that this focus will be even better for digital business, rather than limiting it.

There is a playbook for the next Facebook, and whoever cracks this will reap huge rewards. While Facebook so far is predominantly paying lip service, Google and Apple at least started to introduce features for digital wellbeing into their mobile operating systems. That says a lot.

Photo by Ben Kolde on Unsplash

I’m deeply sorry to again bother you with GDPR, since you probably have already heard of the EU’s new data protection rules. Hold on for a second. We can learn a few things from the recent past.

The most important lesson is that tech is no longer a topic that’s pretty much limited to technologists. Quite the contrary, the broader public is now front and centre about all things digital.

And it doesn’t at all matter that, for example, members of the EU parliament or US congress ask Mark Zuckerberg seemingly stupid questions. Since these are the legitimate concerns of the non-digerati that happen to be deeply affected by digital technology.

We have to deal with it.

Like it or not, as a reader of this blog you very likely live in a Western-style democracy. In democratic societies, there is a thing called government, in many cases elected by a parliament or even more directly by the citizens, like the US president.

These institutions deal with so-called public issues – basically everything that goes beyond the individual, e.g. collective interests or common values. Especially when those are threatened in some way or the other, political institutions will intervene.

And such an intervention has now happened on a scale that’s too massive to ignore. These interventions often come in the form of regulation and tend to have unintended consequences, especially when dealing with complex matters.

Western democracies are inclined to be quite robust. Take the US as an example. Since 1776, the US democracy has survived a civil war, two world wars, several other wars, and four sitting presidents who have been assassinated while in office.

Chances are that the US democracy will also survive Facebook and Trump. Not sure about the other way around. But Facebook messing with the basics of American democracy will undoubtedly lead to drastic action. And rightly so.

The same is true for tech in general. Disruption is only fun until you get disrupted. Democratic institutions threatened to be disrupted by tech will respond and in turn disrupt tech, as far as necessary to ensure their own survival.

Do you remember the financial crisis of 2008? Financial institutions didn’t like the regulations they faced after 2008, and some of the new rules were badly written, but at least we still have money and banks that continue to work. Somehow.

Photo by Werner Du plessis on Unsplash

GDPR is only the beginning.

And it was quite telling that many parts of our industry apparently slept under a rock until the very last moment, when the panic level rose and people complained about law that was finally approved more than two years ago.

That’s 25 months to prepare. To update our software, systems, and procedures. Plenty of time for a fast-moving industry. But we had more important things to do. That says a lot. And it is the best reason why GDPR came into existence in the first place.

It is time to learn that we, as the digital industry, have to deal with the broader public on a scale unknown so far. No wonder, since the top five public companies are now tech giants. It would be stupid to assume that the rest of the world only waits for them to take over control.

We need to realign our values with the societies around us, whom we need to serve, and must neither dominate nor disrupt.

Tech has left the building.

Cover photo by Lucrezia Carnelos on Unsplash

“The primary business model of the Internet is built on mass surveillance”, Bruce Schneier once wrote. That’s a sobering thought. Five years after Schneier’s statement, major changes are now imminent, due to the EU General Data Protection Regulation (GDPR), effective this Friday, May 25. You have probably already noticed the rising panic levels in the digital industry. Surveillance in its many different forms and flavours gets at least harder in those parts of the web that are governed by EU legislation.

Doc Searls, one of the authors of the Cluetrain Manifesto, even predicts that GDPR will pop the adtech bubble. “Without adtech, the EU’s GDPR (General Data Protection Regulation) would never have happened”, he asserts. His long, elaborate, and link-laden post lays out in many details what’s wrong with the adtech space and what will change after the GDPR sunrise later this week. This only adds to our questions regarding the future of digital marketing in general and adtech in particular.

But is the primary business model of the internet (Schneier) really going to change? This question resembles the old debate whether capitalism will go away or not. The answer to both questions is: It depends. Is our current, digital economy correctly characterised by the combination of capitalism and surveillance, and thus dubbed surveillance capitalism, as Shoshana Zuboff and others argue? It seems certainly true that data is the lifeblood of today’s economy. We produce and share lots of data, and our digital activities generate even more data. Value is extracted from those data, and the digital industry appropriates that value (and the data).

The digital industry has a long-standing history of neglecting data protection and user privacy. GDPR is a kind of collective punishment for an industry that still believes to be entitled to all kinds of data usage and misusage. Not that digital capitalists usually wouldn’t protect the data they have, notwithstanding scandals like Cambridge Analytica. But more often than not, we are tracking people without their knowledge, approval or a court order. Under GDPR, this behaviour will change significantly, due to hefty possible fines. We already see companies delete data they shouldn’t store, removing tracking code they don’t really need and asking for permission to use what remains.

Will this massive ongoing spring cleaning of data lead to a real catharsis?

Photo by Matthew Henry on Unsplash

Thinking about regulation as a possible fix for the digital woes our societies suffer from, the future viability of the online marketing industry quickly came into question, for a variety of reasons. In 2017, more than 60% of the worldwide online advertising revenue went into the pockets of only two companies: Google (44%) and Facebook (18%). This also means that 25% of the worldwide (not only online, but all kinds of) advertising revenue was snapped up by these two guys.

Not a very healthy market, or is it? Increasingly, it looks like a duopoly.

No wonder that ad-based business models like traditional mass media are quickly turning obsolete. The remaining share of the advertising market is fiercely fought over in a battle that resembles a race to the bottom. Publishers increasingly move to subscription-based models to avoid the traps of mass-manufacturing attention for the lowest possible price. As always, who pays the bills gets what he pays for.

The business model of traditional newspapers and magazines was two-sided, with advertising and the sale of copies as its two pillars. Digital publishing ditched the copy price and went all-in on advertising, driven by the assumption that higher reach and better tracking in the digital sphere would make up the difference. By now, this assumption can be considered proven wrong.

For a while, better targeting looked like a solution. After all, a perfectly targeted advertisement would be indistinguishable from information and thus worth a lot for all parties involved. Unfortunately, the gap between what the advertiser and what the user deem perfectly targeted turned out to be vast. What works well for advertisers often terribly annoys the user. The overall user experience suffered significantly. To quote Jason Kelley:

We’ll only be amazed (and not repulsed) by targeted advertising—and by features like this—if we feel we have a hand in shaping what is targeted at us. But it should never be the user’s responsibility to have to guess what’s happening behind the curtain.

…

The imminent death of advertising has been predicted for years. Instead of dying, the market grew and continues to do so. Last year, advertising veteran Andrew Essex’s book The End of Advertising made some headlines. For anyone who has at least some experience in the digital industry, what he says is not very surprising:

So if you begin with the covenant that the customer must come first, and that people will mostly reject a bad product, then you simply adhere to that policy and produce a holistic experience in which the entire product is cohesive. Many people misunderstand this and automatically make the leap to a world in which sugar companies will be dictating news reports on obesity. I’d like to believe that smart people will recognize anything that it’s inherently inauthentic. The future I envision is inherently utopian and optimistic, perhaps too much so, and maybe a little elitist, but so be it. But please be clear: I am advocating for a better experience for the buyer and seller, in which there is a holistic commitment to quality and everyone wins.

User-first, a better product experience, and authenticity have been propagated by digital players for years. It’s good to see these ideas finally gaining steam in the advertising industry as well.

Photo by Ross Sokolovski on Unsplash

It’s hard to write something original about the end of smartphones. First, since it’s obvious that the smartphone era won’t last forever, pundits who predict the demise of smartphones inevitably will be right, sooner or later. That’s an easy one. Secondly, the tenth anniversary of the iPhone last year, marked by the iPhone X and the Apple Watch 3, was a milestone, pointing to the direction of change.

But, and that’s a big one, we should be careful not to confuse the long-term future with short-term developments. Think peak oil. It has been predicted for 150 years, but never happened. In a similar way, peak iPhone has been predicted at least since 2016. But has it happened yet? You guess.

“In the long run we are all dead”, economist John Maynard Keynes famously wrote in 1923. That probably applies to the smartphone as well. But how long will its long run turn out to be? Now that’s hard to predict. The PC cycle lasted for around twenty years (1975-1995), the web cycle for fifteen years (1995-2010). Judging from this past experience, the smartphone cycle could reach its peak around the year 2020, giving way to the fourth cycle of personal computation.

Before we dig into the details of the upcoming fourth cycle, let’s first note that a cycle being over doesn’t equal the end of the eponymous device. At least not in the sense that PCs, web client devices (mostly laptop PCs) or smartphones would cease being sold at all. Desktop PCs still need to be replaced from time to time, and the same is true for laptops, despite tablets gaining momentum. The global PC penetration is still growing, and global internet penetration is about to reach the 50% milestone pretty soon.

Expect smartphones to be present for a while as well.

Do you remember the first iPhone? With its 3.5-inch screen, it was tiny compared to today’s standards. Growing smartphone screen sizes made room for another tiny device, hitting the road three years ago: the Apple Watch. Of course, smartwatches had been around for decades, but it was again Apple that brought the smartwatch to the mass market.

So the fourth cycle of personal computing is all about the smartwatch? Not so fast.

Let’s not forget the HomePod. Or, to be fair, the Amazon Echo and Google Home device families. And Apple’s AirPods. Voice interfaces are clearly on the rise. This new paradigm of human-machine interaction isn’t reflected in hardware sales so far, since voice assistants are already on smartphones, tablets, laptops and even desktops today. Someday, they might dethrone the smartphone as the universal remote control for our lives.

In this scenario, we will be talking to Alexa, Cortana, Google Assistant, or Siri through many different pieces of hardware, from the smartwatch and the smartphone to tablets, laptops, desktops, car stereos or smart speakers. Facebook is the only big five company that seems to be missing out on voice interfaces so far. Or isn’t it?

Mike Elgan predicts:

The future of the virtual assistant is not where Apple dominates (on mobile phones) or where Amazon does (on home appliances). The space will be characterized by total ubiquity, which means wearables, all electronic devices, many IoT devices and embedded into all the places where humans spend time (offices, cars and homes). Virtual assistants will become core enterprise tools and will be the main way humans are enhanced through artificial intelligence (A.I.).

He also predicts that Google will win in this space. That could be huge. Google would become the dominant force of the fourth cycle, possibly reaching an even higher penetration than the already almost ubiquitous smartphone. To put things in perspective: The global smartphone penetration is projected to reach the 40% milestone in 2021. This leaves some space for further growth beyond today’s limits.

And we didn’t even discuss augmented reality. Another story, with the potential to replace almost anything, including reality itself. As of spring 2018, we are still waiting for the AR glasses product category to take off. The software already looks promising. It will take a company with the stature of Apple to get hardware, software and services right and ready for the mass market. Pretty much the same is true for virtual reality or, as we prefer to say, immersive experience.

This leaves us with a very broad device landscape. Perhaps, the fourth cycle of personal computation won’t be dominated by a single type of device, like the PC or the smartphone, but instead by strong platforms that can tie all these very different devices together with software and services. The winner will be whoever provides the superior user experience. It may well be the established iOS/Android duopoly, once again.

Photo by Matt Botsford on Unsplash

The ginormous success of the internet and digital technologies is commonly attributed to their decentralised nature. This allowed for quicker and ultimately more growth of the network, because lots of different approaches could be tried and tested simultaneously. Centralised authority and control was limited to a few basic cases, like domain names (DNS) and IP addresses.

Fast forward to 2018, and we see a very different picture, with an oligopoly of five companies (Apple, Amazon, Google, Facebook and Microsoft, not to mention Tencent and Alibaba) controlling huge chunks of our digital lives. On top of a decentralised infrastructure, centralised control achieved a major comeback. Network effects and economies of scale are both strong drivers towards a digital platform economy dominated by only a few players.

Digital is broken. Can decentralisation fix it?

Well, it depends. Decentralisation itself is an abstract concept that can be implemented in a lot of different ways. Technologists think of decentralisation differently than, say, business people. Blockchain technology, for example, took off because it appeals to both. It is radically decentralised from both a technological and a business point of view. To be a real success, now only the user experience (UX) needs to be figured out.

Just as an aside: In our digital age, there are three major success factors – technology, user experience, and business model. In the past, many successful products started with only two of them, technology and user experience, figuring out the business model later. These days, that approach is becoming increasingly harder to pull off. At least if you aim for more than a sell-off to Apple, Amazon, Google, or Facebook.

At least three of the big guys derive their power from ownership of data. This insight leads to the separation of data and applications: Users should own and control their data, not arbitrary corporate behemoths like Facebook. The post-GDPR world will probably take a huge step in that direction.

But how can this separation be implemented? No one less than the inventor of the web, Sir Tim Berners-Lee, has a project called Solid up and running that tries to do just that, while adhering to the open standards of the internet and the web. In a Solid world, I wouldn’t store my social graph and all the other data on Mark Zuckerberg’s servers, but somewhere else, giving Facebook only limited access.

A similar project is Blockstack, using blockchain technology as technological foundation. It comes with its own Blockstack browser and stores data on your local device as well as in the cloud. Blockstack’s appeal may grow after May 25, when GDPR goes into effect. The EU data protection regulation can give a huge boost to projects and products like those. What so far was a disadvantage – not storing data of your users – will suddenly turn into an advantage.

As the Digital Journal points out:

In effect, this turns the web’s centralisation inside out. The internet would transition towards a data-first model, rather than its current service-centric approach. Your data would become the most important element, a principle apps would be required to respect.

Again, this approach looks promising from a data protection perspective. And also from a decentralisation perspective. Since data is the new oil (or not), it is highest time to increase pressure on the data giants of our days. Remember when the internet put pressure on the early online services?

Walled gardens like AOL or CompuServe services were forced to add internet access to their service, only to extend their lifetime for a few years. In the same way, Amazon, Google, and Facebook could be forced to adopt a data-first model, allowing users to store their data wherever they want, and to easily move it (portability).

It remains to be seen whether market competition, technological innovation, government regulation, or social responsibility will be the major driving force behind this shift to decentralisation and data-first. But the overall trend to take back ownership of data is growing stronger. And GDPR is an important part of that.

Photo by Sam Erwin on Unsplash

There’s a famous quote from American writer and political activist Eldridge Cleaver:

There is no more neutrality in the world. You either have to be part of the solution, or you’re going to be part of the problem.

I’ve an earnest question for the digital industry: Do we want to be part of the problem or part of the solution? For quite a while, we took for granted that we, of course, are part of the solution just by being digital, since digital was perceived to be good in itself, and hence digitisation equals progress.

In 2018, it should be obvious that this is no longer the case. And probably never was. As long as we continue to pretend it and act as if, we’ll look arrogant and tone-deaf. Today’s worst example is Mark Zuckerberg, who repeatedly appears as if he still doesn’t understand the problem. I suspect he will be forced to understand, or he won’t be CEO for too long.

In hindsight, the Trump election, and to a lesser degree, also the Brexit vote, served as huge wake-up call for our industry. What happend since felt as if reality broke into our neatly sealed off digital world. It is a classic case of systemic shock. Externalities caused by the digital industry have gotten so big and troublesome that they no longer can be ignored. People stand up and voice their concerns.

Let’s for example take disruption, one of the poster-boy brainchilds of Silicon Valley. At first, what gets disrupted are outdated business models and yesteryear’s technologies. Digital improves the customer experience and delivers more value for less money. New jobs are created, and some people lose their jobs, as it’s always the case when new technologies arrive and older ones disappear.

But after a while, disruption enters other areas, like politics, or the physical world. Now it is our political system that gets disrupted, by Brexit or by a president who viciously uses Twitter not only to win the election but also to speak directly to the unwashed masses and to political leaders all over the world. It is a bit surprising that so far only Facebook gets blamed for this, while Twitter seems to get away with it.

In the physical sphere, you see retail space shrinking, cab services and accommodation disrupted, or the entire automotive and transportation industry shaken up. The first serious doubts appear. Is digital really the holy grail? Do we really want everything turned into a digital product? Should the whole world be taken over by nerds, who seem to be drunk on such power?

At this point, disruption turns into a power struggle. Old power fights back. Now there are two options: New power can pick up the gauntlet and start to fight. That’s a war the digital squad will probably lose, with dramatic results and massive losses. But not very unlikely.

Facebook increasingly looks like a battleship on a collision course with a lighthouse, who still tries to persuade the lighthouse to change direction. Not going to happen. Facebook will inevitably crash or change its course. Crash means that Facebook literally gets deleted. The #DeleteFacebook campaign would end up with the deletion of Facebook itself, not only of a few user accounts.

Would you like that outcome? Perhaps one of the most disturbing long-term problems for Facebook is that more and more people seem to like the prospect of deleting Facebook. Mark Zuckerberg might assume his company being too big to fail, but what would society really lose if Facebook went under? Not much, I fear.

Besides fighting a war, the other option is always peace negotiations. That’s more likely to happen than a full-blown war. In this scenario, externalities will somehow be reintegrated into the digital system. Disruption, for example, will be limited, one way or another. Incentives for Facebook or Twitter to further disrupt the political system will be minimised.

Things like that have already occured. Uber lost some ground in Germany as well as other countries, and also in Texas, at least for a while. Airbnb got severely limited in Berlin, with a law that only recently was loosened a bit. The EU General Data Protection Regulation will shake up the digital marketing sphere and adjacent areas.

