The 7 Key Future Principles of Digital Transformation - Gerd Leonhard

[Music] so good morning what a great building apart from the elevator right that's correct why it's Gary okay so here's the future good morning it's really a great pleasure to be with you today the view was rather limited but otherwise it's nice that's not bad huh that's Italian so interesting the other day was in I was in Tokyo and I had a half-hour conversation with a sushi chef I spoke German and he spoke Japanese to this device as long as he can keep it basic it works so now there's a new device coming up were you aware the earpiece and the other person also wears an earpiece and you don't actually have to have the mobile and you can speak to each other at a different language at the same time like Star Trek right so two years for this technology to be a hundred percent so as long as you speak a mainstream language nor not Swiss German or Finnish you know you can actually have a relationship with anybody through this device so science fiction becoming science fact we have a situation where things it used to be in theory are now actually working self-driving cars language translation intelligent machines maybe not quite yet right but language translation me this means basically in three or four years maybe five would just go to talk to computers no more typing and this is so I like like talking to a friend you know black mirror right so you can sit on your college you can say I want to see Kojak you know 1984 you know that kind of dates me but episode number four you know and we've already before he sucks a little on the lollipop right and boom we will just play and in a couple years we just sit down the computer and we say give me the projection prediction of sales for the following country under the following parameters and we'll spit it out now this is all kind of you know pie in the sky type of stuff but I have seven principles I want to share with you today first I want to show you what my job is my job is not to dick butt is to listen most of my job is to observe and pretty much observe the obvious I would say but 95% of my job is to observe and to think about what happens in the next five to seven years so I do the opposite of my clients which don't usually observe very well they're very good at executing but I also do this I take complex scenarios and I help clients understand the way forward so I work with 47 people around the world in different industries we have to realize and I'm sorry for the in the screen cuts off a little bit here so but I'm sure you can imagine the rest the future is no longer an extension of the present that is because the things that we have seen as a limit you know technology social things globalization technology in general spread of the internet and so on they're finally here you know so basically what's happening is that you know we always think of the future as being an extension of today but it's no longer true this is very hard to understand for us because for example if you in the car industry you used to sell cars and what's the future of the car industry mobility not to own a car I mean if in the real estate market the future has probably the people would share the office 50% of people are going to be in the gig economy in 15 years so that changes everything politics society culture social contracts pensions also longevity you know where we're rapidly getting a older all of us right so every year were gaining one third of the year in longevity the kids are my kids will be a hundred years old an average there's mind-boggling idea so you can retire with 63 and then you know we have 37 years on the cruise ship you know she'll be great for the cruise ship industry but you know I used to be in the music business and you know when I was in music business we actually sold music you little wrong things I remember those old CDs I mean today if you buy a CD and you give it to your kids for Christmas they call a therapist I think you have some sort of mental problems but I used to sell CDs in the future of the music business is not to sell music Spotify doesn't sell music I mean 10 was at 21 million songs on Spotify are available for 10 quid I mean we used to spend 20 quid on one record rich so Spotify doesn't start music is free what a Spotify sell convenience peace of mind interface design features like Netflix same thing right we don't we don't subscribe to Netflix because it's cheap movies you know it just it works right so that's really hard to understand there really what that means is you know is what I call the end of good enough so this is very common of course in in banking and insurance and other companies like this you know into where he said well what we offered was good enough and there wasn't much of an alternative so you couldn't leave and now it turns out a banking for example 74% of kids are ready to skip the bank and go to an internet company for banking I mean here in this country Lloyds Bank right to make this huge shift of what's there I think 2.5 billion pounds into innovation right this is n 26 German Bank a german kid leaving home right now is certain to sign up with this bank it's a virtual bank I think they have several hundred thousand per week signing up it's completely digitized and there's there's no physical building and of course you know the fees are essentially zero compared to the other banks right so mind-boggling innovation here you have a chart of Accenture showing basically the Gotha you know Google Apple Facebook their increase in banking it looks like this and then the FinTech companies the digital leaders like Lloyd's and others right and then you have the language it's pretty clear language here what is happening with good enough Netflix surpasses cable TV cable TV isn't good enough anymore I mean today if I have a 