RSS

Archive for the ‘Innovations’ Category

First volume in the series ”The Complete Guide to Business Innovation” is out on the book shelfs

tisdag, augusti 22nd, 2017

1

Buy it today at Amazon.

Artificial Intelligence & Innovation Management for Business Leaders

onsdag, juli 26th, 2017

You must not fight too often with one enemy, or you will teach him all your art of war. –  Napoleon Bonaparte

Not long ago one of my clients, a very skilled former top consultant, now a seasoned industry leader, asked for “Artificial Intelligence for Dummies”. An interesting question for a very skilled and insightful person and somewhat reminding of the internet hype in the 90s when firms made fortunes via fund raising and spectacular non-working projects for the new economy. Is AI (Artificial Intelligence) akin to The Emperor’s New Clothes, a tale from Hans Christian Andersen about two weavers who promise an emperor a new suit of clothes which they claim is invisible to those who are unfit for their positions – is it stupid or incompetent? Think about when the emperor parades before his subjects in his new clothes, and no one dares to say that they do not see clothes on him for fear that they will be seen as “unfit for their positions, stupid, or incompetent”. But, finally, a child cries out, “But he isn’t wearing anything at all!”. The very valuable client made a point by asking if there is an Artificial Intelligence for Dummies book, because it was just like in the 90s when there was spectacular stories of technology, and a threatening sense of not understanding of it – and we might very well end up in the same way as we were then. The technology matures but many of the promises that were made have been broken. However, a few new enterprises, on a very large scale, have grown as a result of the investments and technology that emerged during the 90s – and this has been the case over and over again throughout history. Technology, investment, and brave leadership have all reshaped the future in times when promises and dreams were broken. At the same time, coincidences have often played a role in the history and outcomes.

One example how technology and coincidence most likely changed history is Enigma. The Enigma machine is a piece of spook hardware invented by a German and used by Britain’s codebreakers to decipher German signals traffic during World War Two. It has been claimed that as a result of the information gained through this device, hostilities between Germany and the Allied forces were curtailed by two years. What would have happened if the British codebreakers had not cracked it? We do not know, but what we do know is that it was cracked by a number of skilled mathematicians, including Alan Turing, and that their breakthrough was reached by, for example, acquiring this stolen Enigma and the use of new technology called the ‘Bombe’ (BBC, 2017).

While technology, strategy, and knowledge can change things, sometimes in combination with coincidences, players can also learn from each other – advantage become equalized and balance is reached until the next tipping point is reached due to temporarily advantages. Or, as Napoleon Bonaparte put it, “You must not fight too often with one enemy, or you will teach him all your art of war”.

Innovation is about gaining, sustaining, and using advantages for as long as possible while, at the same time, learning for the coming situations without exactly knowing if, when or how it will be used. Innovation is about preparation. Recall the three horizons first defined by Baghai, M., Coley, S., and White, D. (1999), these can be described as:

  • The first horizon (H1) concerns itself with smaller, incremental innovations that build on existing business models, extending the existing S curve of the company. These can normally be accomplished with little structural change and lead time.
  • The second horizon (H2) is more creative and proactive, expanding and building new businesses into new directions.
  • The third horizon (H3) is sometimes characterized as “moon shots” or “skunk works.” This is a much more explorative approach to future S curves, to be commercialized in H2, which ends up producing significant cash flows in H1.

Now to artificial intelligence: Ask yourself in which horizon is AI and how should you approach and, if possible, use it? To guide you when answering this question, we will walk through five steps to investigate, understand, and project possibilities of using artificial intelligence in business. These will be based on a combination of technology insights and practical experience.

I will express the steps using straight-forward language, with pros and cons and, most importantly, it will be clean from dystopic scenarios. When reading the five steps, keep in mind that the increase of patent applications and investments in artificial intelligence in United States and China is tremendous – with 28,000 filed patents, 35,000 AI companies, and over $20bn USD in investments from only 2016, which is forecasted to boost global GDP by $16trn (The Economist, 2017). The most likely reason behind the growing interest in AI is the growing computing power and new computer architecture which can perform vector operations much better (important for AI) than traditional computer architectures. It is not a brave statement that we will see totally new computer architecture and algorithms taking AI even further than today and you will benefit from getting ready for the future.

