 Good morning Bonjour. No, I'll skip the rest because I've already heard the rest. I was very good and I can't beat that. So Thanks for being here. I live in Switzerland. I spent 17 years in the US So if I speak too quickly and too excitedly and say awesome too much That's because of the US, but I'm also from Germany So if I use perfection in my slides, that is the reason why Many of you may have never seen a futurist or listened to a futurist before in fact in many Places like Germany for example people don't really know what a futurist is And so I want to describe that first. It's basically a very simple thing. I don't predict the future Unfortunately, I if I could do that. I probably would be sitting in the middle of the lake here with a nice castle So I observe my job is to observe or take a look and basically work on scenarios my company The Futures agency helps companies reinvent And sometimes that's very painful because as you know digital transformation is not about change Change would be trivial compared to transformation I mean if you look at what happened for example the music business I worked for a long time as a musician and producer a record producer and then I went in the digital music business I started a company like Spotify. You may know of course. These are right company like that. I started that in 1999 Thinking that music is ready for the cloud But it wasn't and change is really different than transformation. Now music business is no longer physical And that is a painful transformation It's difficult, but I'll give some more examples about this So this is really my job I had one is to listen and to observe and the other one is to project Backwards from the future and I think most of you could also do this job It's not really a special gift or something. It's just I spent 90% of my time Doing something that's not already here So one thing I want to advise you right from the beginning to change your future and the future of course isn't fixed to create your future Try to spend three to five percent of your time on thinking what is not already here This is very important because now the speed is increasing in a mind-boggling fashion in a way that we haven't previously thought of This is the main thing the convergence of man and technology a woman and technology as well everyone but the convergence of man and machine and if you If you have kids, you know exactly what I'm talking about, right? It's like the mobile device has become the extension of our brain Truly has become the extension and that's good and bad depending how you look at it, right? But now our entire society is moved in this direction that we have this constant convergence of man and machine Robotics artificial intelligence when you're using Google Maps when you're using Siri when you're using anything on your mobile device There's artificial intelligence behind it, right? I mean most people don't even know what that is If you would ask them so we're talking about it really a substantial change and for businesses This is the shift, you know from the old-fashioned way of doing things that was more or less analog or semi digital And to becoming truly digital It's very difficult the bigger you are the harder it gets right so first music Second film and television third books and publishing right fourth tourism hotels fifth financial services Insurances mining cruise ships, you know, you name it government everything right there education So it's all happening basically in all industries and this transition is something that we're looking at and we're saying things We're seeing things like this project for Microsoft called HoloLens right which allows you to see reality in a different way And now we have technology that allows us like Google Glass tried to do didn't really pan out there, right? But this idea of seeing reality in a different way will become completely normal This device is proposed to cost a couple hundred dollars And it's going to be widely used by doctors and policemen and architects and people fixing things and network engineers and you know Being able to see superimposed information on top of your visual field That sounds like geeky stuff now right like my wife wouldn't really understand what I'm trying to say here But in five years Will be as normal as SMS. I mean, of course SMS will not exist in five years. Just kidding I hope it will at least to some degree so Here's one of the key facts. We're now living in an exponential future Exponential is not what we can understand as human beings like because we are linear You know, we can have a maximum of 150 friends in our social circle That's the normal human way. We can't have 15,000 because we have linked in and We can't live faster because we tweet and we are linear But technology Moore's law doubling every 18 to 24 months or depending how you look at it It's basically now at the takeoff point We're at the point of where all the stuff we talked about is actually happening You know 10 years ago. We talked about the paperless office. Remember that didn't happen Is it happening now? Absolutely We talked about the shift in to renewable energy Based on technology didn't really happen. Is it gonna happen now this year? Yes, it's a takeoff point, right? so technology is now becoming exponentially powerful and I like to say that humanity will change more in the next 20 years than in the previous 300 and That sounds totally crazy. All right. Do you think about that? Industrial evolution 300 years ago now we have a major breakthrough just about every week now the technology bioengineering geoengineering Asteroid mining