As we move away from the power structures and ways of thinking that governed the twentieth century we are seeing a desperate rearguard action from the power elites who ruled that time.

A good example of this is the film and music [...]]]>

As we move away from the power structures and ways of thinking that governed the twentieth century we are seeing a desperate rearguard action from the power elites who ruled that time.

Dying Dinosaur Industries in their Death Throes

A good example of this is the film and music industries, whose centralized model of creation and distribution is breaking down.

The proposed US anti-piracy legislation to protect film, music and other intellectual property from unauthorized distribution – SOPA in the House and PIPA in the Senate – has shown deep divides between modern hyperconnected businesses and old world centralized, command-control industries. And it is now reported that the SOPA bill has been shelved after global protests from Google, Wikipedia and others.

The rearguard action by the old industries is also clear in threats against those who fail to support the old industries:

“Consumer group Public Knowledge on Friday accused the Motion Picture Association of America (MPAA) and its head, former Sen. Chris Dodd, of trying to intimidate lawmakers into supporting a pair of controversial anti-piracy bills.

In recent days, Dodd and other top Hollywood figures have threatened to cut off campaign donations to politicians who do not support their effort to crackdown on online copyright infringement.”

Source: The Hill: Consumer group accuses Hollywood of ‘threatening politicians’, by Brendan Sasso, 01/20/12 04:08 PM ET

We are seeing increased efforts from the old guard to control people and their communication. But the genie of a hyperconnected populace is out of the bottle. And it cannot be put back. Even if they remove the internet as we know it – free flowing and accessible to all – we will invoke Gilmore’s Law and route around that damage

The Economy and the Death of the Western Middle Class

The death of these old industries has important implications for society. These industries enabled the creation of a well-off middle class in the latter half of the twentieth century.

But with the digital revolution many the economic drivers that created the twentieth century middle class have disppeared, as outlined in this article about Apple and US jobs.

And even in Australia we are seeing the gradual shift of middle class jobs overseas, as in this recent example from Westpac, Ultimate insult: Sacked Westpac workers forced to train replacements.

It is becoming apparent that even new businesses no longer guarantee jobs like they used to. For example: ‘No new jobs, dollars’ in bulk stores.

The truth about job creation is only now beginning to dawn on us, and we are seeing the inevitable social and economic consequences of transferring work from high cost to low cost economies.

People are even starting to ponder which jobs will disappear next – for example Will these 10 jobs disappear in 2012?

The old industries employed sufficient numbers of the western populace to keep them in comfortable consumerist peace. Their children could afford an education and thus improve their lot in life. The idea that each generation would be materially better off than the previous seemed unassailable.

But now it seems that truth might no longer hold. The #Occupy movement is seeking to bring attention to the economic bifurcation of society between the the very well-to-do and the strugglers.

Embracing the Future

Those who are not trapped in the old model are embracing the evolving world that is fuelled by the digital revolution. They are accepting the dispersed, decentralized, and peer-to-peer future.  The old intermediaries are dying (or are in their death throes), and in their place new ones are arising.

The future is about human beings  connecting with each other. It is about collaboration and cooperation. It is about sustainable growth. And it is about making space for people to create new possibilities unconstrained by the behemoths of centralized command and control.

Author Paulo Coelho summed it up nicely on his blog recently:

“As an author, I should be defending ‘intellectual property’, but I’m not.

Pirates of the world, unite and pirate everything I’ve ever written!

The good old days, when each idea had an owner, are gone forever.

First, because all anyone ever does is recycle the same four themes: a love story between two people, a love triangle, the struggle for power, and the story of a journey.

Second, because all writers want what they write to be read, whether in a newspaper, blog, pamphlet, or on a wall.

The more often we hear a song on the radio, the keener we are to buy the CD. It’s the same with literature.

The more people ‘pirate’ a book, the better. If they like the beginning, they’ll buy the whole book the next day, because there’s nothing more tiring than reading long screeds of text on a computer screen.”

Source: My thoughts on S.O.P.A. by Paulo Coelho on January 20, 2012

The old style company, that is the company circa 1880-2000, had firm boundaries and fixed hierarchies in order to function efficiently. But with the advent of digital technology and the consumer social computing revolution there is a seismic shift in how technology is used within companies. There are also [...]]]>

The old style company, that is the company circa 1880-2000, had firm boundaries and fixed hierarchies in order to function efficiently. But with the advent of digital technology and the consumer social computing revolution there is a seismic shift in how technology is used within companies. There are also significant changes in worker expectations and, as a corollary, companies are changing their demands upon workers. Huge power shifts are underway and it is important that we start analyzing them now.

