On the 6th and 7th of October more than hundred CIOs, senior executives and visionary thought leaders, from many different industries all over the globe, came together in Amsterdam to discuss the theme “Unorganized: Applied Innovation for the Unorganization”.
While innovation has never been so hot, the success of innovation can be obstructed by traditional organizational structures and beliefs. Some traditional managers are stubbornly digging their own grave, others are open for a phoenix-like approach: to let old habits burn out and let new ones arise. But what is the new role of management in the Unorganization? How do you cultivate a mindset for innovation with engaged and empowered people? These questions, and many more, where addressed by the attendees during this exciting Executive Summit. This report will give you an overview of what was discussed and some of the insights that were shared amongst the attendees.
This report can be freely distributed to anyone inside your organization who is interested in the topic. A digital iBook with interactive video interviews of the speakers will also be available. The iBook and the slides used in the presentations can be found at http://www.sogeti.com/summit2016
Reports, blog posts and continuing discussions on this and other innovative topics can also be found at the SogetiLabs blog: http://labs.sogeti.com
Just before the start of the summit, there was an opportunity to catch up with some of the trends in the industry, discussed by our global technology leaders. In these intimate sessions attendees where updated on the state of the art and discussed specific questions they had on each topic. The topics presented where: 'Business Intelligence & Analytics’, 'Cyber Security', 'DevOps', ‘Digital’ and 'Testing'.
Hans van Waayenburg welcomed the attendees and opened the summit: “We are really happy to welcome so many people from all over the world today. This years Summit is already the 11th edition. Previous summit’s have established a reputation and have raised the bar of expectations for this year. The theme this year is ‘Unorganized’ and the goal for the organizing team is to inspire us by presenting examples, visions and evidence, proving that we are entering into a new era. I want to add to that a personal conviction, because I think there is something additional that’s driving the change. I belief that young people simply don’t want to work for conventional companies that limit their creativity. That may go so far as that they decide to paint the wall of their workplace and choose their own furniture, changing the office overnight. Ten years ago I couldn’t imagine this would be possible. A new era, different challenges, different beliefs and a new generation of workers entering the company, demand a different style of management. In closing I want to ask the audience something: let us become inspired by the speakers, but let’s also use the fact that we are with so many people from all over the world. Let’s have fruitful discussions, learn from each other, and inspire each other.”
Michiel Boreel, master of ceremony for the event continued: “Our team has been working on the theme ‘Unorganized’ for a year. We started with the fact that many organizations that we talked with, said that they were stretched to their limits and struggled to innovate at the speed of technology change. Challenged by start-ups that threatened to disrupt their industries they were coming to the conclusion that present organization structure, beliefs, values, culture, mindset and management style stand in the way of change. We have been looking for speakers that each bring different perspectives on how to ‘Unorganize’ and create ‘Applied Innovation for the Unorganization’ and are excited to offer you this year’s program.
Unorganized is about five Un’s; Understand, Unorganize, Unbundle, Unman and Unleash. I’m sure that over the next two days these five - now still abstract - Un’s will become a mantra, a motto, of what the organization is demanding of us, our people and the IT-function to meet the challenges of this new age. To make you think in the next 24 hours, I believe we found 12 original thinkers and storytellers. They will help you connect the dots and envision a digital version of your company, an Unorganized version of your company.
Before we dive into those 12 perspectives, it’s good to get a sense of who is in the audience. We have a series of questions that we are going to ask you while we go along during these two days and Buzzmaster will help us with that. They will make it possible for you to instantly react to our questions through your mobile devices and visualize your reactions.
I’m just back from a holiday in Turkey and still have a sun tan to show for it. When I tell you that I have a special relation with this country, you can imagine that I immediately turned on the televions when I heard about the coup on July 15th. And so did Christiaan Triebert, my favourite unorganizer that I would like to introduce to you. When Christiaan watched the live footage of the events unfolding and the camera showed the smartphone of a captured general, Christiaan took note. At first the messages in a special Whatsapp group where really optimistic about the results of the coupe. This changed when the coup faced difficulties and later the last message was a question “How can we delete a Whatsapp discussion?” An important question, but too late, as we will see.
A week after the coup, Christiaan shared a detailed report of the events from the perspective of the leaders of the coup. Detailed analysis of the Whatsapp conversation created a minute by minute account of what expired. The fact that Christiaan was 8400 km away in Kuala Lumpur during the time of the coup and that he didn’t speak a word of Turkish, did not seem to matter. People on Social Media and Twitter jumped in, volunteering translation and all kinds of helpful information. The Unorganization Christiaan is working for is called Bellingcat, a citizen’s initiative for investigative journalism. Bellingcat is one example of an unorganization that does unconventional things just like Zappos, Haier and Spotify. What do these companies have in common?
One of them is: they do not seem to like ‘bosses’: they are part of a new trend we call Management Exorcism. They are pushing management out. The second thing they have in common is that they are inverting the organization. From the old model to the new model and from inside-out to outside-in. From the old model: institution - individual - profit, to the new model: individual – organization - impact. They are all creating what is refered to as a purpose hierarchy. The third thing they have in common is: they are all stretching the boundaries. They can scale rapidly.
After we finished our four reports on disruption, I often got the feedback: Menno, we are already stretched to our limits. How can we innovate at the speed of technology change? That’s why we decided on doing some additional research on the next stage of organizations and give a more positive view, focused not on the threat of disruption but on growth opportunities. The report will be published tomorrow and you’ll find all the five “UN’s” defined. It’s all about the possibilities to break through the boundaries. The first one is UNderstand: we see demand economies of scale, it’s about understanding platforms. The second one is UNorganize, defining your own minimal viable bureaucracy. The third one is about UNbundling: bundling is what incumbents do very well. Unbundling is what start-ups do very well. UNman is the fourth one: the autonomous organization of smart decision machines. The last one is UNleash: bringing alive your products, ‘IoT-ing’ them, making your customer a daily user. These are the five UN’s.