Electric cars self-driving cars the list goes on every day. It's not a single day that goes by without a major breakthrough in science and technology and then Of course, it makes us worried sometimes that technology is basically taken over everything. I Mean in Japan you can buy an electronic pet To come and greet you at the door, you know, that's something that we probably culturally wouldn't really do in Europe I'm not knocking it, but you know, I probably wouldn't buy one So this exponentiality. There's a very interesting story that Ray Kurzweil likes to tell I will share with you briefly When chess was invented 500 years before Christ in the multi period in India There was a wise man who went to the emperor and brought the chess game and the emperor was really excited about the chess game and Then they had them. They had a match and the emperor said to the wise guy or the wise man. Sorry Why is guys are later? To the wise man said what do you want if you win and The wise man said I want one rice corn for each field on the on the on the chess board Right and you double it every time you go to the next field So basically they the emperor said that's very modest, you know, how much can that be? You know, you get one corn and you get two coins then you get four coins and you get eight You know can't be very much turns out Half way through the chess board it's already the entire rice consumption or production of India and Haven't gone all the way through the chess board It would be a mountain of rice that would cover the earth and one meter a layer of rice, right if he actually won And so the guy did win then the wise man and the emperor killed him and got him beheaded Because he realized that he couldn't pay So this is the thing about exponential. It's very hard to understand But here's something we have to know that we have to consider we are now in the second part of the chess board We are in a place To where we are now entering the truly exponential force of technology And I'm that's not all good thing right most of that is good But it's also quite hard to figure out what we're going to do about this I mean we're looking at these numbers here, right? I mean if you're looking over here in terms of like DNA sequencing It used to cost a hundred thousand dollars to get your DNA down now It's eight hundred forty dollars and some people are saying it will be cheaper to flush the toilet in five years Then to get your DNA analyzed I mean the other way around sorry You you get what I'm saying, but basically it's becoming free. I mean look at the price of music or a film Now you can subscribe to Spotify or Simfy for 10 euros a month. It used to be 20 euros for one CD I mean the changes we're seeing here truly exponential exponential increase in velocity and speed and Magnitude how many companies have become one billion dollar companies companies that are privately funded, right? 86 companies in two years are worth a billion dollars without any bank or any IPO just privately funded I mean we're talking about huge economic impact of this transition disruptive technologies Automation of knowledge work you can download my slides later by the way. We're going to make it available. There's quite a few slides here But basically a McKinsey says we're looking at an economic impact of roughly 30 trillion dollars of This transition and let's make no mistake about it. There's fantastic opportunities and that's quite a bit of Darwinism here If if we're not good enough people will just ignore us and that goes for all of us including myself The tech conference this year will have the first time Where there's a robot delivering a speech about the future? It'll be interesting to see I doubt he can compete, but you know who knows right, but anyway Now we know of course if you have kids again You know I traveled three years ago with my son to Zanzibar the first time ever that he was not connected To the internet and we're sitting on the beach and the hitting his mobile phone like this the whole time saying why is My phone is broke. I'm saying well, there's no internet here, right? No internet no music no news no feet no Facebook I understand basically not breathing dead So connectivity is becoming like oxygen in fact Connectivity in Africa and Asia and many other countries will get there sometimes before electricity Which is kind of a weird thing? But connectivity is becoming like oxygen That also means it will probably come become cheaper, but even more crucial is What it will do to our lives And how we will deal with all the side effects of that too for example sensor networks if we use sensor networks In energy regulation or thermostats at home, you know basically figuring out how our heating and air conditioning works We can estimate about 35 to 40 percent of energy savings By being more efficient with energy Now California is thinking about making it mandatory to use a connected thermostat right to save energy and water We're talking about substantial changes based on those two facts automation Intelligence I would give you a piece of warning on the automation part I think automation is inevitable and lots of jobs will be lost due to automation for example bookkeepers or filing clerks or call centers Maybe some taxi drivers And that is a huge social issue of course, but automation will only last as long as at last, you know You can't automate beyond one So there's an efficiency and end of efficiency, but basically intelligence is the more exciting part Make it systems truly intelligent Now when you talk about intelligence, it's very important to distinguish between human intelligence