The Past

The technology that enabled communication and control of large and dispersed groups of workers was inefficient and required supplementation by human resources in the form a supervisory and managerial hierarchy. Computer resources were initially tightly held by a few individuals within an organisation due to their high capital cost to acquire. And companies had access to much better technology resources than the average individual could ever hope to acquire.

For example, in 1956 a 5MB hard drive from IBM cost US$50,000, and in 1981 a 5MB Apple hard drive cost US$3,500. At prices like these the average person had little opportunity to acquire such technology.

It was this technology asymmetry that also contributed to the non-porous boundaries of the firm. Information stayed inside the firm and was not easy to share. Instead companies were in charge of their information and shared it only on their own terms. And usually that sharing of information occurred through bought or earned media and through ‘official’ news media channels.

The Present and Near Future

Today companies are grappling with the huge shifts in communications. Newspapers and other news media no longer hold the preeminent position they once held. Corporate communications are no longer about faxing out a press release.  Companies are developing their owned media resources and learning to use the diverse earned media opportunities available now via the internet.

Increasingly companies are requiring workers to develop their own social media and social networking personas on behalf of the company.   Also workers are being required to manage corporate social media channels as part of their jobs.  One challenge with this shift in work to social media channels is that they often need tending 24×7. Thus other workers are beginning to feel the operational demands of 24x7x365 operations that those of us in the IT department have felt for many years now.

Another shift is the control over technology within an organisation. In the past centralized control of technology resources was easy due to high cost and complexity to implement. But now with cloud computing as a commoditized service we see the real risk that other departments can go around centralized procurement and IT to implement whatever takes their fancy.

Gartner has just released their vision for 2012 and note that in 2012 we can expect more cloud and consumerization, less IT control.

Increasingly we are seeing workers bringing their own technology into the workplace – smart phones, tablets, and social computing. And articles directed at CIOs are saying: IT’s future: Bring your own PC-tablet-phone to work.

Thus we are at the beginning of a technology revolution in the office that will see the centralized control that was necessary to achieve economies of scale in the last century wane.

Instead we will see the growth of decentralization driven by cost and user demand pressures.  We will also see increased attempts to control behaviour through data and  monitoring due to the growth in the panopticon as I’ve discussed previously.

The Dangers of Digital Serfdom

My buddy Ray Wang posted recently on the right to be offline. We are facing a world of hyperconnectedness in which we can evolve into digital serfs tethered by our digital devices and an un-free as a slave in ancient times.

The risk is that the boundaries between work and personal time become so blurred that they cease to exist. The risk is that employers consider that, with a wage, they have bought our time as and when they choose to consume it any time of the day or night.

The moves to remove penalty rates for IT workers and others also support this trend. Once the unit cost of a worker is standardized an employer does not care what time of day or night they work.

I cannot articulate the concern we should have for retaining this right to be offline any better than Ray:

“There is one thing that I am very worried about actually, is I think it is of the uttermost importance that we preserve the right to be offline. If we don’t preserve that we’ll loose all our freedoms. It starts with ability to be able to escape … of being offline. And so we can be punished for not being offline. For not being online we cannot be punished. It’s happening right now. We are recreating Skynet, we are recreating Matrix, we are recreating all the things that we would fear on our own. And if we can’t protect that basic right of being able to be offline, and being able to conduct a life offline, we’re in trouble. We are in big trouble.”

I commend Ray’s thoughts to you, check out his video:

I came across an article in Wired Science by Jonah Lehrer titled Do Nice Guys Finish Last?. It had plenty to get me thinking.

Apparently:

“… levels of ‘agreeableness’ are negatively correlated with the earnings of men”

Then:

“There are [...]]]>

I came across an article in Wired Science by Jonah Lehrer titled Do Nice Guys Finish Last?. It had plenty to get me thinking.

Apparently:

“… levels of ‘agreeableness’ are negatively correlated with the earnings of men”

Then:

“There are six facets to agreeableness: trust, straightforwardness, compliance, altruism, modesty and tender-mindedness. ”

Also:

“Women were slightly less likely to get picked for promotion regardless of their personality.”

But:

“Agreeable women weren’t nearly as bad off, earning only 1,100 less.”

This research seems to be anchored in personality trait theory (Costa & McCrae, 1992); and there’s been a lot of theorising around trait theory and leadership over the years. That the facets of agreeableness – trust, straightforwardness, compliance, altruism, modesty and tender-mindedness – might not be considered helpful in some contexts sounds bad.

