What World Are You Living In?
How we have gone from connected to hyper-connected and from interconnected to interdependent. An address by Thomas L. Friedman.
We built this conference as a platform to share with you how I try to approach the world, which is really to synthesize technology, business, geopolitics, education, because they’re all really one story, and you can’t separate them out.
What do we meant “next new world?”
I think that what historians will look back on and say, is that the biggest thing to happen, at the dawn of the 21st century, the thing that affected more things than any other thing was the merger of globalization and the IT revolution; how more and more IT drove more and more globalization, and the fusion of globalization drove the deployment of more and more IT. That really is the core thesis of my work and the conference today.
What has struck me, is that nobody is really talking about it. This huge inflection, this merger of globalization and IT, has been disguised by the subprime crisis and post-9/11. No one at the political level is really talking about it and helping us navigate it in our jobs, our lives, our businesses. That is what I hope to do today.
The hyper connecting of the world is changing everything.
While I had been off covering 9/11, I had completely missed something fundamental.
The global economic playing field is being leveled and you Americans are not ready.
What he’s really saying is that the global economic playing field is being flattened. I wrote The World is Flat which made two core arguments.
One, the thing that changed, for centuries, to act globally, you had to go through a country. For a couple hundred years with growth, to act globally you needed a company. Now, you could act globally as an individual. That’s the big change. That’s true in business, in gaming, and unfortunately in warfare.
What caused it? I argued four things: 1) The personal computer, which gave people the ability to author their own content in digital form. 2) The internet, which gave people the ability to send their content, virtually for free. 3) Workflow software allowed content to flow between platforms allowing collaboration. 4) Google and search allowed people to search content quickly and simply, much more efficiently.
All of this came out around the turn of the century. The book came out in 2004.
In 2011, I co-authored, That Used To Be Us. I pulled The World Is Flat off the shelf and discovered that in 2004, Facebook didn’t exist, Twitter was still a sound, the Cloud was still in the sky, 4G was a parking place, LinkedIn was a prison, for most people applications were what you sent to colleges, big data was a rap star, and Skype was a typo. All of that changed after I wrote The World Is Flat. Something really big just happened again. We just went from connected to hyper-connected. We went from the personal computer to the handheld device, tablet, and thanks to the cloud, everyone now had access for pennies, to summon the most powerful computing tools available. Now with mobile, I could not only access information from more places, but I can upload/send from any place. We are headed to a point of the Internet of all things.
Something really big has happened. We’ve gone from connected to hyperconnected which is a difference of degree that is a difference in kind.
So what does all this mean?
I would argue that what it means, for the workplace and education is this: If the whole world were a single math class, the whole global curve just rose, because every entrepreneur, innovator, manager, boss, today has cheaper, easier access above average, software, talent, robotics, labor and genius. What we’re struggling with in our society and families is a big change, which I describe as, “average is officially over”. Robotics and software can do all the average now, that it’s raising the level of white and blue collar jobs at the same time.
There is a saying, “If all you ever do, is all you’ve ever done, all you’ll ever get is all you’ve ever got.” That is no longer applicable. That is not true anymore. If all you ever do is all you’ve ever done, all you’ll ever get is NOT all you’ve ever got. What you’ll get is below average.
So, what is basically going on?
Think about the three labor force. Top tier, non routine, people who do critical thinking and problem solving that can’t be reduced to an algorithm and thus easily outsourced, automated or digitized, (scientist, artist, engineer, journalist, computer programmer, doctor, lawyer, accountant.) Second tier is routine work, any work that can be easily outsourced digitized, automated, etc. We all know that the routine work is being crushed, and the stack is moving up. The third tier was non routine and local, (butcher, baker, candlestick maker, massage therapist, divorce lawyer, etc.) The wages of this work is dependent upon how many knowledge workers you have. We all want to be non routine. I would argue that hyper connectivity is causing all non routine workers to raise their game, to define and nurture what I can only call something extra, some unique value contribution that basically justifies why they should be hired and promoted. My shorthand for it is that you have to be a “creative non routine” now, in whatever you do. You’re no longer safe. You’re not just a lawyer, you have to be a creative lawyer, and everyone’s extra is going to be different.
What is that unique value contribution that I can make?
I would argue that basically what is happening today is that all jobs these days are being pulled in three directions at once. UP, requiring more skill to do, OUT, robots and software can now do it, DOWN, being outsourced to the past, jobs are becoming obsolete.
The middle class was built upon high wage, middle skilled job. I would argue that in today’s world there is no high wage middle skilled job. There is now only high wage high skill jobs. I believe that is the central education and labor skill challenge that we’re dealing with today.
We have a huge educational challenge before us.
We need to bring our bottom to our average so must faster than ever before. And we need to bring our average to the global heights faster, so that we can bring more people who are bringing that extra to whatever it is they’re doing. Our job is not to have our kids graduate high school college ready, but innovation ready. They’ll need to learn how to invent their job.
How do we adapt to this world?
- Think like a new immigrant. There is no legacy spot waiting for me. I better figure out what’s going on, and pursue opportunities more energetically, persistently, consistently and creatively than anybody else. Immigrants are “paranoid optimists.” They’re optimists because they’re in a better place, but they always think it could be taken away from them in a flash. Stay hungry. I think we’re all new immigrants to the hyper-connected world.
- Think like an artisan. Artisans bring extra to their work, take pride in their work, and carve their initials into their work. Bring so much extra to your work that you’ll want to carve your initials into it.
- Always be in beta. You’re always only about 80-90% done. Throw it over the wall, let the community find holes and throw it back to you, and repeat the process. If you ever think you’re finished, you’re probably finished. Always think of yourself as a work in progress. The new literacy is not reading and writing, it’s the ability and desire to keep learning and relearning (Alvin Toffler)
- It’s a 401(k) world. We are in a world less of defined benefits, but more of defined contributions in whatever you do. The big divide is no longer just a digital divide, it’s a motivational divide. Who has the motivation to take advantage of the tools that are out there?
- Think like a waitress at Perkins Pancake House. “I gave you extra fruit.” The waitress gave extra fruit. She was being entrepreneurial. Be relentlessly resourceful. Be relentlessly entrepreneurial to start or find a new business or opportunity.
So what does this mean for government policy?
- We need to extend and take care of our safety nets; social security, health care. I fear a lot more people need them, and for the social stability of our country, we need to take them very seriously.
- We need to invest in yourself. No one tells you how to do that. That is going to be the most important task.
- We have tried to take risk taking out of capitalism. It’s important to take recklessness out. There is a fine line, but risk taking is fundamental to entrepreneurial capitalism. We must invent our way out of this crisis. What we need is four inventing jobs for twenty, ten inventing jobs for fifty… Let’s restore risk taking back to capitalism, without giving way to recklessness.
I’ve often been critical of the Obama Administration for not having a narrative. If I could write a vision for the President, it would be very simple. I want America to be in this decade what Cape Canaveral was in the sixties. That was America’s one great moon shot. I want America to be the platform where everyone in the world wants to have their moonshot; because we have the best laws for business formation, because we have the most open immigration policy, because we have the best health care, because we have the best primary and secondary education, because have the best higher education, because we have the smartest infrastructure, and we have the most aggressive government funded research. That’s our role. That’s what ties together everything Obama has been trying to do, but has never been able to explain.
That’s what I think is the next new world that is coming, and now I invite you to join our discussion about the details.
What Happened to Power?
A conversation between Thomas L. Friedman and Moisés Naím, author of the new book, “The End of Power.”
We all know that power is shifting. But power is also decaying; it is easier to acquire, harder to use, and more fleeting. People in power stay there over less time. This is true in business, religion, sports, science, war, philanthropy.