Which is embodied and physical emotional social intellectual right and machine intelligence Which is based on algorithms For the most part Why should I ask Siri about that but So that's very important to distinguish if we're looking at intelligence for example The example of trip advisor. It's a very good story If you like to use trip advisor, you know what I'm talking about sometimes it's completely spot on and Sometimes you're wondering like who in the world Actually aid here and and lift to write about it It's a it's a good data point, but it's not reality in the same way So I sometimes say that basically trip advisor is some some way between 5 and 20 percent of reality If you're in front of the restaurant looking inside smelling the food seeing the people it takes you less than three seconds Probably in most cases one second to decide if you're gonna go inside There is a difference. Let's keep that in mind So the other thing that's happening here is That there's a temptation of thinking of human processes, you know business is a human process basically right As a machine process as an algorithm And while we use technology to make business perfect in a way and efficient We should not think of that as being sort of a process of machines right an algorithm We also need to keep in mind what it means to be truly human in the sense of actually Finding a purpose for business. This is also very important So in this process of what we're doing here in technology. We're seeing this happening in the next few years basically going from efficiency to intelligence To engagement right ultimately we want engagement with our clients, right? We don't just want them to click something or to find out stuff right? We want them to build a relationship and then have a transaction That's not making mistake and say well, it's enough to be efficient and intelligent. It's not You don't have a relationship. We don't build trust. You don't have a business You could be as efficient as you want and you have no brand nobody will buy anything from you So that's very important to keep in mind My friend Frank Deanna has a fantastic slide here. That's a little bit confusing, but it's still very worthy Showing all the stuff that's happening at this very moment That is coming towards us as a business and as people who are engaged in business are 3d printing the internet of things cognitive systems robotics Automation sharing economy. I mean all these things that you read about pretty much on a daily basis But here's the thing These are all happening at the same time They're combinatorial Part of your mission has to be to figure out how will all of those things converge to change your business And how will you take advantage of it because they're all interactive, right? They're actually all interconnected the exponential interdependent a doctor for example Now has the possibility of taking a IBM Watson type machine or any other provider that does this right to take that along on his rounds in the hospital So when he sees a cancer patient, he can now pull up a hundred fifty eight thousand cases of exactly the same cancer In at the at his fingertips, right? And then he can focus on talking to the patient rather than pulling up the information I mean that is a huge shift in terms of cloud connectivity mobile devices artificial intelligence You've all heard about uber This is a car service like a taxi that you call through an app most of you I'm sure you know it There's lots of Controversy about uber about them exploiting drivers and so on but I use a lot because it's kind of an experiment for me And now the the University of Columbia has done a study already two years ago when they started they figured out that if uber had 9,000 autonomous cars, you know electric self-driving or assisted driving cars in New York City We could do away with all of the taxis 9,000 fully automated cars would do away with a hundred and 18,000 taxis And you would pay less and get a ride quicker This is the kind of transformation that's gonna happen There's lots of reasons why this particular one will not happen. It's just an example But this shows you what's happening right the amount of efficiency and change that we're seeing there is mind-boggling and Companies are coming out of left field like Airbnb and uber and drop box And you know basically coming through the back door and solving those problems It's a very important to keep that in mind is I wrote a book in 2005 after I got done with the music business in 2002 called the future of music and this makes a fantastic example This book is about ten years old, but please don't buy it. It's actually quite old Important part is this one right looking at this slide here from chords QZ comm The music industry keeps selling less and less and less and less recorded music as a record or as a physical good Right. I mean in fact, I think if you give your kids a CD or DVD for Christmas, they would call a therapist I As basically like that. I mean, I think the chart will go towards zero here So the music industry realized, you know people are no longer buying physical goods But they weren't ready to give up on the control of distribution So in the process of this fight since I was involved in 1999 Napster days, basically, right? The record industry lost 71% in revenues and recorded music Because they weren't ready for the shift of the customer to say music is in the cloud, right? I mean where else will music be now? It's just a button on the device now more or less So here's the interesting part, you know, we really have to think about this Peter Drucker says in times of change The