Download the full paper (pdf) covering following five steps:

  1. What is Artificial Intelligence and Machine Learning – How Does it Work?
  2. What can Artificial Intelligence and what Deep learning can do for you?
  3. How Artificial Intelligence Can be Used to Reinvent Your Business Model
  4. Limitations and Business Risk of using Artificial Intelligence and Machine Leaning in Business Development
  5. When Will “The Terminator” be a Reality?

Download the full AI paper here

Strategic goals and design principles for establishing innovation centres

tisdag, juni 20th, 2017

In many assignments, we see that the client has already established an innovation centre, or may be planning to do so. But often such centres do not deliver on expectations and instead can turn out to be very cost inefficient structures that clash with the rest of the organization. However, ignoring innovation and the capability it can give an organization is not a viable option in today’s marketplace, so the question is how can we better design such capabilities to drive forward innovation?

First let´s recap and set out some basic innovation concepts. Steve Coley defined in 2009 how innovation can be divided into three parallel horizons, each evolving along a predictable S-curve. The first horizon (H1) concerns smaller, incremental innovations that build on existing business models, extending the existing S-curve of the company. These can normally be accomplished with little structural change or lead time. The second horizon (H2) is more creative and proactive and involves expanding and building new businesses into new directions. The third horizon (H3) is sometimes characterized as “moon shots” or “skunk works.” This is a much more explorative approach to future S-curves, which can be commercialized in H2 and end up producing significant cash flows in H1. Ideally, a company should be working on all three horizons simultaneously. The biggest failure of many contemporary strategies is that they are stuck in H1. Some studies indicate that up to 99 per cent of businesses are trapped in H1 due to “spiral staircase” leadership, whereby in the interest of safety and risk aversion, leaders mandate step-by-step projects with narrowly-defined goals and a predictable ROI. This strategy has also been compared to arranging deckchairs on the Titanic, a futile action in the face of an impending catastrophe. In this scenario, large H1 projects tend to get prioritized to such an extent that they can generate internal traffic jams, holding back projects that must vie for the same resources. The result is too many, too big and too cautious projects get the go ahead that don’t create real value for the firm or their customers.

Often a more successful approach is seen in companies that deploy their limited resources more optimally through nurturing today’s profit (H1), developing new ideas for tomorrow’s profit and market share (H2) and taking part in building the future (H3). To link strategic direction and business modelling in a hyper-competitive market with change and transformation programmes for driving successful business development in several horizons, one must have a thorough understanding of what innovation management means within the context of your own organization.

Setting strategic goals and how to make the correct design choices

To gain a full understanding of what innovation management means to an organization, the strategic goals must first be defined. According to Peet van Biljon (Senior Advisor, Innovation360), there are ten typical strategic goals driving why an organization might establish an innovation centre, namely, to:

  1. Create a critical mass of skills and knowledge
  2. Obtain new consumer/user insights
  3. Adopt and adapt new technologies
  4. Collaborate externally (external networks, partnerships, JVs)
  5. Identify new business opportunities
  6. Establish a footprint in new or emerging markets
  7. Scale innovations faster
  8. Build a test bed for rapid experimentation
  9. Provide a showcase of new offerings
  10. Create a base for future acquisitions.

Outlining the strategic goals is the first step to follow when considering the possible design choices. Based on the work of Peet van Biljon and Magnus Penker, there are are a number of design choices to be made:

  • How to link to “parent’s”/“owners” growth strategy
  • Choice of geographic location
  • Governance and reporting structures
  • Details of parent involvement (formal and informal)
  • Operating model
  • Parent’s involvement in major decisions
  • Talent management, such as talent identification, selection and incentives.

When designing an organization’s innovation strategy, its strengths and weaknesses need be considered, and not just overall at the organizational level, but rather by examining the innovation characteristics throughout the organization, including exam leadership, strategy for innovation, capabilities and competences for adopting the best solutions. By analyzing +1,000 companies using InnoSurvey™, we have seen how organizations are not homogenous and how insights on their specific characteristics is essential to making the right design chooses.

