digital transformation of business-society - futurist gerd leonhard at orange business hello world good morning 10 i'll skip the rest because i'vealready have heard the rest was very good and i can't beat that so thanks forbeing here are i live in switzerland i spent 17 yearsin the us
kredit rumah murah, so if i speak too quickly and tooexcitedly and say awesome too much that's because of the us but i'm alsofrom germany so if i use perfection in my slides that is the reason why many ofyou may have never seen a futurist or listen to the future was before
in fact in many places like germany forexample people don't really know what a futurist is and so i want to describethat first it's basically a very simple thing i don't predict the future andunfortunately i if i could do that i probably would be sitting out in themiddle of the lake here with an ice castle so i observe my job is to observe ortake a look and basically work on scenarios my company the futures agency helps companies toreinvent and sometimes it's very painful because as you know digitaltransformation is not about change no
change would be trivial compared totransformation i mean if you look at what happened fortop of the music business i work for a long time as a musician and producer arecord producer and then i went in the digital music business i started a company like spotify you mayknow of course these are right company like that i started that in 1999thinking that music is ready for the cloud chance but it wasn't and change isreally different than transformation now music business is no longer physical andthat is a painful transformation is difficult but i'll get some moreexamples about this
so this is really my job at one is tolisten to and to observe and the other one is to project backwards from thefuture and i think most of you could also do this job is not really a specialgift or something it's just i spend ninety percent of mytime doing something that's not already here and so one thing i want to advise herright from the beginning to change your future and the future of course it isn't fixed to create your future try to spendthree to five percent of your time on thinking what is not already here
this is very important because now thespeed is increasing in the mind-boggling fashion in a way that we haven'tpreviously thought this is the main thing the convergenceof man and technology have a woman and technology as well everyone quickly but the convergence ofman and machine and if you if you have kids you know exactly what i'm talkingabout right it's like the mobile device has becomethe extension of our brain truly has become the extension and that's good andbad depending how you look at it right but now our entire society is moved inthis direction that we have this
constant convergence of man and machineand robotics artificial intelligence when you're using google maps whenyou're using siri when you're using anything on your mobile device there's artificial intelligence behindit and i mean most people don't even know what that is if you would ask them so we're talkingabout a really a substantial change in for businesses this is the shift you know from theold-fashioned way of doing things that was more left analog or semi digital andto become a truly digital it's very
difficult the bigger you are the harder it getsright the first music second film and television third books and publishingright fourth tourism hotels fifth financial services insurances miningcruise ships you know you name it government everything about theireducation and so it's all happening basically in all industries and thistransition is something that we're looking at them were saying things we'veseen things like this project for microsoft called whole end and whichallows you to see reality in a different way and now we have technology thatallows us like google glass tried to do
didn't really pan out there and but thisidea of of seeing reality a different label become completely normal this devices proposed to cost a couplehundred dollars and it's going to be widely used by doctors and policemen andarchitect some people fixing things and network engineers you know being able to see superimposedinformation on top of the visual field that sounds like geeky stuff now rightlike my wife wouldn't really understand what i'm trying to say here right but in five years and will be as normalas sms i mean of course sms will not
exist in five years just kidding i hope it will at least to some degreeso here's one of the key facts were now living in an exponential futureexponential is not what we can understand this as human beings likebecause we are linear you know we can have a maximum of a hundred fiftyfriends in our social circle that's the normal human way we can have15,000 because we have linked in and we can't live faster because we tweaked andwe are linear but technology more slaught doubling every 18 to 24 monthsdepending how you look at it it's basically now at the take off . andwe're at the point of where all the
stuff we talked about is actuallyhappening you know ten years ago we talked aboutthe paperless office and remember that didn't happen is it happening now absolutely we talked about the shift inroute to renewable energy and based on technology didn't really happen is itgoing to happen now this year yes it's a take off . went so technology is nowbecoming exponentially powerful and i like to say that humanity will changemore in the next 20 years than in the previous three hundred and that soundstotally crazy right you think about that and joshualevolution 300 years ago
