Looking back on what I wrote about some time ago I found a text I wrote in 2005 about how the European project might crash. The context then was the French riots which sent an echo throughout Europe.
I often find it interesting to read foreigners who observe and comment on your own behavior. In Peter Schwartz’s recent book Inevitable Surprises there is a chapter on the great flood of people who are moving and challenging societal systems everywhere. Among other things he is contrasting United States which is built around immigration with Europe which is not. He notes that Europeans have much more trouble with assimilation of immigrants and suggests that one of the reasons for this is the basic social model which is built around the idea of a small closed society, not unlike a large family, where everybody is involved, via the state, to help the less fortunate members. Immigrants are then shifting the balance and change the gameplan and are consequence not viewed as being part of the society. Most European countries keep immigrants separate from the balance sheet for as long as possible. Maybe hoping that the problem will disappear by itself. This has resulted in large groups of sometimes even well educated people not being able to enter the labour markets, which in turn has created a massive segregation.
Dramatically increased immigration into a society which is regarded as a balanced and closed system is shifting the balance and is therefore predetermined to generate a lot of problems. Schwartz points at the possibility that the immigration problem could be one of the biggest uncertainties when it comes to keeping EU together. A possible sequence of events for an EU collapse could look like this
- The tension between immigrant groups and society increases to the point that violence erupts (terrorism or civil unrest)
- Quick and firm police action aiming for a quick end to violence
- Negative reactions to police brutality increase the violence
- The ultranationalist forces gains support and suggests drastic measures against immigrants – which will gain support in many camps
- The reactions spread across borders to other groups in similar situation who will react in sympathy
- One or two countries will vote for closing their borders to immigration
- If one country closes the borders others are soon forced to do the same thing unless they want to have all the immigrants from their neighbor countries – it will cause a chain reaction
- When this happens the trust between the countries is damaged to a point where EU negotiations break down
Maybe we could rewrite this with some more details now when the Brexit phenomenon is playing out?
The cities of the planet are growing in both numbers and influence. United Nations predicts that in 2050 about 66% of the human population on this planet will not live in rural but in urban areas. Comparing this to 30% in 1950 the global rate by which the cities are growing is amazing. In Sweden, where I live, the urbanized part of the population today is 86% and is predicted to rise to 90% in 2050 i e 9 out of 10 people are soon living in cities in Sweden. For a country which was late into the industrialization and urbanization game this shift is quite extraordinary even if it currently being dwarfed by many fast urbanizing countries outside the West.
This global tendency is even stronger if we look at the economic economic perspective. A McKinsey study projects that 60% of the global GDP will already in 2025 be generated by the 600 largest urban centers. If we add the positive relation of innovation or entrepreneurship and the serendipity effects of large cities the growth rate might be even faster.
Nation states collapse – but cities thrive
The rise of human civilization is closely connected to the development of the first cities. These cities emerged in the centers of thriving farming societies where the innovation of irrigation helped land to produce a surplus that could be used for other things. It was in these cities the specialists which would not have emerged and could definitely not be sustained in the small villages or farms.
With the development of the printing press the human capacity to collaboratively imagine and relate to larger abstract structures increased. This resulted in the dominating organizing model of the Westphalian nation state. A model which later was reinforced by the innovation of e g the mass media, the industrialized corporation and large scale warfare.
The last decades the revolution of global and yet individual communication technology have caused a Copernican shift in human organizing capability. If social, political, economic and industrial development the last centuries was built around the nation states and it’s institutions new structures seems to be built around borderless networks and individuals.
This development seems to favor e g cities and gradually turn the nation states into mere Potemkin structures. Even when the city administrations are facing the challenges of bureaucratic inertia and increasing irrelevance as the nation state institutions, the cities seems to continue to grow.
Why are cities so successful?
The question is not IF the cities are emerging as one, or maybe the, major organization principle of human civilization. They are in a big way. A more relevant questions is WHY.
Here are five answers suggested by researchers from different fields to the success of the cities:
Cities attracts by providing a mix of opportunities, belonging and freedom
People moving into cities have different motives for doing so but most of them seems to boil down to finding new ways to support themselves, changing social environment either from a certain situation, i e become free of something or in search of a community to belong to. Since the possibilities to achieve these increase with size of the city, the attraction along these dimensions is self reinforcing and grows with the city size.
Cities show a remarkable stability and resilience
The bigger the city the better is the access to brains, resources and labor force. And since the city is NOT a designed system where the inhabitants are prescribed a certain position and a certain objective, it is really an ecosystem in which individuals are self organizing based on their sense of belonging. When something bad happens huge numbers of skilled and self organizing individuals gathers to help and manage the situation. This mechanism have repeatedly demonstrated the great resilience of cities, which don’t just survive but in many cases even thrive after devastating catastrophes as big as tsunamis and nuclear bombs.