Design decisions should be based on an external and internal analysis as well as on the initial plans for removing blockages and amplifying the strategic direction of the organization. Typically decisions are based on one of three approaches:

  1. Best Fit, where decisions are based on how the current situation looks and what’s possible without any major changes. Typically, these decisions are based on the current conscious strategy, leadership, type of innovation, and the capabilities and competences that need to be strengthened.
  2. Best in Class, where decisions are based on the best companies that have the same strategic intent you are aiming for. These recommendations focus on the changes needed in strategy, leadership, type of innovation, personas (the culture), capabilities and competences.
  3. Resource-based View, where decisions are based on the company’s current capabilities, personas and competences, focusing on what is realistically possible and how that can be aligned with the company’s existing overall strategic direction by elaborating the innovation strategy, leadership and type of innovation.

Organizational principles

When it comes to implementing an innovation centre, there are three typical possibilities, and the decision on which to apply should be made based on the organization’s strategic goal, design choice and an analysis of the internal and external context by using a defined strategy for outlining the recommendations related to one of the three approaches outlined above: Best Fit, Best in Class or Resource-based View. The three typical possibilities are:

  • as a central department
  • as a fully integrated unit within the existing organizational chart
  • as several collaborating satellites.

The innovation centre could also be implemented as a combination of all three of these choices. Each one has its pros and cons. The centralized model is efficient, but innovation often occurs in other parts of the business or in the marketplace. Integrated innovation is easier to implement in first horizon strategies, but very often hard or impossible to execute efficiently in second and third horizons due to daily prioritizations. Satellites are a mix of both and can be very efficient, but it can be hard to coordinate among them as they usually tend to be highly autonomous or allied with a specific part of the market or the organization.

Every organization must choose among these options based on its own horizon strategy, its industry and market, current level of innovation and other unique internal and external factors. However, after many years working with companies of all sizes in many different markets, we have found that innovation systems are often better implemented in small steps and not as a formal, full-blown initiative from day one.

My reflections on The Drucker Forum 2016

tisdag, juni 20th, 2017

The 8th Drucker Forum was a milestone in many ways. It focused on the core of what will create the GDP of tomorrow and the actions to take – entrepreneurship and innovation. New GDP will not come from governments or from large corporations, even if they are an important part of a system necessary for growth, they’re not in the driver’s seat.

Many speakers, including myself, focused, discussed and elaborated upon the prerequisites for innovation and entrepreneurship as well as the lessons learned from the past. Clayton Christensen opened his speech by sharing his thoughts about data. He said that data is not created by God and it is not the truth, it is most likely to be found in hell, so he will not ask for data in the afterlife. Tim Brown from IDEO, continued the following day by saying that great scientists are bookkeepers and poets at the same time, something I would agree on and that it is also valid for entrepreneurs, innovators and great business leaders as well. A cross disciplinary mix of insights from human behaviors, creativity and curiosity with data from experiments and past experiences is a winning concept.

Generally I would say most people agreed that studying human behaviour (anthropology) and leading Horizon 1 (with spiral staircase leadership style) in parallel with and a more nurturing style in Horizon 2 (Caldron or Fertility Field) and explorative style in Horizon 3 is a way to mitigate risks and maximize growth.

Another interesting discussion was the one I had with Philip Kotler where we agreed, based on data and our experience, that innovation clearly drives market growth but not always profit. Innovation can drive profit but also hinder it. Profit comes from innovation and growth, but short-term it can hinder profit whilst misused innovation can lead to a lack of profit, potentially decline and bankruptcy. Innovation and entrepreneurship are most likely the most important aspects to address the grand challenges we face on earth creating a sustainable and healthy world for us, our children and future generations – and therefore this conference was a marker for the future.


Clip from Magnus Penker speech on Drucker Forum 2016

Magnus Penker on Innovation

söndag, oktober 16th, 2016

Adapt or die. That’s a summation of the evolutionary theory known as the Red Queen Effect. Under certain environmental conditions, some organisms must remain in a state of continuously adaptation or their entire species will face extinction. That’s eerily similar to the situation faced by organizations trying to stay profitable under the current global economic picture. Innovate or be disrupted.

The name of the Red Queen Effect comes from a character in “Alice Through the Looking Glass.” The Red Queen told Alice, “Here, you see, it takes all the running you can do to keep in the same place.” Many people forget that Lewis Carroll, the creator of Alice and the Red Queen, was the nom de plume for Charles Lutwidge Dodgson, a respected 19th-century mathematician with keen insights into chaotic systems.