now we have a major breakthrough justabout every week and now the technology bio engineering geoengineering asteroidmining electric car itself glad because the list goes on every day it's not asingle day that goes by without a major breakthrough in science and technologyand then of course it makes us robin sometimes the technology is basicallytaken over everything and i mean in japan you can buy an electronic pet - come and greet you at the door youknow that's something that we probably culturally wouldn't really do in europe i'm not knocking it but you know iprobably wouldn't buy one
so this exponential lt that's a veryinteresting story that red quartz why likes to tell i will share with youbriefly when chest was invented 500 years before christ and the multi . inindia there was a wise man who went to the emperor and and brought the chessgame and the emperor was really excited about the chess game and then they hadhim they have a match and the emperor saidto the wise guy in the wise man sorry wise guys later through the wise mansaid what do you want if you win and the wise man said i want one rice corn foreach field on the run them on the chessboard friend and you double itevery time you go to the next field
so basically they are the emperor saidthat's very modest you know how much can that be you know you get one corner to get tocorn then you get four coins and you get eight you know can't be very much turns out halfway through the chessboard it's already the entire rise consumptionor production of india and haven't gone all the way through the chessboard it would be a mountain of rice thatwould cover the earth and one meter layer of rice right
if he actually won and so the guy didwin then the wise man and the emperor killed him and got him beheaded becausehe realized that he couldn't pay and so this is the in thing aboutexponential it's very hard to understand but here's something we have to knowthat we have to consider we are now in the second part of the chance port andwe are in a place to where we are now entering the truly exponential forms oftechnology and i and that's not all good thing i'm most of that is good butit's also quite hard to figure out what we're going to do about this i meanwe're looking at these numbers here right i mean if you're looking over herein terms of like dna sequencing it used
to cost a hundred thousand dollars toget your dna down now it's eight the forty dollars and some people aresaying it will be cheaper to flush the toilet and five years then you get yourdna analyzed i mean the other way around so i you getwhat i'm saying but basically it's becoming free i meanlook at the price of music or film and now you can subscribe to spot a firesimplify for 10 years a month it used to be 20 years for one citywhere the changes were seeing a truly exponential exponential increase invelocity and speed and magnitude how many companies have become 1 billiondollar companies companies that are
privately funded right abc6 companies in two years are worth abillion dollars without any bank or in the ipo just privately funded and we'retalking about huge economic impact of this transition disruptive technologiesautomation of knowledge work you can download my slides later by theway i'll be going to make it available that's quite a few slides here butbasically a mckenzie says we're looking at can add an economic impact of roughly30 trillion dollars of this transition and let's make no mistake about it isfantastic opportunities and that's quite a bit of darwinism here and if if we'renot good enough people would just ignore
us and that goes for all of us includingmyself the tech conference this year we'll havethe first time where there is a robot delivering a speech about the futurewill be interesting to see i've i doubt he can compete but you know who knowsthat but anyway uh now we know of course if you have kids again the night itraveled three years ago with my son - well to zanzibar the first time everthat he was not connected to the internet and we're sitting on the beachof the hitting is more for like this the whole time saying why is my phone isbroken thing
well there is no internet here right nointernet no music no news no feet no facebook and it's the basically notbreathing and that so productivity is becoming like oxygen infact connectivity in africa and asia are many other countries will there are some times before electricitywhich is kind of a weird thing but connectivity is becoming like oxygenthat also means it will probably come become cheaper but even more crucial iswhat it will do to our lives and how we will deal with all the side effects ofthat too for example sensor networks if we usesensor networks in energy regulation or
thermal pets at home you know basicallyfiguring out how our heating and air conditioning works we can estimate aboutthirty-five to forty percent of energy savings but being more efficient withenergy now california's think about making it mandatory to use a connectedthermostat way to save energy and water we're talking about substantial changesbased on those two facts automation and intelligence who i would give you apiece of warning on the automation part i think automation is inevitable andlots of jobs will be lost due to automation for example bookkeepers orfile includes our call centers maybe some taxi drivers and and that isa huge social issue of course but
automation will only last as long as itlasts you know you can automate beyond one right so there's an efficiency in the end ofefficiency but basically intelligence is the more exciting part time makingsystems truly intelligent now when you talk about intelligence isvery important to distinguish between human intelligence which is embodied andphysical emotional social intellectual right and machine intelligence we're just based on algorithms for themost part why should ask siri about that but