Why? Is it related to hyper-connected world?
Absolutely. But it’s not the only thing. We are now more than ever. We are now at 7 billion people. It took humanity until 1950 to get to the 2 billion mark. Now we’re at 7. We increase 2 billion every two decades. But also, the world economy doubled. We are twice what we were in 2000, despite the crisis. 125 people per day are have been lifted out of poverty during this decade. 36 countries, once called “poor” by the world bank, are now called “middle-income.” So we are living in a world of hyper-connected profusion. 2007, we have more people in cities than in farms. We have the youngest planet ever, in terms of average age. Then add the fact that they all move. Two years ago, tourism reached the one billion mark. 37% more people than a decade ago are moving from one country to another.
Why does this mean that businesses, leaders, have less power?
In order to have power, you need to have shields from rivals and competitors. You have to have barriers. The more revolution is overwhelming these barriers, challenging the incumbants, and the mobility revolution gives people the opportunity to circumvent the barriers, and the changes in mentality are undermining the barriers. Take nothing for granted. The notion that things have to be done a certain way because they have always been that way is something that you cannot tell your children and mine, employees, and voters. This is a world full of possibilities and opportunities, of people that use to be excluded, but now have a shot; new activists, new columnists, new everything.
These technologies need users, and these users need direction and motivation. It’s very important to look at what motivates people who embrace social media.
So, what does it mean to be a boss, head of a hospital, newspaper…leader?
Be very humble because you may not be there very long, and careful, because there are a lot of people waiting to take you down. Your competitors will not come from where you’re looking. The second thing is a bit paradoxical. Be careful with being too good at what you do. To be good today, you need to be obsessive. But that creates blind spots; it doesn’t nurture your peripheral vision. It’s very interesting to see very successful people not paying attention to their surroundings.
Imagine coming to the NYTimes and saying, “There’s this guy named Craig. And he has a list. And he’s going to destory your business model.” You better start doing events, because classifieds are going away. This would have been unimaginable.
For people in education, study what happened to the NYTimes, because what happened to them is going to happen to you, if you think that MOOCs [Massively Open Online Courses] are going to go away.
What do successful leaders do? Because we still need leaders.
Carlson’s law: Everything top down is dumb and slow. Everything bottom up is smart but chaotic. So the sweet spot for innovation is moving down, but it’s not all the way down. The role of the leader is to nurture and inspire all that stuff that can come up from these more amplified individuals, edit, and direct it in some way.
A lot of these movements have a lot of energy, but no traction, no connection to the wheels. A lot of these movements are good at disrupting, but they’re not that good at governing. A lot are single issue, or about an undefined grievance, which are valid, but are very hard to convert into an action or a political movement. That’s what I think we need to bring political parties back into the conversation.
The illusion that we can have democracy via internet, or via non-governmental organizations is an illusion. We need political parties that have opinions about exchange rates, and kindergarten information, managing agriculture, and technologies. And only political parties do that. The same people that want to change the world want nothing to do with political parties, and that, we need to change.
When everyone has this much power, do we run the risk of the most popular political system in the world becoming vetocracy, not democracy.
Yes, and that’s the danger. In this world in which power is decaying, harder to get, easier to use, and easier to lose, there’s a lot to celebrate, there is a danger that you just pointed out. Vetocracies are good because you have a lot of stake-holders. The bad news is that each of them has enough power to block everyone else, and no one has sufficient power to push through an agenda, a vision, or a strategy.
We see it in Congress in the US, in which you have a profusion of actors, each one following one specific goal, sub-optimizing the totality. And this is a global trend. The political system, democracies around the world are becoming Italian, in which gridlock and stalemate, and vetocracy, in which a lot of individuals or groups can block the game, and that is where we need to unblock it.
How do you lead in this world? And, who is doing it well?
We are seeing a lot of good news and innovation in cities. The successful bosses are those who are very capable, but are able to look around.
You need a more collective collaborative style, but need to also be able to make a decision.
Be careful with the obsession with scale. Large size these days may not yield as much benefits as in the past.
Social Skills: Building a Better Robot
Dr. Cynthia Breazeal, personal robots group at the M.I.T. Media Lab, discusses the future of social robotics and human-robot interaction with Thomas L. Friedman.
What does the robot, Baxter, tell us about robotics?
We’ve been working on manipulation, dexterity, mobility, navigation, but the new new things is how it relates, collaborates with you, not just as a tool, but as a partner. You can train a robot to do a new task which empowers a whole new set of people to amplify their output. And then, to be able to work shoulder-to-shoulder, side-by-side. And then the price point. This is not the replacement, but the amplification of people’s capabilities; amplified individuals. For me, that is a more enlightened view of automation. It’s not about replacing but extending people’s capabilities.
What are the breakthroughs that allowed us to get here?
Part of it was just a shift in thinking. We’ve been so focused on the physical properties of these machines, but we haven’t thought about them in relationship with us, to live with them, to have them in our human environments. So, anyone can really use this? What is that new paradigm in which anyone and everyone could interact with them and engage with them in your lives?
As we’ve been thinking about re-conceptualizing this interaction paradigm, what is the way we would want to interact with this machine that sort of triggers these perceptions of animacy that both consciously and subconsciously we don’t think of it like a thing that is governed by the laws of physics, we think of it as a social entity whose behavior is governed by having a mind. So, autonomous robots tap into our social brain. When we think about that, this notion of this aliveness of this entity, and social interpersonal interaction is something we all already know how to do, if we could redefine an interface that leverages and appreciates that this is how people psychologically make sense of these entities, how do we support that.
So, what does that mean for the worker?
The real opportunity here is thinking about how people make decisions, how they behave, it’s not just about information, which is what computers have excelled at, but the social, emotional matters to us. How do you design robots that support the whole person, and not just the cognitive processing part. When you get down to behavior, the ability to learn better, manage your health better, the ability to take actions that lead to a better quality of life, those are deeply tied to how humans think and behave. The advantage of this technology is that it supports us in this way. The ability for a machine to sense your emotions, to sense your social cues, to in some sense encode this social cue into the device to form rapport, a working alliance, that we know is highly correlated to positive outcomes in people.
We’ll be able to do that?
There are research labs already developing robots that can do this. I think the benefit is bringing the promise of personalized education into the home that supplements and extends the education you get from trained professionals, from teachers — again, which is not about replacing them at all — it’s really about democratizing, I would say, that access to high quality education in a way in which the machine can learn about you, your learning style, have a sense of what you understand, what you don’t understand, understand when you’re confused, to scale that content, that’s a personal amplifier that is so critical.
So what do you think the factory, or office will look like in the future, knowing what robotics looks like today?
This technology transcends to the social and emotional which can optimize human outcomes. You’re going to be able to supplement human professionals, extending the service to the home. The amplification of access is not that you have to go there, but the access can be with you where you are. Beyond screens, it impacts in ways with more powerful outcomes. That’s the huge thing that’s exciting.
Blue collar worker who is terrified of this?
I tend to think of the applications for this, one of the huge opportunities, is helping people acquire these new skills. People are fearing this technology now because it is this sort of hypothetical thing that they haven’t really engaged with it. The thing that’s really intriguing about these social robots is that we apply social psychology to it, so that it’s sort of like interacting with a person. But it also takes on the properties of companion animals. So, you see this thing that is non-judgmental, ever patient, ever attentive, it’s your supportive side-kick that is really there for you. It’s really there and devoted to you. If they had this experience, people would have a very different sense of it. I’m here to help you achieve your goals. Again, this is about a human amplifier; a technology that can amplify human potential, in a scalable and affordable way. Because people are a very precious resource, so if you can somehow extend those services in a tangible way, amplifying individuals, to meet demands, that’s the huge opportunity for this technology. It’s like a new kind of platform, beyond screens that is more impactful.