To fix digital, the industry needs to become aware of its negative side effects and enter into negotiations with the non-digital world about what’s tolerable or even desirable and what’s not. This isn’t going to be easy, and it will probably set some limits for people who don’t like to be limited in their ambitions.

But hey, you can only change the world so far as the world accepts to be changed. If the world considers a problem what you think is a solution, than either convince the world that your solution is not a problem, continue to be part of the problem, or be part of the solution.

Photo by Tim Gouw on Unsplash

Earlier this year Arianna Huffington gained much attention with her essay summing up signs of The Great Awakening in the tech industries. The piece is a good but rather depressing read. And it is only one of many voices from the digitally driven world who analyse and describe developments around the world that were unforeseen – some even unintended – and that now need some fixing, it seems.

Last year, at the NEXT Conference — as well as on this blog — we examined in great depth why digital sucks. This year, it’s time to discuss how we are going to fix digital before it fixes us.

Digital Ego

Before we can do this, we need to take a closer look into the mirror and scrutinise our digital egos. Are we still human? Or do we really believe that in some not so distant time AI will supersede human beings as the highest form of life on earth?

This would imply that there’s nothing genuinely human that couldn’t be automated or at least simulated by machines. To us, this sounds like a nightmarish dystopia.

Why on earth should we create machines that could possibly enslave the entire human race? But hey, that’s what we already did with the creation of Facebook, at least in parts. Or, to be more general, hasn’t the entire internet turned into that human-enslaving machine? Did we already hand over our minds to AI? There is a fine line between our dependence on a necessary infrastructure and a drug. The internet was intended as the former, but has turned into the latter for many.

One of the early prophets of doom was author Jonathan Franzen, who saw things coming for a while. Here’s a quote from The Atlantic (2013):

In the mid-’90s, when I started to feel worried about what was happening to literature with the introduction of the third screen, and with the increasingly materialistic view of human nature that psychopharmacology was producing, I was looking for some way to describe how technology and consumerism feed on each other and take over our lives. How seductive and invasive but also unsatisfying they are. How we go back to them more and more, because they’re unsatisfying, and become ever more dependent on them. The groupthink of the Internet and the constant electronic stimulation of the devices start to erode the very notion of an individual who is capable of, say, producing a novel. The phrase I reached for to describe all this was “an infernal machine.” Something definitionally consumerist, something totalitarian in its exclusion of other ways of being, something that appears in the world and manufactures our desires through its own developmental logic, something that does damage but just seems to keep perpetuating itself.

In short, technology married consumerism and transformed itself into an infernal machine. This techno-consumerism now eats up our lives. We live in a world where technology is worshipped as a solution to each and every problem. Silicon Valley has already started to institutionalise its religious beliefs. For lack of a better term, Swiss entrepreneur Wolfram Klingler calls this newfangled religion Digitalism. Author and academic John Naughton speaks of the Church of Tech(nopoly).

One of the central topics of religion is the relationship between freedom and dependence. To properly acknowledge our dependencies is a prerequisite for freedom. Otherwise, we get enmeshed in an epic struggle with the unknown. For any addict, the inevitable first step is to be honest about the addiction. We need to admit that we are powerless over our digital fix.

But what then? The classic twelve-step programme refers to a higher power that could restore us to sanity. Where do we find this higher power? In times of the internet, probably the most powerful technological creation of all time, that’s no easy task. Besides God, possible candidates include nature, consciousness, existential freedom, or science. Regardless of which higher power we choose to refer to, we enter the realm of belief.

And that’s where the problem is. The filter bubbles of Google and Facebook constantly confirm our already existing beliefs, as venture capitalist and early Facebook advisor Roger McNamee points out:

The result is that everyone sees a different version of the internet tailored to create the illusion that everyone else agrees with them. Continuous reinforcement of existing beliefs tends to entrench those beliefs more deeply, while also making them more extreme and resistant to contrary facts.

That’s interesting to note. Obviously, the technological evolution has forced us to rethink the big questions of life, including our beliefs. That’s a good thing, as a first step. But all the necessary reflection alone doesn’t solve our problems. If we don’t want our own artefacts — like technology, the internet, Facebook, or AI — to become our overlords, we need some kind of intervention. Otherwise, things might get out of control.

Or perhaps they already are, and we have to restore control. The internet itself was designed to be as decentralised as possible, to work without a central authority where feasible, and to spread control as evenly as imaginable. It is a great irony that the internet gave rise to a bunch of the most powerful companies in history: Google, Apple, Facebook, and Amazon. In short: GAFA. Not to mention other global players like Tencent or Alibaba.

The heated political debate after the 2016 US election demonstrated a growing willingness of the political system in general to intervene. Marketing professor Scott Galloway postulates that the GAFA companies should be broken up. They have become too powerful and they threaten, not enhance, capitalism, he argues. Even tech analyst Ben Thompson occasionally pleads for regulation.

Digital sucks

The internet was built upon a certain ideology, sometimes called the Californian Ideology. It has a strong libertarian element that is still prevalent in the higher ranks of the tech industry today, cf. Facebook’s old mantra move fast and break things. Another, somehow paradoxical aspect is the technological determinism of Silicon Valley – the assumption that a society’s technology determines the development of its social structure and cultural values. Increasingly, that is exactly how our world looks, but shouldn’t it be the other way around?

As early as 2011, filmmaker Adam Curtis concluded that the Californian Ideology failed to live up to its claims:

The original promise of the Californian Ideology was that the computers would liberate us from all the old forms of political control, and we would become Randian heroes, in control of our own destiny. Instead, today, we feel the opposite – that we are helpless components in a global system – a system that is controlled by a rigid logic that we are powerless to challenge or to change.

It is time to abandon the ideologies of Silicon Valley. Their key assumptions include that digital equals progress, and that the human brain is (or at least works like) a computer. Neither of these is true. Over the past few years, we’ve learned the hard way that digital technology is just a tool like other tools and can be used for all kinds of purposes, be it progressive or reactionary. This means that we, as the digital industry, are a means to an end; and as such are not exempt from scrutiny should the ‘end’ be seen as controversial.

The second assumption is even more critical. The human brain as a computer is a powerful metaphor, but it is utterly wrong and should be abandoned as soon as possible, psychologist Robert Epstein asserts. This metaphor helps us neither to better understand how our brain works nor to more thoroughly inform our technological progress. Instead, it fosters the view of humans as entities that can (and possibly should) be emulated, replaced and superseded by machines that do everything humans can do – but better, faster, and cheaper.

It is more helpful to see humans and machines at two opposite ends of a spectrum. Computers are very good at things humans are bad at, and vice versa. In this view, the singularity (the merger of humans and machines) becomes very unlikely. Thus, the whole singularity train of thought is flawed and will inevitably end in a train wreck. Bye-bye Ray Kurzweil, see you in 2045.

And what’s more, the notion that smart technology will soon take over most, if not all, of our jobs, requiring a universal basic income to tranquilise the masses of unemployed people, has a strong odor of totalitarianism. In The Origins of Totalitarianism, published in 1951, political theorist Hannah Arendt wrote: “We may say that radical evil has emerged in connection with a system in which all men have become equally superfluous.”

The libertarian ideology of Silicon Valley has a dark, authoritarian side. It can perhaps be described as a new high modernism without strong state authority, while retaining the unfaltering confidence in science and technology as a means to reorder the social and natural world.

None of these attempts, neither totalitarianism nor high modernism, ended well. So why not learn from history?

Digital Fix

How to Fix the Future is the latest book by Andrew Keen. He profiled himself early on as a digital sceptic and internet critic (and was ridiculed a lot for that). Thanks to his classical education, he was able to see some dangerous trends at least ten years earlier than others. In three books, he explained how today’s internet is killing our culture, how the social revolution is dividing, diminishing, and disorienting us, finally stating that the internet is not the answer.

And he remains one step ahead. To solve the myriad of problems the digital world faces in 2018, Andrew refers to a humanist approach – smart human beings instead of smart technology. Again, this is probably anathema to the church of tech. This religion basically believes that every problem can and should be solved by technology. Quite the contrary, digital humanism instead puts human beings (the people formerly known as users) first and restores tech to its proper role as a means to an end.

This of course requires a definition of what is human. And that itself isn’t self-evident. Today, we oftentimes think either in terms of a coming singularity of human and tech, or of a perpetual duality between humans and machines – and also between the tech industry and the rest of the world, as Keen notes. Understanding who we are requires knowing where we come from. And that look in the rear view mirror has been done before.

The 14th century humanists started a cultural revolution that peaked in the Renaissance era. They reconnected with the human heritage from the ancient world, repurposing it for the challenges of their times on the brink of early modernity. This movement was closely related to education – in fact what we still call classical education traces its roots back to Renaissance Humanism. What we need today is a new cultural revolution, a new Renaissance, a Digital Humanism.

But there is no silver bullet, no single solution. Neither the free market on its own nor government regulation alone can fix the problems the digital revolution has created, Andrew Keen writes:

What’s needed, instead, is a strategy combining regulation, civic responsibility, consumer choice, competitive innovation, and educational solutions. It was this multifaceted approach that eventually fixed many of the most salient problems of the industrial revolution. And today we need an equally combinatorial strategy if we are to confront the many social, economic, political, and existential challenges triggered by the digital revolution.

He sums up his five bullets for fixing the future as follows:

• Government or legal regulation
• Competitive innovation
• Social responsibility by citizens
• Consumer choice
• Education

It’s important to note that all five strategies need to be combined for a successful change. We need a fine balance of regulation and innovation as well as a redesign of education with new ways to constantly learn ourselves and educate next generations in ways that reflect the world we will be living in. But the key factor will be how we take responsible actions as social beings, as company leaders, as citizens and as consumers. To paraphrase JFK: Ask not what your digital world can do for you — ask what you can do for your digital world!

In September 2017, some 150 people, from entrepreneurs to designers to philosophers, signed The Copenhagen Letter. As of April 2018, there are more than 4,200 signatures on it. The letter, addressed to everyone who shapes technology today, is a short, concise manifesto that covers many of the topics we’ve discussed so far. Here’s how it starts:

We live in a world where technology is consuming society, ethics, and our core existence. It is time to take responsibility for the world we are creating. Time to put humans before business. Time to replace the empty rhetoric of “building a better world” with a commitment to real action. It is time to organize, and to hold each other accountable.

The letter then moves on with five bullet points, stating that:

1. tech is not above us
2. progress is more than innovation
3. we need digital citizens, not mere consumers
4. design for addiction, deception, or control will not be tolerated
5. human-centred design must be replaced by humanity-centred design.

The text even calls for a new Renaissance. How cool is that? You can sign the letter here.

In November 2017, Rob Girling and Emilia Palaveeva called for humanity-centred design and outlined how the design discipline should move on from the human-centred design paradigm. Their question is: Are we designing a world we all want to live in today and tomorrow? In February 2018, Tristan Harris announced a newly formed coalition of technologists called the Center for Humane Technology, rebranding their Time Well Spent initiative, founded three years ago.

The Center touts humane design as the solution. The differences, if there are any, are subtle. So maybe we should add a sixth bullet point to the list: humane (or humanity-centered) design. And while we are at it: Why not redesign the entire internet, i.e. the technological platform? We’ll need engineering and, as well as design, also regulation, civic responsibility, consumer choice, innovation, and education.

To put it in product design terms: We need a proper product management for the internet. But who is going to be the product owner? The only possible answer is: we, the people.

For way too long now, the digital industry has failed to notice that it causes disruption not only of outdated business models but also of the very fabric of society. This must change, and it will be changed, sooner or later, one way or the other. Yes, society will indeed change profoundly through the digital revolution, and it already has.

That’s inevitable, and not necessarily a bad thing. But no, the direction of change is not predetermined by some integral forces of technology itself. We, the human beings, need to be at the helm of technological innovation, to understand what’s happening and to drive the change.

That’s our social responsibility. And that’s what makes us human in the first place.

Innovation provides for a great buzzword, and also a funny bingo game. Most readers of this blog will probably agree that innovation is a good thing. Innovation is some kind of least common denominator not only for the tech industry, but for many, if not most, other industries as well.

Things become complicated as soon as we think about the best way out of the current mess the digital industry went into. Do we need more innovation? Do we need less, or slower innovation? Or do we need other kinds of innovation?

It may help to take a closer look on the question why innovation so often fails in the first place. The short answer is: Failure is inevitable, since innovation is shorthand for a giant trial-and-error process. You need error to find out (and weed out) what doesn’t work. Innovation is what remains after a cost- and time-intensive process.

Start-up companies can follow a single-idea approach (and possibly pivot after they hit a roadblock), since they are essentially nothing more than bets on future success. Bigger incumbents need a portfolio approach, since they typically can’t afford to bet the whole company on a single idea. For them, it is essential to meet the right mix of innovation management triple-play, combining their own research and development (R&D) efforts with third-party developers as well as successful startups.

For a healthy innovation ecosystem, proper market regulation is required. You need at least some kind of level playing field, thus limiting the power of the big guys, establishing a bunch of rules, and allowing for consumer choice. The IT industry as a whole is evolving in a constant rhythm, swinging between centralised and decentralised systems. After a swing to the decentralised Web 2.0 in the first decade of the current century, the industry has again been centralised by the Big Five (Apple, Amazon, Alphabet, Facebook, and Microsoft).

New technologies like blockchain aim to again open up the market and decentralise the net, thus allowing for a new wave of innovation. Other possible game changers for the next wave are AI/ML and new interfaces like voice or VR/AR/MR. These technologies possibly provide for disruptive innovation, a term coined by Clayton Christensen in 1995.

More than 20 years and at least one wave of disruptive innovation later, his theory gives some hope that the big guys of today are not invulnerable, but potential objects of disruption as well. It will probably take a while. Each new wave of technology, disruptive or not, starts slow. The familiar pattern is the hockey stick: slow start, and then explosive growth. The PC, the Web and even the iPhone/Android revolution needed some time to ramp up.

To quote 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.

From today’s Big Five, only Apple and Microsoft are more than 40 years old. Amazon and Google are in their twenties, and Facebook is not even 15 years old. Whether Netflix, Airbnb, Tesla, or Uber are still the next bunch of candidates to rise up the ranks of the tech oligopoly remains to be seen.

It’s not easy to predict how and when disruptive innovation will unfold, but it is certainly one way to change the status quo for the better. In his book How to fix the future, Andrew Keen reminds us:

In 2013, to hoots of condescending laughter from the digital cognoscenti, Angela Merkel, using language she might have borrowed from More’s Utopia, called the fifty-year-old internet “Neuland”—meaning “new land” or “uncharted territory.” And yet in a sense, Merkel was right. If Germany is to win the second half of the game, the internet needs to once again become uncharted territory. All its orthodoxies need to be challenged. Just as the internet has disrupted old industries, so the time has now come, in the perpetual creative storm of our Schumpeterian capitalist economy, for outsiders to engineer the internet’s own disruption.

Now that’s a challenge. As of today, the probably biggest German success is Samwer brother’s Rocket Internet, and that is a very German endeavour in its own right, because it’s all about execution, not about new ideas. It takes the German approach of incremental innovation, applies it to potentially disruptive ideas and puts it on steroids, borrowing from Facebook’s move fast and break things mantra.

While clearly successful and nothing to be ashamed of, Rocket Internet cannot save the German economy on its own. What’s needed is probably again a hybrid approach to disruptive innovation, combining investments in corporate R&D with third-party development and successful startups, but this time for a whole country, or for Europe as a whole. It’s a portfolio strategy.

Perhaps the EU should shift some of their money into such a thing.

Photo by “My Life Through A Lens” on Unsplash

For quite a while, casts were clearly set: digital heroes like Apple, Amazon, Google, and Facebook were the good guys, and government regulators the bad ones, only spoiling the success of the digital revolutionaries. The tables have turned completely over the course of a mere 16 months. The election of Donald Trump as 45th president of the United States was the much-needed shock and reality check to move the compass needle.

Now, government regulation is not only seen in a much more positive light, it is also widely regarded as an urgently needed fix for the digital woes our societies suffer from. Winner-take-all markets have been on the rise for some time, but only recently the five big winners Apple, Amazon, Google, Facebook, and Microsoft have risen to the top of publicly listed companies, thus reflecting both their current dominance and expectations of future monopoly profits.

Ginormous network effects and the rules of the platform economy are scaring more and more people, and there’s a growing political will to intervene. Just to be clear, this doesn’t mean there will be any new government regulations in the US anytime soon, since Facebook seemingly was critical to win Trump the presidency (and Obama as well).

The public view: regulate

But public opinion has pretty much changed to be in favour of regulations, and if this change persists, policy changes will inevitably follow, since that’s the way Western democracies tend to work. While elections clearly don’t transform everything, they still have a significant impact, as for example both the election of Obama and of Trump have shown.

Free markets aren’t a given, they have to be created, by establishing some more or less basic rules, creating money and payment systems, providing safety, and safeguarding access, amongst other things. Historically, that was the role of governments and other public agencies. Regulation in the classic sense of the word does exactly that. But the behemoths of today are marketplaces themselves, and to a large extent unregulated. They set the rules others have to play by.

For a surprisingly long time, that worked well.