Why wouldn’t high levels of agreeableness be a good thing?  But when it comes to getting things done being agreeable is not always helpful.

For example, scientific advances rarely come to light from agreeing with everyone else. Instead they come from fighting against the current flow of ideas and consensus.

Getting a new business or new business model off the ground requires something different to agreeableness. It requires passion and vision, it calls for team-building and collaboration, it requires dedication and persistence. And, while some of the facets associated with agreeableness are helpful, they alone will not drive the change through to fruition.

Think about many of the leaders of history, for example: Steve Jobs, Jack Welch, Margaret Thatcher, Mohandas Gandhi, Mother Theresa, or Winston Churchill.  Not one of them was reputed to be easy to get along with.  They were each, in their own way, not very agreeable. But, love them or not, they got things done.

But perhaps the agreeable people, who didn’t get promoted, are happier?  Where’s the research on that?

However, it is interesting to note that women displaying agreeableness are less badly off than those not displaying it. Thus it seems powerful women remain undervalued, unlike powerful men.

Friction is one of the more important concepts in the world. Many things are either made possible or impeded by friction.

Strike a match and the friction creates a flame. Yet that same kind of friction stops other things from flowing smoothly.

Perhaps the best description of the challenges [...]]]>

Friction is one of the more important concepts in the world. Many things are either made possible or impeded by friction.

Strike a match and the friction creates a flame. Yet that same kind of friction stops other things from flowing smoothly.

Perhaps the best description of the challenges that arise from friction is from the well known military strategist, Clausewitz:

“Everything is very simple in War, but the simplest thing is difficult. These difficulties accumulate and produce a friction which no man can imagine exactly who has not seen War . . . in War, through the influence of an infinity of petty circumstances, which cannot properly be described on paper, things disappoint us, and we fall short of the mark.”

From: Clausewitz, On War, Book I, Ch. VII

Recently Mark Pesce asked “What happens after we’re all connected?“, and he came up with the answer: “hypereconomics”.

Economics, fuelled by hyperconnectivity and enabled by the removal of friction in processes between people, equals hypereconomics.

And it is this removal of friction in processes, enabled by the internet and mobile technology, that creates the next frontier of opportunities for business.

The combination of mobile accessible applications and peer-to-peer social networks offers an astonishing array of new business opportunities.

In the Arab Spring and Occupy movements we have already begun to see the social and political shifts that are enabled when citizens can communicate and organize effectively through use of mobile technology coupled with social media.

The impact of these political and social movements will necessarily flow on to economic structures. This will create a gap for development of new business models based on removing friction and leveraging peer-to-peer capabilities offered by mobile devices.

Also people are getting used to helping themselves and each other, and the technology is enabling them to act collectively without a great deal of effort. This is the big shift.

We can now collaborate and act collectively even though separated geographically. No longer do we need to meet face-to-face to act. Collective action is enabled and made more efficient with mobile technology in so many hands. And it even facilitates better face-to-face meetings and action (viz. Occupy and the Arab Spring).

I am expecting to see a lot of disintermediation – shifts in the supply chain that that remove some existing intermediary players.

One of the first areas I expect to see this in is new mobile and online peer-to-peer payment models. Another area is aggregation of service providers and potential customers. Up until now aggregating those types of services required large capital investment, but now it just needs a peer-to-peer smart phone application.

If you are an existing economic or financial intermediary it’s time to start planning for this new reality. If you don’t then the dispersed peer-to-peer linked mob might just eat your lunch.

This week I spoke at the Recruitment Technology Evaluation Convention in Sydney. The topic was navigating the hyperconnected world from a recruitment and human resources perspective.

The key issues facing businesses now include:

Steve Hopkins was telling me recently about an interesting law firm he’d come across in San Francisco – it’s called Robot. Where lawyer and junior partner Tim Hwang and his senior partners, Apollo Cluster and “Daria” XR-1029, work to merge legal and technical systems.

It [...]]]>

Steve Hopkins was telling me recently about an interesting law firm he’d come across in San Francisco – it’s called Robot. Where lawyer and junior partner Tim Hwang and his senior partners, Apollo Cluster and “Daria” XR-1029, work to merge legal and technical systems.

It was this law firm, and an interesting conversation Steve had with Tim Hwang, that sparked the idea for Steve’s session at last Saturday’s Social Innovation Unconference at Barangaroo.