so that's very important to distinguishif we're looking at intelligence for example the example of clip advisor it's a very good story if you like touse tripadvisor you know what i'm talking about sometimes it's completelyspot on and sometimes you wonder like who in the world to him actually aid here in and lift to writeabout it right it is a good data . but it's not realityin the same way so i some time to say that basically tripadvisorassemble somewhere between five and twenty percent of reality and if you'rein front of the restaurant looking
inside smelling the food seeing thepeople it takes you less than three seconds probably most cases one second to decideif you're going to go inside there is a difference let's keep that in mind so the otherthing that's happening here is that there's a temptation of thinking ofhuman processes in our business is a human process basically right as amachine processing algorithm and while we use technology to make business aperfect in a way and efficient we should not think of that as beingsort of a process of of machines write
an algorithm we also need to keep inmind what it means to be truly human and the sense of actually finding a purposefor business this is also very important so in thisprocess of what we're doing here in technology we've seen this happening inthe next few years basically going from efficiency to intelligence to engagementbut ultimately we want engagement with our clients room we don't just want them to clicksomething or to find out stuff right we want them to build a relationship andthen have a transaction that's not making a mistake and say well it'senough to be efficient and intelligent
it's not and you don't have arelationship you don't build trust you don't have a business you could be as efficient as you wantnow you have no brand nobody will buy anything from you so it's very important to keep in mindmy friend frankie on i had a fantastic slide here that's a little bit confusingbut it's not very worthy showing all the stuff that's happening at this verymoment that is coming towards us as a business and as people who are engagedin business or 3d printing the internet of things cognitive systems roboticsautomation sharing economy i mean that
all these things that you read aboutpretty much on a daily basis but here's the thing these are all happening at the same timethey're combinatorial and part of the mission has to be to figure out how will all of thosethings converge to change your business and how would you take advantage of itbecause they're all interactive i they actually all interconnected the exponential interdependent a doctorfor example now has a possibility of taking a i bm wats and type machine orany other provider that does this right
to take that along on his rounds in thehospital so when he sees a cancer patient he cannow pull up a hundred fifty-eight thousand cases of exactly the samecancer and in at the at his fingertips right and then you can focus on talkingto the patient rather than pulling up the information i mean that is a hugeshift in terms of cloud connectivity mobile devices artificial intelligence you've all heardabout <operand> twenty </operand> and this is a car service like a taxi thatyou call through that most of you i'm sure you know that there's lots ofcountry controversy about you are about
been exploiting drivers and so on but iuse a lot because it is kind of an experiment for me and now the the university of colombiahas done a study already two years ago when they started they figured out thatif you go ahead 9000 autonomous cars you know electric self-driving or assisteddriving cars in new york city we could do away with all of the taxes 9000 fullyautomated cars would do away with a hundred and eighteen thousand taxis andyou would pay less and get a ride quicker this is the kind of transformationthat's going to happen
there's lots of reasons why thisparticular one will not happen the action is this just an example andbut this shows you what's happening with the amount of efficiency and and changethat we're seeing there is mind-boggling it and companies are coming out of leftfield like airbnb and uber and dropbox or not you know basically coming throughthe back door and solving those problems so very important to keep that in mindas i wrote a book in 2005 after i got done with the music business and in 2002called the future of music and this makes a fantastic example this book is about 10 years old butplease don by it's actually quite old
important part of this one night lookingat this slide here from quartz qz . com the music industry keep selling less andless and less and less recorded music as a record or the physical goods right mein fact i think if you give your kids a cd or dvd for christmas they will call a therapist and i hasbasically like that time is i think the charge will go towards zero here so the music industry realized you knowpeople are no longer buying physical goods but they weren't ready to give upon the control of distribution and so in the process of this fight since i wasinvolved in 1999 and that's the days
basically right the record industry lost 71 percent ofrevenues and recorded music because they were all ready for the shift of thecustomer to say music is in the cloud right i mean we're eligible music be nowis just a button on the device now more or less so here's the interesting part you knowwe really have to think about this peter drucker says in terms of change thegreatest dangers to act with yesterday's logic now this is something you do not wantand yesterday's logic of course we all
