Salim Ismail | Salon: Convergence or Conflict?

Video Transcript

I’m, for like many of you, kind of a bit of a mutt. I’m from India originally, schooling in the University here in Canada. I went to Europe for 10 years and then I’ve been in the US for about 15 years. Ten years ago, I was the head of innovation at Yahoo running their incubator, and I learned a really fundamental lesson, which is, when you attempt disruptive innovation in any legacy organization or environment, the immune system attacks it. Because all of our organizations are built to resist change and withstand risk.

And yet we have technology as a forcing function hurdling us through and acting as a pressure on all of our legacy organizations and all of our institutions. And so we’ve got a really fundamental problem on our hands and you heard that from both Irwin and Galit as they talked about this. How do we navigate and absorb the space of change?

So I’ll kind of just frame a little bit of what we see happening. I’ve had the incredible luxury after to found Singularity University after Yahoo, and for about seven or eight years I’ve been leading all of the programs there.

So for every week I get up and MC, host and kind of navigate the course for a week or two weeks or 10 weeks depending on the topic. So, if there’s a lecture or a lab, or a workshop on blockchain, I’ve heard it like 60 times; same with autonomous car, same with AI and as a result I can pretend to speak about, just about anything. Not too deep, if you ask me too detailed questions, I lose the plot pretty quickly, but the pretend side goes really well. And so that gives me a really interesting perspective on this kind of massive flow that’s happening.

We’ve also since then been looking at how do you interact and coach leaders in the world, both at the public sector level; our government leaders, our Prime Ministers, Presidents, Mayor’s etc, but also the private sector; CEOs of big companies and so on. I did a talk a few months ago at Idea City, a conference called “Death through Corporations” because these are large brittle structures that are not geared for the world that’s coming.

And so there’s four major things that are happening today and I’ll divide this under two little sets of four.

The first set of four is what’s actually happening in the world, and so the first of those is we’re digitizing the world very rapidly and that’s pretty obvious, right? Our memories aren’t in our heads anymore, they’re on our Smartphone’s. All our relationships are now digital because of social media as opposed to analog. If you’re over 35 years old, your Facebook page is way more important than how you’re dressed, right? And we can tell by how everybody’s dressing today that this is really the case.

And when you find, we found out that when you digitize something it becomes very, very disruptive, and the best framing and analogy we found for that is photography. Some of you are old enough to remember film photography. You’re operating on a scarcity model and you can only carry so much film and it costs $1 a photograph, takes a few days to get your prints back and so on. You move to the digital environment and three fundamentally interesting things happen; first, marginal cost goes to zero.

I can take a 1000 photographs, the cost doesn’t change at all, as a result of that the domain totally explodes. In film photography when it’s costing a $1 a click, I’m very carefully clicking here or there, but today we’re holding the button down on all of our devices and taking billions of times more photographs because the cost is gone. The third thing though is very subtle but really important from a business perspective as you shift the problem space.

So in a scarcity problem space I may try and sell very expensive cameras, I may teach courses on photography, I may published books on composition to help people optimize for that scarcity but in an abundant problem space we all have eight copies of our photograph on 10 devices and you can’t find anything, right? More importantly nobody can make money in the old way. Try selling books on photography and see how many you sell. Gone! The business model has changed.

As so what we found is we digitized the fundamental underlying paradigm of how we sell or make money totally changes. And this is the reason we’re seeing such disruption because the incumbents are optimized for this scarcity material, physical, money-based somewhat view of the world and the underlying paradigm is shifting. And what we have noticed at singularity and the driving force behind it is we have a dozen technologies that are moving at the same exponential rate that we’ve seen in computation.

In the neuroscience world, the resolution at which we can image the brain is doubling every year; drones are doubling every nine months in their capability. We’re sequencing the human genome, we’re doubling that every five months and this is unprecedented, never before in the history of mankind have we seen this many technologies move this quickly. And so this is acting as a massive forcing function because each of them is doubling in its own but where they intersect that adds a whole other multiplier to the equation.

So crypto-currencies are just a mixture of computation and cryptography, and where you see these intersections you see massive breakthroughs happening in a way that we’ve never seen. If you’ve seen these autonomous cars, they use a LIDAR unit at the top; light radar to navigate. Six years ago that light radar costs $75,000, and today that same unit is $40. Why? Because there’s three or four technologies and they’re each doubling the aggregate effect as orders of magnitude.