 

Magnus Penker on Innovation (subtitled in English) from Innovation360 Group on Vimeo.

 

Schumpeter’s Response

Once you are inside a Red Queen situation, it can be extremely hard to break out and prepare for the future, as many C-Levels have discovered. The solution would come from the Czech-Austrian economist Joseph Schumpeter, one generation after Dodgson. Schumpeter is best known for his assertion that, “Innovation is the creative destruction where the entrepreneur combines existing elements in new ways.” Schumpeter argued that innovation and entrepreneurial thinking at medium- to large-sized enterprises were the engines of a new economic reality.

Innovation 360’s Magnus Penker recently invoked Schumpeter’s views on innovation to reset the dialogue about the origin and purpose of innovation. In a discussion at the Swedish Computer Association, Penker explained, “Today, innovators build things with existing components that have exponential effects.” One of the clearest examples is TCP/IP, a protocol that began as a way for a few computers to network together across vast distances. This gave rise to a chain of events that brought us the internet, the web, the cloud, data centers, mobile apps and soon quantum distributed computation.

Four Forces

Penker went on to add that those exponential results are just one of four large-scale forces driving the next wave of business innovation. The second force is the prolonged period of low interest rates around the world and even negative rates in some regions. That has made it possible for firms to engage in larger scale investments at lower costs. The third force is digitization, which has augmented the speed and effective productive capacity for everyone from sales to administration. The last force is globalization that has opened access to both greater demand and deeper talent pools.

For C-Lecvels such as CEOs, CIOs and CTOs, these forces can become overwhelming. To adapt and survive, they need to lead their enterprises in a dual innovation strategy. They must deploy innovation to maximize immediate operational efficiencies, but they must simultaneously plan out how to move beyond the company’s core competency in the near future. The reason why involves a reassessment of the three innovation horizons proposed by McKinsey.

Three Horizons for the CIO

A fuller understanding of how the three innovations horizons impact strategy will help CIOs put their innovation management plans into perspective. Penker started by pointing out that the core competencies tend to develop along an S curve — they grow, plateau and decay. H1 technologies must improve operations for today, lowering costs and boosting productivity. Digitization has taken on this role most often, helping companies get smarter and respond more immediately to market changes. The problem is that too many companies are investing 99 percent of their technology budgets in H1. CIOS really need to drop that down to 90 or 85 percent to make room for what’s coming next.

H2 and H3 innovations will also follow an S curve, so they should already be in the works in order to meet the demand for future services. H2 represents where the business will be in 12-18 months. You can expect the market to present some unpredictable shifts in that time due to effects like advances in AI capabilities or new business models. Customers will demand that the market serve them in ways that make more sense to them, and some players will certainly respond to that. To prepare for H2, perhaps as much as 10 percent of technology investment belongs here.

The final horizon, H3, describes where the business will be in 3-5 years, and it deserves at least 5 percent investment in advanced research projects. CIOs tend to avoid H2 and H3 investments because leadership normally wants metrics on effective returns and quarterly results. That’s not possible with future R&D. Immediate problems start to take over the discussion, and the Red Queen Effect intensifies. Keeping all three horizons healthy demands a new level of portfolio management from C-Levels. Too often, they get overrun by the speed of market forces before their H2 innovation is ready.

The Lesson of Sweden

In turbulent times of unpredictable change like the contemporary global marketplace, it’s impossible to predict the future based on the past. Data analytics is doing a better job every day of pulling patterns out of chaotic inputs, but even that is only reliable for a few months out at best. What has proven to be much more successful at predicting the future is an innovation shop that creates the future.

Sweden has emerged as a major innovation hub second only to Switzerland in a recent report by Innovation 360. The composition of those two country really share little in common except for their radical innovations. The most instructive lesson here, however, is that Sweden’s unicorns — companies like Spotify, Skype, Paradox, King and Mojang AB — have skewed the results and may not reflect the overall innovative capabilities of the country. It takes a finer grain innovation assessment to produce actionable advice for CIOs fighting the Red Queen Effect in their own industries.

How Artificial Intelligence Will Drive the Three Innovation Horizons

lördag, juli 30th, 2016

AI long

For the moment, forget all the high profiled media stories about the danger of artificial intelligence (AI). These arguments are based on what AI might become, not on what it is doing now. Business leaders like Steve Wozniak have joined iconic scientists like Stephen Hawking in warning that even benevolent AI could rapidly become dangerous simply though inadequate concern for human safety.