I look forward to all the speakers and the great content they will bring. I hope you will enjoy all of them and enjoy the conversations at your table. And I hope that when you go back to work on Monday that we will have provided you with a clear view of the choices to make to UNorganize your organization.
We are entering a different age, the age of the customer. In history we have seen shifts from manufacturing to distribution to the age of information being paralleled with shifts in organizational models. So what does it mean that we are now in the age of the customer? Which organizational will support this new age? Is that the Unorganization?
This is a really difficult question to answer. I’ll try to help you with answering this question by providing some context in which the organizational model should change.
We are not participating anymore in the linear value chain. What we think at Forrester is that there is a change from this old linear value chain to a dynamic ecosystem of value for customers. And we notice that companies already think that they are putting the customer at the centre, but that’s completely false. We see that customers are choosing their own apps, their own values, and ecosystems. This is completely different from customer centricity. It’s difficult for companies to adapt to this ecosystem of values.
When you compare Uber with traditional taxi companies. The first set of values customer traditionally wanted is “safety, honesty, and on time”. We see now that in the new Ecosystem these values are taking care by either Uber or the community. For example Honesty was first organized by taxi companies, with Uber it’s a set price and the customer doesn’t have to worry about this anymore. Because of this we see a shift of values. The old primary values like safety, honesty and on time are not discriminating anymore in the new ecosystem. Now values as Politeness, Best service, and community values as the employment benefits for drivers become more important.
If we care about customer values we should understand that those values are evolving. Also the company’s own values are becoming more and more important. We see that societal attributes for building trust, like ‘Listens to customer needs and feedback” are valued higher than operational attributes as “highly regarded, top leadership”.
We are now in an era of marketing 3.0, where we are not only looking at product differentiators anymore. It’s about values. We look for new values as customers to choose between different companies. The customer will make his “market” of values requiring marketing becoming even more personalized… and volatile.
One option: the power of communities, social and vote bring back a democratic system.
The difficulty for companies is: are they ready to become democratic? The shift in values in the Uber example was partly because the community could orchestrate the value “Safety” by voting. And you can use the voting in other ways. This way, when people vote, they express what values they find important for the future. Voting is becoming the new democratic way to understand the customers and what they want in the future.
So companies should focus on the customer’s values and integrate those in its own values. It should build trust via integrity, competence, and transparency. The company should align trust-building efforts with brand values and create a cultural commitment to being a trusted brand. And in doing all of this, your empowered employees are key: they will be the first promoters of values that are directly visible to customers.
I’m going to explain and demystify the platform concept from two perspectives. One is the technology and innovation perspective and the second is the economics and management perspective. I think it has great value to try to understand the platforms from these two sides together. What I’m hoping to do during this talk is to trigger some questions in your head: what does the platform economy mean to you?
Why do platforms and innovation ecosystems matter? Firstly: in the last years we saw different platforms become extremely successful in an extremely fast way. We know from their examples that there is a lot of money in the platform economy. In 2014 we saw the revenue of a platform from Apple’s, their app store, exceeding that of the Hollywood studios. Apple paid over $10 billion in revenue to developers and that was already two years ago.
From the 115 Unicorns we surveyed, 80 called themselves platforms. On a global scale we find 4,3 trillion in firm market cap and $100s of billions in global commerce. Platforms are reshaping the boundaries of the firm. They reshape innovation, employment, and regulation and policy. These platforms are not small companies focusing on niches. Think about Airbnb, Netflix, LinkedIn, Google. They have millions of members, apps, and are all over the world.
For platforms the network effect is really important. Imagine you are stranded on an island and are the only person there. You have a phone on that island and a small local network. Sadly, there is nobody else to call. Then somebody else is washed up on the island and you can call him. You didn’t spend anything on new technology but suddenly the phone you already had has more value. When a third person comes, the value increases more. The more people join, the more value the technology offers. This is often the same for platforms; the more users, the more value.
Platforms are impacting the digital economy through the pervasive mobile connectivity. People from around the world can develop software on top of a platform. Companies such as Google, Facebook, and Apple have created technologies that acted as a magnet to which lots of entrepreneurs and innovators have gravitated. These entrepreneurs and innovators developed apps and webservices that use the underlying platform as well as use the marketplaces that these companies have created to connect end-users and consumers.
Platforms change the way of competition as well. We used to think of competition as firm A competing with firm B. Firm A develops a better, cheaper or unique product, but still competes with firm B. In the platform economy you have ecosystems of innovators that are congregating around a platform. These ecosystems compete with other ecosystems. Think of it as a football team on the playing field. The platform leader is going to be the captain of the football team. You have team 1 competing against team 2. That’s the most fundamental way in which competition has changed.
We see that the strongest platforms integrate the transactional and innovation platform. The transactional platform serves an intermediary for direct exchange or transactions, subject to network effect. The innovation platform serves as a technological foundations on top of which other firms develop complementary innovations. We see that successful companies as Airbnb, Google, and apple combine these two. When you are leaving, this could be one of the questions in your head: how can my company become a strong mixture between a transactional and innovation platform?
I work at a school called IMD and we do executive education. The people in the room are almost always better than the organization the work for. The modern complex organization that we are all a part of, takes ambitious bright people and turns them in average performers. Very, very quickly. One of the reasons I’m interested in the Unorganization, is to try to figure out how can we reverse that process. How do we get to Unleashed talent?
Last week I worked for a cement company in Bangkok, you might think that’s a strange industry for innovation. But it’s not, there’s a lot happening there, including 3d printing on sides. I met a young man there who founded EKO. He was already quite successful with his company and was convinced that succeeding in the future wasn’t about his idea or the business model, but all about his team. He was looking for the best talent form around the world and asked “How to build a team that doesn’t need me?”
The same afternoon I went to a company called TRUE, a company in the Telecom space. There the Chief Innovation Officer had the goal to turn his people into entrepreneurs and then they’ll leave and we will all be better off. That’s a different kind of spirit, that’s what it’s all about.