25 year old kid that moves out they just want high-speed Internet that's it everything else is somewhat in there somewhere and Spotify is a great example people don't buy records anymore and Amazon is the purveyor of good enough Amazon is the new good enough it's my blogger you know if you look at their progress you know every time Amazon sees some weakness in the market they move into the offering so Amazon is now getting into checking Amazon is becoming a bank I don't know if you heard this news but just a couple of weeks ago in the u.s. so 340 million Prime customers of Amazon will get free online banking in the next couple years no fees no transaction free credit card international money transfers peer-to-peer loans all part of Amazon Prime I mean if you're a bank they put the fear of God into you as opposed right but it's the end of good enough we're going to have to change things a little just a tiny bit right jump out of that old fishing boat into the new one and that is true transformation transformation not is not to stay in the ball and say I'm going to grow a little bit bigger all of us do that every day but we're going to actually have to transform become somebody else and don't be mistaken you know you may think well it's not going to happen to us because you know we're in the oil industry or mining or you know tourism or you know in my own business we used to write research reports and we were on this fishbowl writing lots of reports selling them for 10,000 euros each and then came along Google Trends if one research is just go to Google Trends and now we speak to IBM Watson you get a research report I mean in a couple years it's completely automated intelligence knowledge what cannot be automated understanding because it requires human perception as Einstein already said imagination is more important than knowledge in five to seven years we will have a computer that will have the capacity of a human brain in 2050 one computer will have the capacity of all human brains the calculating capacity of course it will not be emotional or social I at least I hope not you know that's going to really change your life and then we're going to be in a world they're if they want to be successful in this place we have to make a leap and we may have to pivot it's my favorite American word you know turn around while you're in the middle of the airplane like Walmart read Walmart is pivoting trying to you know roughly hiring another another 1 million people for some new retail places they go online they're completely pivoting and most industries will be reset and rebuilt from the ground up this is very important to realize if the car industry wasn't rebuild by VW or by Audi here you came Tesla and Google and maybe General Motors and Toyota built the car from the ground up you know the Tesla is from the ground up a software package with a large battery I mean it's important to understand this you know we think about marketing or advertising you know we're going to completely reinvent appetising as I'm sure you're aware of if you have inter appetizing appetizers primarily based on surveillance and tracking and noise making and it worked but now we have better ways so rebuilding all that stuff will be crucial future point number two is that we're living in this world where technology is becoming infinitely powerful and humanity which is sort of ephemeral things you know feelings understanding emotions you know they're sort of converging it's really hard to understand how that actually will play out in the future cuz technology is becoming so powerful but what I call ethics and technology digital ethics is a key differentiator how how safe is my data how much they use tech to replace people do you still have a soul yeah does your company have a soul this is the key question actually you won't believe how many companies say well we're going to innovate and we're going to transform we're going to fire as many people as possible and use tech to increase the margin and double revenues in five years okay that's a nice idea but you know what do you actually stand for do you actually mean something and then when I ask the question I get the answer well we're gonna double revenues that's not a meaning just so we don't get confused so doubling revenues is not the meaning of a company so in this future we're looking at the fact that technology is essentially both of these things it doesn't have ethics I mean technology can be used for good or for bad that's just the nature of technology you know nuclear energy the telephone television I mean you can be addicted to television we don't have to go to Facebook for that so here's a key question right we have to actually use technology like genome editing or virtual reality we have to use it in such a way where it's mostly like this Oh like this I was thinking on Facebook you know project over that we have to use it in a good way it's not that we don't use of technology but when we use it too much it becomes evil you know becomes toxic so when you go to some restaurants in Southeast Asia you're sitting around having dinner and all there's every single family with kids everybody has two devices two that they're dealing with at the same time while they're trying to eat I will call that toxic right it's it's kind of hard to imagine this happens everywhere now it and the other day I was in Greece in the on Santorini and the restaurant owner kicked out a bunch of people that were working on their devices the whole time making calls and and not actually enjoying the view which was like 200 miles out into the ocean I mean so that's that's the challenge of Technology ID and when you talk about ethics it's not anything really fancy it's really the idea of saying we may have the power to do this or the right even but we choose not to do it and this is