Those discussions have value, but this is not the place for them. What matters in this discussion is the nuts and bolts of how AI — as it exists in the real world today — can impact revenues and drive innovation within Steven Covey’s Three Horizons.

Horizon Refresher

As a refresher, McKinsey defines Horizon One (H1) as incremental enhancements to core businesses that are already well-associated with the brand. The key concept here is “Maximize.” Horizon Two (H2) opens a window into the exciting world of practical magic where entrepreneurs convert resources into wealth. These are the solid business ventures that could take off with the right investment. The key concept here is “Develop.” Horizon Three (H3) is the hazy realm of visionaries who redefine the possible with thought experiments, research projects, pilot programs and theoretical business models. The key concept here is “Imagine.”

For a more detailed review of how to act strategically on all three Horizons at the same time, consult my related blog published for Drucker Forum “Organizing for Simultaneous Innovation Capability.” The point is that for all three Horizons, AI can and should hold an elemental significance for innovative businesses. Many have already begun to profit from strategic deployments of these non-local, silicon-based brains. Here’s how.

H1 Innovation: Radical Improvement

Some of the most successful advances in AI can be observed in the automatic translation of natural languages. For example, the Wall Street Journal announced this year that “The Language Barrier Is About to Fall” thanks to real-time AI translation inside earpieces. Similar advances have brought AI applications for automatic first-line support, advanced data search and price optimisation.

Collaborative development experiments with open source AI from Google, Facebook and Microsoft are making mobile apps and the Internet of Things faster and smarter in surprising ways. That’s partly why Gartner predicted that AI-driven technologies would certainly be the next disruptor for the world of enterprise software in the very near future.

H2 Innovation: Business Model Redefinition

These AI applications are, by definition, still in formative stages, but the outline of what is to come is gaining clarity. The Economic Forum at Davos this year referred to these proposals collectively as The Fourth Industrial Revolution.

Many B2B verticals are expanding to become B2B2C due to more intelligent digitalisation, customisation and smart interactions between customers and their clients. This is also known as forward integration in the supply chain, to distinguish these developments from backward integrations.

Backward integration using AI refers to businesses that encourage customers to take a larger role in the initial design process. End customers can help construct and build items they are just for them. This sort of self-service production line relies on company materials and services, like additive manufacturing (also called 3D printing) of individual items.

Some companies like Inbenta are experimenting with a range of service offerings up and down the supply chain. At the center of their value proposition is an AI program that understands natural language queries.

Cutting out the middleman opens up many new business models that could disrupt a host of industries. Basically, any vertical with a supply chain is a potential target for industry redefinition using AI. Some, like Alibaba’s eCommerce platform, are going for volume (using AI from a sales and logistic perspective). Others go for closer customer intimacy but using AI to make it all cost-efficient and scalable.

H3 Innovation: Intersection of Possibilities

In the speculative future, unrelated disciplines mesh to create original realities that no one can successfully predict. When Dr. Vannevar Bush wrote “As We May Think” in 1945, he predicted the web with eerie accuracy, but not the vast reinvention of society that arose from this global neural network. The logarithmic technological surges over the past few decades have outpaced forecasts and even credulity.

What companies need to do to push themselves on H3 projects in AI is to create an open innovation place for stakeholders where impossibilities are irrelevant. Companies can support university-led research or partner with deep learning organizations like Baidu’s Silicon Valley AI Lab. These are controlled environments where visionaries can explore ideas related to singularity studies, such as picotechnology for matter compilers, bio-AI convergence, transhuman wellness, commercial applications for exotic materials and the future of mankind in space exploration.

The Natural Progression

The simple truth is that AI should not be considered as something apart from humanity. It is as much a part of the human experience as language or commerce. AI arose as a natural progression from the first mathematicians and it will be there to help take global culture to its next plateau. [bctt tweet=”The simple truth is that AI should not be considered as something apart from humanity. It is as much a part of the human experience as language or commerce. AI arose as a natural progression from the first mathematicians and it will be there to help take global culture to its next plateau.” username=”@InnoSurvey”]In the meantime, there are many profitable and easily implemented solutions on the market right now to deploy for greater productivity and profitability. From decision-making to security to customisation, AI deserves to have a seat at the strategic table driving for innovations at all three horizons.