They have similarities with Zhang Ruimi, the CEO of Haier, which is a Chinese company in the white goods industry since the early 80’s. Ruimi joined Haier in 1984, so what I’m going to talk about is not about a group of twentysomethings. What he’s trying to do with his employees is what we are talking about here at this Unorganized Summit. Ruimi is convinced that everyone wants to realize his own value. He’s really trying to create a world with management without bosses.
Haier’s story is about a large old-economy player in a commodity business. They believe that their ultimate advantage is not lower costs, but the knowledge that their workers have – if only they can release it. The last 30 years that’s exactly what has been on their agenda.
In the eighties we knew refrigerators where coming but almost nobody in China had one in their homes. And most of them didn’t work properly. The CEO of Haier had the vision that this would change and at some time the people of China would want quality and good products. Haier decided that they wanted great product quality and find the interested customers. In order to do that they required disciplined workers with a quality mindset, but they did not have either. They had workers that they needed to remind to not urinate on the floor. The work ethic in China was so low, that there was no way that they could produce quality products unless they changed this mindset completely.
As a demonstration Ruime took 79 refrigerators out front of the building and let his workers destroy them with sledgehammers. This was very symbolic of what they would try to do. Ruimi was changing business models and culture at the same time. They started by creating autonomous working units & internal labour markets.
This strategy worked very well for Haier, but this isn’t the most important part of the story. The one thing Haier did really well in the last 30 year is to have these changes continuously. For example, in 2005 they decided to move from responsiveness to intimacy. Ruime said; we are going to offer personalized orders in real time at an affordable price. This was a bold move, but he created a logistics system and eventually they had zero-distance with the customer. The next step for Haier is to create a platform organization. Ruime is saying we are entering into an era of loosing control. But to counter this he’s setting up a framework for the employees to take action.
What you see is that Haier completely changes their business model once again. Probably for the 5th time in 30 years. The employees are continuously encouraged to talk about change, to treat it as a constant and embrace change all the time. Haier changes right before their performance is peaking. Normal business only start to even think about change when their performance is declining.
The Unorganization is not a live boat for survival. It’s about treating change as something continuous and grabbing opportunity. The people in Haier love their jobs. They feel like entrepreneurs when you talk to them. The last point I want to make is all or nothing. Everybody is involved, even the businesses who are sustaining the present have to change. There is no second class citizenship in that.
We all know that comfortable lies are more popular than unpleasant truths, but today I have the pleasure to talk about unpleasant truths regarding organization and management. The time I have is rather short so I will offer you a fast food menu focused on organizational theories and managements strategies. The menu contains misery, some fundamental insights, why there is a totally wrong focus, the shame, and finally the conclusions.
First of all: the misery. There is no relation between IT initiatives and organizational performance. 70% to 90% of strategic IT initiatives fail. The quest for business and IT alignment drags on for decades. The first publications on this topic arrived before some of you were born: back in 1980. Maybe you said to yourself while lying in the crib: “Hopefully the business/IT alignment problem is solved before I graduate!” and now, 35 years later we find ourselves still with the same problem.
Operational performance is also rather poor: we have social harm, disengaged employees, cynical employees, there are burnouts and a general disdain for customers.
Our next item on the menu are the insights. One core reason for poor performance is the lack of organizational unity and integration. Organizational unity and integration is something you don’t get for free. You get the opposite: inconsistency. Why? Because of nature’s tendency. Nature strives to disorder. If you want order and change undesired things to desired things you need to design things. You can’t say “I want loyal customers and high efficiency” and then wait and see for things to happen. The opposite of waiting for things to happen is designing. Design is changing undesired conditions into preferred ones. Unorganizing is not about creating disorder!
And there is no attention for organization. Attention goes to what is desired not to how that is realized. And another reason for poor strategic and operational performance is the strong belief in strategic and operational planning and control. When we look at Boulding’s hierarchy of complexity, we see that organizations are highly complex socio-cultural systems. The problem is that we consistently address organizational problems as if the organizations were of a lower complexity level, as if the organizations were self-regulating machines.
Organizations are complex high variety systems. They involve employees, customers, stakeholders, economics, technology and many other factors. People in organizations want to predict. Managers want to gather data to predict. But more data doesn’t’ necessarily means more certainty. You can’t predict everything in a diverse system like an organization. In the end we are affected more by what we do not know, than by what we know. Organizations should take this to heart.
Organizing is sense making. You have an organizational situation which is puzzling. Then you make sense of it by organization. This circle goes on and on and on. You have to regulate variety amplification, to self-organize, uniformalize, unorganize.
Mostly management focusses on performance willingness and destroys employee motivation and involvement. This is a totally wrong focus. The should look at the system, which determines performance possibilities. 94% of poor organizational performance comes because of poor system design. Only 6% is incidental, non-systemic.
This brings us to the shame. The misery continues. In 1996: John P. Kotter wrote a book and reported that only 30% of organizational change was successful. Fifteen years later in 2011 I read a new book. In the meantime more than 25.000 books about organizational change were published and numerous ‘business courses’ offered. This all concluded to the same number: still 30% of organizational change was successful. Therefore I think a lot of people must have went to the College of Bullshit and got a ‘Master of Crap’ diploma.
To conclude I would say that organizations are high-variety systems. The numerous emerging phenomena require operational and strategic regulation, which can only be done by employees. Not from a manager higher up, or from a manger who controls things from a spreadsheet. There is an Indian saying: If you’re riding a dead horse, it is better to dismount! Unorganizing implies acknowledging that only employees can satisfy the control requirement. You need to focus on employee performance possibilities and create the conditions for them to be successful.
I want to talk to you about customer engagement in the future. I use a formula for that: C2MxeI. It means Connect 2 Many, Engage Individuals. When facing extreme customer needs, you better have extreme customer centricity.
The world is changing fast, the future is going to be different. First people looked at the painting, then they looked through their mobile device, now they take a selfie in front of the painting. We grow up in a different world and are facing a new type of people. This is the generation that uses the phone but hardly makes a phone call. Different types of communication than phoning or mailing become the standard way of interaction.