think with yesterday's logic becausethat's what we have and but sometimes it pays to sit down and say what if mylogic is actually no longer correct what if my assumption is not correctthis is a crucial question with the american elevators or communicationsystems or a doctor's equipment or music that this is the question is it actuallystill the same the answers people do not want music as a physical good most of uswanted as it is a click and the cloud right so that's a really importantquestion my friend rose dawson had this really good slide about the newsbusiness and i i use it as a as a tangent is a comparison to yourbusinesses and basically if you try to
sell news for money the so-called paywall like the new yorktimes has tried most of them fail miserably because thebottom line is it takes a lot more than the content to make a sale in contentused to be about 75% appetizing supported and now with the internetthere's like a hundred different models how you can monetize content for examplei subscribe to the economist economy's a hundred fifty dollars a year i only subscribe because i can listen tothe economist magazine in the car using their recorded tracks
that is why it's the interface rightthat's why i buy it i mean the writers are greater true butwith without the mp3's i wouldn't wouldn't subscribe so here's a lesson from the publishingbusiness for us just like the publishers aretranscending the idea of selling content you know the paywall which didn't work digital transformation forces us everyother leading incumbent to transcend the products that are becoming a commodity if we have a product that becomes acommodity because of digital you have to
figure out what else you can sell andthat's all those values around it for example audi bmw mercedes be andother carbons they're not going to sell cars in thefuture that will be one of the things that they do they say they will sellmobility transportation and data services that's a much bigger arena so we have tothink this way otherwise you know we may find ourselves out of a spot there for example out of the movie businesswhen you see some slides here and the red line is all the physical sales thegreen line is all the digital sales now
clearly if you are worn or pictures orsony and you're not happy with this because the dvd is the cost with regioncoding included 25 years a dvd now you buy itunes which is pretty expensive butyou can buy netflix or hulu or other services for 10 years a month for undera thousand movies and how much do you get for a movie on netflix europe onzero plus zero point zero zero zero something right it's a differentbusiness model so we can take a screenshot from this and say okay managing dissatisfaction havingdissatisfied customers who don't have other options like you know i live inswitzerland i i i'm banking with credits
with and i'm i feel like i'm the victimof managed to satisfaction i can't really do anything else butevery time i want to change something is not working why does it cost forty dollars to sendmoney to the us when you click on a button i don't know that's just that'sthe way it is right now that's just being average i canguarantee you if you're being average in the future you're dead there is no average and thatis going to be broken on you or exciting or something right
and that's really important so that'swhere the future will take us also because of the millennials and did youknow that seventy-five percent of the workforce in 10 years will be thecurrent millennials which are around 30 now and these people many of you aresome of you are millennials right they think differently they have higherexpectations they use technology they want to make a difference they're looking for all kinds of thingsso we have to keep that in mind especially business-to-business thatbecomes a reality that we have to face so that means we have to think hybridlee or you could say schizophrenic lee
in a way and we have to think of thebusiness of today which is not for the most part not that digital epic it's still fairly old fashioned theusing paper and and then we have to think of the business of tomorrow of thetwenty20 business which is digitally native and that's actually totallydifferent i mean if you sell records today itstwenty to twenty dollars a record if you sell a stream and spotify you just partof a pile of 20 million songs and somehow they have to live together soit's very important think about what is but also think aboutwhat might be cause that's my job so
it's easy for me to say but you knowthat the future clearly we know on this on this monththe future isn't going to be for our fields if in the oil business you're out of luckof that if that's what you're betting online it's totally obvious it's certainquestions just when some of our colleagues have said that this year willbe the first year or some of the oil companies will jump the ship torenewable energy so basically what we're seeing here isthat in this scenario everything and
everyone is moving into the cloud now this is a scary thought also becausethe cloud currently is an entirely secure and there is no real rule aboutit like who gets to administer the securityaccess and who holds the identities what laws are governing cyberspace right we have to solve those problems butbasically what happens here because everything is moving into the cloud databusiness intelligence analytics we have huge competitive advantage you will see companies that arecurrently employing a hundred thousand