what went wrong with Facebook it wasn't a crime it wasn't a hack so it's hard to say what exactly happened right but it's ethically responsible and ethically speaking Facebook is responsible so three weeks ago I left Facebook as a result after ten years you know and my traffic went down about 70 percent of my websites right I'm sure you know how that feels but that's going to happen every day now we're gonna have to think about how ethics will influence this this Barbie doll for example that Barbie launched - two years ago this is a toy for kids that connects to the cloud so a four-year-old can speak to this toy and the toy will learn who the kid is and make smart responses so the benefit being is that the kid can learn that most people have machines right that's that's a good side effect you so there's a lot of pushback against this and they took it off the market I think but this is the kind of you know it's interesting but is it is it a good idea yeah this app called replicas replicates you you give it all the data that it wants and then it can act like you and the prime purpose is to act like you when you're dead that's the that's the purpose of this app and technically speaking it works so you given all the video and audio and you know Blackmer about you it's here don't try it it's dumb no comment on that but you know the the pathetic thing about Facebook was not actually what Mark said in Congress right which was actually not bad is the pathetic questions of the politicians I mean all of us could have asked better Chris come on you know do you understand what Facebook actually does but anyway so I think from our businesses it's important that we maintain the license to operate the permission to operate with a unit advertising or marketing or public transport or whatever that what you do is responsible in a larger sense I mean you know Unilever for example is one of those companies that's trying to do this it's very hard because it's cost money but am i you know i junked facebook as if I removed the license to operate in my life but I think we'll have more of a story there in the long run so here's the thing you know because we're connecting everything now we're connecting our driving our food our digital money our healthcare records I mean in five or seven years we're going to be so connected that the benefits will be I mean imagine all of our healthcare records and DNA and the cloud we can solve the huge medical problems just by having the intelligence but when we do that who's going to safeguard what we are I mean the day will come that we're going to have a hundred thousand clones of people that have their DNA in the cloud right little clothes and this is not science fiction that's certainly not something you would want for your life I don't think right I mean there's people are ready cloning that dog which is a different story but so the more connected we become the more we have to think about this you know how do we actually make sure the human is still inside and I guarantee you if you just connect people and you make that work that's great but if you don't do this you will not be successful that's what people want they want to connect to other you know the most important thing for humans is not technology may be hard to understand today especially when you're talking to 20 year old kids or so right but it's to connect to other humans I mean human happiness is defined by relationships primarily and I don't mean relationships with the screen you know actual relationships point number three exponential technologies exponential change brings heaven or hell right it can be fantastic and be terrible I think it's 90% heaven I'm an optimist there but you know it could turn out bad if we had a surveillance state you know see what happened in Turkey you know how social media is being used in Turkey to put people to jail and who was in charge of that would it be us companies well to some degree I mean you can say even opt out of Facebook that's hard yeah you could do that but it's really the government and it's the do it and this is of course a challenge because most governments don't really understand this issues you know that's that's gonna be the future but you know we're looking at this you know we've always had the same cards we had for thousands of years you know these kind of morals values and then technology gets a new card every day and so it's the state the government that needs to think about how this all comes together this is why we had the GDP our GD RP no GDP our whatever something like that this is why we have regulations and this is very hard to think about because you know we are basically the bottom line is we are in an exponential stage of change and when you think back 20 years we're talking about the paperless office you know remember Napster and the music music and the cloud and all that kinda didn't work I mean I started the company like Spotify in 2001 and we fried several million dollars because it was too early we were here but now with the pivot point of exponential change was the take-off point and lots of people I talk to they're saying well you know we tried this like solar energy or whatever you know ten years ago but it didn't work and we lost all our money but now it's different now we have to take off for it we have all these things the Internet of Things intelligent assistance quantum computing in you know the sky is the limit when you go up three times on the exponential scale from four it's one billion that's 40 years roughly maybe 50 so our world in 50 years will be 1 billion times as far as long in terms of technology not in all technology so even hard to imagine what that means right but you know we're looking at changes that you know basically this wave of change is now rolling over all industries first music and media