We have to be careful as companies that we will not become extinct like the dinosaurs. In 2013 Google said we will have self-driving cars in 2030, maybe 2025. This picture was taken last year, in 2015. It shows self-driving cars in San Francisco. 2030 is here today, it is happening right here and right now.
The old ‘good’ is no longer ‘good enough’, you have to go for the new type of good. We live in a VUCA world. Volatility, Uncertainty, Complexity, Ambiguity. Your challenge is to connect to the networks and engage individuals. You have to go for extreme customer centricity. You can only do that technology enabled. It’s no longer about B2B or B2C, but human to human, H2H, brain to brain. People pay now for an experience. Customer centricity and extreme customer centricity is no longer a choice, an option. It is what the customers already have decided for themselves and you will have to catch up.
So the customer has the key and the networks have the key. Everything is connected and we no longer live in a linear world. Everything is at chaos. It’s the end of linear thinking, it’s the shark fin syndrome. Adoption happens very fast and following doesn’t work anymore.
As a company we are often facing a very fast external clock and a slow internal clock. When the clocks are running out of tune, this is dangerous. In the new world it’s no longer the big fish who eats the little fish. It’s the fast fish that will eat the slow. So you better be fast. It’s the company that is the most adaptive to change.
If things have to move fast then hierarchy is really dangerous. We better change our hierarchies to networks. Banks are a target for disruption. Start-ups are going to eat their lunch. The aliens are where there is arrogance, where there is money, where there is challenge, where there is a complicated customer relationship. Disrupters write new rules, find a new game. Disrupters position themselves between your proposition and the customers. They push you to the left side, to commodity, to starvation. You need to focus on customer relationships and the extreme customer needs. You need extreme customer centricity. People don’t like broken conversations. 92% of the people hate to have to give the same information twice. People are already open to switch brands after three negative experiences. So if you have a CRM system there should be a red warning light flashing when a customer has had two negative experiences.
Your biggest challenge is how to connect to many, and to engage individuals. Use technology for this as an enabler, to meet expectations and use humans to beat expectations. That is what you need to do. People should bring passion, emotion and creativity. You have to transform on two axes: on the digital axis and the human axis. People have to use technology to make customers smart. You are selling without selling: you facilitate the customer buying from you.
As I already said: people pay for an experience, more than for a good product. The CEO of a company has to become the Customer Experience Officer. It’s all about human to human, you have to connect from brain to brain. To do this you need your senses. You need to use your touch points to listen, not only to speak. Listen with passion and then tell your story with passion. The closer you get to your customer the more your company has to become liquid. You have to empower people to become liquid. You have to go for attitudes and values.
If you really want to know if you are an outside-in company or an inside-out company, look at your KPI’s. If your KPI’s are still product related, numbers of products that you sell and profit that you make, you are still an inside-out company. The very moment you start with your KPI’s the other way around, you start to measure how your products make people feel. If people are happy they buy more, they will tell other people, etc. So your new KPI’s should kick your old KPI’s out.
It’s not about what you tell people or what you do, it’s about how you will make customers feel. They will remember that and they will bring you profitability. So you are all customer experienced agents for your company. That’s my final conclusion.
So this is a conference about unorganizations. How many of you are in an organization..? [Everybody raises their hand] So you are all part of an organization. I would assume that you are depressed or devastated of what you have heard today. You are all in organizations, as particular in a classical industrial sense: top-down, hierarchical, relatively bureaucratic, and you have been told that those organization don’t have a future. You have been told that the future is the unorganization. I have never really understood what this unorganization is and I don’t believe in it.
Some of the speakers have presented this unorganized world as a digital world. And the feeling comes to us that the unorganized future is something coming from Silicon Valley. We are expecting, as to quote the last speaker: “A new world with new rules.” And at the same time we are told that this future is already happening in Silicon Valley. And all we must to do is to copy this. They are the ones that figured it out. We are lagging behind. We should watch what they are doing. But I think that is a mistake. I’m critical.
I think we have a delusional understanding of what is going on. The digital revolution has always been presented as this thing that would bring democracy and it would blow up the old industry world. It’s still in some ways presented as that. But I think that is a mistake; what we have seen so far is actually more of the same. It’s more of the structures and phenomena of what happened in the industrialization. We even have more extreme monopolies now: Amazon, Facebook, Google. If you look at the five largest digital companies, their stock market value each is more then 300 billion dollars. Each is valued more as the annual GDP of Singapore.
It was assumed that all this technology would result in more people having more power. But if you have a good look, for example at Wikipedia, you actually see a phenomenon in which a tiny group of users will dominate the platform. You can see it in commentaries, in Twitter with a few people with million followers. You also see it in leadership, the reality of these dominant internet companies is that they are incredible hierarchical and top-down. Look at Apple and Amazon. Steve Jobs was an authoritarian leader. He unleashed creativity, but only in an intimidating, bullying kind of way. And Jeff Bezos is not much different
It’s important to demolish these illusions. This idea of the unorganization and Silicon Valley, it’s becoming an ideology. It’s politically correct to say: we believe in the flat organization, we don’t believe in bosses. Saying you believe in bosses is almost the same as saying you think men are superior to women or white people are superior to black people. It has become an offensive notion. I think it’s really important not to be deluded by the promise, ideological correctness. We want to believe that you can be rich and good at the same time. But the reality is you can usually have only one or the other.
For you in traditional organizations, wanting to come in this new age, it’s also very important not to fall into the traps. Not to make the same mistakes as Silicon Valley. Every industry is now being radically transformed. We need to bear in mind the enormous impact of technology. The precious vase is smashed into many, many pieces.
More than anything else, the potential lies in the H2H economy, human to human. Everyone talks about problems and solutions. But if only we could become more human. We do need to fall back on this conversation about humanity. Partly because we all feel it instinctively. We are looking over our shoulder at intelligent algorithms, at virtual assistants, at the AI revolution.