greatest danger is to act with yesterday's logic Now this is something you do not want and Yesterday's logic, of course, we all think with yesterday's logic because that's what we have But sometimes it pays to sit down and say what if My logic is actually no longer correct. What if my assumption is not correct? This is a crucial question Whether you make an elevators or communication systems or or doctors equipment or music, right? This is the question is it actually still the same the answer is people do not want music as a physical good Most of us want it as a as a click in the cloud, right? So that's a really important question My friend Ross Dawson had this really good slide about the news business and I I use it as a as a tangent as a Comparison to your businesses Basically, if you try to sell news for money the so-called paywall Like the New York Times has tried most of them fail miserably Because the bottom line is it takes a lot more than the content to make a sale I mean content used to be about 75 percent advertising supported and now with the internet There's like a hundred different models how you can monetize content for example, I subscribe to the economist Economist $150 a year I only subscribe because I can listen to the economist magazine in the car Using their recorded tracks. That is why it's the interface, right? That's why I buy it I mean the writers are great, right true, but without the mp3s. I wouldn't wouldn't subscribe So here's a lesson from the publishing business for us Just like the publishers are transcending the idea of selling content, you know the paywall which didn't work Digital transformation forces us if the other leading incumbent to Transcend the products that are becoming a commodity If you have a product that becomes a commodity because of digital you have to figure out what else you can sell and That's all those values around it For example Audi BMW Mercedes and other car brands They're not going to sell cars in the future That will be one of the things that they do they say they will sell mobility transportation and data services That's a much bigger arena So we have to think this way otherwise, you know, we may find ourselves out of a spot there For example, the movie business where you see some slides here, right? The red line is all the physical sales The green line is all the digital sales Now clearly if your Warner Pictures or Sony You're not happy with this because the DVD used to cost with region coding included 25 euros a DVD Now you buy iTunes, which is pretty expensive But you can buy Netflix or Hulu or other services for 10 euros a month for 400,000 movies And how much do you get for a movie on Netflix 0.0.0.0.0.0 Something It's a different business model so we can take a screenshot from this and say okay Managing dissatisfaction having dissatisfied customers who don't have other options Like you know, I live in Switzerland I'm banking with credit Swiss and I'm I feel like I'm the victim of managed dissatisfaction I Can't really do anything else, but every time when I change something is not working Why does it cost $40 to send money to the US when you click on a button? I don't know. It's just that's the way it is, right? That's just being average. I can guarantee you if you're being average in the future, you're dead There is no average that's either going to be brilliant or new or exciting or something, right? and that's really important so That's where the future will take us also because of the millennials Did you know that 75% of the workforce in 10 years will be the current millennials which are around 30 now and These people many of you are some of you are millennials, right? They think differently. They have higher expectation. They use technology. They want to make a difference They're looking for all kinds of things So we have to keep that in mind especially business to business that becomes a reality that we have to face So that means we have to think hybridly or you could say Schizophrenically in a way We have to think of the business of today, which is not for the most part not that digital It's still fairly old-fashioned and using paper and and then we have to think of the business of tomorrow of the 2020 business Which is digitally native And that's actually totally different. I mean if you sell records today It's 20 20 dollars a record if you sell a stream on Spotify. You just part of a pile of 20 million songs, right? Somehow they have to live together So it's very important think about what is but also think about what might be Of course, that's my job. So it's easy for me to say but you know the the future Clearly we know on this on this model the future isn't going to be fossil fuels if you're in the oil business You're out of luck if that's what you're betting on, right? It's totally obvious. It's certain quest is just when Some of our colleagues have said that this year will be the first year where some of the oil companies will jump the ship to renewable energy so basically what we're seeing here is that in This scenario everything and everyone is moving into the cloud Now this is a scary thought also because the cloud currently isn't entirely secure and there's no real rule about it, right? Who gets to administer the the security access and who holds the identities? What laws are governing the cyberspace, right? We have to solve those problems But basically what happens here because everything is moving into the cloud data business intelligence analytics We have huge competitive advantages. You will see companies That are currently employing a hundred thousand people. They will have