Forecasts of the future of breakthrough technologies almost never come true. Even Clayton Christensen, an eminent innovation expert and the author of the international bestseller The Innovator’s Dilemma, failed to understand the real value of iPhone. Six years ago Christensen believed that Steve Jobs’ idea was to create the best phone in the world by converging a traditional phone, iPod’s music capabilities and a touch screen.
However, as it turned out, Jobs had no intention of competing with phones at all. He just wanted create a general-purpose movable computer. He chose cell phone as a basis for the new computer only because it was cell phones that people carried around. The idea is a breakthrough not because iPhone is a great thing to phone, but because it has hundreds of useful applications ranging from magnifying glass and ruler to library, information desk and intelligent assistant.
Now hundreds of experts predict the rapid development of social media and social networks, thereby making the same mistake as Christensen. They are trying to predict the future on the basis of the current state and understanding of the phenomena. They believe that social networks will enjoy more and more users and there will be more mobile devices and online content, more information about what people prefer to do and how they behave, as well as more monitoring and control. In other words, all will be approximately like today, but at a much greater scale, much cooler and more efficiently.
As John Maynard Keynes wrote, ‘The idea of the future being different from the present is so repugnant to our conventional modes of thought and behavior that we, most of us, offer a great resistance to acting on it in practice.’ Things may be very different and technological breakthroughs may considerably differ from our today’s ideas. All will be different – from the mode of production and system of management (in Russian) to motivation and even the system of values. And that future is not for everyone.
THE WORTH WHALE
Knowledge tends to radically change with time. For many centuries mankind believed that the earth rested on three whales. The number of “whales” on which knowledge rested never changed no matter how much new knowledge was acquired. The Marxist political economy was also based on three “whales”: (1) working people, (2) the means of production, and (3) production relations. From Marx to Gorbachev, it was believed that there were exactly three “whales”.
But at the end of the second millennium the fourth “whale”, media, appeared on the scene. Material production that had dominated for many centuries started to steadily make way for nonmaterial production. And it turned out that three old “whales” were not enough. There was need for the fourth one to store and transfer information and knowledge. At first, “small fish” – uncoordinated information media and channels – were used for this purpose, though. But within a few decades separate media and channels were united into a perfect whole (a huge “whale”) – the Internet, a global network.
Then, a dozen years later, an entirely new “whale species” emerged – social media and social networks. The new “species” has absolutely new features, such as self-organization, goal-setting capability, and a distributed, weakly hierarchical decision-making structure.
These new features suggest that “the fourth whale” can radically change the whole system of mankind’s production of intangible goods because they affect all three basic factors underlying the production of information and knowledge: (1) sources of information, (2) decision-making methods, and (3) production control.
Before the postindustrial era, there was not much information and the speed of accumulation of information was relatively low. In fact, experts were the only source of information and knowledge necessary for decision making. “The era of experts” lasted thousands years. But with the advent of electronic media a new source came into existence – electronic information storage facilities. And now, in the second decade of the XXI century the Big Data Era is here. And it is not that the amount of data increases by leaps and bounds.
Most importantly, there are fundamentally new sources and new types of information in social media and social networks. This information is hidden in the heads of people in the form of “dispersed knowledge.”
However, if the market worked everywhere, neither new models, nor new knowledge nor new methods of management would be necessary. Actually, the market system does not work within market participants themselves – companies and enterprises. Since the dawn of time companies have been based on hierarchy, subordination and directive planning. Such an arrangement suggests no room for the market within modern enterprises therefore there is no opportunity to use the “dispersed knowledge.” To retrieve that knowledge and use it, companies will have to adopt an absolutely different way of management and become free of hierarchy, directive planning and bureaucracy.
The term ‘dispersed knowledge’ was first used by Nobel laureate Friedrich Hayek. He considered the market as a special kind of information device. Each agent possesses some information unknown to others. Through competition and free pricing, the market system accumulates and processes that knowledge (its share in the total knowledge is about 80%). This is the essence and purpose of the market. What may happen if we abandon the market and neglect the “dispersed knowledge” is illustrated by the directive planning of socialist economy.
It turns out that such a management method has been already invented by the U.S.military – like many other technological breakthroughs.
NOW YOU ARE IN ARMY
Almost everyone knows that the Internet was invented by the U.S.military. But few know that the U.S.military thought up how to use the Web to obtain a dominant position in the world. We are talking about the concept of network-centric warfare, which is called so because its central element is a network of people and computers. Here is how the authors of the concept, Vice Admiral Arthur Sebrovski and John Garstka, an officer at the Ministry of Defense, reasoned in their Network-Centric Warfare: Its Origin and Future.