The great revolution is still to come, the big thing to come is AI. Smart machines that are able to replicate menial tasks as serving food, doing accounting, researching law cases, to even managing other people. The great challenge and opportunity for organizations is not only the unorganization. It is to really create human centric organizations. We didn’t have them in the past. The economy and society was a factory like world. Whether it was in the factory itself, on the assembly line, or in the education system or in organizations. Technology is doing away with that. Whether it is Blockchain, or AI. What we are going to be faced with is a world where we need to figure out what we can do that technology can’t do. Rediscovering empathy, meaning. The problem all too often is that we try or encourage to turn ourselves into machines.
Perhaps it’s in Europe itself, with a more historical sense about what it means to be human, where this challenge could be addressed best. It’s not an unorganization, not doing away with hierarchy. Because some people will do more well with this than others. The Steve Job’s will get it before anyone else. The unorganization doesn’t work because it doesn’t recognize that some people are more intelligent than others.
There are great opportunities for the future. The future could be the new Renaissance. The new humanist century. But it won’t come easily. It’s not going to come without costs and bloodshed. It’s not cosmetic change, its fundamental change. We are talking about technology that will replicate most of our cognitive skills. Hopefully there will still be a place for us with our unique human skills. We are not going to live in a world where everybody is going to work for themselves. Most people can’t and won’t. There will be a need for organizations in the future and it will be a human centered one.
I’ve a saying: you don’t realize you are on a quest until it’s too late to turn back. Apparently I’ve been on a quest and want to begin my talk by looking back on the things I was writing about and thought that were important. In many ways I talked about the idea that we were moving from a linear to a nonlinear world. If I was really provocative I would say we are standing on the adaptive edge.
I talked about the organization as a platform. Open and greater innovation, greater information transparency, greater competitive intensity, open legal frameworks, open data, open API’s, open business models, open organization, open source. If I look back from where I’m standing now I see many of these things manifested in the world now.
What I became convinced about is that human beings have a desire to connect. This force is greater than all political ideologies. That desire for connectivity will not stop, it will continue and present us with massive challenges. This is why we get disruption of existing markets.
This year I published my new book ‘DO/DESIGN Why beauty is key to everything’. This book came really from the heart, of what I find important when looking at the world.
In this book I look for example at why the banking crisis happened. Greed and ugly thoughts have ugly outcomes. It had massive economic consequences for companies and the societies they are supposed to be serving. The model of neoliberalism economics, as far as I’m concerned, has promised to be a failure. I am a great believer that we really need businesses that function and deliver to society.
What do I mean by beautiful business? A definition I use is: ‘Transformational in the value and utility they bring to the world, which is sourced from an embracing of purpose and service. Restorative to people and planet, deliver everyday joyful experiences for their customers and employees, are lovingly disruptive. That make money.’ We should ask ourselves the question: can we create something that really makes the world more beautiful?
Radical trust creates beauty. For me beauty is foundational for live. It’s not just aesthetic. It’s something much more fundamental and something on which business could thrive. I refer again to the crisis to show what happens if you let ugliness gets its way. Also openness, is very important. Openness in science as a policy, is allowing people to collaborate and address issues and cases that could otherwise not be addressed. Think about Elon Musk and Tesla sharing the battery patents with the world. At this moment there’s too much capital in the hands of too few.
Bloomberg and the Economist are talking about Blockchain as a trust making engine/machine. Think about the loss of value of Volkswagen due to the lying. It’s really hard to earn that trust back. I think over the next 10-15 years Blockchain technology will start to play a key role in many aspects of our lives and organizations. Blockchain will make it possible that we can trust absolutely everything that is happening to us. Our identities could be part of Blockchain technology. I would argue that this is a beautiful solution in how we deal with trust and to get rid of banks who should be a trustworthy third party but have shown not to be this.
Automation can also be beautiful. A couple of weeks ago I was in a car park in Denmark. It was fully automated. What was amazing when I was standing there and see the smiles on the faces of the people. Families left the car there overnight as well because it’s safer to leave it there then leave it out on the street. It also moves your car during the day when it knows at which time you are leaving so when you are picking it up the waiting is as short as possible.
Another example is Topcoder, a company in the US which runs competitions to solve coding problems for companies. They have 1 million members, 7000 challenges per year and already paid $80 million to their community. One of their large clients was NASA. Their best people couldn’t solve a problem. Topcoder organized a contest with a price around $2 million and gave a time period for people to solve the problem, which they did. People from around the world can come to Topcoder. They are bringing huge value to people who need problems to be solved. No company could hold that amount of knowledge; this is the power of a platform. This is a way of being open and collaborative which would be impossible in the old model.
At the end of my book I said: everything man made is designed. If everything is designed, we have an opportunity. Why not make it beautiful, make it engaging, meaningful, restorative, uplifting, and valuable? And yes, creating beautiful things is really hard work, it’s not easy. But the reality is: if you put in your effort, you create and deliver value in this world which your customers will reward you for.
So let’s end with this question: What would your business look like if it would be more beautiful?
I would like to do a little experiment with you. I would like you to close your eyes for a minute. Imagine the place you would like to be most right now. Think about something calm and peaceful. Keep our eyes closed and raise your hands if the place you thought of is outdoors… [almost everyone raises their hand]. Now open your eyes and look around: you are not alone.
Live on earth exists for 3.8 billiard years. In all this time it experimented, it changed, it developed. We are a young species, just existing 200.000 years. We did a pretty good job, we are with seven billion people now, but our impact on earth is not only positive. I think we can find hope, strategies, and good ideas in nature and that’s what we are continuously doing at biomimicryNL.
When I discovered biomimicry seven or eight years ago this completely changed my world. You could say I became Unorganized. This was in a period that I worked at Shell and was part of a group of Game Changers. While thinking about innovation we also spend a lot of time and energy in innovating our own team. We spend a couple of days with twenty researchers and managers in nature, thinking about new ideas. It became really clear to me that we are also part of nature and that we share a lot of challenges with other creatures that already came up with really sophisticated solutions.
I will show you a couple of examples of products based on biomimicry. You can apply biomimicry at form, process and system level. While the most value can be gained on system level, it’s also the most difficult part.