Are wars going to be fought by robots?
We have a human responsibility to each other. These life and death life-cycles in situations, humans always need to be a part of the decision making process. To separate yourself from these very critical things, the fabric of society, we need to have skin in the game, personally viscerally invested. I would be concerned if it becomes too easy, and too detached.
What should educators know? How fast is this going to be upon us?
Educators provide, always, a critical service. Human connection, personal connection, which is absolutely essential. You can’t be with your students all the time. Imagine a technology that can be with them, more accessible, in which what they do at home can be reinforced by the technology. Whether the entity knows the child, or whether it’s also a technology that mediates other people providing services through it, we’re going to see a lot of innovation in that space. The point is, it’s all about meeting the needs of individuals. We’re going from broadcast, to deep models of innovation tailored to that individual, at that moment in time to give them the maximal impact.
It’s about amplification, not substitution.It’s about deep personalization and ready access to it.
So, whenever I write about these things, comments about Huxley, Brave New World… What worries you about this?
I think the worry is that technologies are transcending the world of information into the personal realm. What does it mean that non-human entities are taking on these human properties.
These things don’t have to be human. They simply need to encode human properties that support positive outcomes. I don’t think people are going to be confused that this is another person.
In terms of what to worry about, what happens if it’s, not inadequate, but it’s so fantastic that people prefer this sort of thing over people. That’s why this dialogue is so critical. Humans have to be a part of the fabric of all of this.
Are Chinese robots going to be different from American robots?
Yes. There are underlying values that are different from culture to culture. How they’re expressed and designed will be different. But, like C3PO, you can have multicultural robots.
People see this as a labor device. I see this as a technology for personal transformation. It’s all about human amplification, and the democratization to access to opportunity and quality of life.
How the Digital Revolution Is Accelerating Everything
A conversation with Erik Brynjolfsson and Andrew McAfee of M.I.T.’s Center for Digital Business, and co-authors of “Race Against the Machine”. Conducted by Thomas L. Friedman.
Core thesis: Technology is racing ahead, but at the same time, a lot of people are being left behind. Wealth creation and the number of people being left behind can be explained by the underlying changes in technology.
The world is also becoming more “tractable,” which is a Geek term for “can you make progress on really tough problems?” For decades, robotics, technology, etc., was making very slow progress, incremental. Recently, this has accelerated. So, why? Combination of three things: 1) Computers are obscenely powerful and cheap. We can think of Moore’s law as a “drum beat” in the background of the economy. 2) The world of big data. To give you some idea of how much data there is out there, we are now in the zettabyte era, 10 to 21. We are about to run out of metrics. 10 to 24 is yottabyte . We are getting to that point of data, outstripping everyone’s expectations. [BTW, after yottabyte is a brontabyte, 10 to 27.] 3) Brilliant Geeks who are using the data and computational power, to make progress.
For so many years, three things grew together. Talk about that, and where we have now seen this disjunction.
So what Andy and I call the “great decoupling,” is the fact that it use to be that productivity was growing, and if we took care of that, then right along with it would go jobs and median income. I use to give talks on this, if we could just take care of the productivity problem, then everything would take care of itself. It’s a rising tide that lifts all boats. And for most of the 20th century, that is what happened. Starting in the late 1990s, those lines started diverging quite dramatically. For the past 15 years, job creation has been flat, median income has been falling, but productivity has grown as fast or faster than ever before. It’s the dirty secret of economics that there are no economic laws that say that technology needs to benefit everyone. It appears that those lines have really diverged. The biggest single driver is the new nature of technology.
We really find ourselves in this Charles Dickens economy, “It is the best of times and the worst of times.” When you look at productivity and output, it’s the best of times. When we look at wages, workforce, they’re either tailing off, or actively heading in the wrong direction.
In other words, our stubborn unemployment issue is not just a demand issue?
Yes. Demand is good, and we could increase demand, people would go back to work. But what hasn’t gotten attention is this relentless astonishing technological progress. We think this is going to be a bigger deal going forward. We think that outsourcing is a way-station to automation.
There are headwinds that are slowing us down. But we just see an amazing set of technologies in the pipeline that are as big or bigger than anything in the past.
Productivity and GDP are not welfare measures. It’s entirely possible for productivity and GDP to go up and people to be worse off, or vice versa. E.g., Wikipedia displacing Encarta and Encyclopedia Britannica, GDP went down, but having free stuff is good and we’re more informed.. E.g, iTunes; the music industry is shrinking, but I’m listening to more and better music.
What about blue- and white-collar jobs? What do we as a society say?
Any response needs to be thoughtful and delicate because they’re in a tough place. I would emphasize a couple points. First, it’s a huge mistake to think of technology as a force against humanity, or a force against the worker. Technology is bringing astonishing things to our lives, whether or not you have a job, you have access to information and other human beings unparalleled in human history. If you get sick, you have access to medical advances. Second, it’s not the case that technology is taking work out of the economy, it’s also putting work back in. And I don’t just mean jobs for data, Google, etc., technology is providing work opportunities for the median worker. If they can rent out their spare room (Air BNB), offer skills (Task Rabbit), and others. Now, it is important to not make too much out of this, as it’s providing supplemental income, not replacement. But it is offering more and more opportunities.
I agree with what Andy said, but there are people that are suffering. They’re legitimately upset, because if you look at the data, the median worker is doing worse. Technology doesn’t automatically help everybody. There are three sets of winners and users. While the pie is getting bigger, some people are falling further behind and getting a shrinking piece of the pie. Specifically, “skilled biased technical change” which means people with different skill levels are benefiting differently. If you only have a high school education, your wage is falling rapidly than those with higher education, relative to where they were a generation ago. Employment rates are falling too. Second, “capital biased technical change,” technology that benefits capital owners at the expense of people who provide labor. Third, “talent/luck biased technical change,” that there are a few superstars that are able to take their insights, ideas, and if they can reduce it to an algorithm, then you can replicate that (e.g. pop music and entertainment, turbo tax), thus 17% less tax preparers, simply because we’re able to codify the work, digitize it, and disseminate it. The people who do the best versions, it’s a winner takes all market. This is the 1% of the 1%, who have a hugely increasing share of the GDP income. All three of those are happening at the same time, all pointing to more wealth, but a reallocation of wealth.
Is there a skills gap?
Certainly the recession is real, but the bigger force, over 15-20 years, is the technological change. If you look at high school, college, post-college, they all went up together, until the 70s, when they all went down together. Since then, there’s a huge fanning out, a huge divergence. The data is unequivocal. There is no question that there is a skills gap.
What are robots still lousy at?
Ideation. Entrepreneurship. Innovation. They’re still answer technologies, not questioning technologies…yet.
The other area is the other end of the wage/skill spectrum, which is vision, fine motor control; artisan work.
Walter Russel Mead suggested we’ve moved from men and women working with land, to men and women working with machines, to men and women now working with other men and women. Is that right?
It’s at least partially right. If you are a gifted sales person, you have a safe career for a long time. If you are really good at one-on-one, or a team manager, that’s a resilient set of skills.
It’s not just IQ but it’s EQ. I would say that’s a frontier for the future, but it’s not here yet.
What do we tell our kids about how to prepare for this world?
It’s the end of average. You have to excel in some area, creativity, entrepreneurship, that will benefit individuals, but also society. We need to invent new industries. We’re not doing that fast enough. Entrepreneurship is down. If you can identify where people can race with machines instead of against machines. Robots are designed to work alongside people. There is a cognitive bias, to look at existing tasks and jobs and think, How can I automate that? and we need to break out of that and think, What are the new tasks and jobs that haven’t been created yet?