telecom communications and so on and so I talk about future readiness a lot and future readiness is really three pieces ok because the future is no longer by the time it's about your mind it's a it's a mindset the number one defining factor for the future of your business is whether you have a future ready mindset and that includes you know thinking understanding exponential combinatorial how things are coming together interdependent and holistic business models and this is what all the successful companies on the list prior right this is what they do they think like this they think like this and they reinvent and they do other things and the future is no longer time frame it's a mindset so here you can clearly see you know in this mindset you know connected mindset all these things that are influencing each other are creating a new opportunity and it's kind of hard sometimes to understand all these things because you know new ecosystems are coming quantum computing is here roughly seven years we'll have machines that are a million times as powerful as today so any job you want to give them you know running a hundred trillion data feeds no problem you can 3d print things we've talked about 3d printing for twenty years never did anything but in the very near future we're going to print all of the older parts we need on demand the UPS truck will be a printer will not actually bring the pieces and we have this possibilities of you know getting all the data from people Google home anybody here using Google or Amazon echo Alexa yeah that's essentially what it does right jumps inside of your head fishing for information listen to what you say the mega shifts I don't have time to go into great detail here but in my book is Chapter three and basically it's not just digitization that's changing a world is all the other stuff that vapors around it like augmentation data fication automation give us some examples so here for example if you take the car you can see how these mega ships have changed the car and how we essentially facing the the end of the car as I like to call it I mean being from Germany this is a painful subject but you know what we see here clearly you know autonomous cars will search even though I don't think they'll be truly autonomous in the sense of like what we do with them but level 3 or 4 with the plenty to change the entire City of London trail and do away with parking right electric cars of the future every car company has said they're gonna stop making cars with gas engines it becomes and they talk about 15 years but they really mean five right so I mean look at this you know transportation as a service rather than owning a car it's a huge business opportunity but is it gonna work for BMW there used to much harder margin I mean the cost of per mile is declining for the user because of this kind of services and this is the Tesla right starting from scratch so what's happening here is that this whole idea of you know how the car is defined is impacted by the mega shifts and changing it so very important for us is to take a wider view and I see again and again the most successful companies this is what they do sales revenues projections planning execution efficiency well we're gonna tell you efficiency is for robots right efficiency is for machines that's what machines do and what we need to do is the go take it further look and say well you know would not talk about CDs we're talking about music and the cloud we're not talking about physical cars we're talking about connected cars mobility we're talking about not the bank's building but the bank digital so taking the right of you the other thing is that you know now we have this saying has been said many times data is in you oil that's a very old thing but was finally true artificial intelligence is the new electricity which means that you have the date and then you have a machine that understands how to read the data because humans can't read a trillion data feeds yeah you need the machine in marketing this is crucial like marketing automation and then the Internet of Things connecting traffic devices everything as I said earlier this could be a nightmare it could be fantastic I think it's going to be great but we're gonna have to agree on what we want we don't want these guys to make social decisions what you'd be surprised you know there's the first companies proposing we should replace the judge by an AI my hunch is that Trump is already in AI we just haven't found out you know that's why he likes to treat sort of automatically as Kevin Kelly says you know a movement to a future where first we digitized and now we called no fire would make make things smart and we jokingly call this a smart converter this is Mackenzie says roughly 62 trillion dollar business taking the old stuff putting in the converter outcome smart smart city smart farming smart health maybe even smart government possibly even smart banking so this is the future that we're facing in out there's a AI everywhere as Spotify has AI Airbnb has AI these guys have AI and this is what the list is of AI and you you can download the slide later to take a better look because I have to wrap up very soon as you can hear but many people have said intelligence is the new UI AI is the new UI other user interface and that's going to be very true in just a couple of years you know appetizing as we know it and surge is going to become more than five years I mean who would go to a machine and type in best sushi in London when the machine is essentially in your head or you can just speak to it I mean when you speak to machine you say I'm looking for a sushi place that's not too expensive that has the following where my friends have gone that's close by and the Machine says boom here you are and I have a coupon try to do that on a search engine so getting