Cities show high capacity for innovation
One key ingredient in creating something new is that people with different thinking patterns and different sets of skills and knowledge accidentally meet and mix their needs and knowledge. The attraction and dynamics of urban areas drives both specialization and accidental meetings which in turn increase the capacity to conceive, develop, test and launch new ideas. Because of that the economic growth rate of cities are much higher than the surrounding environment outside urban areas which in the longer perspective is distancing urban areas from rural.
Cities learn better from other cities than countries do from each other
With the development of C40, an environmental collaboration between the largest cities on the planet, and many other collaboration networks between cities it became evident that cities all over the globe show much more similarities than countries. Based on that similarity it is much easier to successfully transplant ideas and innovations between cities than e g between countries. The fact that cities are not interlocked by the zero-sum geopolitical agendas the nation states suffer from is of course also a huge advantage.
The more the city grows the more efficient it becomes
A physical or maybe biological propertyof cities that might explain their long term success as an organizational model, is that cities gets more efficient in utilizing it’s resources that the larger it gets. Cities and ecosystems are unique in showing this property of superlinear relation between size and resource utilization. All other organisms show a sublinear relation which means that they are less efficient the larger they get. This unique property of cities and eco systems – the superlinearity – is a result of being organized as a loosely connected and adaptive network structure of relating components.
Humanity is becoming a city dwelling species
There are of course many voices pointing to the many problems cities show. And yes, citification of humankind, is not without problems. But judging by the long term evolutionary direction and the unique properties of superlinearity, resilience and problem solving cities show I think that nature itself so far is betting on cities. And at least until we see a countertrend that threatens to break this 8.000+ year gigatrend of urban growth I agree with nature.
Humanity might be on it’s way to be defined by it’s cities i e becoming a city dwelling species by nature in similarly to the ant being defined by it’s ant colony or the bee to it’s hive. You can of course pick a single human and analyze her as an individual, but like an analysis of an individual ant or a single bee, it will just become a fragmented and relatively uninteresting part of the understanding of the humanity.
Cities – the most successful sharing platforms so far
But in order to relate to this fundamental shift humanity have to relate to the gigatrend of citification by developing a positive metaphor that is not based on old industrial logic.
One way of achieving this is to change the metaphor by which we talk about cities. We could e g describe the cities as: the socioeconomic reactors of humanity
Or why not ride on a popular metaphor currently being commercialized by famous companies like e g Über and AirBnB and say: Cities are the most powerful and resilient sharing platforms – so far or Cities are, after the planet, the mother of all sharing platforms?
A digitalization strategy is dangerous and mainly wrong approach.
Because it draws the attention to today’s models, structures and systems and how they can change and become digital.
And why is that wrong?
Just ask yourself these questions:
- Would the bookstores have survived if they pursued a digitalization strategy?
- Would the newspaper industry thrive if they succeeded with a digitalization strategy?
- Would the film developing industry have boomed if they just pursued a digitalization strategy?
- Would the video rental business kept up with a digitalization strategy?
No, of course they wouldn’t. But they might have had better chances to survive if they understood how digitalization changed the world around them. And if that insight could help them letting go of their obsolete assumptions and identify where the new potential for value creation will be tomorrow. Then, they would at least have a chance to develop a relevant strategy in order to transform themselves.
What companies need for the future is not a digitalization strategy, but a broader overview and insight of what is happening and a strategy for meeting a world that is transformed by the tsunami of digitalization – a strategy for the future and not for the past.
Nature can be described as organized in hierarchical systems layers – but that doesn’t mean humans must organize themselves in static hierarchies. There are examples of different ways of organizing people to perform work together.
This post explores three flat and fluid organizations in completely different industries and of vastly different sizes. All of them lack hierarchical management, so how do they thrive? They follow these principles:
- Management is tasks: They think of management as a set of tasks rather than a group of people. Those tasks are broken down and formally distributed among regular workers. Everyone manages but no one is management.
- Transparency and accountability are sacred: Everyone’s performance metrics are made public and anyone can demand an accountability to anyone for their performance.
- Everyone makes decisions, but not everyone is involved in every decision: Workers are free to make decisions about their work without consulting “higher ups” (as there are none). Decision making power is distributed, but decisions are not made by majority vote.
- Make what’s implicit explicit: Topics that are taboo or give room for internal politics in hierarchical organizations (e.g. compensation, natural leadership, allocation of undesirable or highly desirable tasks) are confronted head on and the resulting decisions are made public and binding.
These organizations are living examples of that there are different ways of organizing than the traditional hierarchies. So why do we believe in organizing hierarchically when we can avoid it?
Most of us agree that just because the development process in nature can be described as a Darwinistic process doesn’t mean that we should use Darwinism as a norm to how we organize our society. Why is it then so important to organize ourselves in static hierarchies?