What does it mean for education and what should the government be doing? We teach our fighter pilots the OODA loop (Observe, Orient, Decide, Act). What is troubling me, is that our national OODA loop is completely discombobulated.
Teach that the world is a very interesting place, and you should go explore it. As for government, EIEIO: Educational Reform, Immigration Reform, Entrepreneurship, Infrastructure, Original Research.
What You Don’t Know Is Coming
A discussion about the technology just around the corner with reporters from The New York Times Bits blog: Nick Bilton, Quentin Hardy, David Streitfeld, Nicole Perlroth and Claire Cain Miller. Moderated by John Markoff.
NICK: Ingestible technologies. Take this pill and it will email me in the morning. Or, RFID chips that you swallow that connect with your vehicle.
CLAIRE: I work with Google. Predictive search, giving you information before you tell your device, or before you are even aware you need it. Google thinks that it can figure out what you need to know before you even know it. Expect Labs has created Mind Meld, an app that listens in to your conversation and sends you relevant information while you converse.
QUENTIN: We know that we will have an infinite amounts of storage and bandwidth. How does that play out? GE announced a database to analyze industrial objects. We are moving to seeing entire ecosystems of behavior. Also, on Sunday, Intel and the Chinese Defense National University, produced the world’s fastest computer, 54 petaflops, which is 1000 trillion instructions per second. In the benchmarking, they included big business data. Supercomputers are moving into business, they will be attached to the cloud, and they will be used as consumer devices to some extent as well.
NICOLE: While I think PRISM is interesting, what I think is more interesting is Zero-Day Exploits (ZDE), previously undiscovered vulnerabilities in security software. If you have a ZDE, you can get into someone’s computer, spy on them unnoticed until discovered, or be used by the Israeli Government to hack into Iranian computers and destroy a fifth of their uranium supply. Hackers once used them for street cred. These days they’re being sold for millions of dollars to the US government, European government agencies, Iran, China, companies, and this is all happening everyday. Just yesterday, Microsoft said they would pay up to $250k for computer bugs. The debate will be interesting because, how can this be legal? The second you make it illegal in the United States, it goes dark somewhere else, and turns into something like the drug market.
DAVID: There is a push-back coming to the new technology, out of Europe, the sister-city of Palo Alto, Brussels, where a lot of policy is decided. In Europe, they have a much more hesitant embrace of technology than here. They have questions about what is going on that we don’t. In effect, I think Europe will be deciding how people control data for the next several years.
Baby-Boomers care about privacy, but these younger generations don’t care as much. Has there been a shift back in the way younger people are looking at privacy?
NICK: I think it’s everyone.
QUENTIN: I think because of technology we’ve had a kind of deviance-inflation, in the last 10-15 years. It’s harder to shock people because information is so public. Bill Clinton said he didn’t inhale, George Bush said he shrugged it off but everyone knew he used, Barack Obama said I snorted coke, and no one really cared. People have become accustomed to a certain level of deviant behavior that hasn’t existed before, and that may be part of it. What’s interesting too, is you’ve created a kind of market where actually losing something, not having it encoded, is a scarce value, in a world where everything is recorded, creating a business where everything is erased turns out to be a business.
DAVID: I do know a lot of people who are happy to be in the rear-guard. They’re not on Facebook, and not embracing the new technologies, and there are more of them than you think. How Silicon Valley reacts will be interesting.
NICK: Young people understand privacy more than we give them credit for. There’s definitely a societal change. Society is growing up.
NICOLE: I think we’re bringing security into awareness, and in the future, only the wealthiest or most educated people can stay private. Now, you have to pay reputation.com, and only US and China and Russia are the only countries able to pull of cyber-attacks.
Disruptors? What’s the next choke point, and what Google won’t get because they’re so ingrained in search?
CLAIRE: Inside Google, the mortal fear is not to become the next Microsoft. They were once the new kid, but now there are new kids showing up, and they’re terrified of that. Google is not being disrupted much, but the percentage of searches that go through general searches have declined for the first time ever, and the percentage of ad dollars that go to search have declined in the first time ever. They are small declines, but they’re indicating something bigger, there is disruption going on. I think a lot of it has to do with consumer behavior. If you want to go to a restaurant, you can go to Google, or you can go to Yelp or OpenTable. Same with weather. Same with shopping. People also want more specific things. According to Google’s estimate, there are 30 trillion URLs. A few years ago, there were 5 trillion. If you search at Google, you’re going to get a lot of things you don’t want to see. If you go to Amazon.com, Pinterest, etc., you’re going to get exactly what you want; they’ve curated it.
So who is the biggest disruptor for Google?
CLAIRE: At this current moment, it’s Amazon.com. People don’t think of Amazon.com and Google as competitors, but most of Google’s ads are shopping ads. Now, more people go to search for shopping on Amazon.com, than on Google. And that’s a lot of money lost for Google.
QUENTIN: People think of Google as in search technology. But Google, and much of the web is based on an ad model that may not be true in 5-10 years. It may be micropayments, etc. may be more profitable, in which Google ads are less valuable.
Will Yahoo! survive? Will Apple survive?
QUENTIN: Companies are hard to kill.
NICK: There are a tremendous amount of organizations going on in the company (Apple). They’re working on a wearable watch. Now they’re trying to segment into other markets. The difference between Jobs and Cook, is that Jobs was willing to kill profitable parts of the company, and Cook hasn’t demonstrated the willingness to do that yet.
NICOLE: I cover Yahoo! too, and it makes my life incredibly depressing. I think Mayer is trying to turn it around; Tumblr acquisition, which I thought was smart. This is a “sticky” site, people stay on it. I’m curious how they’re going to make money, and what the next acquisition is going to be. Right now they’re focused on product.
QUENTIN: They’re hiring a lot of designers.
What about transportation technologies; e.g., Uber, Sidecar, Lift, Freewheel… Do you use them? Is it going to make a difference?
QUENTIN: I think they’re all an interesting subset of what’s going on. Virtualization is taking one server and having it do the work of several.
NICK: Instagram announced that they’re going to do 15s videos. Vine does 6s videos. And now there’s a market for 10.5s videos. What happens in the Valley, is that there is one success and everyone rushes to emulate it. I think you’re reaching a gluttonous market in all of these markets. That’s a bad sign.
Is the Valley over?
QUENTIN: The consumer web in the last 10 years, Google and Yahoo!, pretty much created the big data business by created data architectures and software, they kick started the cloud software, 3D printing, Nest, etc. The internet which was largely created here is blowing out in to the physical world which is going to be a much bigger change.
Would major platforms emerge somewhere else, other than Silicon Valley?
NICK: There will be some. Privacy? We don’t think people care about it. Europe does think people care about it. The problem with the Valley is that it builds things for the Valley. E.g., “Twist,” and app that tells people you’re running late. Who outside of the Valley wants that? If the Valley continues to build things for the Valley, then there will be other markets, other products, etc.
NICOLE: I would love to hear more about what’s going on in biotech, health IT, and people just are not talking about those in Silicon Valley, primarily because those are not the areas that are getting money for Venture Capitalists.
Grand Strategy for a Sustainable Future
Patrick C. Doherty, director of the Smart Strategy Initiative, the New America Foundation and Mark Mykleby, senior fellow at the New America Foundation concentrating on grand strategy and sustainability. With Thomas L. Friedman.