We discussed the time in the future when robots run everything. And it got me thinking just how much robots already do for us. For most people the robots that run things are unknown and operating below their level of consciousness.

But let’s consider some of the work that robots already do for our society:

• manufacturing – e.g. assembly lines for things like cars and packaging, quality control, building electronics components such as circuit boards
• call centres – e.g. automated voice response systems
• financial services – e.g. business decision support systems, straight-through-processing trading systems
• the internet – e.g. search engine bots or those annoying Twitter bots
• military – e.g. unmanned combat air vehicles (aka drones)
• home and industrial cleaning – e.g. vacuum cleaners

I’ve been personally involved in developing and implementing intelligent business systems for a long time. Starting in the early days of voice automation and straight-through processing of financial transactions in the 1990s, through to the present day.

A large part of my work during the late 1990s and early 2000s was automating business processes and removing human beings from business processes. It was a huge shift in labour from human beings to robots. Those were mainly clerical jobs where a computer with a decision engine could easily replicate the work done by people.

Consider the productivity savings achieved by many of those projects; for example one project halved the number of call centre operators through the use of automation. That saving was achieved by addressing throughput constraints in both the inbound and outbound queues.

Firstly savings were achieved through the use of automated outbound calling technology – not waiting for the humans to dial a number but rather having the system start making the new outbound call while the earlier call was finishing. It also improved throughput by automatically bringing up the data entry screens for the call centre staff.

Secondly savings were achieved by adding customer self help options at the start of the inbound call process and by providing support to move customers to online self service. Instead of a human being tied up on the phone for 2-5 minutes with a customer trying to ascertain their needs the IVR and the customer did that work thus freeing up the operators to take more calls.

Arguably these improvements through increased automation were not as good for customers as they were for the bottom line of the companies, nor were they very good for the call centre staff that became redundant. And many would argue (as do I) that shifting the business processing efforts to consumers does not always make for excellent customer experiences. But cost and process optimization is a fundamental business practice.

It’s interesting to consider what other jobs will be removed from people via the next rounds of automation. The jobs that will go next are most likely to be middle class and white collar jobs.

The jobs that could go include: journalists, lawyers, managers and supervisors, warehouse personnel, sales staff (if the sales are all online how many do you need in a store?). Fundamentally, if your job or substantial parts of your job,  can be defined by means of a decision tree then your job is at risk of a robot taking over.

Welcome to the brave new world of work. What’s your plan to survive when robots rule the world?

Note: I’ve left out the entire area of robots for health since I don’t know much about it – but I reckon that will be huge too.

Tonia Ries has just published an article titled Privacy Fail: Klout Has Gone Too Far, which outlines how Klout is indexing social networks and creating/measuring user profiles, even if they have never registered with Klout.

About the [...]]]>

Tonia Ries has just published an article titled Privacy Fail: Klout Has Gone Too Far, which outlines how Klout is indexing social networks and creating/measuring user profiles, even if they have never registered with Klout.

About the same time Facebook was accused of creating ‘shadow profiles’ on users and nonusers.

As I said recently, welcome to the panopticon.

When Jeremy Bentham originally came up with the idea of a panopticon he introduced it saying:

“Morals reformed – health preserved – industry invigorated instruction diffused – public burthens lightened – Economy seated, as it were, upon a rock – the gordian knot of the Poor-Laws are not cut, but untied – all by a simple idea in Architecture!”

Source: Bentham, Jeremy The Panopticon Writings. Ed. Miran Bozovic (London: Verso, 1995). p. 29-95

And thus it is, that by the beginning of the twenty-first century, we have (well most of us) willingly and freely chosen to become part of an electronic panopticon.

Privacy is now only possible by a steadfast refusal to participate in digital society in any way – by becoming like the Unabomber and moving to a shack in the woods. And even then, if others who participate in the electronic society mention your name or activities online, you are still caught up in the net.

Global surveillance has been made easy, simple, and ubiquitous. The very devices – laptops, tablets, mobile phones – we all carry enable this constant geophysical tracking via the SIM cards and wifi connections.

However, as we are seeing with the various #Occupy movements around the world, these same technologies that enable surveillance of us by the authorities, also enable sousveillance of the authorities by us.

This is one of the interesting things about living in an electronic panopticon. Unlike Bentham’s inmates we are not physically constrained to cells. We can move about freely (for the most part).

And we can also co-opt the same technology to create our own networks. Those networks can become peer-to-peer and frictionless. They can enable us to organise into groups very easily and to share information and ideas in ways that used to be hard.

The panopticon is here, it’s time to turn it to our own ends.