Google and Facebook, for example, sucked up most of the online advertising revenue, rendering ad-based business models like traditional mass media obsolete. That wasn’t a problem only until it was. Occasionally, regulators fiddled with Microsoft or Google to fight their monopolistic misbehaviour, but nothing serious. This is going to change dramatically. It is no surprise at all that Facebook can be used to influence elections. But where is the line between legit political advertising and illegit voter manipulation?

Manipulation breeds regulation

Obviously, there need to be some rules, and Facebook impressively failed to regulate itself. Besides blatant manipulation, there are other issues as well: the degradation of civil society, filter bubbles, the spread of fake news, hate speech, and respective measures that turned into a kind of semi-public censorship regime in Germany, just to name a few. Facebook as a company has been exceptionally bad at politics, probably for a number of reasons. There is now a perfect storm brewing that could severely damage the company.

And probably should.

Tracing the roots of this mess, we easily come to the advertising business as the culprit. Facebook and, to a lesser extent, Google have both optimised themselves for marketing purposes, gaining huge shares of the advertising markets. More and more voices now call for breaking up Facebook. In Europe, a new round of regulations becomes effective this May with the EU General Data Protection Regulation directive. On the tax front, the European Commission has just made some bad news for the big guys as well.

All of this leads to one question: Is there a future for the online marketing industry?

Photo by Nicolai Berntsen on Unsplash

Steven Pinker is on a two-fold mission: He fights against the common perception that our world is becoming worse over time, using a myriad of statistics to prove the opposite – that progress is real. And he fights for the ideals of enlightenment, namely reason, science, humanism and, well, progress.

As children of the 20th century, we are heavily influenced, whether we know it or not, by the Dialectic of Enlightenment, first published in 1944 by Max Horkheimer and Theodor W. Adorno. These two philosophers wrote their influential piece under the impression of World War II, National Socialism, Stalinism, state capitalism, and 20th century mass culture.

Since then it wasn’t easy anymore to view enlightenment in a purely positive fashion. The dark side had to be taken into account as well. Yet in Steven Pinker’s view, the catastrophes of the 20th century are reduced to mere dips in his graphs that overall point in the right direction. In general, I’d buy into his radical optimism, at least when it comes to statistical proof for progress. Yes, things are getting better.

But I think Steven Pinker needs to do his philosophical homework as well. Having a one-dimensional, black-and-white world view clearly doesn’t cut it. Simply identifying enlightenment with reason, science, humanism, and progress is too reductionist. As every serious historian will assert, some aspects and consequences of enlightenment have been unreasonable, nonscientific, inhumane, and reactionary. Hence the dialectic.

Fast forward 200 years, from 1789 to 1989, the year Sir Tim Berners-Lee invented the World Wide Web. Almost another three decades later, his invention has shown to be Janus-faced as well. The Digital Dialectic has already been published in the nineties. In our days we learned that digital technology is causing rising inequality, loss of jobs, a cultural crisis, and fosters business models that Andrew Keen sums up as surveillance capitalism.

Just to be clear: there obviously is digital progress, but digital technology isn’t inherently progressive. It has regressive side effects, it can be used for all kinds of purposes, good or bad, and it is. Andrew Keen describes a loss of human agency, with raw computer power and clever algorithms designed to replace us. However, as he emphasises, technology can never have a will of its own.

Basically, there are two schools of thought these days. One sees humans as entities that can (and possibly should) be emulated, replaced and superseded by machines that do everything humans can do better, faster, and cheaper. The other school views humans and machines at two opposite ends of a spectrum. As Simon Segars, the CEO of chip-maker Arm, puts it: Computers are very good at things humans are bad at, and vice versa. Andrew Keen is clearly following this latter school of thought.

The former is based on the assumption that the human brain works like a computer. But, as psychologist Mary Aiken reminds us, even today we barely understand how the human brain works. The computer-brain metaphor is powerful, but wrong and should be abandoned. Though this would steal pundits like Elon Musk a lot of their thunder. Instead of the singularity, Mary Aiken proposes the mutuality, a symbiotic relationship between man and machine, but with humans in control. There is a change in terminology: intelligence augmentation, rather than artificial intelligence.

In this view, human-machine interaction becomes even more important. The Paralympic Games these days can be viewed as a celebration of human-machine interaction, as Hans Georg Näder (pictured above), an entrepreneur from my small hometown in Lower Saxony, pointed out. Ottobock, the company he owns, does amazing things in the field of high-tech healthcare, augmenting people in a quite literal sense of the word, e.g. given them legs or other body parts.

Technology is interwoven with every aspect of our lives, but the promises of digital transformation – we are not there yet. We are not even close… As new technologies and opportunities arise, we must tackle human challenges and create better mental models and better outcomes. Right now companies just try to save or reinvent their old business models, instead of building better ones.

It’s the time for digital fixing.

In 2018, it seems to be common sense that some things in our (digital) world are out of control. What’s less clear is who or what is responsible for the mess, not to mention how to fix it. At SXSW last year, the tech scene was still under shock after the Trump election. This year, the overall tone is pretty sober.

It’s worth noting that a technologist like Tim O’Reilly now blames neoliberal capitalism for the many wrongs of technology. Less Milton Friedman, more John Maynard Keynes could be his motto. He cites statistics about stagnating real median family incomes vs. rising productivity to prove his point.

In his view, it’s more our financial system that is to be held accountable than technology as such, or tech companies in particular. They operate under the conditions set by the capital markets, and thus we have to redesign these markets, he concludes. This at least is worth considering, though it draws attention away from the responsibility of tech companies and their leadership.

Of course, Tim remains as optimistic about technology as ever, and it’s hard to condemn him for that. But he refrains from worshipping tech and rather sees it as a tool that can be used in different ways. It’s on us to decide how we use it, and we are responsible for that.

Tim O’Reilly uses the term technology in a rather narrow meaning, thus excluding the broader technological, financial and social systems that make up the tech industry as a whole. This move allows him to shift responsibilities away from tech and towards society in general, and the financial markets in particular.

He certainly has a point, since Silicon Valley is based on venture capital, one of the purest forms of modern capitalism. And it’s not Silicon Valley alone that makes the rules of venture capitalism. Quite the contrary, even companies like Apple operate under the pressure of the financial markets, and the basic rules of these markets didn’t change very much after the financial crisis that took off ten years ago.

Even Whole Foods CEO John Mackey, who is very outspoken about the many merits of capitalism, agrees that the financial markets have their flaws. Whole Foods was basically forced to put itself up for sale by capitalists he famously called “greedy bastards”. He asserts to be very happy with Amazon now, but still believes it is wrong that a relatively tiny shareholder can have such an enormous influence.

Which brings us to another point: the single focus on shareholder value as the only thing to optimise business for. This has been criticised a lot in the past, but tech conferences didn’t use to worry a lot about questions like these. Now they do. Journalist Ezra Klein took a systemic approach in his talk, showing how we designed politics, the Valley, our media, or Wall Street so that even good people act badly.

All systems are optimised to be self-sustaining, and they change only to the extent necessary for their own survival. That’s probably old news for someone who has read for example Niklas Luhmann, but nonetheless useful to take a closer look at, especially in times of crisis. Since our brains are also systems, this train of thought even helps to solve the problem of responsibility.

So who is responsible for the mess in our digital world? Systems are the culprit, and a systemic approach is needed to fix the disarray. We need to redesign our systems to better align them with values and purposes that go beyond systemic self-sustainment, while keeping them up and running. After all, systems like technology, capitalism, media, politics, and our brains have done great things for humankind in the past. So let’s not destroy them.

Old farts like me probably remember John Lennon’s song Power to the People, released in 1971 as his fifth solo single. To be fair, back then I wasn’t even two years old. The same-titled political slogan is of course much older than the song. But only three years after Lennon, in his 1974 book Computer Lib, Ted Nelson connected computer use with political freedom with the rallying cry “Computer power to the people! Down with the cybercrud.”

Later in the game, the digital industry shifted this idea of empowerment from politics to consumerism, turning people into consumers. Still, there has been a considerable power shift away from corporations and to the consumers, thanks to the internet in general and social media in particular. What once was a linear, one-way relationship between producers and consumers turned into a two-way and even multi-way conversation.

Markets are conversations is a famous phrase from the Cluetrain Manifesto, published in 1999. What the authors probably didn’t expect at the time was the scenario we are witnessing today: Four companies essentially own the markets, and thus also the conversations and the relationships. That’s a far cry from the decentralised internet that the founding fathers (yep, mostly men) had in mind.

Computer users, to borrow a term from the early days, and consumers now find themselves struggling with the GAFA behemoths: Through network effects and the power of digital platforms, Google, Apple, Facebook, and Amazon are effectively dominating more and more markets, owning consumer relationships and acquiring unprecedented power not only over consumers, but also over the rest of the economy.

Consumers not only feel increasingly trapped into the GAFA platforms, they essentially are. And it’s the same with businesses: They also have no other choice than playing by the rules set by the GAFA companies. No wonder there are more and more lines drawn to the history of Standard Oil (broken up in 1911) and the Bell System (broken up in 1982/1984), two powerful precedents. Will we see the breakup of GAFA in our lifetimes?

Besides antitrust and other forms of regulation, there is still consumer power. An influential 2013 article in the Journal of Interactive Marketing describes four sources of consumer power: While demand- and information-based power is individual, network- and crowd-based power is collective. Granted, this distinction is a bit academic, since the purchasing (or boycott) power of any given individual is limited, while aggregated consumer decisions have considerable impact.

Thanks to the internet, e-commerce, and the GAFA platforms, retailers got increasingly disintermediated, while consumers and platforms both became more powerful than in pre-digital times. Thanks to information-based power, consumers are now better informed about products and services, while they produce relevant content themselves, e.g. product reviews, which further add to their power. The conversational element is strengthened, control shifts from the marketer to the consumer.

On the other hand, businesses now gain power through the information (i.e. data) consumers produce. Personalisation, profiling, filter bubbles, or big data all point in the same direction – towards greater control for the business. Consumers might in turn lessen transparency to preserve their power. Networks like Facebook enable the next round of power shifts, giving consumers the power of networks and connections, e.g. for content distribution.

But Facebook itself became powerful as well, through the same network effects consumers enjoy. Users in turn feel entrapped, addicted, or see the distinction between reality and virtual reality blurring. And marketers regained power through better targeting. Enter crowd-based power. That’s the endgame, leveraging all sources of power to maximise consumer power: demand, information, and network. Examples include Wikipedia, Kickstarter, Amazon Mechanical Turk, or Etsy.

We are dealing with some fundamental paradoxes of technology, as described by David Glen Mick and Susan Fournier in their 1998 paper, published in the Journal of Consumer Research. In our case, it’s the paradox of empowerment and disempowerment, taking place at the same time and through the same digital products.

Technology can facilitate independence or fewer restrictions, and technology can lead to dependence or more restrictions

The master-slave relationship between human beings and technology works both ways and is reversible.

(By the way, the other seven paradoxes discussed by Mick and Fournier are also worth keeping in mind.)

This leaves us with ambivalence. The people formerly known as consumers are more powerful than ever, but the digital platforms that enable their power are even more powerful. Still, consumers need to exercise their power, even if they end up like Don Quixote, fighting the windmills of Google, Apple, Facebook, and Amazon. We’ll only know what we can accomplish when we at least try.

Photo by Daniel Jacobs on Unsplash

In July 1535, Thomas More was convicted of treason and then executed. His famous novel Utopia had been published almost two decades ago, in 1516. These seemingly unrelated events share a common thread through the word responsibility. In Utopia, More defines what it should mean to be a responsible human being. And in his execution, he died for following this principle. More’s Law, as Andrew Keen dubs it in his new book How to Fix the Future, states our duty to make the world a better place:

In today’s age of acceleration, five hundred years after the publication of Utopia, many of us once again feel powerless as seemingly inevitable technological change reshapes our society. As More reminds us, fixing our affairs — by becoming steersmen or pilots of society — is our civic duty. It’s what made us human in the sixteenth century, and it’s what makes us human today.

Let’s reiterate: What makes us human is that we take our fate in our own hands, that we take responsibility for our society and for the greater good. That we don’t surrender to the supposedly superior forces of technology. That we don’t become slaves of the internet, Facebook, or AI. Responsibility has many facets, three of which I’d like to take a closer look on:

• individual responsibility
• social responsibility
• corporate social responsibility

Individual Responsibility

Do we have a free will, and if not, are we still morally responsible for our actions or omissions? We can leave the answer to philosophical debate and neuroscience. For practical reasons, it makes sense to operate under the assumption of being (morally) responsible for our affairs, including digital.

Our responsibility starts with basic behaviour in the digital sphere. Since we know about the traps designed into digital media, we are obliged to watch and to adjust our habits. This might include drastic measures: Your Facebook account doesn’t give you value, but instead shortens your attention span to that of a goldfish? Delete it! (Though the goldfish meme is probably a myth.)

But that’s not enough. We need to ask ourselves what we can do to make the digital world a better place. To paraphrase JFK: ask not what your digital world can do for you — ask what you can do for your digital world. The internet was designed on principles like liberty. We must defend them.

And for those who have acquired great wealth in the digital realm, there is an obligation to do good with it. This is a very American stance. In Europe, we are pretty much used to leaving that to the (welfare) state, and then minimising our contribution through taxes and public dues.

Andrew Keen reminds us of the philanthropic Carnegies, Stanfords, Rockefellers, and Fords of the early twentieth century. In our days, tech tycoons like Bill Gates or Mark Zuckerberg are becoming their counterparts. But that’s my second point.

Social Responsibility

Social media is not really social, if we stay with the overcome meaning of the word. Social is the fabric of our society, and it is our responsibility to cultivate it. Instead, the digital industry is often accused of disrupting it, and that has become the dominant narrative by now.

This view of course is by no means new. In his 1942 book Capitalism, Socialism and Democracy, Joseph A. Schumpeter notes:

In breaking down the pre-capitalist framework of society, capitalism thus broke not only barriers that impeded its progress but also flying buttresses that prevented its collapse. That process, impressive in its relentless necessity, was not merely a matter of removing institutional deadwood, but of removing partners of the capitalist stratum, symbiosis with whom was an essential element of the capitalist schema. [… T]he capitalist process in much the same way in which it destroyed the institutional framework of feudal society also undermines its own.

That very same movie is now shown again in a cinema near you. Yes, society will indeed change profoundly through the digital revolution, and it already has. That’s inevitable, and not necessarily a bad thing. But no, the direction of change is not predetermined by some integral forces of technology itself.

We need to be at the helm of technological innovation, to understand what’s happening and to drive the change. That’s our social responsibility. And it is social also with regard to the fact that it can’t be done alone. We need to build and foster civic associations to take care of the social fabric of our digital society.

Corporate Social Responsibility

The third pillar of responsibility sounds quite dull and makes everyone yawn, perhaps except some CSR eggheads. But wait a minute. What’s interesting are, if we follow Wikipedia’s definition, two aspects:

• self-regulation
• integration into a business model

Self-regulation, if done well, lessens the needed amount of external regulation. If, for example, Google would stick to its don’t be evil mantra, the debate with external regulators could focus on the definition of good and evil. The Google Code of Conduct serves as a good reference point for everyone involved.

Integration into a business model would be even stronger. If the business model itself fulfills the criteria of (corporate) social responsibility, we almost live in the best of possible worlds. At least in theory.

…

So how can we be good digital citizens? We need to take up our responsibilities. With great power comes great responsibility. But I think the opposite is also true: With great responsibility comes great power. That’s what we call Digital Humanism.

You must choose. But choose wisely.

Photo by Louis Smit on Unsplash

Mobility is always network-based. Even the simplest modes of mobility require a network consisting of connections between nodes. Think of paths between villages, or waterways, as early examples. The advent of modern transportation technologies, like railroads and motorways, didn’t change the networked character of mobility, quite the contrary. Most cars are pretty useless without sufficient roads to drive on. Access to networks is a prerequisite for mobility.

As a commuter, I live in two very different worlds. On the countryside where I reside, owning a car vastly improves my options for getting from A to B. Parking is almost no issue, while the public transportation network is significantly weaker than it is in the city. Services like car2go, DriveNow, myTaxi, let alone Uber, but also bike sharing, are not available at all. A very different picture from the city where I happen to work. My commute starts from a place where a car is the optimal choice, and it ends in a convenient underground garage, but in between is a famous traffic bottleneck: the Elbtunnel.

Owning a car gives me access to the road network. Things get really complicated when I try to combine different modes of transportation. How do I get to the train station? Where do I park my car? And how do I close the travel loop to get back to my car, since I don’t always travel back and forth, but also between three destinations, e.g. my home, the office and a place I like to visit somewhere else? Remember, since I live outside the area of strong public transportation, the car is a given. But it isn’t a travel destination in itself: I don’t want to go somewhere just because that’s where my car is.

Almost half of the people in Germany don’t own the place they live in, so why does the great majority of households own at least one car? Because the user experience of getting access to a car right when you need one still sucks. Carsharing services are pretty limited and cover only parts even of the biggest cities. So for most people who don’t own a house or a flat, the car is the single biggest purchase they make.

This means of course huge sunk costs (for the car and its maintenance, insurance, tax etc.) and low marginal costs (for any additional drive), rendering other options of mobility less attractive. The linked transport systems – Verkehrsverbund in German – on the other hand have been around for decades, but still no oyster card. Access to mobility in general remains cumbersome, and the pricing doesn’t always make sense, at least from the user perspective.