What would a grand strategy for the United States look like? So, at the Pentagon, we first recognized, quite frankly, the last thing America needs is a strategy. What America needs is a story, a narrative. Not about our past, but more specifically about our current position, and even more importantly, what our future possibilities are. We recognized that almost all of the current strategies are founded on threat and risk, very few if any of them talk about opportunity. And we are the land of opportunity, not the land of threat and risk. And we wanted to focus on what America could be, and in order to do that with a little bit of emotional and intellectual honesty, we needed to talk about where we currently are, and where we could go. Threat and risk strategies are focused on all of the conflicting interests in the world. We wanted to focus on the converging interests and where that beautiful opportunity space is. If you really start considering the world, not in the framework of containment, which really was a control strategy that leverages force and power, but if we could shed that and map to our 21st century reality, which is interdependent, then we find where our interests converge. The world is not a closed system you can control. It’s really an open system that acts like a strategic ecology. In that ecology, the central idea is *not* can we be the best competitor, but can we become the best organism in this new ecology. Can we build our own strength to have credibility and influence in the world based on our own actions, so we can pursue our enduring interests of prosperity and security. The old frameworks of the cold war are putting us in a position right now where we’re expending our prosperity in pursuit of security which, I would say is an illusory condition of security as defined by our 20th century past, not our 21st century reality.
So, what would replace containment? Sustainability. This maps directly to our enduring interests of prosperity and security because the ecological definition of sustainability is an organism’s ability to remain diverse, and productive over time, diversity, depth, redundancy, resilience. We have to be more resilient in this world. But we also have to take a hopeful, productive path in the future, but it can’t be quantitative in nature because we live in a resourced constrained environment. We have to start thinking about qualitative growth.
Sustainability is a hard sell. If you name it, you own it. What kind of push back did you get?
Not so much push back, but surprise. As a great power, why do you have to have a threat to define yourself when really it should be your own interests? We approached sustainability from a science base; it’s math. We live in a resource constrained environment.
At the end of the day as military officers, by oath and by conviction, we don’t subscribe to either aisle of the political spectrum. Our duty is to solve the problem. Figure out the problem set. Well, we went to solve a problem, and the answer wasn’t military. It wasn’t power structures of the 20th century. The answer was, How are we going to be the best competitor and the strongest organism in a global ecology?
What is our biggest challenge in which we need a grand strategy to answer?
There are four dimensions to the sustainability challenge. 1) Economic inclusion. We have 3 billion people coming to the global middle class. Over the last 20 years, we brought 1 billion people in to the middle class. 2) The green dimension of sustainability. Climate change, plus the destruction of natural capital and ecosystems. The caring capacity of the planet is going down and creating all this disruption. 3) Contained depression. We’re not in a standard business cycle downturn. We’re in a de-leveraging event. Our economy is not healthy.
How do we get this into the mouth and minds of our leaders, and what is the Ask?
4) Resilience deficit systems and supply chains are fragile. Those four problems, Inclusion, Depletion, Depression, Resilience, are now functionally coupled. If you want to solve for one, and not just the symptoms, you have to go through the rest.
When countries come out of depression, it’s because a new demand has been found.
Grand strategy is fundamentally the operating system of the country. And we’re working with an operating system that was developed in the forties and fifties. We have not adapted that operating system fundamentally, since then. And we are running all these apps on top of this; all your firms are running on top of it, social security, etc., and it’s not working so well because the fundamental landscape has changed.
You had real live experience trying to sell this grand strategy within an administration. Show us the scars, and tell us what you learned about taking these ideas which you have nurtured, and how hard it is to translate it into politics.
I really thought we were at a historical point, in 2009 with leadership that bought into it, we had the mechanics, and the administration liked each other. But it’s the private sector which must step into this space and lead. This is an issue of leadership. I believe we have public servants who care, but they’re stuck in a system that won’t allow them to act…
Go a little deeper for me on that. Why was it so hard to get the attention of the White House?
I can’t answer the question because I don’t know. For example, why couldn’t we talk about climate change in our presidential election? Are we really so afraid of having an adult conversation in America?! It’s an issue of our institutions not allowing our elected leaders to lead. It truly is a moral issue. The ideologies that we subscribe to now are really holding us back. Ideologies are a false faith. It allows us to preserve a status quo, but the rest of the world is changing.
I think there’s something structural in Washington. Washington has largely forgotten about grand strategy, because containment worked really well. We’re not doing strategy at that level anymore. There is no demand signal in Washington. There is a structural problem, because what we needed to do in the cold war was to keep them from going nuclear, literally. We trained ourselves to do that, and we’ve forgotten how to do grand strategy.
If we had a grand strategy now, what would be doing? What would you like to see Obama doing, and what would the impact be?
A smart framework is to start with the economy. Take the private sector, and incentivize people to solve these problems. Then we move to foreign policy. Then embrace the idea that we must do something akin to National Security after 1947, what we called the National Prosperity and Security Act, that fundamentally re-frames, and re-designs the instruments of our nation; public, and private resources.
You can grow without a plan, but you can’t cut without a plan. If you cut without a plan, you may hit bones, muscle, etc.
And if you engage crises without a plan, without a larger vector for where you want to go, you’re going to be zig-zagging around the course, and that’s what we’re doing right now.
We have the Arab Awakening, NSA (privacy and threat), and China. What would your grand strategy say about how we approach those foreign problems.
It does start here at home, and it’s an issue of behavior. The challenges that China and Turkey faces is an issue of governance, legitimacy, and sovereignty, but it’s also an issue of humanism. We have to take a humanist approach on our engagement with the rest of the world, and that starts at home. This is classic George Cannon, if we really want to lead on the global scene, we need to get our act in order, and not think we can control those other dynamics. This is an issue of credibility and influence.
It doesn’t do us any good to see China fail in any way. Our success cannot be defined by some body else’s failure. To me, the best American can be is addressing our own problems, because our problems are their problems.
When the world gets interdependent, you have this fascinating inversion. Your friends can kill you faster than your enemies, and your rivals falling is much more dangerous than your rivals rising. It requires a whole different thinking.
The four challenges we’re facing, are the same that all the other economists are facing. When we work together on shared challenges, and we’re putting our own economy where our mouth is, that’s the most powerful way to engage the global economy. We can engage as partners in solving a shared challenge, instead of as what we’re doing now, defending our primacy. We need to recognize those shared challenges, identify that opportunity space, and be smart about how we structure this for the 21st century, and not make the same mistake that John Kennedy made, which is we have to be able to continually update and adapt that strategy over time because of this hyper-connected world, the rapid rise of 3 billion people to the middle class, things are changing fast. We cannot be stuck for another 40 or 70 years with a single grand strategy.
C.E.O. Conversation: Young Start-Ups
Slava Rubin, founder and C.E.O. of crowd funding site Indiegogo and Sharmila Shahani-Mulligan, co-founder and C.E.O. of big data powerhouse ClearStory Data, talk with Thomas L. Friedman.
We need to think about data as a new form of a continuous feedback loop. It’s not about the volume, it’s how you access it, and bring it from the backroom to the front room, analyze, and quickly react to what you’re seeing. It’s not about hoarding data. The question is, what do we do with it?
Who would have thought that you could start a business where you get strangers to fund the aspirations of other strangers?
There is a demand for this problem (access to capital) to be fixed. It doesn’t mean that banks or credit is going away, it’s just not fulfilling all the proper demand that is out there. Indiegogo is creating a marketplace for the inefficiencies that are out there.
There are four reasons why anyone funds anything. 1) They care about the person, the cause, or the idea. DONATION. 2) PERKS. Product, the service, or the experience. 3) PEOPLE WANT TO BE PART OF THE COMMUNITY. 4) PROFIT. So, we wanted to do all four, but the regulatory rules made it difficult, so we decided that we’ll just do the first three.