Speaker at The Global Peter Ducker Forum

lördag, juli 30th, 2016

DruckerForum artwork GPDF16_Visual_Aula_newI am very proud to announce that I have been appointed as a speaker at the most important forum for global entrepreneurship – The Global Peter Ducker Forum in Vienna. This year’s theme will be “The Entrepreneurial Society” and renowned personalities from the business world such as Alexander Osterwalder, Steve Blank, Clayton Christensen and Philip Kotler will attend this year’s edition of the Forum. Also read my blog post at Drucker Forum  ”Simultaneous Innovation Capability”, a piece of work based on key findings from more than 1,000 companies in 62 countries in all continents.

For more information about the Forum read here.

Today 30 SME Grown-Ups signed up for a super-innovation program

söndag, mars 13th, 2016

Today one of the largest innovation lifts in EU was launched – 30 parallell SMEs Grown-Ups with +2,000 employees in the Swedish ”Mittelstand” Småland did sign up to a 3 year journey! The GrowKomp Journey.

The kick-off took place at Kinnarps Arena, in Jönköping and is a program managed by Jönköping, Vaggeryd and Nässjö Business Regions in cooperation with the Jönköping Business School and the leading consultancy firms  Innovation 360 Group and Codeq.


 

GrowKomp is an 8.2 million SEK worth development project financed by the European Union that has as a goal to generate sustainable growth and competitiveness for 30 companies in Vaggeryd, Jönköping and Nässjö. This initiative will be possible through the strategic facilitation of innovation capabilities, competencies, CSR, gender equality and diversity.

The facilitators of the project are Innovation 360 Group and Codeq, that in a period of 3 years offer an analysis of the current situation, a business and innovation strategy intertwined with couching and consulting to all the companies. Together they will also provide individual analysis, feedback, coaching and training hence providing the companies with the necessary expertise to further develop their innovation capabilities. All highly digitalized and very scalable.

Five Levels of innovation assessment, analysis and development.

Assessing, analyzing and developing innovation can be made on five levels as illustrated in the image below. The region represented in the fourth level is one of the most complex and in this case close to be 80% digitalized by using InnoSurvey for assessing competencies, capabilities, collecting data regarding diversity, company facts, industry and market as well as case management, coach facilitation notes and support, digital sign-in on events, and setting, following up and coaching for actions to close the identified gaps.

Screen Shot 2016-03-10 at 14.33.28

Awarded with Deal of the Year Award 2015

fredag, februari 12th, 2016

The Innovation 360 client, Netsafe International, a company known by its expert services within the areas data communications, IT security, data centers and operator networks, was acquired by  Danish company Conscia AS during 2015.

The acquisition and merge was part of  well structured innovative business and market strategy that aimed to integrate and complement the best of each company into a new consortium that expands Conscia’s market to Sweden and that has as a goal to be the strongest provider of  system integration of network services in Sweden.

Netsafe International and Conscia A/S are two well known companies within their specialty area, being certified Cisco Golden partners. Therefore the acquisition was a proccess that complemented both companies’ capacities to make them stronger. Quting AI (the organisation awarding the deal of the year) there ”was a strategic fit between the two companies and their agendas”.

The acquisition from the Danish company Conscia has as a goal to make Netsafe,  the leading company within system integration of network services that caters for the most demanding clients in Sweden. It resulted in a profitable business, with a turnover equal to half a billion Swedish Crowns, in a period of 5 years.

The selling team was represented by NetSafe’s founder and CEO Emanuel Lipschütz, Magnus Penker Chairman and strategy consultant and CEO to Innovation 360 Group, as well as lawyer Peter Hummelblad from firm Wåhlin and was the final of a well planned and strategi agenda. Conscia was represented by  the company owners and Danish VC.

The positive results of this purchase has been awarded by the Acquisition International granting of the Deal of the Year Award 2015 to Netsafe International and it´s team due to a successful transaction.

For a full article regarding the acquisition go to the Acquisition International Deal of the Year Award 2015 website.