people they were have 1,000 people infive years doing the same job if that's good or bad for employment idon't know you know this is just a question of using technology and thathas many consequences one of the consequences is that we canno longer live in a silo you can say well i'm the tech guy you guys are the marketing people youguys are the financial people and you guys are the er you know the advertisingguys or whatever right it's all together now best example is tesla mean that the carthe product is the marketing the product
of software so you can update it and nowthey're branching out into batteries and transportation they're leaving the silos i meancompared to bmw or audi and they're still very much solidly in the silo ofmaking cars and technology a tesla is not a car company in the technologycompany so thinking about that is basically gameover for the silos it's hard to realize this you know evenif you are an engineer or marketing person you're going to have to know someof the other neighboring areas to come up with new business models
marc andreessen said this in 2011software is eating the world everything that used to be hard stuff hardware is becoming software musicfilms books money driving cars education that's not to say that of course ineducation we will still have universities are hard things right buteverything is becoming software that changes the mechanics of things thatchanges how we do anything everything that can be digitized orautomated will be and then i'm not saying that because i want that tohappen now this is just the sort of a diagnosis right and what that means forus as we're going to have to think about
the consequences in it and how do wegenerate trust if things are digital it's actually pretty hard to generatetrust when it's not real time real place with people you cannot automate ordigitize trust we have to get that reminder we can destroy trust in adigital world we can do that can we generated we can maintain it robotic cars ships planes their firstdebate from airline saying that we should get rid of pilots this is serious right because it'spretty much proven to be safer without them
but who would want to fly in one withouta pilot robotic pets very popular in japan this thing and called the gebo theroads closed first family robot check it out onyoutube is quite scary this is all happening right now in real time what's happening also with computing isthat now computing is becoming ambient you know part of the environment wedon't even know that it's computing but it is it is actually predicting thingslike many apps that we have announced the prediction business anticipating our next move andgiving us a kind of super intelligence
i mean i i say prevent this is rightbecause there's no such thing as super intelligent so it just feels superintelligent i mean you can use an app for sentimentreporting and for analysis of analytics that does the same thing that your otherpeople have done with a staff of four hundred people now software does thismind-boggling changes predictive analytics this is the company funded by markzuckerberg from facebook and it's called bicurious and their headline is werebuilding software that things and learns like a human
are you want to scream in horror ordelight i don't know it's kind of like i call this hell then you know he'll inheaven we don't know which one is going to beequal that's becoming the default ibm watson you can watch the videos on youtubeartificial intelligence helping for example companies like johnson & johnson todevelop new products by analyzing hundreds of millions of data feeds andsocial commentary about products financial services are about to becomeautomated using what's called the robo
advisor charles schwab has the first one cameout three months ago we have a software giving you financial advice should checkit out i don't really know what to think of that but it's basically directionsand logistics right now we're looking at this basically saying logistics andshipping very time solutions sooner or later can probably be runlarger by robots and artificial intelligence that's something we have to look at whatthat means for society right but this is for certain we're living in this worldthis is a military term called luca and
volatility uncertainty complexity andambiguity and if you're reading this you can safely say well that is really whatmy everyday looks like rent and that's not going to change this is our realitybecause of the complete interdependence of things so as a response i'm working with manyof my clients on what i call flipping the vodka and do you have a response on this velocityspeed on orthodoxy think richard branson you think in the right direction collaboration and agility and if i speakin america always say awesomeness about
the agility is more powerful and but ifyou put this in front of your desk and said yes you know it's a tough place out therebecause everything is changing all the time you have to respond you have to befast you have to be unorthodox come up withnew ideas you have to collaborate because this is for certain in our ownwork kevin kelly from wired magazine saidmachines are for answers humans are four questions and i canguarantee you we cannot beat the machines for answers we we used to beable to for a while but in the future in