In the industrial society, the dominance was basically physical: kind of whose fists are larger. Now it is necessary to use other techniques because society, production, business, war – all depend largely on information.
Those who have more complete and up-to-date information make optimal decisions and thereby achieve dominance.
The new management method, equally applicable to warfare and business, was first described in David Albert and Richard Hayes’ revolutionary book Power to the Edge published in 2003.
- In the complex and rapidly changing world, the success of any business – either military or civilian –cannot depend on one “genius,” however intelligent and perspicacious he is. This means that directive planning and hierarchical management is coming to an end.
- Directive planning and hierarchical management are being replaced by a new management technique, “Power to the Edge”, in which (1) powers are delegated to performers, hierarchy is replaced by collaboration, (2) all performers together with a set of IT-devices form an open peer-to-peer network, which results in synthesis of man and machine, and (3) people can access and freely share information and make decisions collectively.
In that case, it is dispersed knowledge that is a source of information. Information required for decision-making goes directly to performers, as opposed to the conventional systems. For example, branches or corps of the armed forces used to send their respective aircrafts to a battle site and give battle orders to them independently. Now, the aircrafts act in concert and receive coordinated orders as they approach a battle site because the situation can change while they are in flight.
Network-centric management system (e.g. Future Combat System) is a distributed, self-organizing intellect rather than an organization. This intellect knows what not a single person ever does, nor a computer.
We do not know, but the network does. The network-centric intellect allows knowledge required for decision making to be hugely broadened in terms of both quantity and quality. The new knowledge can be divided into six categories, which are superior to the cognitive abilities of an individual.
First, there is “dispersed knowledge” per se, i.e. specific knowledge in the heads of certain people. McKinsey (in Russian) calls it tacit knowledge (implicit, non-verbalized knowledge). McKinsey experts believe that “tacit knowledge” will become a key competitive advantage in the XXI century. It will help revolutionize health care, retail, insurance, financial services and consulting. McKinsey experts have analyzed the performance of nearly four hundred companies and found that “tacit knowledge” helps increase productivity, eliminate bottlenecks and improve the quality of customer service. So, companies have to change the decision-making structure, become open and non-hierarchical to boost the confidence and enthusiasm of employees, their involvement with work and desire to share ideas and experience. It is not easy to solve this challenging problem. But if you do solve it, “tacit knowledge” will gush from every nook and corner – there remains then only to pick it up.
The second category is “scattered accumulated knowledge.” Through the use of market information tools, this knowledge can be extracted from the heads of hundreds and thousands of employees, customers and partners. Among these tools are prediction markets, which are exchanges where participants put their stakes on certain events, and predicting-the-present tools, which are algorithms to understand the actual situation based on analysis of search engine data or the dynamics of social networks.
Predicting-the-present methods are especially great at predicting people’s behavior – from consumer behavior to the behavior of those who purchase shares on the exchange. Both prediction markets and predicting-the-present methods are already widely used by many corporations ranging from Google to General Electric to Starwood mostly for planning and marketing purposes.
The third category is structural networked knowledge which is a result of dynamic network analysis taking into account all types of network connections and interactions. That knowledge is used to identify the employees who hold crucial information or are crucial ‘bridges’ between separate groups in a large company, i.e. those who ensure effective exchange of information within the company, and whose unexpected resignation may negatively affect the company’s success. Rather advanced tools are available for obtaining the knowledge from the existing social networks. If social networks move from mere communication and entertainment toward decision-making, these tools will grow dramatically in effectiveness.
The fourth category is the knowledge that results from collaboration of people and computers united by one information network. At the heart of that knowledge is efficient man-machine synergy. Development in this field is just beginning, but the mobilization of that knowledge has already resulted in several breakthroughs – from creating new drugs (for example, a new formula of AIDS drugs) to detecting potential terrorist threats.
For example, the Palantir system, which helped prevent several terrorist attacks, allows an analyst to access enormous amounts of information. The program system fishes up unusual, interrelated events from the sea of information, analyses and converts the data into a visual form of representation (the process is called visual data mining). Man performs such an analysis much more efficiently than computer, both in terms of visual association and intuition – in these areas computer can do nothing so far. So, there is a perfect division of labor. Computer processes terabytes of data “looking for a needle in a haystack,” while man analyzes the data based on his experience and intuition, detecting those “needles” that indicate a potential terrorist attack (see here (in Russian)).
The fifth category is knowledge that accumulates in course of indirect communication between bearers of intellect. These processes were discovered by Pierre-Paul Grasse in 1950 when he studied the behavior of social insects.Grassecalled the phenomenon stigmergy. The term is now in use again thanks to the appearance of social Web applications.
It was found that the means of communication between ants are very much similar to recommendation services’ mechanisms of popularity.