Davos Innovation Analysis: Will The Fourth Industrial Revolution lead to Households as employers?

fredag, januari 29th, 2016

The echo form the Davos meeting just begun… To quote Erik Brynjolfsson, Director of the MIT Initiative for the Digital Economy, “The idea that robots will take our jobs is the biggest misconception I’ve heard here at Davos.” Instead, he emphasized technology’s potential as a powerful tool. Or cite US Vice-President Joe Biden said “I believe, on balance, these transformations are changes for the good. But they come with real peril, and they require us to be proactive. For how will the warehouse worker who used to ship your order, or the salesman who used to take it, now make a living when he or she is no longer needed in that venture?”


 

We stand on the brink of a technological revolution that will fundamentally alter the way we live, work, and relate to one another. In its scale, scope, and complexity, the transformation will be unlike anything humankind has experienced before. We do not yet know just how it will unfold, but one thing is clear: the response to it must be integrated and comprehensive, involving all stakeholders of the global polity, from the public and private sectors to academia and civil society.

Are we on the cusp of a Fourth Industrial Revolution? Most participants in Davos think so. And it’s unlike anything we’ve ever experienced: “As a society, we are entering uncharted territory,” Salesforce CEO Marc Benioff told participants on the last day of this year’s Annual Meeting.

The Fourth Industrial Revolution was  on all lips  in Davos, a good thing but let´s recap. The first three industrial revolutions were, in chronological order, the steam engine, electricity and electronics. The concept is connected to the Internet of Things, and provides that any product in the production chain can carry information about where and how, with the result that the factory is be able to organise itself. The goals are shorter adjustment and lead times, fewer errors, more flexibility and no time-consuming programming. Fourth Industrial Revolution is about the re-industrialisation of the Western world and it could be summarised as an extension of the possibility of connecting machines to other machines and ultimately an end-consumer somewhere in order to organise production in a smart way. At the same time, other possible future-interlinked trends taking place are:

  • The 3D printing revolution, where you print everything from spare parts for air crafts to industrial high-speed fans; bio-parts to full-scale cement houses; as well as consumer products, such as toys and food;
  • The omni-channel in retail and e-commerce, where consumers interact with brand owners, ultimately designing their own products and services using mobile technology for design and access, and brick-and-mortar as service points for training, service and upgrades/modifications. Another example is connected trucks interacting with the nearest service garage when it’s time for a service;
  • The security revolution, where old paradigms are challenged. Classic LAN and firewall architecture are on longer capable of protecting multi-channel connections. New threats require new architecture; and
  • The social revolution and global transparency, which have led to increased demand for fair training and a fair labour market but also sustainable thinking and rapid communication, where everybody with a story to tell can have an impact.

The possibilities of billions of people connected by mobile devices, with unprecedented processing power, storage capacity, and access to knowledge, are unlimited. And these possibilities will be multiplied by emerging technology breakthroughs in mentioned fields such as artificial intelligence, robotics, the Internet of Things, autonomous vehicles, 3-D printing, nanotechnology, biotechnology, materials science, energy storage, and quantum computing.

Already, artificial intelligence is all around us, from early self-driving cars and drones to virtual assistants and software that translate or invest. Impressive progress has been made in AI in recent years, driven by exponential increases in computing power and by the availability of vast amounts of data, from software used to discover new drugs to algorithms used to predict our cultural interests. Digital fabrication technologies, meanwhile, are interacting with the biological world on a daily basis. Engineers, designers, and architects are combining computational design, additive manufacturing, materials engineering, and synthetic biology to pioneer a symbiosis between microorganisms, our bodies, the products we consume, and even the buildings we inhabit.

Challenges and opportunities

Like the revolutions that preceded it, the Fourth Industrial Revolution has the potential to raise global income levels and improve the quality of life for populations around the world. To date, those who have gained the most from it have been consumers able to afford and access the digital world; technology has made possible new products and services that increase the efficiency and pleasure of our personal lives. Ordering a cab, booking a flight, buying a product, making a payment, listening to music, watching a film, or playing a game—any of these can now be done remotely.

In the future, technological innovation will also lead to a supply-side miracle, with long-term gains in efficiency and productivity. Transportation and communication costs will drop, logistics and global supply chains will become more effective, and the cost of trade will diminish, all of which will open new markets and drive economic growth.

Moreover, technological innovation will also lead to more reuse and less waste of material and energy due to economical reasons and social demands.