Business plan is a 20 year old concept, and it’s 40 pages of you have excitement about yourself doing research. It should be in the library next to Isaac Asimov and classic science fiction. Today, what we’ve done is collapsed the entire process. You can actually get data.
If you think about each industry being disrupted, and then think about government, and the 1/8th of the global GDP going through a funding program. Right now, you pay taxes. How cool would it be if you got 1/8th of your dollar back into an escrow account that the local community put out initiatives, and you could allocate it wherever you wanted?!
Where will the big data revolution be in five years, and what should we think about so we manage these privacy issues?
Big data will change a lot of industries. Product development, and the speed at which we can introduce new products to the market. Next generation cars and how they’re pricing leases; ow the data in the system is going back to the manufacturer, giving car companies to go to a variable lease model, depending on your profile, how you drive, you price it accordingly.
You can apply this to industry after industry.
Think about 5 years ago, how many of you were on MySpace or Friendster, and how many of you use social media today? That’s exactly where we are with Indiegogo and Big Data.
C.E.O. Conversation: Engineering the Future
From his work as an engineer for the NASA Mars program and as one of the early pioneers in green tech, K.R. Sridhar, co-founder and C.E.O. of Bloom Energy, has been recognized as one of the top futurists inventing tomorrow today. Marina Gorbis is executive director at the Institute for the Future and author of “The Nature of the Future.” They talk with Thomas L. Friedman.
We’re in a transition from institutional production (government, large foundations, corporate, etc.) to social structuring where value is created in a much more distributive manner. Our social structures have now mirrored the technology that we’ve put in. E.g., Wikipedia; people are contributing data without centralized power.
Bloom Power has shifted from centralized to distributed power. Whoever picked the name “personal computer” was a genius. How many of you felt personal, passionate about your telephone 20 years ago? The power of moving from centralized to distributed is accessibility, affordability; centralized is command and control. Distributed is democracy. We’re using 20th century infrastructure to power a 21st century world.
What are the right government policies, what we should be doing?
Planning to sensing. Taking signals and adjusting along the way. We really need to rethink our social safety net given that health care is now tied to our jobs and that people are not going to be working for large corporations, education, work, etc…
Independent of organizations. Again, we need to be innovation ready, not college ready.
What does this natural gas revolution mean for the country, and the world?
The two definitions of power, social and energy, while dictionary different, are amazingly quite coupled.
#nytgf Our foreign policy is dictated by energy. If you think about the future of the world, the 9 billion people that have to be there. Energy is the capacity to do work. If you don’t do work, you can’t make output, if you don’t have economic output, you don’t have growth. If you deny half the world’s population energy, you deny them economic growth, and that’s not a safe world. You have to give power to empower people.
So, what does natural gas mean for the rest of the world? The fact that we’re going to find it in so many places creates democratization. But it’s still a fossil fuel. That can give us another 100 years. We better not be stupid at that 100 year bridge, and use it as a bridge to a clean energy future.
How do we need to think about education?
What we know from history of technologies, it applies the same patterns of usage. Regarding MOOCs, but they’re basically classroom lectures, and who says that learning should be limited to 20 min., or 40 min. a day. What about apps that can show you an education as you walk around the physical space, in real time, in context, when you want it, etc.? Classrooms are sensory poor environments, and so all of our information is moving off the desktop into the real world, the real environment. So the opportunity is becoming when the whole world becomes the classroom.
I call it a “microlearning” movement. It’s almost like you’re going from institutional learning, to learning as a flow. The challenge becomes, How do you inspire people to want to dip in. There are “extreme learners.”
Do you manufacture in America? What’s that like?
The core of any country is the middle class. Without a manufacturing base, that core is in jeopardy. There is no reason why that core cannot be reinvigorated.
What puts you into a hair-pulling rage manufacturing in this country, and what should the government do?
It’s not easy to do business in the U.S. That’s not what it used to be, and it’s not what it should be. So many regulations. Second thing, the easiest way to create a market and jobs for capital heavy goods is to create a market; send a market signal. Few realize that the entire mobile revolution would not have happened except for one policy act: the Telecommunications Act, breaking down AT&T and MaBell, disrupting that monopoly. If that hand not happened, I assure you, you would not be walking around with your iPhones and your Blackberries. Where is the Telecommunications Act for energy? What is the problem a regulated utility? I’m given a guaranteed rate of return, which is fixed, and I pass through everything I need to pass through, to you. Why would I need to innovate if I’m in that industry? That’s what’s wrong.
As we go into a 401(k) world, more defined contribution than defined benefits, personal motivation, personal aspiration, a lot of these “soft-skills” become more important. It’s not the digital divide, but it’s a motivation divide.
“Amplified individuals” are able to bring communities together to create something. Who are these people, who are passionate, no titles, not paid? This is a bit of social design, internally driven, and they know how to activate communities?
Do we have to teach motivation?
I’m not sure you can teach motivation. I do know one thing: Awe is an amazing motivator.
Clean energy revolution in America has taken a beating. Where do you see it going? Have we hit bottom? Can we come back?
The market is definitely going to happen, worldwide, global. Why? It’s ripe for disruption. There is the sheer captialistic propensity that humans have, combined with the opportunity size (trillions of dollars), and the Do Good purpose. You may not teach someone motivation, but it is easy to motivate someone if they’re working for something that is really big, that has purpose. They need to be on the 20-mile march, and on a journey. When you have that combination in an industry that is absolutely inefficient, and ready for disruption… I don’t consider Bloom a clean or green energy company. We are a 21st century disruptive energy company. Will that happen in the world? Absolutely. Policy or otherwise. Policy is an accelerator. Are we going to be the leaders in this country, in this big marketplace? That’s what our leaders need to decide.
C.E.O. Conversation: Making New Media
Barry Diller, chairman and senior executive, IAC and Expedia, Inc., in conversation with David Carr.
Barry Diller, got started in TV, inventor of a 4th network, greenlighted The Simpsons, the inventor of home movies, transactional TV (QVC and Home Shopping), USA Networks, entered transactional Web (Match.com, Travelocity), Aerio a fundamentally disruptive technology of our time.
Is this the biggest or rapid shift?
What is “this?”
TV ratings going off a cliff…
For sure. This revolution has been around since 1995 that we’ve had real interactivity. We may almost be in the beginning of the second generation. Once we have regionally figured out how to send a signal through the air (about 100 years ago), this was inevitable.
You can’t stand on the track as the train comes down.
I simply discovered that a screen could be used for something other than telling a story.
Aereo is a platform which allows a customer, to access all broadcast signals over the internet. And, there’s a DVD in the cloud. It is a different way of receiving, free, over the air signals.
It is the nature of incumbents to put walls around their fortress. But, they are the beneficiaries of technology.
What consumer need is Aereo meeting?
Well, you wouldn’t call it a need, you would call it an alternative. Most people under 35 are not in large numbers subscribers to cable. But, they would like to, we think, see live sports, live programming etc., at 1/10th the cost of cable. My argument, is that this will increase the audience. I think people that don’t who don’t subscribe to cable will think this is a perfectly legitimate alternative. And then the people that do subscribe to cable and don’t want to subsidize ESPN. Cable bills are now, the natural cycle of a closed-system, as they get into antique form…
We’ve been talking about big data. In entertainment, Netflix and Amazon are examples, even Kickstarter…
What’s fascinating is that Warner Bros. said to artists, Go on Kickstarter, get an audience, and then we’ll talk to you. That’s an extraordinary development.
What’s fascinating, is that people need to go offline to complete the connection.
Ideas at the Intersection of Design and Technology
Beth Comstock, C.M.O. and senior vice president, GE, who leads the company’s organic growth and market innovation initiatives, as well as sales, marketing and communications, talks with Thomas L. Friedman.