An example for biomimicry with shape has to do with a shape we often see in nature: the spiral. We see it in the shape of a shell, sunflower, goat’s nostril, and in the shape of a water vortex. The company Pax Scientific saw that the quickest way to transport water is not a linear line, but a spiral shape. Think about unplugging your bathtub. Pax froze a vortex and created the Impeller, a small machine that only needs the electricity of three light bulbs to get forty million liters of water moving. It creates a vortex which keeps the water moving in an incredible efficient way. People didn’t believed the big energy savings, so Pax had to make the systems themselves to demonstrate the efficiency. Pax uses their knowledge now in a lot of fields: to regulate airflow in buildings and computers, and in ships. This is really about unorganizing, doing stuff radically different.
We all know that nature organizes itself. What does that mean, self-organizing? Does that mean there’s only chaos? Which best practices can we find in nature about processes and Unorganization? The ants are an incredible example in nature of Unorganized. Or look at a flock of birds. Geese always fly in a V. We found out they don’t only do this because flying up front is the hardest, but also because no goose knows the whole route. We can learn from this when we organize projects and programs; maybe we don’t need a project manager for the whole term but for every period a different project manager with the best suited requirements.
When Darwin talked about survival of the fittest he didn’t talked about the physical strongest but about the ones that could ‘fit in’ the best. In nature symbioses this is really common. This often takes the form of networks with architectural and mathematical laws. The biological networks have only a few grades of separation. There are clusters, but never a central hub. We learned by looking at networks and ecosystems that weak links, the links that are not connected with everything, but just with a few, make the system strong and resilient. You as organization should pay attention to creating dynamic relations.
These networks in nature are optimized to exchange. There are a lot of plants and trees that can communicate with each other via fungi. Biologists have the joke that even the internet is copied from the Wood Wide Web. What can we learn from this biological interconnectivity? People still need to upload information to tell when an asset is available. Via IoT we can let the assets upload this information itself. Or when an object senses it isn’t used anymore, than it disassembles itself. In the future we can have buildings that sense the weather and season, and that can change accordingly. I can’t foresee what’s going to happen, but also in the biomimicry field we can expect an exponential curve.
Biomimicry is a new way of viewing and valuing nature, based not on what we can extract form the natural world, but on what we can learn from it. You don’t only need to learn new stuff and new ideas, but also need to let the old ways of working go. To Unorganize one first needs to Unlearn.
I’m going to give you IBM’s perspective on Blockchain. It’s an area we are really interested in. We think we got a distinct point of view about where we are going and where we want to see the Blockchain technology evolve to and develop in the future.
We all participate in a world of business networks. It’s about connecting suppliers, banks, participants. Wealth is generated by the flow of goods & services across business network in transactions and contracts. They all participate in a public or private market. What we are looking at doing here is transferring assets to build value across these business networks with the participants in these markets. We see two fundamental types of assets. Tangible assets as a house, and intangible assets as patents and digital music.
Think about financial assets and intellectual assets. You often pay lawyers when you are transferring these assets. There is also a digital market which will grow and grow with assets like music, video, medical health records. How are you going to control that permission access to the digital information? Here’s where Blockchain comes in; we start to see Blockchain have broader applicability.
In this world of business networks that we all play in and interact, the ledger is key. It keeps the copy of records for the people participating in the world. In our world the Blockchain is a shared ledger technology allowing any participant in the business network to see the system of record, the ledger.
The problem we have today is about linking all the different companies together. Often file transfer is used in complex partnerships and this results in a fragmented, disjointed and vulnerable situation. Our solution is a commissioned shared replicated ledger. I mean with ‘Commissioned’ that you are commissioned to see the transactions that you are entitled to see on that business network, on that ledger. The core goal behind Blockchain is about the Unorganized theme, less bureaucracy, more efficiency, more trust.
Blockchain is not Bitcoin, it’s the technology underpinning Bitcoin. Bitcoin is an unregulated shadow currency. That makes it quite difficult to use in any regulated industry where you need to know who the actors are in your network. So here is a challenge. Crypto currencies are not something we are currently interested in. Digital currencies which are underpinned by a sovereign currency have our interest. Digital currencies are going to change fundamentally how we think about money and liquidity. This will be an interesting area for the future, and needs a lot of regulatory control and government interest. Politicians are going to be fascinated by the taxation questions and social implications of the government agencies that are able to see where you are, what you buy and what you are doing are non trivial.
It became clear for us that there were some core parts that we needed to see developing. These are the shared ledger, smart contracts, privacy, and the need to have variable and pluggable consensus. We believe in the use cases where you know who you are acting with, who has permission and rights in that network.
So why is the business interested in Blockchain? The benefits are a reduction in cost and risk, it saves time and increases trust. And in the same breath you can drive in an innovation agenda across some of your long running business processes. An immutability use case is the financial ledger. In this use case the financial data in a large organization is dispersed throughout many divisions and geographies. Audit and compliance needs indelible record of all key transactions over a reporting period. Blockchain collects transaction records from diverse set of financial systems. It append-only and tamperproof qualities create a high confidence financial audit trial. The privacy features ensure authorized user access. This leads to benefits as a lower cost of the audit and regulatory compliance. It provides “seek and find” access to auditors and regulators and changes nature of compliance from passive to active.
Where’s Blockchain standing now, anno 2016? We are getting feedback from our first projects. Blockchain is moving faster than everything I’ve ever seen before; the adoption and movement of Blockchain is staggering. The intense interest is there. A year ago it was all financial service industry. This year it’s only 60% financial service industry. 40% of our clients are government, supply chain, retail, there isn’t an industry that isn’t looking at Blockchain right now.
We are in an awareness and learning phase. If you want to start experimenting, start with choosing your first project. Think about how the unorganization agenda can help you with that. The objective for us is to push through the hype. The key thing is to start doing things for real. Human beings learn by doing. Start experimenting.
I’m going to take a different approach and challenge some of the conventional wisdom around innovation. At Capgemini we think it is all about how you leverage the value of innovation. I will tell something about some techniques we developed and follow that up with some organizational models and how they can facilitate an applied innovation approach, specifically focused around the Unorganization.