But that’s not all.

Public transportation is heavily subsidised, with the consequence that every investment to improve the supply also increases the amount of subsidies to pay in the future. This situation severely limits possible improvements, including the unified access to different modes of mobility beyond what’s possible today.

Despite all the obstacles (or maybe because of them), new digital mobility products will arrive sooner or later. In Hamburg, we already have switchh, which combines car sharing with bike sharing and public transport. Still nascent, but the potential is huge, if they get product and business model right. The HVV network covers the vast metropolitan region around Hamburg, including the place where I live. Think of the switchh model rolled out area-wide. That would be big.

A different approach is followed by moovel, like myTaxi a Daimler company. They combine a multi-modal connection search with a ticketing and payment solution, allowing users to check which travel option (e.g. car, bike, taxi, or public transport) suits their needs best, book it and pay for it in one go. This is another example for a digital service layer that is put around an existing product.

Both models can and hopefully will be expanded in the future, integrating other services and including more areas. The killer app of mobility would be a single solution, covering every possible region worldwide and all means of transportation, including cars or even planes. The result would be a platform to rule all platforms, or a network to rule all networks. Mobility as a service. MaaS won’t arrive overnight, that’s for sure. But in the long run, this model will probably dominate.

Photo by Nik Shuliahin on Unsplash

Disclosure: Hamburger Hochbahn, who runs Switchh, is a client of SinnerSchrader Swipe. SinnerSchrader is co-host of the NEXT Conference and part of Accenture Interactive.

In 1958, Swedish researcher Nils-Ake Hillarp discovered the role of dopamine in the human brain. What scientists went on to learn over the following decades was in our days exploited by tech companies to engineer the dopamine loop into the experience. Thus, our behaviour towards smartphones and other digital tools was profoundly changed, and today we find ourselves trapped in those loops.

With Hooked, published in 2013, Nir Eyal basically wrote a playbook for the design of dopamine loops in the realm of tech. The book cover, of course, said it was about habit-forming products. These days, however, the common sentiment towards those kinds of products has significantly changed, so that even Facebook is now strongly motivated to tinker with its news feed algorithm.

Mark Zuckerberg’s wording in his announcement was telling: The first sentence mentioned time well spent as Facebook’s new focus. Coincidentally, that’s the name of an organisation founded by Ex-Googler Tristan Harris, with Facebook veteran Roger McNamee as an advisor. McNamee recently wrote an essay on how to fix Facebook. Time well spent (the organisation) explicitly focuses on the issues created by habit-forming products like Facebook.

The Experience Loop

What does this mean for the design and development of digital products? It’s clearly not enough to simply hack human psychology. We need more sustainable models. Enter Matthias Schrader, who recently published the English version of his bestseller Transformational Products. In this book, he proposes the Experience Loop model. His model takes up several insights from Nir Eyal, but expands Eyal’s hook model significantly.

The key insight is the relentless focus on the user and his experience (UX) of the product. Superficially, this might sound trivial. But it’s exactly the lack of focus on the product and on the value the product creates for the users that often makes the difference between success and failure. Transformational products redefine user expectations, change user habits and transform value creation.

The change vector starts with the user, who is also the co-creator of the value-added. The value shared between users and enterprises is the transmission belt that moves from service diffusion to service experience, and then on to service co-creation.

This conveyor belt is the Experience Loop. It has six steps:

1. Trigger: low use-threshold
2. Use service: take control of the user interface
3. Integrate: discover new, proprietary use value
4. Expand: integrate third-party services
5. Reward: go for functional and mental lock-in
6. Change habit: efficient marketing

Granted, the Experience Loop model is definitely more complex than the hook model. But that’s where the beef is. Matthias Schrader shows how Google, Apple, Facebook, and Amazon were able to reformat entire markets seemingly at will by creating transformational products (like Google Maps, Amazon Prime or Apple’s iPod). In the playbook part, the Experience Loop is followed in reverse order, starting with service co-creation, followed by service experience and service diffusion as the later parts.

The new value chain

Service co-creation thus starts with the discovery of a product’s use value. Besides, it is also about questions like business model, scale, data, and APIs. The service experience then addresses user habits, user interface, and user experience. Finally, the service diffusion discusses user expectations, triggers, value proposition, and built-in marketing. At this point, many product ideas fail because no mechanisms for self-marketing can be found. Recognising this fact early in the process saves a lot of time and resources.

The Experience Loop is the new value chain. And contrary to the traditional, linear, inside-outside mindset with its focus on process-driven, incremental optimisation, it is an infinite loop. It follows a service-dominant logic, as it was first described back in 2004 by Stephen Vargo and Robert Lusch. They postulated a shift in focus from an economy based on goods to one based on services. Digital services are governed by software logic. They can be scaled exponentially at negligible cost regardless of the amount of human effort involved in its creation.

In our digital world of today, linear models no longer fit. But brain hacks and dopamine loops don’t do the trick. Welcome to the infinite loop.

Last updated on June 4, 2021. Photo by André Roma on Unsplash

Disclosure: Matthias Schrader is the co-founder and CEO of SinnerSchrader, the co-host of the NEXT conference. I was involved with the book.

Let’s start with key technologies, like the printing press, the steam engine, electrical power and information technology. Each of them revolutionised the way we live, work, and relate to one another. Now, the Fourth Industrial Revolution does the same again.

While the printing press didn’t affect the majority of the workforce, the steam engine, electrical power and information technology did, causing massive job losses and birthing the opposition of capitalism versus communism and socialism. Labour-intensive work is what gets replaced by new machines first, as soon as the capital cost of building and running these machines drops below the cost of labour.

What’s left is always work that can’t be done by machines, at least not yet or under current market conditions. Namely, the modern knowledge worker is someone who always tries hard to let machines do those parts of his work that machines can do better. For instance, I nowadays let Deepl Translator do a huge chunk of my translation work.

Human and machine learning

By the way, what amazes me most is the elegant way to further refine the already very good first draft Deepl provides. This way, by working together with the machine, we get better results than we could otherwise get, given the time and effort available for translation work. And since the machine itself learns from my improvements, the translation gets even better over time.

This is a pattern. I currently do more translations than ever before, because it’s now feasible, since a huge part of the work has been automated. Thus, I’m more productive. But at some point in the future, the need to provide translations might be fulfilled entirely by machines. Then I’ll probably drop this part of my work. I’m fine with that. I can do other things.

On the surface, this work attitude might look like flexibility. Personally, I don’t think that’s true. It’s more of a proper use of new tools and the necessary adaption to new possibilities. Thanks to the internet, it has never been easier to find out about new tools than today. Individual workers need to bear the same attitude towards their own work as companies towards their products.

This can be described as life-long learning, but it’s more than that.

Universal basic income isn’t a solution

In the big-picture view, that’s not bad at all. Humankind always sought to reduce the amount of labour while increasing the amount of wealth, including capital. Problems only arise from the distribution of the available labour, wealth, and capital. People who lose their jobs due to technological progress definitely need another source of income, and most of them aren’t content with an income from the welfare state, at least in the long run.

Work means self-actualisation, and while it’s not the only way to achieve self-actualisation, it’s no doubt the most important one in today’s Western societies. Personally, I don’t put much hope into pseudo-socialist ideas like a universal basic income. In my opinion, its premises are flawed. The welfare state undoubtedly has to play its genuine role to ease the transition from old jobs to new ones, but the welfare state cannot take over the world of work without destroying it. That has been tried before, and the results were disastrous.

Furthermore, it has never been proven successful to permanently substitute the income from human labour with welfare money, for a variety of reasons. But to me, the most important reason is that we need humans to build a humane world. Machines should be put into proper use, but they shouldn’t govern our world. And I don’t want to live in a world that is ruled by a small and very wealthy tech elite, while the majority of the population is tranquillised with a basic income, but has neither something to say nor to do.

That’s simply not humane.

Last updated on June 19, 2024. Photo by rawpixel.com on Unsplash

In many ways, we’re still children of the Industrial Age. In the field of learning and education that’s even more obvious. Despite the several transformations over the course of the last two centuries, our schools and universities continue to be biased towards the needs of an industrial society. What industries in the classical sense of the word (lat. industria: diligence, purpose) need are workers who reliably show up at the right time and the right place to do what they are told to do. Their habits and skillsets are standardised, making them easily replaceable. The education system preselects its clients and marks them with formal certificates, basically some kind of guarantee to possible employers for certain qualifications.

This is a far cry from what Wilhelm von Humboldt had in mind when he founded the University of Berlin in 1810 (which was in 1949 named after him and his brother Alexander). The German new humanism was driven by strong views about a humanistic idea of knowledge, referred to as Bildung, and to the idea of humanity, the intellectual, physical, and moral formation of a better human being. In some respects this is the sheer opposite of today’s education system. Especially the Bologna Process, ironically named after the oldest European University, made things a lot worse. Critics have already proposed to finally replace the students by robots, because what they are required to learn in post-Bologna universities could best be performed by learning machines.

In a world where machines are about to take over job after job that can be automated, this is not only ridiculous but also dangerous. Human beings need to focus on everything genuinely human that cannot be automated or simulated by machines. On this blog we already discussed the need for a new Digital Humanism. Of course, if you believe that there is nothing genuinely human (that cannot be automated or simulated by machines), you end up with a dystopian view of a world with a universal basic income to tranquilise the great majority of the population, and with armies of useless people: Nutzlose, as Marc-Uwe Kling in his social satire Qualityland calls them.

In the end, this could be a self-fulfilling prophecy. If we don’t educate people in a way that helps them leading their own life, they won’t be independent, self-directed citizens. Again, we face the question of how we conceive the human being. In his book The 3rd Alternative, the late American educator Stephen R. Covey proposed to abandon the Industrial Age framework of schools as factories with children as commoditised products – instead of people. In his view, eduction shouldn’t train children to be dependent, good followers. Instead, education should

unlock the potential of all children to lead their own lives instead of being led. This would be a transformational change.

Covey defines leadership as being the active, creative force of your own world.

True leaders define and achieve enduring success by developing character and competence and taking principled action; they don’t wait for others to define it for them. Because they see themselves as uniquely gifted, they compete against no one but themselves. In economic terms, they are the only providers of what they provide, so they can auction their talents to the highest bidder. These leaders create their own future.

Clayton Christensen has written a whole book about what he calls student-centric learning. Sounds familiar? We’ve talked a lot about user-centric design and its sibling, human-centred design. It’s time to apply what we’ve learned and redesign our education system.

Adam also delved into the underlying needs of a 21st century digital education system.

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Photo by Roman Mager on Unsplash

For quite a while, automotive has been the supreme discipline of both the advertising industry and the German economy as a whole. On the verge of the digital transformation (or rather disruption), the question looms whether that will still be the case in the not so distant future. In principle, there are two major possible scenarios for the future of automotive: the first is more hardware-focused, the second has its emphasis on software and services. And of course, both are interconnected.

The first scenario

Let’s have a look at hardware first. These days, we can describe a car as a complex computer system on wheels. This includes, as it is the case with all digital systems, both hardware and software. From this perspective, the car is the ultimate mobile gadget. It is an Apple-like integrated system, closely controlled by the manufacturer who captures most of the value added. Distributed through different channels, the car generates revenue by hardware sales, while the software is more or less free of charge.

As cars are getting increasingly digital, car manufacturers will try to move to a platform business model, with hardware still front and centre. At some point, we’ll see app stores for cars, and apps that enhance the car experience with additional services and software. (Automatic, for example, launched their app store back in 2015.) This scenario follows the Apple iOS blueprint and could be a possible path at least for premium brands. Since the global car market is huge, there might be room for more than one premium car platform brand.

The second scenario

But like Android and iOS, the yin and yang of the mobile (smartphone) world, this leaves room for a second, software-and-services-focused platform model. In the second scenario, the car hardware tends to be commoditised. The iPhone profit share is a huge warning sign for car manufacturers. In 2017, Apple’s quarterly profit share has been 84%, 68% and 72%. This doesn’t leave much room to breathe for other smartphone manufacturers. If and when the same happens to the car bigwigs, they’ll be more or less doomed.

The second scenario sees value creation moving away from hardware and towards software and services. This shift has now been anticipated for a while by automotive managers like Rupert Stadler, chief executive of Audi. He expects new digital services to eventually make up half of the carmaker’s revenues in the near future. If Android can be a lesson here, this would imply Audi to control the platform. For a premium brand like Audi, that looks at least feasible, while at the same time requiring an Apple/iPod-like pivot.

With the iPod in 2001 and the iPhone only six years later, Apple performed two successful pivots, propelling the company into the mobile hardware-centric platform philosophy that proved to be key for the rise to the top of the world economy, as the most valuable company, within the space of a mere 10 years. Can Audi do the same? That remains to be seen. For the car industry, the key trends driving the transformation are electrification, autonomy and cars as a service. Again, these trends are interconnected.

Automotive at risk of commoditisation

The digital car will be defined differently, as for example the launch of Byton at CES last week illustrated. It’s about the user experience, the user interface, the voice controls, the sensors, the network and its corresponding network effects, the platform model and the AI systems, maybe even VR/AR/MR and the immersive experience a car ride will provide. And in today’s world, it makes less and less sense to own a car. Thus, in both scenarios, the automotive business model is moving further away from hardware sales.

It will be key to own the customer relationship. But if the smartphone world is a role model, this leaves room for multiple players. Apple and Google have customer relationships through their platforms, while the users still need contracts from telcos. In the case of Android, the hardware is provided by third-party vendors. In both scenarios, it’s an open question how profits will be distributed between the different players and layers of the future automotive industry. What’s clear is that profits will shift from hardware to software and services, fostering the need for car manufacturers to build up the corresponding businesses. Otherwise, they will get commoditised.

Meanwhile, Adam’s been having wild fever-dreams of what the future of mobility might look like.

Last updated on Jan 24, 2024. Photo by Carlo D’Agnolo on Unsplash

In 2017, we’ve talked a lot about why digital (products) suck(s) and what we can possibly do to make things better. One pretty clear lesson from the past year is that we have to change our design objectives. In her book Designing for Happiness, NEXT speaker Pamela Pavliscak writes:

The truth is we have never designed technology with well-being, broadly speaking, in mind. We’ve designed for ease, productivity, engagement, and delight. Each has proven inadequate to really fostering well-being. What if we re-frame how we design technology to intentionally focus on happiness with a capital H?

Pamela is not the first to write a book on this subject. Over the past couple of years, there’s been a continuous flow of publications about the connex between happiness and design. Paul Dolan’s Happiness by Design, published in 2014, is a prominent example. Stefan Sagmeister gave a TED talk with the same title as early as 2004. In 2013, he curated “The Happy Show” in Toronto. And in 2017, Mo Gawdat came up with Solve for Happy. His take is driven more by engineering than by design, which seems fitting for a Chief Business Officer at Google [X] and a serial tech entrepreneur.

What they all have in common is the notion that happiness is something that somehow can be designed, engineered and produced. Basically, they are optimists regarding tech and a happy life. This is of course conform with the basic premisses of modernity, especially faith in inevitable social, scientific and technological progress and human perfectibility, and with rationalization and professionalization (to quote Wikipedia). But is it true?

Adam Tinworth seems to disagree. He advocates designing for contentment instead of happiness, which is both easier to achieve and better to sustain, with human psychology kept in mind. Instead of consumption and consumerism, designing for contentment includes designing for meaning, creativity, autonomy and agency, all of them prerequisites for happiness. But no guarantee.

Andrew Keen profiled himself early on as a digital sceptic and internet critic (and was ridiculed a lot for that). As one of the few people in the tech industry with a classical education, he was able to see some dangerous trends at least ten years earlier than others. In three books, he explained how today’s internet is killing our culture, how the social revolution is dividing, diminishing, and disorienting us, finally stating that the internet is not the answer.

And he remains to be one step ahead. In his upcoming book How to Fix the Future, Andrew offers some solutions to the myriad of problems the digital world faces in 2018. To a reader who has followed this blog over the course of the last few weeks, it’s no surprise that Andrew refers to a humanist approach – smart human beings instead of smart technology.

Again, this is probably anathema to the church of tech. Yes, we live in a world where technology is worshipped as a solution to each and every problem. “Tech is the new religion, offering hope of salvation in a troubled world,” as News agency AFP puts it in the lead of a story about CES. And tech pioneer Anthony Levandowski already founded a new religion to worship the AI god (no joke).

To an extent, we have come full circle from God who created mankind to mankind who creates their own tech god. But that’s nothing new. From the early days on, mankind created their own idols, false gods, tin gods without life in them. Psalm 115, written at least 2,500 years ago, reads:

Our God is in heaven; he does whatever pleases him. But their idols are silver and gold, made by human hands. They have mouths, but cannot speak, eyes, but cannot see. They have ears, but cannot hear, noses, but cannot smell. They have hands, but cannot feel, feet, but cannot walk, nor can they utter a sound with their throats. Those who make them will be like them, and so will all who trust in them.

This is the story of humanity. Remember Apple’s famous 1984 Macintosh commercial? Apple’s mission back in those days was illustrated by a strong metaphor – the hammer that smashed the 1984-style dictatorship. The Macintosh as a tech icon for liberation, creativity, and thinking different.