one thousand people in five years Do the same job if that's good or bad for employment, I don't know You know, this is just a question of using technology and there has many consequences one of the consequences is That we can no longer live in a silo You can't say well, I'm the tech guy you guys are the marketing people you guys are the financial people and you guys are the You know the advertising guys or whatever, right? It's all together now best example is Tesla means that the car the product is the marketing The product is software so you can update it and now they're branching out into batteries and transportation They're leaving the silos I mean compared to BMW or Audi, right? They're still very much solidly in the silo of making cars, right? Tesla is not a car company. It's a technology company So thinking about that is basically game over for the silos It's hard to realize this, you know Even if you are an engineer or marketing person you going to have to know some of the other neighboring areas To come up with new business models Mark Andreessen said this in 2011 Software is eating the world Everything that used to be hard stuff hardware is becoming software music films books money Driving cars education That's not to say that of course in education. We will still have universities right hard things, right? But everything is becoming software That changes the mechanics of things that changes how we do anything everything that can be digitized or automated will be And I'm not saying that because I want that to happen. This is just a sort of a diagnosis, right? And What that means for us is we're going to have to think about the consequence in a and how do we generate trust if things are digital? It's actually pretty hard to generate trust when it's not real-time real place real people You cannot automate or digitize trust We have to keep that in mind we can destroy trust in a digital world. We can do that. Can we generate it? We can maintain it robotic cars ships planes The first debates from the airline saying that we should get rid of pilots. This is serious, right? Because it's pretty much proven to be safer without them But who would want to fly in one without a pilot robotic pets very popular in Japan this thing Called the Jibo the world's first family robot check it out in YouTube is quite scary This is all happening right now in real-time What's happening also with computing is that now computing is becoming ambient, you know part of the environment We don't even know that it's computing, but it is and it's actually predicting things many apps that we have are now in the prediction business anticipating our next move and Giving us a kind of super intelligence. I mean I say prevent this is right because there's no such thing as Superintelligence right it just feels super intelligent I mean you can use an app for sentiment reporting and for analysis for analytics That does the same thing that your other people have done with a staff of 400 people now software does this Mind boggling change is predictive analytics. This is a company funded by Mark Zuckerberg from Facebook It's called vicarious and their headline is we're building software that things and learns like a human Are you want to scream in horror or in delight? I don't know it's kind of like I call this hell then you know Hell and heaven. We don't know which one is going to be That's becoming the default IBM Watson. You can watch the videos on YouTube Artificial intelligence helping for example companies like Johnson and Johnson to develop new products by analyzing hundreds of millions of data feeds and social commentary about products Financial services are about to become automated Using what's called the Robo-Advisor Charles Schwab has the first one came out three months ago. We have a software giving you financial advice Check it out. I don't really know what to think of that, but it's basically direction. So and logistics right now We're looking at this basically saying Logistics and shipping married time solutions sooner or later can probably be run largely by robots and artificial intelligence That's something we have to look at what that means for society, right? But this is for certain. We're living in this world This is a military term called VUCA volatility uncertainty complexity and ambiguity and If you read in this you can safely say well, that is really what my everyday looks like, right? And that's not going to change. This is our reality because of the complete interdependence of things So as a response, I'm working with many of my clients on what I call flipping the VUCA To have a response on this Velocity speed unorthodoxy think Richard Branson you think in the right direction collaboration and agility And if I speak in America, I always say awesomeness rather than agility. I Were powerful But if you put this in front of your desk, you're saying yes, you know, it's it's a tough place out there because everything is changing all the time You have to respond. You have to be fast. You have to be unorthodox come up with new ideas You have to collaborate because this is for certain in our own work Kevin Kelly from wired magazine said machines are for answers Humans are for questions and I can guarantee you we cannot beat the machines for answers We used to be able to for a while right but in the future in that in 2027 we're going to see machines reaching the same capacity than the human brain Right now. It's a capacity of a cricket the largest computer in 2055 Computers can match the capacity of the entire mass of human brains on the globe in terms of processing power right