There is a marriage of hardware and software.
This is the “industrial internet.”
What does all this mean for education? How do you look at the world?
You have to look at it as a multi-national. “Softwarization” of manufacturing, creating new geometries that never before were capable. As manufacturing, do you need write code, or a welding gun? Probably both. You want work forces that can do both.
I just wrote an article on one of the Balkan States implementing coding as part of the K-12 education.
We’ve just started the Maker’s Guild, putting skills building as part of the educational process. The Malaysian government has brought in Design thinking into their education.
Will Silicon Valley become a manufacturing town?
I think hardware is getting a bit buzzy around here. And, the ability to access these markets is exciting.
We’ve got 2 billion more brains solving these problems. What do you think it means for education? What kind of worker do you need and are you finding them here?
We are finding them here. We are bringing back jobs that were off-shored. There are a lot of great manufacturing jobs in the U.S. People need to be skilled, and companies need to offer the training. We’ve teamed with TechShop here in SF to offer training, to help fill in the educational gaps.
What does it mean for China if we are able to bring manufacturing back?
I think the competitive race is on.
How is Crowd-sourcing influencing business?
It is changing business. In one example, some competitors from China, who know nothing about aviation, had the best design. That’s humbling for GE. Digitization is allow us to do this more and more.
In health care, energy, and education, what excites you?
Many of them you’ve talked about here. The digitization of industry. Artificial Intelligence. Outsourcing intellect. Manufacturing space. Printing tissues, bones, body parts, skin, etc. The ability to customize and personalize with all of this. Mobility. From an education perspective, you can start to access ideas from anywhere. What’s the right user experience? It’s not just the technology, but it’s how you use it.
C.E.O. Conversation: The Value of Networking
We’re watching things go from vertical to horizontal. The big challenge for the Arab world, is can the people come together and write a social contract. What have you learned about how to produce leadership in this horizontal world.
As opposed to centralized command center, it’s a more networked architecture. But then it’s, Which information do you trust? Part of what you do when you’re trying to create robust patterns that are adaptable, you have to have a network that has some independence in the clusters that are all tied to one another.
Silicon Valley works because all the companies talk to each other. “What else do you know from what else is going on in the field?” That’s not just managers and co-workers, that’s the whole system, the whole field. Leadership has to understand it, nurture it, leverage it.
What was the insight that LinkedIn had that turned out to be right?
We are heading to a networked world. As part of that, everyone would have a public and professional identity that would help them navigate their work and their career. That identity would help them to find resources to do their job, but also to be found. That would be an extremely valuable ecosystem, benefiting companies and individuals, the entire economy. “If everyone understood LinkedIn it would raise the GDP.” Second, these networks would be platforms which would generate the next applications for life.
What about the labor market? What do they need to know? What’s new?
The key thing is to leverage your networks to find the right information to find the right connection. You know about the distant uncle who knows something that you should apply. Internship, opportunity, etc. A network possibility isn’t just about you getting the right information, but about people getting to know you. Personal referential information is valuable.
The Start Up of You. What was the major idea?
Manage your career the way an entrepreneur would, rather than someone climbing a promotional ladder. In fact, you have to be thinking more like a jungle gym; how is the landscape changing so that I’m adapting myself to the changing landscape. That’s what entrepreneurs do.
Soft assets really matter a lot: networked connections, skills, information about an industry…
What comes after hyperconnected?
I think there are two directions. The “internet of things,” where not every person is connected, but every device is connected; watches, glasses, cars, etc. Sensor costs are going to zero, and how you get the refinement loop, etc. Second, this creates a data layer, which helps build the foundations of new kinds of technological opportunities, to help us navigate the world better. E.g., Waze, if everyone’s cell phone was connected to traffic, leveraging that to manage traffic.
What excites you today, generically speaking, around start-ups?
I tend to invest in networks, marketplaces, and platforms. These are things that hundreds of millions of people come together in a productive ecosystem.
One of my deepest roots of curiosity is human nature. What are your secrets of investing? I try to invest in one or more of the seven deadly sins. Part of what makes deep thought in the seven deadly sins, that they are the classic negative predilections in human psychology (sloth, envy, ego, greed, vanity, etc.), but that also means that they’re triggers for how people act, and they’re triggers across millions of people. That’s a common human substrate. Can I get my platform to that wide spread audience, if it doesn’t connect — and this is more tongue in cheek rhetoric — to one or more of the seven deadly sins, you have a problem. LinkedIn? Greed.
How do you think about privacy and security?
It’s a serious and important topic, and it has to be navigated carefully. Imagine Facebook’s photo uploading method 10 years ago; that someone could upload a picture of you, tag you, and make your picture immediately accessible to all your friends, we would have been aghast. But that’s how it works today, and most people say it adds value. So, one of the things you have to track the do’s and don’t’s of privacy is the benefits as well as the costs, and how that system goes. It does mean that people should never be ambushed, never put in harms way, give them controls, etc. The whole controversial thing around PRISM, part of the thing that’s terrible, is that people should feel safe and security. There are obviously doubts and questions that should be raised, and companies want to speak to this.
If there were cameras everywhere, and everyone had access, that’s probably a safer universe. And that’s the kind of thing to think about. It creates the right personal and social goods, at low or zero costs.
How Do You Do Business in the Next New World?
A conversation between Dov Seidman, author of “How: Why How We Do Anything Means Everything,” and Thomas L. Friedman.
What unites this group are two things. Instead of reforming, and rebooting, everyone here recognizes that we’re in a discontinuous future, and we have to have the courage to rethink the future.
This next new world is a shift from content, to context and cultures in which people can behave a certain way so they can thrive.
The number one word searched in all of 2012 on Webster’s Online Dictionary was “capitalism,” people trying to make sense of capitalism. Business isn’t working, scaling, and we’re trying to go back to first principles.
Many people believe that Adam Smith was an economist. In reality, he was a moral philosopher.
The more connected the world gets, the more transparent it gets, and the more cheaply and easily people can see deep into our character and the culture of our organizations. Once they see deeply, they start to care.
When doctors apologize, they get sued less. When they apologize in-authentically; if you point out to a doctor that they get sued less if they apologize, they get sued more. You can see that deeply into the character to see how authentic someone is being, and then you can tell everyone about it.
1.0 was about transparency. The only way to have nothing to hide in a world where nothing stays hidden is to have nothing to hide. We’re never going to be less connected, and therefore we’re never going to be less exposed, so we better lean in to the world. And as we lean in, we go from connected, to interconnected, to interdependent, and I would say we are now morally interdependent.
The opposite of a moral foundation for capitalism is not immorality, it’s amorality. We’ve adopted The Godfather, “It’s not personal, it’s just business.”
The interdependent world has made separate spheres of personal and business impossible. And interdependence is a moral relationship. I owe you duties, and you owe me duties because we rise and fall together. One banker at his desk, because of interconnectivity, can lose $2 billion and infuse risk into global markets; what happens in Bangladesh does affect an entire retail industry; one vegetable vendor can start a revolution towards freedom throughout the Middle East, etc.
Martha Paine story. We are now in a world in which 9-year-olds can change the conversation.
Is that what you meant when you wrote the book How?
I wrote how to point out that competitive advantage has shifted to behavior. It matters more than ever, and in ways that it never has before.
Behavior is not just do the right thing. Collaboration, innovation, Tweeting, delighting, etc., are all behaviors. Partnering vs. transacting, etc. The more products and services become commoditized, and content becomes democratized, the one thing the competition can’t copy, which is always the source of competitive advantage, is how we behave, how we invent humanity in how we personify the way in which we relate, connect, keep promises, gender trust in our relationships, give people wise counsel and advice, etc. So I just think that interdependence, the key foundation of it is that the source of competitive advantage has shifted with it to behavior, how we do what we do.