There seems to be a failing normative logic behind Organizational Hierarchism similar to the failing normative logic behind Social Darwinism. It might just be an example of Moore’s naturalistic fallacy; just because something IS in a certain way doesn’t mean that it OUGHT to be that way.
What is Blockchain and what are the possible consequences for the future?
Blockchain is the key innovation behind the cryptocurrency Bitcoin and have lately come in focus almost everywhere. Blockchain itself can be described as a technology with the ability to displace the need for other (e g human, legal, governmental…) layers of trust between any numbers of globally distributed endnodes. We can compare it to how e-mail and messaging is displacing the need for mailmen and postal services. Or putting it another way: it is a global distributed platform for implementing algorithm based trust relations.
Ok, but what does all this mean for the world in the longer term?
Possible future implications
Service based organizations like e g insurance companies, banks and most governmental bodies rely on two core capabilities: (1) the ability to provide a certain service while (2) retaining their role as a trusted provider. We already witness how accelerated digitalization and democratization of technology moves processing power from centralized service centers to our smart phones and personal computers. One consequence is that our devices now have the capacity to completely bypass the central servers. If it wasn’t for the trust aspect many systems and apps would be redesigned taking advantage of the new technical possibilities. What Blockchain is doing is opening up the possibility to digitally integrate the trust component.
If the local endnodes in a global system of relations provide algorithmic trust i e have an algorithmic proof mechanism instead of having to rely on other ways of trusting each other, it opens up the world of global and individualized cooperation and collaboration. More specifically it opens up an innovation arena for the, now much larger, army of hackers that e g built the Internet.
A huge wave innovation around Blockchain will change the world quite dramatically. The administrative services we rely on today from a few large providers will be digitized, unbundled and reinvented by millions of innovative individuals who have better ideas. Specific platforms like e g Ethereum or more generic cloud platforms like e g Google, Facebook or Amazon will provide the trusted storage, processing and communication needed to run the societal administration.
If there is a wide adoption of blockchain-like technologies it will mark the beginning of the end of organizations, companies and governmental bodies who provide information and administrative services. Cloud platforms will be fully capable of provide a large part of their value. Those institutions who are not rendered completely obsolete in this transformation will at least live through an accelerated unbundling of services which will break institutions apart and turn them into new and unrecognizable constellations.
For nation states this might turn out to the greatest challenge of them all. Already today the nation states are gradually becoming reduced to insurance companies with armies. This is starting to become a huge problem for many governments who see their relevance for their people are being reduced step by step. With Blockchain there might radically less need for a trusted nationwide insurance logic. What is left is then – an army!
Supporting driving forces
- The technology is supported by the combined forces of a individualization, bottom-up innovation and the increasing influence of Internet technology and mentality.
- There is a long list of applications built on blockchain in the pipeline attracting a huge interest from early adopters and innovators around the globe
- The current uncertainty and instability around the global economy, currencies and even the nation states is opening up for new models of trust and payment (see e g the book: Stuff and Money in the Time of the French Revolution)
Weighs and challenges
- Most institutions, governments and corporations don’t understand and are skeptical to this new technology which seems both uncontrolled as well as uncontrollable. One notable exception of corporations supporting the technology is the recent interest from the bank community who is now investing in Blockchain knowledge.
- The association with Bitcoin, an independent och perceived dubious currency by some nations, might be an obstacle (e g Russia and Thailand)
- The huge interest and the many application efforts might not just have positive consequences for the development of Blockchain. Among the current projects there might be ideas and application that will be considered offensive or subversive to powerful actors like governments or corporations.
We are drowning in news about new technologies every day. Technologies that are solving difficult problems as well as opening new possibilities. It is easy to see them as the most powerful forces transforming our world. But we forget one important aspect. We perceive these technologies through the stories of our time. These stories are much more important factors shaping our future than any technology. It is the stories by which we explain ourselves, our situation, our role in the world and our futrue that determine our thinking decisions.
In the late 1990’s I visited Global Business Network in Emeryville to learn scenario planning. During those meetings I met many interesting people: Peter Schwartz, Stewart Brand and Kevin Kelly. I was fascinated by their long view of the critical importance of stories. Since then I have been following their work and soon after they initiated the epic project to build a 10.000 year clock. The core idea was to challenge our current civilizational stories. By running a public project with a civilizational time frame of 10.000 years in the future, it will require us to take a longer view. A longer view that change our stories about on ourselves, our civilization and our future.
I have written about this a couple of times before so why do I mention it now? One reason is that I feel our times are now accelerating even more and we are starting to feel the future dizziness and nausea like we are being rolling around in a washing machine. In short: we are in more need than ever of inclusive longer term stories that organize our thinking and our societies.
A more direct reason is that a group of filmmakers published this beautiful short film describing the project.