Happiness is a warm gun.

Photo by Artem Beliaikin on Unsplash

It is a common notion to view digital transformation as the Fourth Industrial Revolution. This puts the digital revolution in line with the steam engine, electrical power and information technology. The timeframe is not much greater than the 250 years since the introduction of modern production methods into the British textile industry.

This framing already implies that we are dealing with a huge shift and a new major industrial era with great consequences. But what if that picture still is not big enough? This thought first occurred to me while thinking and writing about Digital Humanism. That phrase immediately propels us into a much bigger perspective. 14th-century Renaissance Humanism stood at the cradle of the modern era. Suddenly we are talking about at least 500 years.

Postmodernity, liquid modernity or high modernity?

Last September, NEXT regular David Mattin published an insightful piece about augmented modernity. This neologism combines augmented reality with modernity, and rightly so. Let’s have a look at the second part first. Historians define early modernity as beginning with the Fall of Constantinople in 1453. The second phase, classical modernity, starts with the French Revolution in 1789. Late modernity then gets going around 1900 (or 1914, if you follow Hobsbawm) and ends with the revolution of 1989.

It is unclear whether we now live in postmodernity, liquid modernity or high modernity. Historians will have to settle this sometime down the road. But the year 1989 also marks the invention of the World Wide Web. So perhaps we can add David Mattin’s phrase augmented modernity to the mix. While postmodernity would imply that modernity is finally over and an entirely new era has begun, the other terms just mark a new, fourth phase of modernity. The basic premisses of modernity are still intact, they are only applied to a new subject field then.

A nascent techno-consumerism

According to David, this new subject field is what makes us human: love, happiness, politics, and the search for meaning. To be fair, modernity had enormous impact on all those fields from the very beginning. You could easily argue that modernity already has profoundly changed, and forever altered, the concepts of love, happiness, politics, and the meaning of life. So what is new? And how will they eventually be changed again?

David introduces the notion of a nascent techno-consumerism that now is taking aim at these concepts. Jonathan Franzen once wrote: “Techno-consumerism is an infernal machine.” At the time of his writing, internet skepticism was often diminished and ridiculed, as it is still today, but the tide is turning quickly.

In the mid-’90s, when I started to feel worried about what was happening to literature with the introduction of the third screen, and with the increasingly materialistic view of human nature that psychopharmacology was producing, I was looking for some way to describe how technology and consumerism feed on each other and take over our lives. How seductive and invasive but also unsatisfying they are. How we go back to them more and more, because they’re unsatisfying, and become ever more dependent on them.

Sounds familiar? It’s the sound of the dopamine loop many of us have been trapped into.

No real world left?

The shift to augmented modernity has more to do with the leap from mass consumption of material goods to immaterial, often digital services, from consumer goods to customer experiences, and from basic needs to higher-order concerns. David thinks that technology in general, and artificial intelligence, virtual reality, robotics, and automation in particular, can and will directly address the latter. So when in the recent past you consumed physical products to satisfy higher-level needs (or at least simulate this satisfaction), you will instead consume virtual worlds in which these needs are satisfied by design.

In a sense, this is nothing new. Theatre, books, cinema, or video games always brought us into worlds that were somehow virtual. What’s new is that virtual worlds will be totally immersive and difficult to distinguish from the real world. At some point, there even might be no real world left, or no difference between real and virtual. We already almost lost the difference between online and offline, or between digital and analogue. Reality itself could be next. In comparison, fake news is just a minor issue.

Adam has also written his take on augmented modernity.

Last updated on October 14, 2021. Photo by The Roaming Platypus on Unsplash

Sifting through dozens of postings about technology trends for 2018 (and beyond, because that’s what you add these days to stand out from the crowds), two things occurred to me: First, there doesn’t seem to be anything really, really new out there. Most 2018 trends are simply the same trends we have been dealing with here at NEXT for the last couple of years. Some of them have been slightly refurbished, but that’s what you would expect from a fast-moving industry like tech. Secondly, it feels a bit odd to talk about trends for next year at the end of a year when covering trends is what you do year in and year out.

Trends don’t change overnight, and they don’t change year over year as well. Instead, they evolve over time, slowly or rapidly. Gartner has a long-standing tradition observing these movements through their hype cycle model, which has its limitations. To its merit, the hype cycle deals with trends not only while they are hot, but also during drought periods. Some trends are quite short-lived and disappear after one year or two, others are real long-term trends. Besides, Gartner happily mixes hardcore technology trends, like edge computing, with more application-oriented ones, like connected home.

With our focus on the user, the customer and, in 2017 terms, the human, we are more interested in the latter group of trends. Technology trends are important to us as far as the user (customer, human) is concerned. Peering into 2018, we are looking for the kind of trends that Isobar predicts in their 2018 trend report titled Augmented Humanity. In their eyes,

technology enhances and scales our most human attributes. In 2018, technological interfaces will become more natural and instinctive, technology will automate repetitive tasks to free up time for creativity and compassion, and artificial intelligence will meet emotional intelligence.

To me, it seems a bit of a stretch to expect all these things from a single year, but the overall picture is something I can agree with. There is a long-term trend towards ever more natural and instinctive interfaces, from the punchcard to the terminal, to point-and-click with the mouse, the browser and the web, multitouch and now voice control, virtual and augmented reality. This isn’t going to stop anytime soon.

Likewise, automating repetitive tasks has been going on at least since the first industrial revolution – you can even think of Gutenberg’s printing press as a means to automate the repetitive task of producing copies, and that was more than 500 years ago. The challenge always was how to use the freed up time in a way that people still can earn their bread and butter. Creativity and compassion are great, but do they pay the bills? The Isobar folks believe that emotional intelligence is what separates humans from machines: “The power of being human is in empathy. This cannot be automated or outsourced.” I tend to be of the same opinion, but perhaps emotional intelligence can be simulated?

What else? I go along with Bernard Marr’s trends forecast: The big data explosion will continue, as will the rise of the internet of things (IoT), and the exponential growth of computing power according to Moore’s Law, with quantum computing as a possible successor to integrated circuits once their further miniaturisation runs out of steam. Artificial intelligence won’t go away either, but instead take over more and more tasks from humans, driving automation up to new levels and changing (replacing, augmenting) more and more jobs. This can affect half of today’s jobs, if not more.

3D printing seems to be anything but dead, instead it might remake industries like manufacturing in profound ways. New interfaces like voice, virtual and augmented reality will change how we interact with technology and businesses. Likewise, blockchain technology shouldn’t be underestimated. The Bitcoin hype of 2017 might lead to disaster or to new, unknown heights (who knows?), but Bitcoin is only one of many possible applications of blockchain technology. We’ll see way more. And the platform economy is another megatrend that will continue for the foreseeable future. All of these nine trends have been the subject of NEXT for the last couple of years and probably will continue to be.

Deloitte paints an IT-heavy, enterprise-centred picture of pretty much the same bunch of trends in their annual Tech Trends report. These folks use their creativity mostly to come up with fancy buzzwords like the “symphonic enterprise”. What’s really funny is their take on treating robots and AI as our work colleagues and developing HR programmes for them. At least that’s an innovative approach.

Our real, flesh-and-blood colleagues from Fjord released their annual Trends 2018 just a few days ago. Not surprisingly, they view the trends landscape from a design perspective. Computer vision, the ability to understand images and to interact with humans in a more human-like way, is one of Fjord’s additions to our list. Others, like the rise of the algorithms as gatekeepers between consumers and brands, are not really new, though they are gaining importance with new interfaces like messaging, chatbots, and voice. And the ethics economy, stressing that brands increasingly take political stances, is not a tech trend at all, but a broader societal and political issue.

To sum things up, we are probably not too far off the trends grid with topics like digital humanism, human experience and AI-first, to name a few examples. We’ll continue to explore the scenery in 2018 (and beyond), and that’s something you can look forward to. At least that’s what I do.

Disclaimer: NEXT is hosted by SinnerSchrader and FAKTOR3. SinnerSchrader is part of Accenture Interactive, who also owns Fjord and is a premium partner of NEXT. Deloitte is a competitor of Accenture, and Isobar is a competitor of Accenture Interactive.  

Photo by Jan Kršinar on Unsplash

Last year, Google announced a shift from mobile-first to AI-first. Others, like Microsoft and, to a lesser degree, even Apple followed suit. This new rallying cry indicates a huge shift for the tech industry.

Of today’s tech giants, only Apple and Microsoft are children of the PC age, the first cycle of personal computing (1975-1995) they helped to create themselves. Amazon, Google and Facebook came along with the web age, the second cycle of personal computing (1995-2010). To survive, all five of them had to adapt to the third cycle, the mobile age (2010-2020). With iOS and Android, Apple and Google won the mobile platform battle, while Microsoft, Amazon and even Facebook struggled, before they finally figured out how to thrive under the new conditions.

Now we are about to enter the fourth cycle, the AI age (2020-2025), and that’s a new ball game. For the new age, AI-first is what mobile-first has been in the early years of the mobile age. Each cycle is dominated by a certain combination of hardware and software. The desktop PC with Windows and Intel inside was superseded by laptop machines and the browser, only to be replaced themselves by smartphones and apps. And now we’ll probably see voice-driven hardware taking over, powered by AI systems.

Of course it is true that no new generation of hardware and software completely erases the older ones. Some people still use desktop machines today, but more laptops have been sold than desktop PCs for years now. And tablet sales overtook laptop sales years ago. Not to mention mobile devices in total – 2010 was the first year with more smartphones being sold than laptops or desktops, marking the dawn of the mobile age. Compared to a whopping 1,495.36 million smartphones sold in 2016 alone, the voice-first device market is still tiny, with 24.5 million units predicted for 2017.

But needless to say, AI-powered assistants are already on smartphones, tablets, laptops and even desktops today. This means usage by now is way ahead of hardware sales, and with more people getting used to the new interface paradigm, devices might take off soon. Less than ten years from now, we could probably live in a world where we talk to HomePod while at home and use AirPods and Apple Watches on the go. Of course, the same scenario plays out with Google Home, Amazon Echo or other devices.

AI-first is a huge challenge for product engineering, product design and product management. Even Google estimates that only 10 percent of their 25,000 engineers are proficient in machine learning (ML) at this point. How many of your engineers can master ML/AI? For product designers, the shift is even greater. No more Photoshop or Sketch – the design of voice interfaces is a new frontier for UX design. And product managers need to rethink their products from the ground up.

It’s not enough to simply add an Alexa skill to an existing product, like it wasn’t enough to make your website responsive or launch a mobile app without changing anything else. AI-first means reimagining your product for a world driven by AI and voice interfaces.

And first and foremost this means developing entirely new products – the next generation of transformational products.

Photo by Alice Donovan Rouse on Unsplash

Over the past two decades, we have seen a shift from user experience (UX) to customer experience (CX). This shift reflected the underlying assumption that a happy customer is more important than a happy user. Or isn’t it? After all, the customer is the one who pays the bills, and if the customer is not the user, than why care about the user at all?

Wrong. We’ve seen countless products thrive because of their outstanding UX, and others fail because of their lacking UX. The distinction between user and customer is still valid and essential, for the reason that sometimes there are heavy tradeoffs to make and tough business decisions to take.

UX is a term invented in the early days of the IT industry, while CX is more of a marketing phrase. Now there is a third kid on the block called human experience (HX), and things are getting complicated. What the heck is HX? Broadly defined, it’s everything a human being experiences. There is a slight difference between HX and human perception, but I’ll leave that aside, at least for now.

A human-centric perspective

Since we are talking about (digital) products and services, HX is how a human being experiences your product or service. So why is that different from how a user or a customer experiences a product? Clearly, HX provides a more holistic, human-centric perspective than UX (user-centric) or CX (customer-centric). We, the users, are not only users. We might be customers, or the product being sold, but we definitely are human beings.

HX is more about purpose than about consumption (customer/consumer) or usage (user). We use or consume products for a purpose. What’s more, “purpose is what gives life a meaning,” as American social reformer Charles Henry Parkhurst famously put it. Almighty Google also knows this.

By the way, the second quote – “purpose is what creates true happiness” – stems from Mark Zuckerberg’s May 2017 commencement address at Harvard University. The corollary of these two statements would be that what gives life a meaning is what creates true happiness. We are talking about a lot more than products or services here. After all, we are human beings 24 hours a day, while our existence as users or consumers is only a part-time endeavour.

HX trumps everything

In an undated by insightful essay, Paul Campillo writes:

Make no mistake. This is the great opportunity that stands before makers—the understanding that products exist to enhance someone’s life. The human experience trumps everything, and a product or service that’s designed with a contextual view of someone’s life will dominate the marketplace.

He defines the human experience as the exact opposite of what he calls the sucky experience (SX), on a continuum that is the UX spectrum.

The ultimate UX of a product is HX. It’s the highest experience of what a product, company or organization, or brand can bring to its users. The HX hooks every user because, in the end, there’s one thing most humans want more than anything: To feel more alive.

We can see a pattern here. HX is more or less strongly correlated with Digital Humanism – “the notion that people are the central focus in the manifestation of digital businesses and digital workplaces” (Gartner). To get from UX and CX to true HX, we first and foremost must stop to reduce human beings to their roles as users or consumers, or to an entity that can be replaced and superseded by technology.

We need a Renaissance

Secondly, we need to break the world domination scheme of technology and restore technology to its proper place as a means to an end, and not an end in itself. What is the proper purpose of technology? Start with why, as Simon Sinek would say. There is no easy answer. Quite the contrary, we need a movement like the Renaissance. Sheer Romanticism would not suffice.

Truly human experiences satisfy our emotions, ethics and creativity. What sets us apart from technology is neither rationality nor knowledge, but the opposite. The challenge is to add erratic, beautiful, and totally unexpected experiences beyond conventions and norms. Outliers. But how do we build them? Experiences will have to integrate concepts like emotions, morals, and beliefs.

To quote Charles Henry Parkhurst again:

There is always the possibility of beauty where there is an unsealed human eye; of music where there is an unstopped human ear; and of inspiration where there is a receptive human spirit.

Let’s talk about beauty, music, and inspiration, as well as emotions, morals, and beliefs.

Last updated on May 4, 2021. Photo by conner bowe on Unsplash

In 2015, the smart guys at Gartner tried to coin a strategic buzzword they called Digital Humanism. They even wrote a Digital Humanism Manifesto, but never really published it. Digital Humanism, as defined by Gartner,

is the notion that people are the central focus in the manifestation of digital businesses and digital workplaces. Businesses who embrace digital humanism use technology to redefine the way people achieve their goals and enable people to achieve things not previously possible.

Despite Gartner’s efforts, the term actually didn’t take off. Google Trends for example doesn’t even recognize it. This might be rooted in some deeper misunderstandings of the term itself and its implications. First of all, humanism is an ambiguous word. To further confuse the occasional reader, Wikipedia lists several different flavours of humanism, both with lower-case and capital H. Is Digital Humanism an ethical philosophy, a theory based on the generation of knowledge, meaning and expertise or a new intellectual movement like Renaissance Humanism? And then there are the academic disciplines called humanities who also happen to discuss digital humanism since 2011 at least.

Digital technology is a culture

Doing further research, I dug up a ground-breaking essay written by Milad Doueihi, a french professor of digital humanities (!) at Paris-Sorbonne University. His definition, though seen through the lens of the humanities, makes a lot of sense:

Digital humanism is the result of a hitherto non-experienced convergence between our complex cultural heritage and a technology that has produced a social sphere that has no precedent. This convergence, instead of simply forming a link between antiquity and now, has redistributed concepts, categories, and objects, as well as behaviours and associated practices, all in a new environment. Digital humanism is the affirmation that current technology, in its global dimension, is a culture, in that it creates a new context, on a global scale.

Digital technology is a culture. This is strong. It is of course also true and not new at all. As early as 1984, the Orwell year, Sherry Turkle published her book The Second Self: Computers and the Human Spirit. The sociologist and psychologist was itself born in 1948, the year Orwell finished writing his famous novel. In her book, she defines the computer as more than just a tool, but as part of our daily personal and psychological life. She looks at how the computer influences the way we view ourselves and our relationships with others. And she insists that technology defines the way we think and act.

Life on the screen

In 1995, the web was still in its infancy. That year, Sherry Turkle came up with another now-classic book: Life on the Screen. More than two decades ago, she already thought and wrote about virtual worlds, their impact on the way we think about ourselves, and how our human identity changes due to the fading boundary between humans and computers. She raised ethical questions as well as questions of perception, regarding the difference between the human mind and machines. This stuff is pure gold in a time when we talk about artificial intelligence that might replace or supersede humans altogether.

This brings us back to Gartner. In opposition to the digital humanist, they see the digital machinist. The machinist will seek to automate everything and put the user, the people out of the equation as far as possible, and maybe even entirely. This strongly resonates with a mechanistic, materialist worldview. This view reduces the human being to an entity that can be replaced and superseded by technology. This is a bit odd, since humans created technology in the first place. But it reminds me of Goethe’s ballad The Sorcerer’s Apprentice (German: Der Zauberlehrling).