Let’s debunk a couple of myths around innovation today. In the last 6 months 56 innovation centers where opened around the world by multinational corporations. Today in Silicon Valley there are more than 17,000 startups. 80% of these startups fail. We need startups in the market, but the success rate is not high. Investments that corporations are making in technology today is at the highest level it has ever been in our history. Corporate venture funds have invested $7,5 billion in 2015 alone, 21% of that was invested in start-ups. I’ll tell you also that the results of these investments are still uncertain. A massive amount of money goes into research and development. 85% of the products fail and over 90% of the C-level executives interviewed say they are still too slow to market.
Something is going on that’s not allowing us to really get the value we are looking for.
Just some more data to throw at you. We know the story of the Fortune500, where 52% from the year 2000 no longer exist. We know the stories of the iPhone, Uber, and SnapChat.
The thing of innovation today is that the pace of innovative introductions is getting faster and faster. The second thing is that the source and the effect of innovation is now widespread.
Most organizations are ill-equipped to foster innovation. They lack culture, risk tolerance, talent, and/or process. They want to get there fast, they want help to scale on a global basis, they want to have it done safely, and want a high degree of certainty. So no small tasks and no easy answers to that. We also see that innovation is not a random act. We believe that innovation is a discipline which can be managed and planned.
The big story we were seeing is the application of the innovation. How do you apply the innovation in such a way to get real value, real return and greater certainty? And we believe there are four major steps in that process. One is the discovery step: what is actually out there, what are the disruptions that could affect my industry? What are the emerging technologies that a competitor could use against me or I could use as an advantage? The second step is Devise. How do I contextualize the innovation and really make it right for my business? How do I experiment with it and develop a business case? The following step is how to deploy the innovation? How to scale on a global basis? And lastly: how to sustain this over time? If innovations keep coming and the pace is going to accelerate, this is something that is going to be with us for a long time. We talk about that in terms of companies becoming proficient at applied innovation. Or companies developing applied innovation as a core competency of theirs as they move forward.
The second thing we think that’s critical for a company to apply innovation is the ecosystem. We are no longer in a world that companies can innovate within their four walls. We are in a world where the ecosystem is something that has to be nurtured and developed. We see more and more companies reaching out to all kinds of resources in the world.
The third element is the facilities themselves. One of the reasons a lot of innovation centers don’t get the returns is that the center is really not an experiential base facility where things actually happen.
Emotional engagement is required for innovation to work. If I want to engage the younger people of my organization. There is a need to inform, to inspire, to incite and ignite the people.
If we come back to that organizational paradigm and we look at talent, culture, risk tolerance, and the process, and put them to the lens of the unorganizaton, we can see how the organization can enable an applied innovation type of environment for my organization.
If you look at the digital native leaders like Facebook, Uber, Airbnb, LinkedIn, Amazon, Tesla and Zillow, they tend to be very unorganized. But it is not just the digital native companies that do that. Take for example General Electric, Siemens, Schindler, or the Singapore Government. They all made a major shift and change in the organization, their processes, the talent and their risk tolerance.
The time to act is now. You need to establish a raison d’etre which is innovation-ready. IT powered by applied innovation. In you horizon map you will need to move to a 70/20/10 spend posture. For a lot of companies this means a shift from short term investments to longer term investments. Launch “Core 5” initiatives: calibration, ecosystem, experimentation, environment, alignment. Become digitally-inspired and become a real software company that architects for change.
I want to tell you three different stories in the next 20 minutes and give you three things NOT to think about over the weekend.
First story - When I celebrated my 9th birthday my grandfather asked me what I wanted to be when I grew up. I thought that was rather a silly question. We lived on a farm and my future was already crystal clear. I would go work on the family farm. First I had to go to the regional farming school, then finish school at sixteen. I would speak the local dialect with my friends, work six days a week and go to church on Sunday, twice. I would marry and have kids.
Two days later my father died. Just like that. Sort of a bummer. We had to sell the farm and a lot of what I envisioned actually didn’t happen. I went to a different school and travelled the world for work instead of living at my birthplace.
And preparing for this presentation I thought back about my grandfather’s question. I realized there where really a lot of different possible futures. And back when I was nine years old I only saw one. That is exactly where the most of the people in your team are at this very moment. Almost all the people are really only aware of one way of running IT, and cannot imagine there are different ways to organize IT. That there are different IT worlds so to speak. We have to realize there are more worlds to choose from. That unorganizing is one of those possible futures. Find and define the best possible future for your company today.
We know change is going to happen and that you are going to run your IT in a different way. Whatever you learned in your MBA is absolutely useless. Only applying a 360 degree view will help you with finding your best future. Think about your CAPEX and OPEX, see the system and not just the parts. See the input, the throughput and the output.
Second story - I recently was invited to fly to Londen and meet with a CFO of a bank I was doing a project for. The CFO was staring at me like a frog. An intense glare. I thought: “Wow this is going to be fun”. The CFO said: listen I gave you the money for this fancy cloud project and you promised me a 40% reduction in costs. You ended up with increading the spend with 20%. And then in a typical British reserved way he repeated ”twenty percent”, which meant he was really angry.
Why was this so relevant and why was he angry? He is forced to take his company through a digital transformation. He has to change the business model fundamentally. The problem is that traditionally many of these C level executives are accustomed to look at IT as a service, as a cost center at best. This time around, by changing the business model, IT is effectively becoming part of the value chain and in that way IT has direct impact on the result of the bank. And obviously the value of IT in this situation can not be measured by looking at the costs. And that’s the reason why he’s angry. He is looking throught the lens of the old IT-operating model while the whole role of IT has evolved, including the creating of a new operating model that should be measured against different objectives.
The real question is: how do you get from A to B? How do you start when the future IT operating model is not crystal clear yet? You have to start, change your mindset, experiment. Unlearn, learn again, adjust and keep moving. Keep transforming.