I agree in principle with the analysis that BCG have done and which they conclude in what they call the Digital Imperative. They have also developed a nice animated presentation that explain it visually.
It is when I reach the end of their animation I suddenly see all five fundamental changes that a company needs to address I start to laugh and shake my head. I suddenly visualize something like a Larson cartoon where a bunch of dinosaurs are sitting in a conference listening to a presenter that shows PPT-slides which tells them to evolve into mammals.
– “A developed reproduction system known as a womb and a new and more advanced temperature regulation system is the core tricks here. We call this strategy the Mammal Imperative!”
It is very clear that all organizations that sustainable thrives in the new digital ecosystems are younger than 30 years of age and belongs to a different species. It is also clear the number of organizations that have changed and survived through disruptive business environment transformations are almost zero.
The BCG line of reasoning assumes that a single organism or system can have the ability to fundamentally redesign itself. Nature have so far for the last billion or so years taken a different path:
- every individual organism tries to utilize their inherited capabilities, use it economically and efficient in order to survive until it can breed
- change occurs between generations by the means of mutation
Isn’t it the same pattern we see in organizations as well? Organizations don’t seem to have very good capacities to change, but people are creative. When they start a new organization, their knowledge and capabilities of finding out how to create value in the current ecosystem results in that next generation of organizations have different capabilities.
I know this is a tall order to grasp. Could it really be so that my organization don’t have the capacity to change and adapt to the emerging digital world? Yes, and if we are looking at statistics so far it is even very likely so.
If you still are having this blog in your RSS-stream or elsewhere I think I owe you an explanation of the disappearance of this blog. It did NOT mean that I stopped working with future related things. This blog, and the whole of my site was unfortunately hacked, and I had to remove everything and start all over. I fixed my Swedish counterpart of this site which was the most important for as most of my work is taking place in Sweden. Anf this have been dragging ever since…
But now I am back!
If somebody is still here, why don’t you throw me a comment?
In uncertain times it is more important than ever to wish each other a Happy New Year!
Happy New Year to you all!!!
How does the digital transformation of your organization go? According to the global studyÂ DIGITAL TRANSFORMATION: A ROADMAP FOR BILLION-DOLLAR ORGANIZATIONS from CapGemini just 50 of 157 executives say that they have an effective approach. Not an easy task it seems…
But why is this so hard? The report states that
Successful digital transformation comes not from implementing new technologies but from transforming your organization to take advantage of the possibilitiesÂ that new technologies provide. Major digital transformation initiatives are centered on re-envisioning customer experience, operational processes and business models. Companies are changing how functions work, redefining how functions interact, and even evolving the boundaries of the firm.
I couldn’t agree more. But isn’t this difficult? Yes, really! What makes it even more difficult is further described in another conclusion:
Successful DT comes not from creating a new organization, but from reshaping the organization to take advantage of valuable existing strategic assets in new ways.
This means that in order to succeed you have to understand what your valuable existing strategic assets really are and transform your business to leverage them in a digital approach.
I think these statements are correct, are really important and points in the right direction. But judging from my 10+ year experience in working with intelligence, strategy and change in a global company, I see is that this is incredibly difficult to do in practice. Is it really so that as much as 1 in 3 are successful in this process? And to what extent are they successful?
From a historical perspective from other technology driven transformations, there are extremely few companies that have been successful in transforming themselves across societal and technological shifts. How many companies are e g older than 100 years? 100 years ago there was another, albeit a magnitude smaller, technological and societal shift that also required transformation and how many organizations survived that?
We must correlate these insight with other findings e g John Hagel’s analysis of the performance of today’s companies:
Firms in the Standard & Poor’s 500 in 1937 had an average life expectancy of 75 years; a more recent analysis of the S&P 500 showed that the number had dropped to just 15 years.
I think it is time that people reread the former Shell executive Arie de Geus’ book The Living Company,Â Clayton Christensen’s The Innovator’s Dilemma: The Revolutionary Book That Will Change the Way You Do BusinessÂ and Alan Deutchman’sÂ Change or Die: The Three Keys to Change at Work and in Life.
In the end of the executive summary the CapGemini reports correctly states that:
Despite the hype around innovative digital technologies, most companies still have a long way to go in their digital transformation journeys. Leadership is essential. Whether using new or traditional technologies, the key to digital transformationÂ is re-envisioning and driving change in how the company operates. Thatâ€™s a management and people challenge, not just a technology one.
From my view from the outside I still wonder if change really is happening to the extent that people think it does. Because if it does it is against all historical odds. Or are we creating an illusion of change, when in fact organizations are failing more dramatically than ever?
The good thing with this report is that they are starting to formulating the difficulties in a much more realistic way than I have seen before from IT-consultants. And that is a good thing… If they show the correct picture of the reality, I am not at all sure.