From computer-literate people to people-literate technology

On the contrary, Digital Humanism also stands for the shift away from computer-literate people to people-literate technology. Machine learning, autonomous agents and things (Alexa, Siri or the self-driving car) and smart robots all point in the same direction. It’s all about further easing the interaction between humans and machines. This has been the case since the early days of digital interfaces. We went from punch cards to terminals, from graphical user interfaces to the web, (mobile) multi-touch and now voice.

Seen this way, Digital Humanism refers to the age-old concern to put humankind, in all its aspects, at the centre of our work. The early, 14th-century humanists started a cultural revolution that peaked in the Renaissance era. Maybe it is time for a new cultural revolution, a new Renaissance. Or is it already happening?

Last updated on June 3, 2021.

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Photo by Ouael Ben Salah on Unsplash

When Apple released its ARKit this year, it was clearly a milestone for the mass-market adoption of virtual reality (VR), augmented reality (AR) and mixed reality technologies. While the difference between these, especially between AR and mixed reality, is still a bit confusing, it may help to shift perspective to the user’s point of view and talk about the immersive experience instead. Gartner has named immersive experience one of their top 10 strategic technology trends for 2018.

For quite a while now, users of digital technology interacted with visible hardware objects, and the long-term trend clearly goes towards simplification and ease of use. With VR/AR/MR, hardware becomes almost invisible, at least with regard to the user experience. Of course, the user still needs some gear, but the experience gets one step closer to the point where the hardware is no longer part of it. Quoting my past self from 2013:

Two decades after Marc Andreessen released Mosaic 1.0, we are quickly moving away from a web- and desktop-centric universe that was dominant for most of the last twenty years. We are entering a post-digital era where digital technology is so omnipresent that it is almost indiscernible from the non-digital world. It’s more than mobile. It’s everywhere.

Virtual reality may even become bigger than reality itself. Besides sight, sound, and haptic feedback, VR will also deliver smell. The Vocktail (aka Virtual Cocktail) already simulates multisensory flavour experiences today. A London hotel bar just launched an immersive experience with 360-degree film along with sounds and molecular scents to enhance their cocktails. And the National Geographic Channel just sent a VR camera into space.

Hardware, Games, and Hollywood

To enter our new, shiny virtual reality world of immersive experiences, three steps are needed: hardware first, then games and last, but not least, Hollywood. VR gear is still some steps away from mass adoption. For the gaming industry (not to mention porn), VR technology is just another new platform that will fuel a new wave of growth. And finally, the big Hollywood players will get on board, producing cinematic VR content. Storytelling will be as important as it always was, but has to be figured out for the new new medium.

Besides the entertainment industry, VR will probably change the workplace and could drive the next industrial robotic revolution as well. But designers should be careful not to create a VR dystopia, Alysha Naples recently warned:

Data and algorithm cannot replace facts and ethics. Empathy is a conscious choice. […] Consider safety, protecting emotions and privacy when you design for VR and AR. Or else technology without ethics will lead us to dystopia.

Done wrong, VR can suck as well.

Last updated on October 14, 2021. Photo by Cyrus Lopes on Unsplash

Do you still remember the stock-market craze of the late nineties? And are you excited about the latest ICO at the same time? Then think again. For those of you who don’t know what ICO means: it stands for initial coin offering, and that is a kind of crowdfunding via cryptocurrency like Bitcoin. It’s the hottest thing since sliced bread, or at least since the dot-com bubble. And it might very well end like the last major tech bubble ended, in blood, sweat and tears. At least that’s a possibility you should consider in case you are invested.

Of course this doesn’t mean blockchain technology or even Bitcoin must be a fad or a scam. It just means we might see people make the exact same mistakes they made almost 20 years ago. Meanwhile, there are a few killer apps for blockchain technology already emerging. These could be, in no particular order, dark web and black market payments, digital gold, (micro) payments in general, and tokenization. The first one is quite obvious: If you want to pay someone for something on some kind of black market, you need anonymity.

Digital gold is more complicated, but if you think about it, it’s a compelling proposition to have a replacement for precious metal that can be easily transferred and used as a store of value. Payments in general and micro payments in particular can also be huge, if solved by the blockchain better than by yesterday’s technology – or solved at all, like the micro payment problem. After all, it still sucks to pay a few cents on the web.

The fourth killer app of blockchain, tokenization, is harder to understand. Think ICO and smart contracts. If and when done right, tokenization can create whole new markets for assets that are not very liquid today. Perhaps we need an ICO bubble first, and a burst of that bubble second, to finally get there. By then, the finance industry will look very different, and some people will lose their jobs.

Which is what a lot of people expect from AI. Kevin Drum sums up the current debate about massive job loss due to AI-driven bots taking over human’s jobs, with a very US-centric perspective. But he offers no solution other than the usual suspects like universal basic income, which might itself quickly turn into a dystopian future. So let’s leave that aside, at least for now. A few weeks back, at NEXT17, we had a lot of debate about the burning question why and where digital went wrong.

I must say I like Adam’s dry British humour. Here’s a quote from him on Steve Jobs:

People tend to take the wrong lessons from Jobs – they behave like an arsehole, rather than being a hands-on product person.

Read the whole piece. This brings us from problem to solution. Product design has undergone several iterations over the past few decades, e.g. from user-centred to customer-centred and then to human-centred design. It’s time to move on and take the step to humanity-centred design. The question that leads to this is: Are we designing a world we all want to live in today and tomorrow? At least that’s what we should do.

Photo by jose aljovin on Unsplash

Still wonder why Donald Trump became President of the United States or the British people voted for Brexit? It’s a matter of trust, or lack thereof. The general population has more or less lost trust in all four key institutions — business, government, NGOs, and media, as the global communications giant Edelman found out in their annual survey (published in January). In the words of CEO Richard Edelman:

People now view media as part of the elite. The result is a proclivity for self-referential media and reliance on peers. The lack of trust in media has also given rise to the fake news phenomenon and politicians speaking directly to the masses.

People now trust their peers more than they trust traditional institutions. Rachel Botsman describes the shift as a move towards ‘distributed trust’, or direct trust between human beings or with intelligent machines. Institutions weren’t designed for the digital age.

In contrast, digital marketplaces are in the business of trust. The way they design trust is so different from a traditional brand. The question is, can technology make us smarter around who and what we trust?

According to Botsman, digital marketplaces have a closer connection to what the market wants.

It’s feedback on steroids, whereas older companies still often work on a linear, supply and demand pipeline. It’s not the way the world works anymore. Organisations in this camp need to take the dynamics of a marketplace and behave more like one. What trust does give brands permission to do is play in a role in the consumer’s life. Trust has always been important. Where institutions struggle is in the way of building, managing and repairing trust – there are whole new set of rules around that.

In her upcoming book “Who Can You Trust?”, Rachel Botsman explains why trust is collapsing in all kinds of institutions and yet at the same time, the rise of new technologies is enabling ‘distributed trust’ across networks of people, organisations and intelligent machines. I think we can trust her that it will be a good read.

Photo by Chris Greenhow on Unsplash

This week, Gartner published their annual update on the Hype Cycle for Emerging Technologies, as they have done for years now. What struck me was the observation that there seems to be a pattern now: Gartner sees a trend towards human-centric technology, which they had mentioned last year and dubbed digital humanism the year before.

Personally, I think it’s an important shift for an industry that has been talking about user-centred design and customer centricity for decades. What may look like just a change of wording, in fact has broad implications for digital business. Gartner writes:

Technology will continue to become more human-centric to the point where it will introduce transparency between people, businesses and things.

Transparency is the key part here. From its humble beginnings, the internet was a machine that made relationships more transparent – relationships between people, businesses and things, to reiterate the Gartner quote. This trend is truly empowering people, shifting the balance of power away from the business world and freeing us from the tyranny of stuff.

Even the Big Four (Google, Apple, Facebook, Amazon) reign on power that has been granted by the users. Sooner or later, it will be taken away.

Photo by Toa Heftiba on Unsplash

Take for example Twitter. For a while, it looked promising. But then we got Trump. We enjoyed our Uber rides, only to witness a full-blown meltdown. Or think Internet of Things. We hoped for a future of connected devices, but what we’re experiencing instead are massive botnets that take down large parts of the internet and digital lightbulbs that are vulnerable to virus attacks. That sucks!

Once we faithfully listened to the promise of artificial intelligence. Now we worry that we will lose our jobs to machines, and that AI will eventually overtake the world and replace human beings as the highest life form on earth. Furthermore, we deeply believed in the internet as a powerful platform for a blossoming culture. Instead, we got fears that the internet will suck the creative content out of the whole world until nothing is left (David Byrne, 2013).

Digital sucks! Or doesn’t it? One thing is for sure: We live in a beta world. Nothing digital ever seems to be finished, and we’re always waiting for the next update. With each update, old bugs are fixed – and new ones introduced at the same time. We’re constantly living at the bleeding edge, taking high risks in our usage of technology and tools.

Every revolution comes with a cost

Did we end up with a white elephant? We cannot dispose of our digital possessions, but the costs are all too often way higher than their usefulness.

We can ask the same question with regard to the digital transformation, especially looking at the return on sky-high investments most companies made over the course of the last few years. Loads of time and money went into shiny new digital projects. But did the probability of surviving for these companies increase accordingly? Or do they still face the same huge risks of disruption? Software is eating the world, as Marc Andreessen famously put it.

How could it happen that the land of digital utopia, populated with unicorns, might turn into a dystopian nightmare that simply sucks? Every revolution comes with a cost. This cost may be too high from many people’s perspectives, but do these people get a say? Ironically, it was the relentless focus on the user of digital technology, the consumer and human being, that made many things digital so overwhelmingly successful. The same user who gained lots of value from technology now feels that the price he has to pay in the end may be too high.

We deserve a better digital world

First, we have to admit that the tech utopia, which originated in the seventies, was at least in part overly optimistic. It was not so much grounded in reality as in a kind of wishful thinking. Technology in itself is not the solution to all kinds of problems, rather it’s a tool that can be used in many different ways. The Californian Ideology was simply – an ideology. As such, it was certainly powerful, but sooner or later every ideology runs into problems with a different reality.

That is exactly what’s happening with Uber and, to a lesser extent, also with Lyft. Both ridesharing services showed a certain kind of arrogance when they retracted from the Austin market after the city decided to require background checks on drivers. This was a classic example of free-market ideology clashing with government regulations.

In hindsight, though, it was only a bleak foreshadow of the PR disaster Uber faced in early 2017, when CEO Travis Kalanick was accused of bad behaviour by an Uber driver, while at the same time allegations of systematic sexism and harassment surfaced. Uber had to learn the hard way that toxic company culture and blatant neglect of corporate responsibility can and surely will backfire and hurt performance. Digital sucks, but it shouldn’t; neither for customers nor for employees and other stakeholders.

Digital value creation is based on the service experience of the user

Second, as value creation shifts from other sectors of the economy to the digital realm, this process inevitably goes hand in hand with the devaluation of more traditional assets, skills, and jobs. This shift is nothing particularly special, it has happened before – first with the industrial revolution and later with the rise of the service sector. Solutions are needed to ease the transition, not to resist it, as resistance is futile. People will always flock to regions, industries and professions where value creation is higher than elsewhere. These days it is the digital sphere where that is the case.

Third, we have to keep in mind that Twitter, like the internet, does not in itself lead to freedom of thought and expression. While it can empower users to raise their voices, it can also amplify the voices of those who already own a huge mindshare. Donald Trump has proven that Twitter can be highly effective in addressing vast crowds of followers, bypassing traditional media. The same applies to other platforms like Facebook. While the digital field is indeed different, it is not completely dissimilar from the incumbent media sphere. The attention economy works in favour of those who understand how to capture the most attention. So it is on us to decide whether we want to continue to listen preferably to the one who barks the loudest – or if we want to come up with new algorithms that give people better choice.

Digital sucks, but differently

The same principle applies to pop culture. We’ve seen the rise of influencers and YouTube stars, while the business models of the incumbents started to crumble and in some cases collapsed. It might look like the internet was sucking all the creative content out of the whole world, as David Byrne put it. But a more realistic view would acknowledge that digital value creation is simply different from the business models of the past. Those were based on scarcity of physical goods that could be packaged, priced and sold to a mass market. By comparison, digital value creation is based on the service experience of the user. While it still has a physical hardware component, the software is much more important.

Streaming services like Netflix and Spotify don’t sell DVDs or CDs, but instead charge monthly subscriptions to access huge libraries of digital content. They learn the user preferences and adapt their services to personal taste. Services like these can be more valuable to the user than traditional media packages. At the same time, they hook the user into time-wasting habits like binge-watching. Both Netflix and Spotify are now increasingly moving into content creation themselves, thus cutting out traditional middlemen like movie studios and music labels. This structural change need not be bad for artists, at least if they learn how to play by the new rules.

AI fuels the fourth innovation cycle

It seems that the prophets of the New Economy in the nineties were mostly right when they touted the new rules. What was wrong was the widespread anticipation of the speed of change. We overestimated how fast users would adopt new behaviours, but underestimated how far the change would reach. The same might be true for the next tech cycle that will be fueled by artificial intelligence (machine learning, deep learning) and voice-driven interfaces like Alexa and Siri.

AI, machine learning and deep learning have now reached a state in which machines essentially programme themselves. This makes it very hard for human beings to understand what these machines actually do. Expect a lot of heated debate about these questions in the near future. The somehow misguided argument about the ethics of self-driving cars deciding whether they should kill their passenger or an innocent pedestrian is only a bleak foreshadow.

The race is on

Voice interfaces heavily rely on AI algorithms and massive amounts of data as their backend and backbone. Better algorithms and data fuel better interface quality. Thus, they are generating more and improved data that we can use to develop enhanced algorithms and even more data. Rinse and repeat. The race for the next dominant platform is on. The winners will be those who get the virtuous circle of data and interface quality right.

We will see more and more algorithms and applications like Soul Machine’s avatars that will be able to interact with humans on an emotional level – reading our feelings maybe even better than humans do and responding to them in an inconceivable way. How do we feel about that?

Judging from the earlier cycles (PC, web, and mobile), the next transition might be even faster. While it took the PC around 20 years to reach mass adoption, the web needed only 15 years. And it looks like the current mobile cycle will be completed after 10 years. By around 2025, we’ll see whether the fourth cycle will succeed in just five years, and maybe reach even more people than the smartphone.

Will we see the killer use case of IoT soon?

While machine learning and voice interfaces already show promising use cases, the Internet of Things still seems to be lacking them. IoT looks a lot like mobile before the iPhone came around. Today, connected devices often only add complexity to otherwise simple use cases like room lighting or heating. The smart home that has been promised for quite a while now still doesn’t look too smart.

A huge need exists to redesign the user experience of buildings, offices and apartments. This experience has basically been unchanged for decades. Current IoT appliances only digitise well-known interfaces without rethinking and changing them from the ground up. This work has to be done, and it will be done, with huge rewards for those who manage to become the dominant digital platforms of real estate.

In the long term, huge chunks of the giant real estate market can and probably will turn into a digital service business that lives on platforms like Airbnb. Users will rent fully-equipped houses, apartments and also office space for a limited time or even long-term, with every aspect of housing neatly fitting into a single monthly bill, all services metered and billed digitally and automatically. This is the killer use case of IoT, but it might take some time to fully develop.

How to design products that serve us?

Digital product development is hard, can fail, and there are no shortcuts. Like every innovation, it is risky. At the sharp end, product innovation is the discovery of a new customer benefit. Transformational products hold a radical value proposition – and they deliver immediately, instead of promising things they can’t deliver. A positive sense of achievement for the user is the first step to a sustainable change of behaviour. To change user expectations, user behaviour and, last but not least, value creation is the secret sauce of successful digital transformation.

Photos by Jacob Townsend on Unsplash, Victor Garcia on Unsplash and Jules Bss

Notes from SXSW 2017

How much has the country changed in the last 12 months? At SXSW a year ago, President Obama spoke and enthusiastically livened up the tech scene. A similar appearance of President Trump at SXSW 2017 would hardly be imaginable. In Travis County, to which Austin belongs, Hillary Clinton brought 65.8 percent of the votes in the presidential election of 2016. Trump was far behind, but won Texas and, of course, the presidency.

First impression: Austin is still the cool, cool university town that we know and love. The Immigration Officer at the airport is friendly and relaxed, the ridesharing service driver, and the staff at Whole Foods are delighted to see SXSW guests flocking in and spending their money. At first sight, there’s no trace of Austin being in a lesser mood.

South of the Austin Convention Center, in Rainey Street with its picturesque wooden houses, the wrecking ball has been busy over the past twelve months. Sadly, some of the old local pubs and bars were demolished to make way for large new buildings. If it continues at this rate, nothing will be left of it in just a few years.

The German House, very visible last year, has already been moved northwards to the Barracuda on East 7th Street. Rainey Street was once an area with a dubious reputation for drugs and guns. But today criminality has disappeared, and in its place is an eclectic assortment of chic bars.

As in 2016 with Obama, SXSW has this year also started politically. And the drastic change in atmosphere was palpable. Democratic senator Cory Booker, in his moving opening speech, pleaded that love should be the force of cohesion in today’s deeply divided US society. Tolerance is not enough, on the contrary – it creates new boundaries instead of unification. What a contrast to Hillary Clinton’s statement in which she said half of Donald Trump’s supporters belong in a “basket of deplorables”.