A user sees a post with interesting news. Giving the post a positive recommendation, the user leaves his “odor trace” in the network environment. That “trace” attracts new users. The more users the more the trace smells. As the news goes out of date “odor” evaporates, and those who do come down that trail, do not get pleasure and leave no marks. Thus the post sinks into obscurity. An ant finds food, eats it and goes to the anthill, giving off a scent. The more the ant has eaten the stronger scent it leaves on its path home. Other hungry ants follow the scent to find the food. They eat and give off a scent on their way home, too. And the scent becomes stronger and more attractive for other ants. But the food ends eventually, and newly arrived ants leave the place hungry. Clearly, they are upset and do not give off any smell on the way home. The trace becomes weaker and weaker and finally the odor trail disappears. This repeats itself as a new food source is found. Communication takes place not directly between ants but through the environment.
All the five categories discussed above are a product of collective consciousness, not individuals’. But collective intelligence has its own collective unconscious. If we access the collective unconscious we will be able to obtain knowledge of the sixth category. This is possible to do only through the Web. Experiments in this direction are already underway – there are projects exploring network-based collective consciousness. Examples can be found in PrincetonUniversity’s Global Consciousness Project and the Metaphor project carried out by IARPA, CIA research agency. The Metaphor Project’s objective is to teach a man-machine system to “read” emotions we express in metaphors in speech or text. “Reading” emotional intonations should help in understanding the hidden meaning of what is said, even if the speaker does not want to advertise the meaning. This “polygraph detector” has a scientific base and is already showing satisfactory results.
The collective knowledge, in terms of volume and value, is likely to be by orders of magnitude greater than that of the most sophisticated and experienced experts. And that is gorgeous! However, we must remember that this is not the only advantage of the new management paradigm. Knowledge will not simply increase in volume – people will learn to make decisions in more effective way and will better manage the production of knowledge.
The future of the armed forces of developed countries is more or less clear. The Armies of U.S.,Australia,Britain,China,FranceandSwedenare already moving toward the network-centric concept. The network-centric management is increasingly being used by business and governments, too. This means that future businesses are likely to have neither hierarchical nor matrix structure. They will consist of a network of self-organizing communities of practice rather different from modern corporate social networks and collaborative platforms. The latter are mainly focused on communitainment – communication and pastime for fun; they are based on business models that are not very compatible with the principles of “Power to the Edge.”
It is highly probable that networks of communities of practice will be based on the same principles of self-organization as P2P networks or torrents are based today. There are not many companies that have accumulated broad experience in this area, and they are quite reputable. (That experience is described in The New Edge in Knowledge.)
For example, Schlumberger has built a network of 23,000 active members (20% of the staff) united in 157 communities embracing three hundred to four thousand employees each. The communities of practice correspond to different operational and functional directions of the business. Another example is found in Fluor whose 24,000 employees are organized in 46 communities. Among pioneer companies are CEMEX, Conoco, Phillips, Shell, and Statoil. There are many others.
The purposes of information communication will fundamentally change and new motivation will change the basic set of values.
Using chess champion Bobby Fischer’s words about chess, we may say that working for network-centric enterprises is “as competitive as football, as thrilling as a duel to the death, as esthetically satisfying as a fine work of art, as intellectually demanding as any form of human activity.” McKinsey experts formulate their opinion in plain words as follows: employees willing to share information and knowledge will feel more comfortable at work. Traditional conflicts will be smoothed over as a result of the collective search for solutions. Ultimately, there will be a shift in motivation: the success of your work will be determined by how well you work with others.
All such changes will be certainly impossible without technical revolutions. Nowadays the world is experiencing total “mobilization”. Mobile devices are beginning to be built into articles of everyday life – everyone knows about Google glasses operating in an extended communication mode 24 hours a day. Most of such devices will be able to work both with and without the participation of man – for example, monitor a person’s physical state and predict the way he/she feels.
Absolutely new user interfaces will be required. Unluckily, none of the interfaces of Windows or even Apple can support the new type of motivation. There will be obviously need for a breakthrough in gamification techniques to turn arduous work into game for inquisitive mind.
New mechanisms of motivation will in turn change not only communication itself but also public institutions. In what way exactly, we can only guess. Most likely, not only labor legislation will change, but also such institutions as intellectual property rights, taxes, and social structure of society.
Basic human psychology will however remain the same. Hence, there will not be many highly motivated people (in the above sense) – just the very same 6% of population as before the network-centric era. This means that society will inevitably be divided into a creative “6%” group (some sort of Homo Ludens) and the rest.
The future will be so different from the present that it is hardly worth trying to understand it. Grasping the figure is impossible, we can only conjecture.
The article is prepared specially for Slon.ru (in Russian)