One of the various social media influence scoring platforms – Klout – has just changed its algorithm and overnight many people’s Klout scores have dropped.

This has caused one of several reactions:

In response to yesterday’s post someone on Twitter, @dmanww, raised the very sensible issue of the triple bottom line, or as some might call it,

In response to yesterday’s post someone on Twitter, @dmanww, raised the very sensible issue of the triple bottom line, or as some might call it, corporate social responsibility (CSR).

However, having worked in a number of organizations that took the triple bottom line and corporate social responsibility very seriously, I know that it is not pervasive within the organization in the same way as the maximization of shareholder value.

To put it bluntly my bonus often had a small component of CSR involved, but the major KPI was always contribution to revenue (a.k.a. shareholder return).  Very rarely were major issues discussed in terms of CSR impact, but issues were often talked of in terms of impact on shareholder return.

Measurement of the triple bottom line is not the problem. It is only a problem in an environment where the only things that matter are those that are monetized and which are realizable within a short term timeframe.  In that context it is impossible to measure other things that matter – like quality of life, social impact, or common good.

Corporations focus on what provides revenue. That is the nature of the beast. It is not evil to pursue revenue. However, the pure pursuit of revenue is an amoral activity. This is especially true if executed in an environment where things – people, environment, society – are objectified and monetized.

I got interested in the idea of implementing a triple bottom line back in the 1990s.  From my perspective it has not made much progress.  CSR is still largely the responsibility one department within most companies.  It has not become a pervasive filter for everyday business decisions.  And I do not think it ever will become one with the current way corporations are structured, rewarded, and assessed.

Even if a corporation wanted to change their approach on CSR and implement it more fully, the market analysts would most likely punish them.  This is because CSR necessarily impacts upon returns to shareholders.  Since most public companies focus on analyst reports to ensure share prices are maintained this is a problem. And the problem is related to executive rewards, since often these are tied to stock performance.

For modern corporations the complex nexus between  corporate structure, executive reward, and market assessment means that truly implementing the triple bottom line is fraught with risk.

It is interesting to think about this now that we see Occupy Wall Street spreading around the world (even to Occupy Sydney).

Back in 1976  Michael Jensen and William Meckling argued that the solution to the principal-agency problem — business leaders [...]]]>

It is interesting to think about this now that we see Occupy Wall Street spreading around the world (even to Occupy Sydney).

Back in 1976  Michael Jensen and William Meckling argued that the solution to the principal-agency problem — business leaders advance their own interests not those of shareowners — was to make the goal of the corporation the highest return to shareholders and to align shareholders and business leaders through granting stock options. Today this remains the prevalent model of organizing and motivating people within organizations in the western world.

I have long argued that this approach evokes extremely dangerous behaviours in companies – creating corporations that are run as if they are peopled by soulless automata.

The construction of reward systems that prioritize shareholder value as the sole objective of the corporation encourage risk taking, little focus on other concerns (such as social and environmental good), and poor treatment of human resources.

Dan Ariely has written about Better (and more) Social Bonuses - it is worth reading. Bonus scheme incentives encourage unhealthy competition and can drive unintended outcomes, such as ignoring due process (as in the various bank scandals such as the recent UBS rogue trader).

One characteristic of the shareholder value model in action is the objectification and monetization of things – people, environment, social good.  This attitude has inherent problems for all stakeholders in a business, even for the shareholders. Shareholders are people too, they live within a society and an environment.  Thus prioritizing shareholder value over social and environmental good is not necessarily good for shareholders.

As a senior manager in large corporations I often found myself referring to people as FTE (a.k.a. full time equivalents). This objectification of the people within the organization – treating them as if they are mere machines – is a characteristic of this shareholder primacy model.

Once the people who work in the business are successfully objectified it is much easier to treat them in ways that previously impossible. It is easier to implement inhumane or unsafe work practices. It is easier to fire people. It is easier to ask people to do things that are unethical.

The other part of this unhealthy equation is the large institutional shareholders in corporations.  Because they represent interested parties at second or third hand again we see objectification of the process.  They too seek only to maximize benefit for the shareholders that they represent.  But  because they represent those shareholders at arm’s length they do not understand the needs or wants of those shareholders.  Thus the real people who are shareholders are assumed to only seek maximum value no matter how that is achieved.

The common thread in all of this that real people with real desires to create a good world for themselves and their grandchildren do not have their interests adequately represented.  Instead we all suffer – people, planet, nature – because of this single-minded pursuit of maximal shareholder benefit.