Cory Booker

Organisers of the SXSW this year set themselves the task of explaining to an insecure tech scene how it could happen that Donald Trump was elected as the 45th President of the USA. Cory Booker was obviously concerned about reconciliation rather than division and, at the conclusion of the first conference day, CNN journalist Van Jones (The Messy Truth) delivered a brilliant and clever analysis of the political situation.

He also identified himself as a Liberal, but at the same time made it clear that the a key value of the Liberals in the USA is justice and not freedom, which in turn is a key value of the conservatives. It’s almost a cliché say that society needs both freedom and justice, but it is an important insight in the political climate of 2017, and as such is worthy of being discussed at one of the world’s biggest tech events.

The technically induced filter bubbles, in which followers of respective world views move, are now clearly recognised as a problem. Obviously, a shocking event such as the election of Donald Trump was needed to grow the realisation that – beyond their own filter bubble – people live whose values, concerns and needs cannot simply be ignored or dismissed as irrelevant. In a democracy, one may have a different opinion. Where all must agree, there is dictatorship.

“Nothing is gonna change unless I do,” Cory Booker exclaimed. And, “Be the change you want to see in the world.” He took a long look at the history of the United States, quoted Martin Luther King, and reminded the audience of Abraham Lincoln. Europeans are probably thinking how much the country is trying reassure itself. Like Cory Booker, Van Jones reminded us that, throughout American history and in recent pre-Trump days, things were never perfect. Van Jones, himself a 9th generation American, said he was the first in his family to be born with full civil rights.

Van Jones

It says a lot about the upheaval of our Western democracies that so many of these insights are currently being discussed. Reflecting this, it was natural that politics should figure so prominently on the SXSW agenda. This year, it was mainly Democrats and closely related speakers such as Van Jones on stage in Texas, together with former vice president Joe Biden who spoke on Sunday.

Will we see Republicans on stage in 2018? This remains to be seen.

Originally published in German here.

“In the digital transformation, we often overlook what is actually being transformed” writes Martin Recke in his column. “And that thing is value, which affects not only humans but also industries.”

There are basically two ways that we deal with the challenge of the digital transformation. One is simply to deny it as a reality: Me, my industry, my life and my job are not affected, because all of that remains analog. The other is the complete reverse: Yes, everything is going to be digital. If we lose our jobs because of this, we will still need a basic income.

Both are nonsense: the reason being that the digital transformation digitises the value. This affects everyone and everything – people, industries, products, life, jobs. Therefore, it will preserve analog things, products and ways of life – but their relative value, compared to digital products, decreases rapidly. To understand this, a look back at similar transformations in the past is necessary.

Before the Industrial Revolution, the majority of the value added was produced in agriculture, everything else was largely craft and trade. None of this has completely disappeared – but in agriculture less than one per cent of gross value added is provided today. Nevertheless, no one should go hungry, and a densely populated country like Germany can practically feed themselves. The Industrial Revolution marginalised agriculture. The value has moved from agriculture to industry, and with it the labour force.

The value is digitised

Around fifty years ago, the same process started again. This time it’s the service sector that’s growing, while industry is shrinking and migrating to Asia. In part, this process is dramatic – and can be suitably described as de-industrialisation, which has drastic consequences for regions and employees. A strong industrial base such as Germany today yields less than 30 percent of gross value added in the industry sector – compared to almost 70 percent in the service sector, where nearly 75 percent of all employees work.

The productivity of employees in the industrial sector is only slightly higher than those in the service sector. However, services also include relatively simple tasks, which bring the overall average down. In fact, low skilled industrial jobs were cut long ago. On the other hand, there are lot of well-paid expert tasks in the service sector, with most of you reading this article belonging to that category.

The value is already migrating towards digital, while services, industry and agriculture are either digitalised or further marginalised.

The digital transformation has not only recently begun to take away share of value added from the three sectors of agriculture, industry and services. It’s hard to calculate by how much but, according to official figures, the ICT industry already provides almost five percent of the gross value added, more than the machine engineering industry. The level of digitalisation of the German economy in 2016 was already at 55 of a possible 100 points. Studies like these suggest that about 50 percent of the value generated is by digital offerings. An industry heavyweight like Audi CEO Rupert Stadler says that, in the future, his company will obtain 50 percent of its revenue from digital services.

Would statisticians therefore eventually bring themselves to define the Digital Economy as separate sector, then the digital sector would definitely already be one of the major pillars in the diagram. In other words: The value is already migrating towards digital, while services, industry and agriculture are either digitalised or further marginalised. This process inevitably means that jobs will disappear, specifically those whose value has been substituted by the digitisation. So, to continue the analogy with the Industrial Revolution, the term Digital Revolution is quite appropriate.

The unconditional basic income is not a solution

We may ask if an unconditional basic income is a solution to this problem? Probably not. And again a look at history is enlightening. The welfare state as we know it today emerged in response to the social problems of the Industrial Revolution. It helped to mitigate the distortions of this structural change. However, a redistribution of the value on a large scale cannot be accomplished by the welfare state. That would not be compatible with the idea of the social market economy. But when an unconditional basic income has to compensate for the consequences of the digital transformation, it would have to do and be exactly that – a redistribution of the value in a big way.

If this wasn’t achieved, then the unconditional basic income would not solve the problem its supposed to solve. Without redistribution on a grand scale, the largest part of the value would remain with those who generate it. The actual core of the discussion is to be found here. Redistribution on such a scale would mean burdening the digital value with higher taxes and fees, which would be understandably unpopular.

Equally, it is questionable whether the solution would be to pay significant social benefits to large parts of the population. The experiences of the past decades in this respect are not encouraging. Most people of working age prefer to be involved in the value creation, so they can feed themselves, than to be bankrolled. So if the value is digital, so too must be the jobs. More specifically, people need jobs that can’t be digitally substituted (yet). And for that it needs human ingenuity – as always. In the end, that has little to do with digital transformation or unconditional basic income. It has more to do with the fact that people always go where they see opportunities for themselves and their lives – in occupations, industries and regions where value creation is higher than elsewhere.

Originally published in German at t3n.de on February 15, 2017.

A warning: There is no master plan, or definitive process, for developing successful products. The product is more important than the process. When we talk about processes, we should always keep this in mind. Thinking in products, not in processes, is crucial.

Product Thinking is a holistic approach in several ways. First of all, the term product covers both physical goods and digital services. In addition, the term focuses on the needs of the user, the user experience and the results for the user. Product Thinking always considers the product in the context of its use.

Product Thinking also includes Product People. These are people who are concerned primarily with the products – not with the processes. Product people know the right processes. But they also know that processes need some slack. They must not be applied too rigidly, and must be subordinate to the product – and thus, ultimately, the user. The product and the user should always come first, not the process. Finally, the customer pays for the product and the user uses it. No customer pays for the process – unless the process is part of the product.

Product thinking is fundamentally different from thinking in projects

Project Thinking focuses on (project) processes, on timing and on resources. Project management becomes a key discipline. While it is true that without good processes hardly any good results can be achieved, the resulting product is much more important than the process. And while projects have an end point, successful products often survive their makers, be they those of Steve Jobs, Walt Disney or the pyramids of the Egyptian pharaohs.

Product Thinking directs the focus away from methods and processes towards concrete results.

Product Thinking directs the focus away from methods and processes towards concrete results. The customer pays for the result, not for the process. Product Thinking leads to key questions: What is the product? How much will it cost? How will it be sold? Who needs the product? How can it evolve? The answer is to think product first, process second, not vice versa.

Frequently, existing processes set the stage for new products. But this limits the possibilities of those products. In addition, while products are always clearly defined, processes and projects can continue without result and remain unclear in their outcome. A product either exists or does not exist. If the goal is a product, the journey on the way to that goal can be easily identified.

Sometimes a good result is achieved not because of, but in spite of, the process. This is partly due to the nature of creative processes. There is a danger of making the quality of the process a criterion of success – instead of the quality of the product. Focus on the former and, if everything’s in the best order, it may appear that all’s going well. Meanwhile the real goal, the quality of the product, has long disappeared from sight.

Begin with the user and the problem

Product Thinking helps one determine the problem that the product is designed to solve for the user. That is why he or she will buy the product – provided that it solves the problem. If there is no problem, or the product does not solve the problem, then it is worthless for the user. If only the solution is wrong, this can be remedied. But if the problem does not exist, there’s no requirement for a solution. In many cases it is not easy to find real problems.

Putting oneself into the shoes of the user (empathy) is one of the most important prerequisites. Talking to the user is important and correct, but it is not enough. “It’s not the customer’s job to know what they want,” Steve Jobs famously said. Product thinking begins with the user, with the problem to be solved and with the target group. This helps to formulate the vision (why?) and the strategy (how?) as well as the objectives and finally the features of the solution.

Nikkel Blaase is establishing Product Thinking at the intersection between UX Design and Product Management. This shows three things:

1. Product Thinking is, when rightly understood, a discipline of design. Tailor made, good design does nothing else: It identifies user problems and designs solutions.
2. Product management is part of design. Good design thinks in products and solutions.
3. Conversely, design also belongs to product management. In the classic marketing mix, the product stood behind the other three Ps (Place, Price, Promotion). Now it moves into the centre, together with design and engineering.

Thus, Product Thinking is the expression of a trend that puts together what belongs together: product management, design and engineering.

German version at t3n.de. Photo by Balázs Kétyi on Unsplash

Why do many companies still wait for their products to be devalued by digital transformation? It was a long time to foresee, and lost time can never be recovered.

Recently I had once again “Being Digital” by Nicholas Negroponte in my hand. In this book, which appeared in 1995, there is basically everything that has to be known about digital transformation. Okay, I admit, this is a little exaggerated. Nevertheless, many companies would be better off today if their bosses had taken “Being Digital” into their hands and thought about what digitalisation could mean for their industry and their business.

Where this is supposed to lead, was already known 20 years ago

That bits, compared to atoms, have incredibly many advantages, isn’t plausible only since yesterday. The fact that everything which can only be digitised in some way will be digital in the medium and long term, people could have predicted more than 20 years ago: Nicholas Negroponte even wrote in detail about the events and consequences of digitalisation. He often kept right – so you could have known.

“Why Software Is Eating the World”, declared Marc Andreessen 2011 in the Wall Street Journal – also already five years ago. Nevertheless, this still seemed to be a novelty for many people at the time. Why has so little happened in many industries? Why do many people still wait calmly, as their existing products become commodified through digitisation, thus becoming replaceable and thereby losing value? Why was the magnitude of the challenge recognised so late and in some cases apparently is still not recognised correctly?

Keyword(s): Computer science

Now it is certain that the seemingly obvious is not equally obvious to everyone. Rather, knowledge is linked to certain prerequisites. First of all, what’s needed is a basic understanding of digital information technology. This is still far less widespread than I think it should be. It is certainly the schools where computer science today still lives in a shadow. My own schooling has been past so long since the next generation has already left school. Sometimes, however, I get the impression that the teaching of computer science has become rather worse than better as it was in those days.

But I still feel a sort of collective suppressive mechanism. Such mechanisms also work in other areas of life. For example, you can hardly claim that the refugee crisis of 2015 almost came out of the blue. Whoever wanted to, could already know in the early 90s what would come to us. The number of asylum applications had already risen since the 1980s; in 1992, the topic dominated the headlines. At that time, as now again, a provisional solution was found to get the topic off the table. No one dared and dares to approach the principle problem. The consequences would simply be too dramatic.

As long as the conventional business works, the pressure of change is low. And once the conventional business does not work so well any more, it is usually too late.

The same is the case in many companies. Everywhere, there are clever people who know or at least guess what is coming to them. But they are often heard – rather, if at all – too late. As long as the conventional business works, the pressure of change is low. And once the conventional business does not work so well any more, it is usually too late. Then there are no longer enough funds available to support large investments in innovation. Besides, the necessary time is missing. When the first internet bubble burst in 2000/2001, many companies in Germany went to sleep. The subject of internet was delegated downward from the CEO until it arrived at the trainee. It took correspondingly long until it had climbed back from there onto the executive floor again.

Lost time?

In the meantime, countless startups continued to diligently create facts. Some of these, including names like Google, Facebook, or Amazon, are among the big players today. The lost time can never be caught up again. This is because the speed of innovation in the digital world is so high that conventional means have little to do. It takes a ten-fold increase in customer value to be able to compete. However, this is actually the great opportunity. After all, not everything is digital yet which can in principle be digitised. New, digital products that are ten times as good as what consumers are offered today are possible.

They just have to be invented.

First published in German at t3n.de.

Ten years ago, I co-founded NEXT Conference almost by accident, together with Matthias Schrader and Mark Pohlmann. It has been a wild ride since then. We moved the event from Hamburg to Berlin and back to Hamburg, from springtime to late summer and from an early Web 2.0 conference to the digital part of a creative festival. We rebooted NEXT with a sharp focus on the people formerly known as users or consumers and on products that transform their behaviour, thus moving markets and shifting entire organisations.

But now it’s time for me to move on. On July 1, 2016 my dear colleague Ina Feistritzer took over the helm. I’m sure she is better than me at many things regarding the further development and management of NEXT. I’ll happily stay at SinnerSchrader where I have been working since September 10, 2001. In my new role as Corporate Editor, I’ll continue to support NEXT where I can, giving advice when needed and helping with content development.

I look forward to continue working with Ina, which has been a pleasure ever since she first joined our team more than 4,5 years ago. I’m thrilled about a new project I’ve started working on together with Matthias Schrader. Hopefully we can talk about that soon.

Vorsätze für 2016:

1. Mehr schreiben.
2. Mehr lesen.

— Martin Recke (@mr94) January 1, 2016

On January 1, 2016 I resolved to write more and read more. Half-way through this year, I’ve at least made some progress, but there is still room for improvement. Everybody talks about content these days. That’s a term I don’t like, since it reminds me more of container boxes and shipping than creativity, arts, music or writing. But hey, if that’s the buzzword of the day, then let it be. Let’s do some cool content marketing.

These days, everybody and their uncle wants to be a platform. The Four Horsemen of Tech — Google, Apple, Facebook, and Amazon, or in short: GAFA — might still be dominant, but others are rising. Especially in the east, where WeChat is now widely perceived as vanguard of a new, powerful model for a mobile, chat-centred app platform. Or is it even post-app?

The GAFA platforms are used by, and enable, lots of other businesses — and even provide building blocks for another breed of tech giants called Unicorns. The fastest growing superpowers in the network economy today are not Google, Apple, Facebook, and Amazon, but rather Netflix, Airbnb, Tesla, and Uber — the latter built on top of the former.

In the age of the platform, proclaimed back in 2011 by Phil Simon, it is essential for every enterprise to have a concise platform strategy. This starts with the intelligent use of existing platforms, while avoiding the trap of auction mechanisms that suck out the last bit of operating margin from your business. It doesn’t end with the question of user interface (UI) that’s at least partly defined by the platform you build upon.

But the crunch question is whether your product has at least the potential to become a platform itself, albeit in the long run. Since the early days of computer networks (that are also platforms) we’ve seen countless platforms being built on top of each other, interconnecting technology and human beings – the people formerly known as consumers or users.

At NEXT16, we will adopt a global perspective on the platform game. We are excited that William Bao Bean will join us. He is Partner at SOSV, a US$250m accelerator focused venture capital fund, and the Managing Director of Chinaccelerator, East Asia’s first startup accelerator, and knows the Asian market pretty well. We can also expect some insights on WeChat and what is so special about it.

The emerging global web is a topic covered by Stephanie Rieger, a product designer, researcher, and anthropologist at Yiibu. She thinks about IoT, futures, re-appropriations of technology and mucks around with design fiction. Her insights about the creative use of digital platforms are refreshing and surprising.

A bit more local flavour is brought to the table by NEXT regular Nils Wollny, Head of Digital for German car maker Audi. We are proud that Audi is again partnering with NEXT and helps us bringing you the unique NEXT experience. Kudos to Nils! But don’t worry, he will never even think about boring you with a subpar talk. If in doubt, watch this video from last year.

For the 2016 jubilee edition of NEXT, Nils has promised a completely different story. Audi has been working on cool virtual reality (VR) stuff for years, and in September we will see what they have in store. VR itself is rapidly evolving into one of those new platforms that might change human-computer interaction from the ground up.

While Audi is famous for its sleek design, there is a lot more to say about design these days. Which we will of course do at NEXT16, among others on a panel with the working title “How to design products that people really love”. We are thrilled to welcome Jason Cale, Product Design Manager at Facebook, to our speaker roster. Jason’s brain is one part artist, one part engineer. Before Facebook, his work spanned interface design to advanced web app prototyping to pair programming with engineers.

Together with Jason, Golden Krishna (Google) and other, yet to be announced speakers will discuss product design, which seems to be a hot topic these days. Besides Jason Cale and Golden Krishna, don’t forget Brian Solis who will also talk about product design. And be sure to apply for a ticket to NEXT16. Summer Rate ends on June 30, so better be quick.

Product is important – design also? Notes from day two of TNW Europe 2016

German version here.

Design is a difficult word. Many people, when hearing that word, think Photoshop, colourful images, pretty and superficial aesthetics. A fundamental misunderstanding but widespread.

