The inconvenient truth of a flat world

The infamous gas pedal. Source: Wsj.com

I grew up in a small town lost in the French Pyrénées. The three or four drunks, bolted to their seats in the village’s only bar, were my first encounter with pundits. With all due respect to all the “real” pundits populating the mediasphere, I am just saying that strongly voicing your opinions on various subjects, some of which you barely understand, is ingrained in human nature. We inherently value people with strong opinions and resent the ones unable to provide a clear black/white answer – ask any climate scientist grilled during a congressional hearing! By saying this, I am also guilty of a black & white description of the world. There are of course a lot of exceptions to what I just said; but, underestimating how widespread this phenomenon is would be a great mistake.

Ask Toyota!

Hiatus

Only a couple of months old and already on a hiatus!

I have not given up on this blog but my personal life is dramatically changing lately: engagement, marriage and moving to the West Coast. Thus, I will only scarcely write in the coming months. I mean when the “agitation” all around me stops taking so much of my brain bandwidth!

Loic

The future of books… scratch that. The future of reading

Winnie the Pooh on the Ipad

While most of us focused on the implications of initiatives like Google Books, we may have overlooked the elephant in the room. The story is not about the future of books but rather how people will consume written content – if at all! Whether you read your book on your Kindle, Ipad or whatever, you are still consuming knowledge the same way your ancestor did: reading one line at the time with 90%+ of your brain activity dedicated to this activity.

Audiobooks were the first real challenge to this very principle. You can consume knowledge while driving your car, moping your floor, etc. While quite prevalent in the American culture, audiobooks did not change the book industry – rather it created a new revenue stream. The matter of the fact is that knowledge consumption remained untouched: still a one-way street.

This is why Paul Carr’s recent review of the IPad in TechCrunch got my attention. Paul makes the interesting argument that the Ipad will not only kill the Kindle but it will also kill “the experience of reading for pleasure.” Why?

“The iPad is emphatically not a serious readers’ device: the only people who would genuinely consider it a Kindle killer are those for whom the idea of reading for pleasure died years ago; if it was ever alive. The people who will spout bullshit like “I read on screen all day” when what they really mean is “I read the first three paragraphs of the New York Times article I saw linked on Twitter before retweeting it; and then I repeat that process for the next eight hours while pretending to work.” That’s reading in the way that rubbing against women on the subway is sex.”

His point is that our experience of reading has changed with our attention span. Reading is no longer as entertaining as it used to be; especially on a platform on with awesome games just one click away. The immediate consequence is that you will see more and more video and interactive content integrated in your reading experience. Reading will then become more and more like surfing the Web – a two-way street knowledge consumption.

Small, Gray and Feminine – The future of aging in the US

Skydiving at 92? (Source: Faded Tribune)

As part of the MIT Future Freight Symposium on March 11th, I attended a talk from Dr. Joe Coughlin of  the MIT Agelab. Dr. Joe Coughlin is a leading expert in demographics and behavioral changes due to aging – I highly recommend his blog disruptive demographics for more data and insights on aging. In his talk, he painted a picture that resembled a “nation of Floridas.” In a nutshell, trends are pointing towards a small, gray and feminine future.

Small

The fastest growing household in America is the single person category. 30% of the Americans above 65 now live alone and this trend will only accentuate, as one out of five baby boomers is currently living alone. While we can expect some of them to downsize and move closer to urban centers for convenience and fun, we foresee that most of them will downsize their habitation in the same neighborhood they grew accustomed to. For your reference, 70% of Americans live in suburban and rural areas. Naturally occurring retirement community in urban centers (NORC) is a currently observed phenomenon but will remain a niche segment.

However, small only applies to the size of their homes; not to their purchasing power. On the contrary, trends show that baby boomers will want to stay active and will want to enjoy life to the fullest. It is then worth noting that older adults control $1.6 trillion in buying power in the US, and that’s expected to increase by 29% over the next five years.

The end of retail as we know it. A scenario of virtualization.

Health toilet in Japan - Source: ideaconnection.com

It is always interesting to see how pushing some trends to the limit create challenging scenarios. While most people will agree about the existence of a trend, few will care to walk through the unintended consequences. Here is a great example of how our mental models if unchallenged can leave some gigantic blind spots in our understanding of what the future may hold.