not purely that So that's very important for us to keep in mind that we are better for questions than we are for answers Of course that also means we have to give answers, but basically that's kind of where our future is going Another very important thing is the duck This is the focus on duck You may remember, you know us being somewhat close to the birthplace of philosophy here This is Descartes right Descartes said that essentially animals and then humans by extent by Extension are kind of like fancy machines And he actually said that animals are like an automaton like a machine and can be described as a machine And and so this guy focus on built in artificial duck that has gotten lost, but there's many replicas right you can feed this duck this mechanical duck and Therefore to prove that all of biology is a machine Now the problem leads to this really and Ultimately, yes, I think it's interesting to say we have to be very careful about technology should never trump humanity in business Because when it does Your business declines right the business becomes a giant apparatus. It doesn't create any values Very important to keep that in mind the future of business is Awesome algorithms and technology and what I call a humor rhythm right a human sense like an algorithm. I Think this is going to be very important for our immediate future When you take the Internet of Things Cisco says 227 billion devices Connected in roughly ten years and some people say that Cisco is wrong It should be roughly about one trillion connected devices Traffic lights street sensors environmental sensors wristwatches everything Think about that for a second when that happens and this is already happening on What becomes the number one concern is safety security? standards collaboration I mean it's bad enough today if you can hack the internet and steal things from Government agencies right but imagine the future if everything is networked if your car is networked into the system It may lock you in and not leave you out for the next 14 days and turn the air conditioner to minus 14 I would be easy to do So it becomes a real number one concern I think ultimately Also the idea of privacy for example if we want to use the internet But in return we lose every possible right to who we are and what we can hide what mysteries we have What we discover, you know what accidents happen what lies are happening that would be a bad thing Not that lies are a good thing, but it's human right Which you want your insurance to know how much you drank last night or if you drank How much you drove the car how fast you went So what we're going to need here is kind of a social contract I think it's very important for all of us to collaborate on these social contracts because without the social contract There will be no security in using all of this It's not enough to invent technology We also have to invent the social contract around it So we can actually live with it. I think this is a mission for all of us to look into So when everything is connected, that's my final point in a short summary When everything is connected security standards rules and enforcement become crucial in the end digital technology Will be like nuclear technology It has the power to really do great things But it also has great tremendous destructive power So we have to collaborate on that as well in the long run. So let me summarize digital transformation I think we're looking at roughly as McKinsey said at this 30 trillion dollar opportunity Lots of change especially in the workplace and how we work and how we collaborate and so on But basically going back to my first line the changes we're going to see in the next 20 years If you have kids, right? You're going to want to be part of this Even if you don't have kids, you know, unless you're already 70 you may not get to see to live up to 2050 But humanity will change tremendously in these of this the summary here digital transformation Absolutely, if you were if you thought that you were safe, you're not Right if you're in the mining business or the insurance business or the banking business The bankers thought they were safe until this year and I live in Switzerland to where I know what that feels like Everything that happens to music and films and publishing is going to happen to us. It just takes longer. It's more complicated next point Exponential combinatorial interdependent. We're moving into a world of ecosystems In a connected role that has to collaborate our choice is not to hyper compete But to hyper collaborate and since you're here for two days, I would urge you to hyper collaborate The only way to survive is to hyper collaborate Because now with everything is interconnected Digitization optimization intelligence and humanists. They are not actually an opposite. They can come together very nicely hybrid thinking This is the hardest part down if you're running in companies and business you're so busy you already stretched 150% right? How are you going to think about what might be? Well, I can guarantee you if you don't think about what might be you don't get to live to see what might be That's mandatory now because we're moving so fast. We don't have time to sit there and say well Let's wait and see like we do and like to do in Switzerland And flip in the VUCA Let's respond to this challenge of transformation by being fast by being unorthodox coming up with ideas collaboration and agility So thanks very much for listening. I want to leave you with a final quote by Ellen Kay That's what I wish for you the best way to predict the future is to create it. Thanks very much for this