In the tech sector the importance of design can be seen in a simple relation: the number of designers per developer. Often the ratio of designers to developers is only 1:10. In such an instance, the designers can only provide a firefighting role.

To make things worse, in companies like these, the design function is often fulfilled by people who are not trained for it. Andy Budd, founder of UX design consultancy Clearleft, calls at least one designer per two-pizza team, or about a ratio of 1:3 to 1:6. The ‘two pizza team’ refers back to Amazon CEO Jeff Bezos’ famous rule that teams should not be larger than what two pizzas can feed.

That there is another completely different way of operating is proved by Booking.com – no doubt not a nice platform, even rather ugly, as TNW co-founder Patrick de Laive noted in conversation with Gillian Tans, CEO of Booking.com. “Digital brutalism” Patrick called the look of the hotel booking platform.

“We do not listen to opinions”, admitted Gillian Tans frankly. “We look at what our customers want.” Booking.com is extremely focused on its customers and bases decisions always on hard data, not opinion. This is also design, albeit with entirely different aesthetic consequences.

Booking.com’s aesthetic brutalism has, apparently, not harmed the company so far. The platform continues to grow rapidly and currently generates one million bookings per day. However, since there is no similar operation to compare it with, no A/B testing is possible that might reveal whether or not the addition of some design magic would have a beneficial effect.

If design is the product, as Andy Budd says, then a successful product obviously can also be ugly. But, if the customer doesn’t insist on beauty, the user interface (UI) and user experience (UX) can still work.

If design IS the product, as Andy insists, could this be a job creation scheme for designers? Not necessarily, it is more about a different understanding of design. Product design is far more than superficial aesthetics; it should reach deep into the entire functional relationship in which designers work with UX.

People first, this is the design maxim of Facebook, says Julie Zhuo, VP of Product Design. Good design solves the right problem for people. Hard data is simply more evidence, more material. In order to understand problems, it is necessary to talk to the people and to understand the context as much as possible. Empathy and intuition are the key words.

Data

Let’s look at a second aspect: the data. Amazon CTO Werner Vogels differentiates along the time axis between the past data (analysis), the present (dashboards) and the future (predictions).

Data from the past is the raw material for predictions, which in turn can be produced by means of Machine Learning (ML). It also develops Amazon models and tests them until the results can be sufficiently convincing. Numerous functions – both those visible and behind the scenes – already use ML, starting with the well known purchase recommendation, right through to abuse recognition and predictions about which recipients will open a particular email.

Machine Learning: learn your business rules from data (Werner Vogels)

Werner Vogels commented on both the exaggerated expectations of artificial intelligence (AI), and the dramatic fears of a takeover by machines. “It’s just computer science” he noted tersely. “It may look like magic, but it is not.”

Should designers be able to program? Julie Zhuo says it’s useful if they can in any case. And should programmers have at least a rudimentary understanding of design? Given the numerical ratios that can’t hurt – regardless of whether the beauty of a solution now lies in its functionality, as with Booking.com, or in its aesthetics.

Product managers are the new stars of the tech scene. Evidence of this trend was showcased recently at TNW Europe in Amsterdam. Despite lacking some of the ‘big business’ glamour, product management is where the action is today.

From the huge stage in Gashouder, Product people like Julie Zhuo, VP Product Design of Facebook, or Aparna Chennapragada, Director of Product at Google, gave insights into the product thinking of these net giants. The focus is always – the human.

The vocabulary has changed. We no longer call the audience users or consumers, but people – or human beings. This change of perspective also explains why the attention is now not solely on developers or entrepreneurs.

Sure, we are still talking about technology, and developers are still in great demand. As are entrepreneurs who create new things out of nothing. But even in the most recent generation of entrepreneurs, it’s the product people who stand out more clearly than they did a year or two ago.

AI + UI + I

It is they who ultimately create value out of technology and code, of design and user experience (UX) with a clear focus on humans. Aparna Chennapragada describes the secret sauce with the formula AI + UI + I. Artificial intelligence plus user interface plus human. The product management of Facebook, from where Julie Zhuo can draw on more than a decade of experience, uses three simple questions:

• What people problem are we trying to solve?
• How do we know this is a real problem?
• How will we know if we’ve solved this problem?

Focus is the key to success. Without it, it’s easy to get bogged down, and product development sinks into the mire. Focus, therefore, is a high art.

Des Traynor, Co-Founder and Chief Strategy Officer of Intercom, looked at the tectonic shifts in today’s world of products. Will our creations still be relevant in the age of bots, AI, augmented reality and virtual reality? How can product management deal with it?

Certainly not like Steve Ballmer, who famously derided the first iPhone. Traynor quoted Ghandi: “First they ignore you, then they laugh at you, then they fight you, then you win.” And Steven Sinofsky:

“No technology is really the centre of a system, but rather a constellation of bodies under the influence of each other.”

Product makers will always go where the people are. And that is currently first and foremost messaging. This is why bots, currently, are so hot – because they may be located exactly at the intersection between messaging and AI, thus joining two hot topics together.

This tectonic shift can have far-reaching consequences. “The product is now part of the conversation.” Traynor overlooked conversational commerce and selected a vivid comparison when he referred to messaging as “the command line for normal people”.

Every product maker must ask themselves whether they really want to expect people to learn a new interface. Or whether it would be better to use an existing, universal paradigm, as – in the post-app world – messaging is now.

Human-Centred Design

How much Human-Centred Design (once popularised by IDEO) has now seeped into the general consciousness of the digital industry was demonstrated by the fact that a veteran like Jeff Jarvis now speaks of it. He advocates considering people as individuals and members of communities – and not on their demographic criteria.

Only the shift of emphasis towards the product has not yet been fully grasped by journalism professor Jarvis. He continues to believe the product is static – and not a dynamic element that makes a successful digital concept. Products are never really finished, but continually evolve, driven by product managers who are no longer just small cogs in the corporate wheel. They are key players of the internet in the year 2016.

German version here.

10 years ago, we founded NEXT Conference to spread the gospel about the digital revolution, a revolution that transforms marketing by shifting power to the consumer at an ever-increasing speed. Ten years later, we’re convinced that this transformation is far from finished – in fact it hasn’t even begun.

Part of the reason is that we still tend to reduce human beings to their roles as consumers (as in marketing) or even users (as in Internet user, or drug user). With artificial intelligence (AI) on the brink of transforming the consumer internet, it’s time to rethink everything – e.g. behaviour, product design, platforms, or business as a whole – from a deeply human point of view. AI forces us to think deeper about our human nature, about what it is that makes us human and differentiates us from machines.

At NEXT16, we’ll be putting the human being at the centre. Consumer first. User first. Human first. We’ll strive to

• understand human behaviour,
• design products that create value or change behaviour,
• know which platforms to turn to, to get in touch with your customers,
• understand how man and machine will work together.

This quest has a highly subjective side as well as relevance for your business and society as a whole. It’s me, your digital ego.

Analysing Information

Behaviour Analysis: What are people doing and why the hell are they doing it?

To approach human beings, the first step is to understand them. Why do human beings behave as they do? And how do they behave in the first place? Anthropologists, neuroscientists, psychologists, trendwatchers, product designers and data analysts approach human behaviour from different angles. Their insights provide the groundwork for behaviour-transforming technologies that really help users to organise their everyday life differently, or simply better.

Understanding human behaviour in a digital world has at least three major dimensions: psychology, trends, and data. Some kind of framework is needed to make sense out of this. Nathalie Nahai coined the term ‘web psychology’, and defined it as “the empirical study of how our online environments influence our attitudes and behaviours”. This has a practical side, as well, providing a psychological toolkit that will help us design more persuasive user experiences. Here is a link to the world of product design we’ll also be exploring:

On the one hand, as people’s lives become increasingly digital, we have more data available than ever before. But does this mean we understand people better than we did in the past? Matt LeMay calls this thinking a myth:

One of the most damaging and persistent myths of the ‘big data’ era is that, by looking at numbers and dashboards, we can know people ‘better than they know themselves.’ This mindset betrays not only fundamental misunderstandings about ‘data,’ but also about humanity itself. The idea that we can understand people without listening to them is hubristic, narrow-minded and, frankly, sad. Talking to actual humans can be confusing, awkward, and even downright discouraging. But if we really want to understand customers, we need to accept and embrace that people are not fully predictable and quantifiable.

On the other hand, there are ‘data optimists’, as I would call them, like Christian Rudder, the founder of OKcupid and author of ‘Dataclysm’. He uses the vast amount of data available from sites like Facebook and Google to reveal who we truly are. And that’s sometimes sobering to see.

Art Invisible – Art Irresistible

Design: How to design the perfect experience for digital egos

Consumer first. User first. Human first. Design defines way more than a product’s look. The idea of how something works and how it brings value to the world is already design. It’s design to think about how a digital product touches our lives. To follow the market and to open up new markets: design. On top of that, design also plays a key role in communication between a service and its user.

It helps to have a well-designed interface that draws attention, because it fascinates and simply delights its users. But at the end of an intensive design process it might as well be the case to have not much left of a visible interface. As Golden Krishna puts it: The best interface is no interface. Since screens have taken over our lives, and many people spend most of their waking hours staring at a screen, it’s time to rethink all the addictive distractions that come with digital interfaces. Think beyond screens – innovation can be more meaningful than that, if we follow Golden Krishna’s train of thought.

In a digital world, brands are no longer designed in a classical manner, says Brian Solis: “Where everyone is connected to information and also to one another, customer experience is your brand.” What people feel and share online defines your brand. Brian advocates experimenting in order to learn how to create and cultivate desired, meaningful and uniform experiences. Often, our own experience gets in the way of designing for people not like us.

Brian Solis calls for human-centred design and emphasises the humanity in it. Human-centred design is an approach made popular by IDEO and the school of design thinking. While it’s certainly in line with user–centred design and customer-centred design, we think the focus on humans and humanity is an important shift of perspective, overcoming the reduction of human beings to their respective roles as consumer or user.

Almighty Internet

Platforms: How to build platforms and places that people love

When Amazon celebrated its 20th birthday last year, Founder Jeff Bezos reiterated his famous line about it being “Day One” for his company: “In fact, I believe that the alarm clock hasn’t even gone off yet,” he said. “We’re still asleep in our beds, far from having even pressed the snooze button.”

Together with Google, Apple and Facebook, Amazon makes up the Four Horsemen of Tech, also known under the acronym GAFA. These companies have created powerful platforms that users flock to in droves. Such platforms are used by, and enable, lots of other businesses – and even provide building blocks for another breed of tech giants called Unicorns. The fastest growing superpowers in the network economy today are not Google, Apple, Facebook, and Amazon, but rather Netflix, Airbnb, Tesla, and Uber – the latter built on top of the former.

Think of Uber. How does it distribute its products (its app)? Through the AppStore, the Play Store and most recently Facebook Messenger. How does it store and manage data? Through Amazon Web Services. Most importantly, how does it geolocate travelers and cars? And how does it provide navigation services? Through Google Maps of course! Do the same exercise with any Unicorn you can think of, and you’ll see they’re all relying on GAFA’s infrastructures to run their businesses. Like foster-mothers, GAFA have spawned and nurtured an ever expanding digital playground.

The Four Horsemen have done for the 21st century what the railroad corporations did in the 19th century – they’ve built an infrastructure for new kinds of businesses. Eventually, this infrastructure will be commoditised (that process has already started) – value creation and most of the value share captured will move from Google, Apple, Facebook and Amazon to other players, just like it happened to the railway companies after airlines and interstate highways arrived.

Recently, powerful platforms like the blockchain technology emerged, with tremendous potential: Don and Alex Tapscott consider blockchain the single technology likely to have the greatest impact on the future of the world economy. Blockchain stands in the tradition of the distributed, protocol-based platforms like the internet itself, the world wide web and BitTorrent. None of them are under the control of a single company, and are more decentralised networks than monoliths.

With WeChat in China, we already see more than a prototype for what a powerful mobile, chat-centered app platform can do. “WeChat reveals what’s possible when we take a mobile-first approach to platforms, portals, social networks, and brands”, writes Connie Chan of Andreessen Horowitz, in her analysis. The recent launch of Facebook’s strongly anticipated “Bots for Messenger” may soon bring a similar model to the Western Hemisphere.

Conversational interfaces may well cause the next great shift for the user experience, like the shifts we’ve witnessed from the web to mobile apps in the years since Apple launched the App Store back in 2008. Chat and messaging apps are already widely in use, and the simple text-based interface also allows for an easy integration of sophisticated artificial intelligence functionality.

Photo by Marko Ahtisaari

Already Implemented

How Artificial Intelligence finds its way into products, and its impact on humans

Artificial intelligence. That sounds like pie in the sky and science fiction. Nevertheless, AI is already implemented in lots of products. But what’s the benefit of intelligent, self-learning, or even emotional machines for the human being? How can machine learning be used for all dimensions of marketing in a meaningful way? Where are the possible dangers, and how must we as enterprises deal with them in a responsible way?

In March 2016, for the first time, a computer conquered one of the world’s best go-players. That was widely viewed as another milestone on the long journey towards artificial intelligence. Most experts agree that there is still a long way to go until AI reaches human level or even superintelligence, i.e. above-human level. But how long this will be is a controversial topic, as is whether we’ll see an exponential development, a hypothesis formulated by Tim Urban in his influential Wait but Why posting on AI. In 2014, Philosopher Nick Bostrom reasoned that AI will supersede human beings as the highest form of life on earth as soon as AI becomes intellectually superior.

What currently happens is the drawing of connections between lots of single dots. Like the internet, through the connection of single machines, and web 2.0, via the connection of single human beings, we now see new connections between AI and technologies like machine learning, virtual reality (VR) and augmented reality (AR). Ultimately, this creates new interfaces between man and machine. The role allocation between man and machine is being redefined, and there are also new mashups like human-assisted AI and the AI-augmented human.

The more human abilities are learned by machines and robots, the more urgent is the question of: What constitutes a human being? Is it only those skills that cannot be automated? And what if nothing remains of it?

Since the very beginnings of AI there has been a strange paradox: As soon as a new AI function or ability has been successfully implemented, it is immediately taken for granted and no longer considered to be AI at all. Speech recognition, for example, has long been a textbook example of AI – yet today it is seen as nothing remarkable.

Photo by Shutterstock CC

What’s NEXT?

We are currently working on these four main topics, that will be the major subjects covered at the 2016 jubilee edition of NEXT Conference. Back in 2006, we focused on the next 10 years. Those years are over now. Last year, we restarted NEXT Conference, renewing and sharpening our focus on consumers and their needs. Now it’s time for a fresh look at the old question: What’s NEXT? We believe it’s a much greater and clearer focus on people, on the human being. On being human. The shifts we see in user behaviour, product design, platforms and artificial intelligence all point in the same direction.

Join us: Apply now!

Five Key Learnings from my first ever visit to Austin’s SXSWi event

Wow. South by Southwest Interactive (SXSWi) has exceeded every expectation I might have had before attending. Even a few days after our return from Austin, I’m still in a high-adrenaline state of mind. Exhausted, but at the same time my batteries feel charged (even if I don’t like the metaphor), motivation is high and my mood is well above average. Now it’s time to jot down what I might have learned from my very first SXSW.

1. Attract like-minded people. That’s a first and really important. This makes it easy to connect to lots of strangers, because there is common ground that can be easily discovered. The psychological and practical risk that’s inherent to any kind of communication is considerably lowered. In general, I would describe the SXSW crowd as open-minded people, interested in a lot more things than just tech. While tech is of course important, there is also a strong influence from contemporary culture, arts and philosophy that can be felt.
2. Create an event that absorbs attendees’ hearts, minds, and souls. Many conferences cater first and foremost to the intellect. While that’s pretty important, it doesn’t suffice. The power of events lies in total immersion. Events can and should induce strong positive emotions and feelings, capturing not only minds, but also hearts and souls. Attendees need to love your event and the crowd they are a part of. And haters should simply stay away. Which leads me to my third point.
3. Don’t make it too easy to attend. There must be some kind of hurdle that attendees need to jump over. Many events these days are invite-only, which is fine and works well. SXSW is different, because Austin is not just around the corner. Even from the Valley it takes several hours to fly in, not to mention the long-distance flights many people from all over the world have to swallow. This creates a strong self-selection of the audience: Only people who really care show up. Which is a good thing.
4. Optimise the event experience for newbies (like me). Newbies shouldn’t feel like strangers. SXSW does a very good job for first-timers. Over the past 30 years, the event has attracted lots of new attendees, so they simply know what to do: Draw them in with a broad, well-curated selection of content, unusual and surprising meeting spaces, tons of side events, parties and stuff like that. And keep a very relaxed and easy-going mood that helps people even getting through the inevitable logistical hardships and nightmares that come with events at this scale.
5. Let serendipity do it’s magic. At SXSW, people have to walk around a lot. But believe it or not, it’s easy to meet others you might already know, simply by chance. I don’t know how exactly this works, but it must have something to do with a few main walking paths people have to use over and over again. And probably also with the simple schedule that puts most sessions in one-hour slots and half-hour breaks between the slots. So after each session attendees essentially play musical chairs for a while and bump into each other.

That’s it for now. I might add more thoughts if they occur to me. But for now, I’ll try to figure out what we can learn from SXSW for NEXT.

First published at Medium.