Third story - We live in a factual world. We have Google, Wikipedia, Facebook. We have facts in abundance. But facts are not enough to convince people. They need a story. We use storytelling and find this one of the best ways to convey a message. You should do this to. Think about real situations that happened to you, your colleagues, your company. Use the story as a metaphor for your strategy for example and let people internalize your strategy via the story.
An example story is ‘Tom’s list’: Tom was working in his garden and was creating this fancy new whatever. His wife came to him and looked at him and said: ‘Wonderful, but how would it be if you actually finished all the things I told you to do.’ Tom replied ‘Listen woman, there is no need to remind me my list every three months.’ This had two consequences. His wife realized she was trying to run a business at home. And Tom realized he always had too much work in progress. He was working on a million things at the same time, but never got things done or finished. So now at Tom’s company, when they try to do something new they ask: ‘Would it fit on Tom’s list?’
There are three things I really don’t want you to think about over the weekend. One: How can I describe my new operating model and how can I get a 360 view? The second thing I would really hate if you would think about it over this weekend: What is your biggest constraint, where should you start? And the third thing not to think about: You have to create a story. So please don’t think about the story, don’t think about the new operating model, the 360 view and the right place to start change.
Hello everyone, my name is Nell, and today I’m a little bit sick. I’ve a bug. It prompted me to take the lemons and turn it into lemonade and to think about the immune system. What it does for us and how it operates.
The immune system is a way to differentiate between the self versus the other. And to keep the other outside the self. It’s finding patterns. When you encounter a new bug, your immune system is learning about it. This is not in a particular part of the body, but a distributed system. It’s also approximate, our immune system can be wrong. Things like pollen can make our immune system response in ways we wish it would not. It’s this approximation which gives our immune system it’s flexibility. Approximation and flexibility go together.
Something else interesting about the immune system is something called Hormesis. Hormesis is the idea that being exposed to something with a little bit of stimulation helps to improve to get better. Like going to the gym when you stress your body to become stronger. Or calorie restriction diets, where you eat less, actually lets organisms live longer. The immune system takes a little bit of stress and improves the organism.
It’s also a learning system. For example through breast feeding. We found clever ways of improving this learning, for example via vaccination.
Every single individual in a population is unique. This property of uniqueness enables some members to escape an epidemic. Our body seeks out uniqueness. The common canary uses it’s tweeting to find a mate. The songs of canaries that are a bit inbred sound different, the other canaries can hear this and sense that the singer’s genes are of less quality.
Our immune system is pattern-seeking, it distinguishes between the self and the other. It uses distributed detection, its approximate and flexible. It’s learning and adapting and passes that information on to other, searching and creating individual uniqueness.
Al of these qualities we find in distributed organizations. Having a single point of failure means the system can be wiped out in a single strike. This reminds me of an octopus. The tentacles contain 3/5 of the neurons of the creature. 3/5 of its neurons are not in its head. This means the brain can send a command: help me to grab this thing, so the arm can help him and the head can do something else. Incredible: the decentralized octopus. If you sever the limb of an octopus which contains part of its brain, it will regenerate. What an incredible resilient creature. Beyond decentralized we can move in distributed organizations.
Emerging technologies like Blockchain tech may provide a new answer for regulating contracts: it offers smart contracts. The smart contracts can be created in a DAO, a Distributed Autonomous Organization. People from all around the world can coordinate their efforts in this DAO. You have AI in the center controlling things and that AI is able to employ human beings and distribute different tasks. In essence this is a hybrid of a person, cooperation, and a machine. I think here is where we will likely see the first machine persons of a sort.
In the coming years the hacker attitude, the hacker culture will grow. Finding a way to survive, to get the job done. This mindset is going to be so important in our emerging century. Companies like Google: are less interested in what someone’s PHD was about and more in what you can create. They look for people who are great at lots of things, love big challenges and welcome big changes. Agency is key, it’s society’s most precious resource.
We are starting to delegate more and more commercial activity to chat bots and AI’s. Pretty soon machines will be paying things themselves. The Machine Payable web is emerging.
In the economic world we often describe labor and capital. Capital is able to coopt other labor. We may see the start of a shift where machine can outcompete capital itself. Maybe Machines will become the 1%. I think that will be ok. I think this can help to make a society where everybody benefits. These increasingly smart machines will be testing us.
Do you know what the digital most powerful thing on earth is? It’s the Bitcoin processing network. In total there is more computational power in the mining of Bitcoin than in the top 500 supercomputers in the world… times thousand. The future of computation is not servers in some farm, it’s distributed. In fact, we have enough computation power in this network to emulate the human brain if we knew how to do that.
These smart machines are possibly going to cause problems for us. There are already those that use recorded human lines which are played in the right order by AI. They will try to sell us insurance. When you ask them if they are a robot they will lie and deny. They will lie the same way as the machines from Volkswagen did.
It’s not just a case of putting the naughty AI in a box with clear boundaries. That’s impossible with resilient, distributed intelligence. We need to get smarter, to find other ways. There is an emerging way: understandable ethics. I’m part of an initiative called OpentEth which is creating a map of ethics. I invite all of you to join in to co-create. When we are hearing stories about the big bad wolf and the three little piglets, those are in essence coded ethics. This is how we are teaching machines as well, we create scenario’s and variations to teach them what is preferable. I believe that the next trillion dollar economy is the kindness economy. I think we can have a happier world. And I think it can be a joyful place if only we can have very smart machines that also have a very big robotic heart.
Michiel Boreel has worked in the IT Industry for over 21 years and since 2007 has held the role of Chief Technology Officer with Sogeti. Michiel started his IT career at a company now owned by Sogeti advising about the reverse engineering of legacy information systems and migration estimation methods.
In 1994, Sogeti asked Michiel to lead a new initiative, called the Institute for the Analysis of New Technology (VINT), a small research and trend spotting group with the goal of inspiring customers to apply new technology in business processes. A constant theme in all of the VINT research is the question what role IT will play in the future society and how technology can be applied to create meaningful business innovation.
In December 2011 VINT was complemented by SogetiLabs, also headed by Michiel Boreel.
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