there in 20 27 we're going to see machines reaching thesame capacity than the human brain right now it's a capacity of a cricket the largest computer in 2055 computerscan match the incapacity of the entire mass of human brains on the globe interms of processing power and not really that right so that's very important forus to keep in mind that we are better for questions and we are for answerscause that also means we have to give the answers but basically that's kind ofwhere our future is going another very important thing is the duckand this is the focus on duck
you may remember in order as beingsomewhat close to the birthplace of philosophy here this is the cart and the card said thatessentially animals and then humans by extent by a extension are kind of likefancy machines and he actually said that animals are like an ultimate on like amachine and can't be described as a machine and and so this guy focus onbuilt in artificial duck that has got lost but there's many replicas so youcan feed this duck this mechanical doctrine and therefore to prove that allof biology is a machine now the problem is to this really i'multimately yes i think it's interesting
to see we have to be very careful abouttechnology should never trump humanity in business because when it does yourbusiness the clients right the business becomes the giant apparatus it doesn't create any values veryimportant to keep that in mind the future of business is awesomealgorithms and technology and what i call a uemura rhythm right a human senselike an algorithm i think this is going to be veryimportant for immediate future when you take the internet of things cisco says227 billion devices connected in roughly ten years and some people say that ciscois wrong with should be roughly about
one trillion connected devices trafficlights street sensors environmental sensors wrist watches everything think about that for a second when thathappens and this is already happening on what becomes the number one concern issafety security standards collaboration mean it's bad enough today if you canhack the internet and steal things from government agencies that but imagine thefuture if everything is network if your car is networked into the system it maylock you in and not leave you out of the next 14 days and turn the airconditioner 2-14 and i will be easy to do so it becomes a real number oneconcern i think ultimately also the idea
of privacy for example if we want to usethe internet but in return we lose every possible by to who we are and what wecan hide what mysteries we have what we discover you know what accidents have more lies are happeningthat would be a bad thing not that lies are a good thing but it'shuman right which you want your insurance to knowhow much you drank last night or if you drink how much you drove the car fast unso what we're going to eat here is kind of a social contract i think it's veryimportant for all of us to collaborate on the social contract because withoutthe social contract
there will be no security in using allof them it's not enough to invent technology wealso have to invent the social contract around it so we can actually live withit i think this is a mission for all of usto look into so when everything is connected that's my final point a shortsummary when everything is connected security standards ruled and enforcementbecome crucial in the end digital technology will be like nucleartechnology and has the power to really do great things but also has greattremendous destructive power so we have to collaborate on that as well in thelong run
so let me summarize digitaltransformation i think we're looking at roughly as mackenzie said at this 30 trillion dollar opportunity lots ofchange especially in the workplace and how we work and how we collaborate andso on but basically going back to my first line the changes were going to seein the next 20 years that we have kids right you're going to want to be part of thisbut even if you don't have kids you know unless you already 70 you may not get to see the live up to 2050 but humanity will change tremendously
and this is this the summer you digital transformation absolutelyeverywhere if you thought that you were savedyou're not right if you in the mining business or theinsurance business of the banking business the bankers thought they were safe untilthis year and i live in switzerland to where i know what that feels likeeverything that happens to music and films and publishing is going to happento us i just takes longer it's morecomplicated next . exponential
combinatorial interdependent right we'removing into a world of ecosystems in the connected world that has to collaborateour choice is not too hyper compete with the hyper collaborate and and sinceyou're here for two days i would urge you to hyper collaborator the only way to survive is to have tocollaborate because now with everything is interconnected digitizationoptimization intelligence and you - they are not actually oppositethey can come together very nicely hybrid thinking this is the hardest partdown if you're running companies and you're so busy you already stretched ahundred fifty percent right how are you
going to think about what might be why ican guarantee you if you don't think about what might be you don't get to live to see what mightbe that's mandatory now because we're moving so far as we don't have time tosit there and say well let's wait and see like we're doing like to do inswitzerland and flipping the vuca that's respond to this challenge oftransformation are being fast but being unorthodox coming up that he hascollaboration and agility so thanks very much for listening i wantto leave you with a final quote by ellen
k that's what i wish for you the bestway to predict the future is to create it thanks very much
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