There’s formal authority and moral authority. The more you exercise formal authority, the more you deplete it. The more you exercise moral authority, connecting with people and inspiring the right kind of people, the more you expand it. I noticed, in the comments, how many resonated with that and how many people in Turkey are living. Talk about what that means to be a leader in behavior.
Moises spoke beautifully about power. But there is another type of power that is increasing. Formal authority is losing its currency, and it’s giving way to moral authority, doing this because we share moral values, because this mission that we’re on is worth of our mutual collaboration and dedication. The more interdependent and connected the world becomes, the more my ability to get you to join me — which is what leadership is about, influencing others — will depend on my character, and not who I was born to, being elected, etc.
There is nothing more inspiring than entrusting people with the truth.
Formal authority is power over someone; more money, higher position, etc. If I have something over you, then I can get you to do something in relation to my power over you. When people in Brazil can come together because they don’t like the price hike on busses, or Netflix decides to do a price increase and 800,000 consumers decided to bolt in unison,… So, when power has shifted to individuals, and the individuals’ ability to combine their power, then my ability to hang on to people depends on how I treat them, and how the deep the relationship is.
It’s all how.
Ultimately, people want to be free, be happy, and have meaning in their lives. Interdependence has created an unprecedented “freedom from.” We’re seeing the ability to cast off formal authority. The freedom that we revere is not freedom from, but “freedom to,” to pursue happiness, to scale a company, etc. And you’ve never been able to have a freedom “to” without values, shared principles, common visions, and a certain kind of leadership that is moral.
When we create freedom from, we begin to celebrate. This is what I call the “empowerment movement.” Whenever you empower someone, you’re saying, this is about power. So, instead of scaling a culture where people are obsessed with what they have a right to do, they haven’t built the muscle to do what is right. There is a difference between what is right to do, and what you have the right to do. Instead of people being empowered, today, people need to be inspired.
What animates behavior. Coersion. Motivation. (Carrots and Sticks). The cleanest, most affordable, renewable form of energy is not motivation, but inspiration. Students need to be inspired from within. What’s within us? Missions that are worthy of our dedication, purposes that we want to devote our lives to, a sense of meaning, that I matter, beliefs that we share… What moral leaders do, is they inspire people.
Illustration. I forgot to kiss my 5 year old son while leaving, and rather than being emotive, my son says, “What kind of father would not kiss his son?!” He went after my character, not his feelings.
People all over the place are calling out all leaders on their character.
If I’m an employee at LRN, and I want to take a vacation, how does that work at your company?
You can take all the vacation that you need. We did evaluations that were collaborative and self-evaluative in partnership with their mentor. We paid bonuses based on their self-rating as long as they’ll publish them for all their colleagues to see.
We’ve scaled up the wrong idea, that of empowering people rather than entrusting people. We grew up in a society of “trust and verify.” We’ve misunderstood the nature of Aristotelian trust. The virtue of trust does not lie in you and see if you’re trustworthy, trust lies in giving it away, when I give trust away, I’m giving you the power to do right by me or let me down. Inspirational leaders entrust people.
We don’t have a jobs crisis, we have a careers crisis. What’s going on there?
We do have a jobs crisis, but Gallup just released their “employee engagement scores,” and they’re the lowest ever since they were measured. They measure how much people’s hearts are in the game. 7 out of 10 are disengaged, and 2 out of those 7 are actively disengaged, actually sabotaging their company; stealing trade secrets, on Facebook saying nasty things, etc. That’s $500 billion in lost productivity. 7 out of 10 people not flying out of bed to contribute their character and creativity to make a difference, and to create jobs for their brothers and sisters, uncles, etc. That’s a lot of people not thinking about how they can build a life.
Companies are starting to get this. That we’re in the era of behavior. Chevron is now the “human energy” company, Cisco is the “human network,” Dow is the “human element,” Deere is “human flourishing,” Allied Bank is “we speak human,” TD Bank, “Banking is human again,” Samsung (in competition with Apple), “Design for humans.”
Marketing departments are rarely wrong. Now, I think cynicism is corrosive. But when the marketplace says cynically, “is this just marketing, or do you really mean it?” when companies declare their humanity (7 out of 10 consumers are disloyal with the brands), so we have a disconnected crisis, and everyone is declaring their humanity today the way we used to declare “quality is job 1,” and the winning companies are going to be the ones who take that proclamation and translate it into corporate practices, leadership, and individual behaviors, and then put their money where their mouth is and reward that, because you can’t pay someone for their integrity, you can only pay for the behavior that someone with integrity manifests. And that’s why I think the future of business is corporate culture, context.
Now, business is about systems. When business wants to scale, it creates a system. We now need a human operating system. And the biggest challenge for us today, is to create a system that is harmoniously guiding and inspiring behavior.
Right now the forces that bear on behavior are totally at odds because we’ve scaled up a rules based culture of what you can and cannot do with carrots and sticks, when we are in a new interdependent world where we need to use values and principles to inspire what people should and should not do. I used to think that culture was an aspect of the game. Now I’ve discovered that culture is the game.
Don’t ask me what our strategy is, ask me what I believe.
Go back to jobs and careers. We have a careers crisis. What does that mean?
People want to build a life, and a legacy. They don’t just want success. The word “job” was created to control people. Big swatches of work were chopped up into tiny little pieces, into tasks, and your job was to do those tasks. People want to bring their whole selves to work. I just think people want a career, they want to matter, they want to do something that will be on their tombstone one day, and leaders have to create environments for that to happen, and I think that’s the future.
The country doesn’t feel like it’s on any kind of journey today. Why is a journey so important and what could you tell President Obama that might help get us launched on a journey?
In business, we said that a “journey” is a fortune cookie. The defining characteristic of a journey is that they go up and down, towards progress, and it never stops. It’s an elevated way to be. The behaviors we want in the 21st century, are not behaviors that we can shift (buy now not later is a shift; and shifts are forward, back, side, etc.) Behavior economics have taken off because we’re obsessed with nudging people. The behaviors that win in the 21st century you can’t shift for. They’re elevated behaviors; passion, creativity, collaboration, responsible conduct. What elevates people, again, are values, purpose, a sense of mission. What I’m so optimistic about is that human elevation, which was kept outside of business, is making its way in, and the last piece about elevating people is to get them on a journey.
Businesses have to get back to journeying, which is about progress, pivoting, experimentation, failing fast,… and more CEOs are starting to use this language more and more.
The last time a US President had us on a journey was Kennedy. Of course we were inspired by the moon shot, but what inspired me more was not the moon shot, but that we were going to land on the moon within a decade. When was the last time a leader gave us a vision that will take 10 years or more, outside the presidential term?
So, we need leaders who are playing long ball. The problems are so large, the opportunities are larger, and it will take 10 years or more. Journey is an ethic. It’s how you journey.
When we did land on the moon, 24 out of 25 of the elements in Neil Armstrong’s suit, was made by DuPont.
The last thing we need, is hope. We need hope. It’s not about being hope, but it’s about inspiring hope in others. Technically hope is not a strategy, but when FDR said “We have nothing to fear but fear itself,” that was an elegant double negative way to say, “Don’t lose hope.” When people lose hope they despair and disconnect. When you have no hope and you’re leaning out of the world, to have disconnection, and disengagement, this is a terrible recipe for life and for progress. Without hope, there is no strategy. It is the most sustainable and sustaining value that there is. We can probably have a world without love, but a world without hope is impossible.
If we can inspire hope, imagine the virtuous positive cycle of hopeful people, leaning into the world, innovating, and creating.