Pr. Sanjay Sarma from MIT recently gave a presentation to an audience of supply chain executives on the state-of-the-art of sensing. Sensors are now ubiquitous: in you car, your house, your cell phone, etc. There is a clear consensus that this is just the beginning. More complex sensors are becoming more affordable everyday. The computing power and infrastructure to handle the data is also getting exponentially cheaper. With your IPhone, you can already scan the bar code of the product you want to buy, and search on the Internet where to find it at the cheapest price. We are just a couple of years away from sensing appliances in our homes. Your fridge will sense when you will be out of milk or Diet Coke and will signal it to you. The sensing toilet is a reality in Japan. After analyzing your “body fluids,” the toilet makes recommendations for your diet and will give you information that you used to only get through a blood test i.e. sugar level, etc.

Everybody in the audience bought into a future where sensing was omnipresent. The supply chain executives could already experience in their businesses how sensing has become a pervasive innovation – from GPS tracking to RFID tags. However, when asked about the potential implications in such a future, they quickly concluded that dynamic routing would be the most important impact in their respective industries. Sure, being able to reroute your fleet to avoid congestion will allow saving a lot of money. But, is it really the most dramatic impact you can think of for this type of technology?

The inevitable collision between the scientific and public world

Cover of the latest UNEP report

The scientific community prides itself in its ability to distinguish good from junk science thanks to a thorough and objective peer-review process. While this process has proved successful to foster scientific progress, it has been recently put to test when scientific issues became entangled with public policy debates. From the toxicity of chemicals like aspartame or tobacco in the 1980’s to the recent Climate Gate, more and more scientists get dragged into the public arena where brilliant or simply demagogic rhetoric trumps long and complex discussions about statistical significance. Scientists are ill-equipped to provide opinions when they are in reality accustomed to discuss about facts. As a result, you end in situations like Climate Change where both scientists and public leaders get frustrated at each other, leaving the door open for private and other interests to shape the debate in their favor.

A couple of months ago, MIT organized a conference with Richard Lindzen and other professors from the institution. Richard Lindzen is the A. P. Sloan Professor of Meteorology at MIT and one of the most famous voices against the climate change consensus. He is widely quoted in the conservative reports denying the existence of climate change. However, when one carefully listens to him, it becomes obvious that he does not deny the existence of man-induced climate change. He just argues that the data proving a anthropogenic climate change is not conclusive for lack of statistical significance. In a nutshell, he does not deny nor confirm climate change; he is indecise. During the same conference, Ronald Prinn, the TEPCO Professor of Atmospheric Science at MIT, strongly argued against Pr. Lindzen but finally acknowledged that the only difference between them relied on their different appreciation of the risk. Prinn summarized it well when he said: “My judgement of statistical significance for anthropogenic warming is very much dependent on my belief/fear that we don’t have another planet to go to.” Both were looking at the same data but saw different thing.

Geeks have done their share; it is now up to you, business leaders, to innovate!

Cleantech Gap, Source: Clean Horizon Consulting

In their recently published book “Wired for Innovation,” MIT Professor Erik Brynjolfsson and Wharton lecturer Saunders contend that: “even if all technological progress were to stop tomorrow, business could create decades’worth of IT-enabled organizational innovation using only today’s technologies.” As a society, we all expect technology innovations to bring more progress to everybody, and at a faster pace. However, we rarely reflect on whether our business leaders innovate enough to match the high expectations we have for the technology community. How many times have you heard of a revolutionary technology vs. a revolutionary business plan?

Humor me on this one: should a technology be discarded because its benefits under the current business model does not overweight its costs? or should it be discarded because we could not think of any business model in which its benefits overweight its costs? Let’s take the electric vehicle as an example. In a previous post, I have shown some reserves regarding electric vehicles adoption because the technology still does not make economic sense in the current business models. However, I also affirmed that it could become a reality, today, with a company like Better Place which offers a revolutionary business model. Electric vehicles only make economic sense if you look at the total cost of ownership i.e. car’s price tag + fuel cost + maintenance cost. Therefore, Better Place knew they needed to find a business model that would leverage this challenge as a strength instead of a weakness. Instead of selling you a car, Better Place will sell you kilometers to drive, which translates into charged batteries. Like with a cell phone, you will buy the hardware (the car) and you will choose a plan that best fits your driving needs. Better Place owns the batteries and will provide you with a network of charging stations to recharge them – monitoring your consumption while doing so. cye88sebwgzu CYE88SEBWGZU

The power of self-fulfilling stories in financial markets

Soros, the new Citizen Kane? (Credits: mindfully.org)

On December 2009, the euro traded at $1.51. Today, it trades at $1.35. What can explain this 11% downfall in little bit more than 2 months? An avid reader of the Wall Street Journal or the Financial Times will eloquently explain that it just reflects the faster recovery of the US economy out of the crisis vs. Europe, amplified by fears that Greece may default on its sovereign debt. End of story? Not so fast. A closer look will reveal the perfect case study for the power of self-fulfilling stories in financial markets.

