In the industrial age, businesses grew large because services that were centralized were better. Railroads and electric power companies are two examples of industries where companies expanded to improve the services they delivered. The bigger they became the better they could service their markets.
In the paradigm shift that’s emerging in 2015-2020, technology is enabling de-centralization. Think how Tesla’s creation of a standalone battery to power a home or office, eliminates the need for an electric utility company. 3D printing, Internet of Things, smart watches and mobile technology are enabling people to de-couple from businesses. The implications for businesses today are vast.
In the Game Changers Radio series hosted by Bonnie D. Graham, Futurists Frank Diana, Gray Scott, and Timo Elliott discussed “Eating Disruption for Lunch: Digesting Decentralization“.
Below are some of the key notes from the show — and you can join us for part two of the show on August 5th, 11 AM EST, 5PM CET.
Frank Diana, Futurist, TCS
“The challenge is to rehearse the future and prepare for a range of possibilities” Fast Future Research
- The centralization so core to industrialized society is giving way to decentralization. Driven by enabling technologies like 3D Printing, the Internet of Things, and Renewable Energy, decentralization and democratization will drive a massive paradigm shift. This same decentralization rips at the foundation of our organizations, as centralized command and control structures give way to an enabled edge that is unencumbered by the legacy and culture of the core.
- Disruption on a massive scale is likely, and it will be continuous with no period of stabilization. This lack of stabilization makes this transformative period different from previous ones. The exponential progression of technology and science is at the heart of an emerging paradigm shift – but institutions and humans are linear entities: the shift is from linear to exponential. The characteristics required to survive in this exponential world are not part of the DNA of most institutions. This exponential progression spawns a mounting number of disruptive scenarios that collectively, even if they each play out 10%, are massively disruptive
- The challenge is to rehearse the future and prepare for a range of possibilities. It is critical for leaders to embrace scenario thinking. These scenarios create disruptive stress or disruptive opportunity – and organization viability is linked to how well they rehearse the future. Scenario thinking involves the analysis of scenarios to understand opportunities, risks, obstacles, accelerators and the identification of and experimentation with potential responses.
- In line with the notion of decentralization comes the shift from vertically oriented value chains to horizontal ecosystems. The connected car, the Smart Home, and Connected Healthcare, are all examples of this shift. This is another element of the paradigm shift, as firm-centric, me-oriented thinking must give way to we-oriented ecosystem thinking. However, thinking in the context of value creation and capture across an ecosystem of stakeholders is challenging, and fundamentally different than the current firm-level (business model) perspective.
- Famous economist Jeremy Rifkin believes we are moving closer to a Zero Marginal Cost society, where our current notion of work changes dramatically. Andrew McAfee in his work on the “The Second Machine Age” believes we are heading towards a world where people will no longer need to work. Even knowledge work, once believed to be something that only humans could do, will be automated in the future. Many like McAfee believe a Government-provided living wage is on the horizon.
- We are at the early stages of realizing a new general purpose technology platform that ushers in the most transformative period in history. General purpose technology platforms must have three components: energy, communications , transport and logistics. The last two general purpose technology platforms were: Industrial revolution One: energy (steam engine), communication (printing press), Transport (railroad); Industrial Revolution Two: energy (oil), communication (telephone), transport (car, highway). The emerging general purpose technology platforms is: energy (renewable), communications (internet), transport and logistics (IoT, 3D printing, autonomous vehicles, etc.).
- The law of disruption states that while technology progresses exponentially, businesses change incrementally. This creates a gap for killer apps that the market rushes to fill. This gap is getting wider, and the opportunity for low cost new competitors and market entrants is growing. Incremental business change is no longer sufficient.
“Nothing comes unannounced, but many can miss the announcement.” — Terence McKenna
- The future will be automated, decentralized, digitized and eventually simulated. By 2035, our homes, cars, and most of our jobs will be automated. Automation will decentralize and disrupt almost every industry.
- The world economy will face a new future filled with 3D printers, personal Artificially Intelligent (AI) assistants, and digital real-time healthcare applications that we can access on our personal smart devices.
- Right now, we have a Star Wars economy. An economy based on scarcity, paywalls and resource hoarding. However, innovations in technologies like automation and 3D printing could create an economy more like Star Trek, enabling us to explore our creativity and our dreams.
- Decentralization will enable the individual to produce the products they need or desire in the near future. The true age of decentralization will begin when 3D printers that can print other 3D printers become ubiquitous. In the future the consumer is also the manufacturer. 3D printers can print circuit boards, fabric for clothing and chocolate. What more do you need?
- The idea of the corporation may no longer be necessary in the future. Raw materials will be the new big business. We may not need factories and megastores in the future but we will still need raw materials for the individual.
“Status Quo is, you know, Latin for “the mess we’re in.” — Ronald Reagan
- Disruption can be very painful if you’re not the one doing the disrupting. The ability to disrupt and absorb the blow of being disrupted becomes an essential core competence for organizations in the future.
- Decentralization means new competitors, well outside traditional industry boundaries. For example, Tesla is a car company that has just introduced home batter solutions that will take revenue away from electricity companies. And the latest competition to car companies is a software company: Google, that announced they’ll be selling their own self-driving cars. And a software company is taking on the banks — Facebook launched the ability to easily send money to another user, taking away a lucrative niche from traditional institutions.
- Disruption has to be a core competence. To be game changing, you have to figure out what game you’re playing — go back to the core of the job customers are trying to do when they purchase your product.
- One of the best ways to deal with disruption is to constantly do what you would if you were just starting out. A lot of the pain of disruption is psychological. It’s not who you are that holds you back, it’s who you think you aren’t…
- Companies need to stop focusing energy on fighting the old, and instead nurturing the new. This is painful, because it means threatening your existing product lines. Few things guarantee failure faster than the safe option — by definition, breakthrough products disrupt current lines of business.
- Decentralization applies to companies, too — business departments are now more empowered than in the past. Marketing departments now spend more on IT than the IT department.
- The old centralized command-and-control organizational style doesn’t work anymore. There’s a lot of tension between the center and the edges — we need new ways of organizing…
- There’s a huge opportunity to disrupt with new business models. Famously, people don’t buy quarter-inch drill bits, they buy quarter-inch holes. Now the opportunity is to use all these great new technologies to sell them “quarter-inch holes as a service”
- Decentralization has a lot of benefits — but some real costs. There’s a lot of needless duplication, and it can make it very hard to do things that are good for everybody, like have defined standards that permit interoperability. For example, some form of central control becomes more important than ever.