into those machines if you feel like stuff that is the ultimate because if you're not in there you won't even exist so I'll wrap up is saying that intelligent machines will change our world more than any other invention and again I think that it's mostly positive but we have to get used to the idea that machines can actually do things you know that they're not no longer stupid I mean looking at this what abiam calls cognitive computing you know we're now going to world where essentially the computer systems could think not like we do but they can analyze things they can make their own decisions and we should not overdo this I don't think you know we need to be very careful because this is human intelligence it is actually totally unclear how we do all of these things and that's why we haven't succeeded in building this because machines don't have emotions social kinesthetic in our body emotional intelligence that's the stuff that we have built in things that humans decide in 0.4 seconds like you know if you're a threat or if you're interesting or that takes 0.4 seconds when we meet the machine needs years for this to analyze so let's not get too carried away right I think there is it there's a chance that these guys will get too smart in 50 years but for the time being these are as dumb as a toaster compared to humans that doesn't mean we can't use them we can use them but we shouldn't trust them in the sense of a black box you know just saying well the machine has said you know and so that's it it's like Trip Advisor and who would trust Trip Advisor right I mean it's interesting but is it real it can be I may be sure you know what I'm talking about you know when you use TripAdvisor it can be quite good and real but like a person machines don't think like humans do so that's also why I think we should not give machines too much power we shouldn't give them the power to upgrade themselves and this is where it gets dangerous around Elon Musk and Stephen Hawking where we allow the machines to connect that's kind of like asking for trouble right so I always say that intelligent assistance is fine but i AI to me is a rather scary topic so I wrap up saying by basically that we're looking at the end of or teens for jobs any job that's routine machines will learn any that includes a scientist anyone will just take a little bit longer a speaker now you have the first TED conference where it's only robots that will do the talking I'd like to say jokingly that's kind of like what we have today and just kidding yes because they all say the same thing I do love Ted but anyway I don't think that means the end of human work I think that's what we have to give ourselves a bit more credit than that but because if we let go of the routines fine you know can we you know are we gonna become useless because we don't put in data anymore or drive a car yeah if that's all you do within you you're gonna be useless right but can you rise above that can the government help by figuring out how to create new jobs and train our kids differently because this cannot be replaced by machines that's 95 percent of what we do understanding negotiation storytelling invention creation thinking maybe machines will learn that in 50 years you know I think for the time being were quite safe there so very important you know the percentage of you would only work will increase from increase dramatically if you have kids ago think about that their jobs won't be here you know doing things that machines can do there'll be a hundred percent human only jobs that only humans can do so I think that's good news it will take quite a bit of of understanding but you know to summarize basically we should not concern ourselves too much with efficiency you know they see if our luvs efficiency everybody loves efficiency because it makes money right but efficiency isn't human if it came down to efficiency we wouldn't exist we wouldn't be allowed to exist no because we're not efficient when we waste so much time we make up things we have feelings you know all that stuff we don't need so we have to use technology not just to be efficient but to create new things that is the Holy Grail that's what's really transformation everything else is innovation which we need but it's really about creating new things using technology like Airbnb and others have shown the other thing is that you know we need we need motivation to change that how do companies change the Padilla's now 15 years there's only two ways that will change as people in his company's pain and love so if you're in a company it doesn't have enough pain that won't be change if there's no love of new ideas there won't be change so your job to drive your company forward is to inject some pain if needed you know to say what Irfan and to bring up some new ideas you know humans are not actually driven by this realization on the spreadsheet saying that we can double revenues if we do X Y Z and well that's kind of interesting if we want to you know buy a new Tesla or something but it doesn't drive people keep that in mind when you're thinking about this finally let's keep in mind that we are driven by technology all these changes come from technology but we're actually defined by humanity companies are defined by what they stand for what they say what story they tell what purpose they have and whether you can trust them as Peter Drucker used to say variation of Peter Drucker culture eats technology for breakfast so thanks very much for listening and hope to see you later [Applause] [Music] you

Channel: Thoughtworks

Views: 33,106

Rating: 4.8409786 out of 5

Keywords: Thoughtworks, Technology, Business, IT, Consulting, Programming, Gerd Leonhard, Futures Agency, culture, discovery, human, values

Id: r1rzllzvg7U

Length: 32min 23sec (1943 seconds)

Published: Thu May 31 2018