Deeply ingrained in our collective subconscious is the fear that we are getting manipulated by higher forces. Not so long ago, people questioned the power of mass media and how Rupert Murdoch or Silvio Berlusconi could bend reality with their editorial lines rather than reporting it. I will argue that hedge fund managers and other leading investment bankers have become the new Citizen Kane, shaping reality with powerful storytelling. Financial markets have slowly but surely built a very advanced language that now allow them to communicate and broadcast complex stories. Puts, call, credit-default swaps and other derivatives constitute the building blocks of their vocabulary. Traders have become the journalists that put those words together, following the editorial line dictated by their fund manager. The assets under management, the equivalent of circulation, provide more or less clout to the fund editorial line.

The predicted extinction of the Homo Economicus

Source: hugsandi.is

Amongst fear of biodiversity loss, one species is slowly but surely facing extinction – the Homo Economicus. According to Wikipedia, the Homo Economicus “is the concept in some economic theories of humans as rational and broadly self-interested actors who have the ability to make judgments towards their subjectively defined ends.”

Yes, human beings are capable of rational and utilitarian thinking but this is only the tip of the iceberg. Neuroscience has made tremendous progresses on how our rational and irrational selves interact but there is still a long way to go. For a curious reader, I recommend the book “How we decide” from Jonah Lehrer. In this book, Lehrer provides plethora of scientific nitbits that will challenge your beliefs about the human brain. For instance, we are all victims of a phenomenon called “anchoring” or how your short-term memory strongly influences your most “rational” decisions. A group of economists led by Dan Ariely asked MIT students to enter an auction and bid on several random items ranging from a cordless keyboard to a bottle of wine. Before bidding for each object, students had to write down the last two digits of their Social Security Number and decide whether they were willing to pay that numerical amount for the item. Then, they were asked to place their final bid for the object. It turned out that students with a higher-ending Social Security Number made an average bid 4 times greater than the ones with a lower-ending Social Security Number. While their Social Security Number was irrelevant to bid for a cordless keyboard, their brain kept the information in their short-term memory, which anchored their next decision.

Corporate diplomacy – Forget geopolitics, think ecopolitics

Source: nexus404.com

In 2009, Exxon Mobil and Wal Mart revenues surpassed Sweden’s GDP – the 22nd wealthiest country in terms of GDP. Companies like Google publicly challenged China in a human rights debate more powerfully than any developed country had ever dared to. With the economic clout of a develop country and a time horizon set on quarterly earnings, large corporations turned century-old diplomatic protocols upside down like a bull in a china shop. As I see it, large corporations’ government affairs will soon start to look like a Foreign Affairs Ministry with a clear diplomatic agenda to uphold.

When you start to think about it, it is already the case. Corporations in America leverage lobbying to shape the political environment the same way a diplomatic mission would do in a foreign country. Building on the analogy, the World Economic Forum at Davos is the equivalent of the UN where traditional diplomats come to negotiate with their corporate counterparts. If this is already happening, quid novi sub sole? Well, I expect corporations to become bolder in setting and communicating their diplomatic agenda. By doing so, they will redefine the power map – shifting international relations from geopolitics to ecopolitics.

One may then argue that economics are already driving foreign relations. Diplomacy and companies’ interests tend to go hand in hand. Watch a presidential plane from a Western country land in China and we will see a clique of CEOs mixing with the usual diplomatic aides. The line gets blurred between old-fashioned diplomats and global business leaders. Though now, there is still an implicit deference to the old system with the business world trying to piggy-back on the old diplomatic channels to support their interest. This is where I see a branching point: will corporations still defer to diplomatic channels to make them case or will they develop their own, running the risk of clashing with the traditional diplomatic world?