At the same time, as the economists Erik Brynjolfsson and Andrew McAfee have pointed out, the revolution could yield greater inequality, particularly in its potential to disrupt labor markets. As automation substitutes for labour across the entire economy, the net displacement of workers by machines might exacerbate the gap between returns to capital and returns to labor. On the other hand, it is also possible that the displacement of workers by technology will, in aggregate, result in a net increase in safe and rewarding jobs.

We cannot foresee at this point which scenario is likely to emerge, and history suggests that the outcome is likely to be some combination of the two. However, I am convinced of one thing—that in the future, talent, more than capital, will represent the critical factor of production. This will give rise to a job market increasingly segregated into “low-skill/low-pay” and “high-skill/high-pay” segments, which in turn will lead to an increase in social tensions. Discontent can also be fueled by the pervasiveness of digital technologies and the dynamics of information sharing typified by social media. More than 30 percent of the global population now uses social media platforms to connect, learn, and share information. In an ideal world, these interactions would provide an opportunity for cross-cultural understanding and cohesion. However, they can also create and propagate unrealistic expectations as to what constitutes success for an individual or a group, as well as offer opportunities for extreme ideas and ideologies to spread.

The impact on business

An underlying theme in general is that the acceleration of innovation and the velocity of disruption are hard to comprehend or anticipate and that these drivers constitute a source of constant surprise, even for the best connected and most well informed. Indeed, across all industries, there is clear evidence that the technologies that underpin the Fourth Industrial Revolution are having a major impact on businesses.

On the supply side, many industries are seeing the introduction of new technologies that create entirely new ways of serving existing needs and significantly disrupt existing industry value chains. Disruption is also flowing from agile, innovative competitors who, thanks to access to global digital platforms for research, development, marketing, sales, and distribution, can oust well-established incumbents faster than ever by improving the quality, speed, or price at which value is delivered.

Major shifts on the demand side are also occurring, as growing transparency, consumer engagement, and new patterns of consumer behavior (increasingly built upon access to mobile networks and data) force companies to adapt the way they design, market, and deliver products and services.

A key trend is the development of technology-enabled platforms that combine both demand and supply to disrupt existing industry structures, such as those we see within the “sharing” or “on demand” economy. These technology platforms, rendered easy to use by the smartphone, convene people, assets, and data—thus creating entirely new ways of consuming goods and services in the process. In addition, they lower the barriers for businesses and individuals to create wealth, altering the personal and professional environments of workers. These new platform businesses are rapidly multiplying into many new services, ranging from laundry to shopping, from chores to parking, from massages to travel.

Household as employers is mot likely the place where we will see most innovations and most new jobs in the future, Magnus Penker CEO Innovation360 Group

On the whole, and according to the Davos Economic Forum, there are four main effects that the Fourth Industrial Revolution has on business—on Customer Expectations, on Product and Service enhancement, on Collaborative innovation, and on Organizational Appartamento, Rendering 3d progetto, interniforms. Whether consumers or businesses, customers are increasingly at the epicenter of the economy, which is all about improving how customers and  consumers are served. As a CEO you need to be able to cope and understand the there are four main effects in relation to other. The diagrams below, based on data from InnoSurvey, show how ready we are in some of the large industries and the conclusion is that household as employer is a very innovative trade and someplace where we most likely will see new jobs of the future. Moreover, we can clearly see that non of the industries are really ready for radical change and disruption and all are more or less lacking of the customer capabilities. Interesting is also how Mining is more innovative industry than Manufacturing and Finance – we can clearly be better prepared and trained for the future and we will most likely see new type of jobs that was not in the focus of the Davos World Economic Forum – the households and the micro economy which in it turn are end consumers driving demand for other industries.

InnoSurvey Analysis of Aspects

Global data snap-shot from InnoSurvey™ describing the four areas pointed ot by Davos as critical. Households as employer (followed by mining) seems to be more ready for appointed aspects than Finance, Manufacturing and Retail which also seems logical as we see a market increasingly segregated into “low-skill/low-pay” and “high-skill/high-pay” segments. 

InnoSurvey Analysis of Strategy

Global data snap-shot from InnoSurvey™. Below 3 means not innovating incremental/radical.  The investigated trades are incremental and not ready for disruption. If Household as employer (and firms organising for household services) will apply radical innovation and disruptive technology we will most likely see new well paid jobs here.