And we have a really tough time getting our heads around that. And so this disruption is enormous. The third piece of this is a demonetization. So you have this kind of incredible costs drop as we take the money out of the system. Very few people can make money in the same way in music or newspapers or publishing but now cars, taxis, hotels, all being digitized in a very different way. So we sell 90 million new cars a year around the world today.

When you own a car, you use it 4% of the time and it depreciates while you own it. It’s the worst investment you could possibly make. At least with a house, it may appreciate. With a car, you use it 4% and it depreciates, that’s a terrible idea. And you’re basically, we can you see car as they’re trying to sell you the lifestyle, the sexiness of this gleaming curve on this piece of the car but really it’s totally useless.

And as you see what’s happening, the younger generation doesn’t care what brand the Uber is. And what also the car companies aren’t noticing is teenagers in big cities all over the world aren’t getting driver’s licenses, and it can be kinda hard to sell them a car. And so we’re going to see this deflationary cliff and we’ve seen this before in the newspaper industry, in the music business, revenues kind of went along like this and then boom, you had a 6x or 10x drop in revenues within a couple years as the whole thing digitized and the money leaves a system.

And the big challenge we’re seeing today in the economies as we’re digitizing and getting more efficient, even though production is expanding, the net effect is almost zero. And today, this economic recovery of this last 10 years has been almost completely from governments printing money. There’s not been underlying productivity increases in the economy.

Now the final piece that makes us so inexorable is the sheer democratization of these technologies. Because they’re cheap, in the past advanced technologies used to cost a lot and only a government lab or a corporate private, a big corporate lab could afford to kind of play with it.

But today, drones, Bitcoin, neuroscience breakthroughs are totally unbelievable, anybody can access them. Any entrepreneur can enter a legacy environment with a beginner’s mind, leverage these new technologies and totally disrupt it. It’s completely down to a mindset today. Elon Musk may be the best example. No experience in the car sector, the energy sector of the space industry and yet he’s created market leaders in all of them. And his methodology about it is really simply, he looks at the technology that’s growing exponentially, aims 10 years out, where will this be in a 10 year curve and he aims to build a company that interest up that curve. Because it takes about 10 years to build a global organization, and then it takes off after that and so that’s his pattern.

And the mindset of just kind of leveraging these new technologies and refusing to say no and just plugging ahead is really what drives success, combined with the acceleration in the technologies. Many of you are familiar with the Hyperloop where he wants to go from LA to San Francisco in 20 minutes at about 4000 miles an hour. A lot of people think it’s impossible but now we have prototypes being built all over the world along these lines.

And I was chatting with him about this and I said, Elon I have a degree in physics, if you try to give them 20 minutes and you try and accelerate a human being from zero to 4000 miles an hour and then decelerate them back to zero, you’re probably going to kill them. And his answer was, “Yes, it’s an issue.” I’m like, “Dude, you should just stop, you might kill somebody, so hold up.” Most of us say, “Whoa, whoa, back off let’s not try that,” etc and he’s like, “Yeah! It’s a problem, we have to overcome that problem.”

So this is the attitude of all of the new generation of entrepreneurs that are just saying, I’m just going to go do it.

Vitalik Buterin: $40 billion industry totally will change the world. 18 years old. Ignored all the pleas of his professors to be careful about what he was doing, boom! Off he goes. And so this is the enormous forcing function. This younger generation armed with this, why not try it? Plus the low cost of these technologies will disrupt everything.

And in the face of that disruption, I’ve caught kind of the final four observations in what’s happening. The first is that we have 20 Gutenberg moments hitting us at the same time.

In the 15th century, the printing press changed everything. And it took about 100 years for society to absorb the full pace of change of that one invention. And in the past, we’ve had one or two of those happening occasionally, but today we have a full 20 because just autonomous cars changes everything. Then you add in drones and you add in Bitcoin, you add in blockchain, food technologies, AI, virtual reality, solar energy.

We have never seen this before, and what we’re seeing is in our enormous inability to absorb all of this technology, Society is not set up for this, it’s breaking every institution. And this is what I’m focused on a lot today, is how do you solve this breakage of our existing institution? Journalism is breaking, education, all our education systems are designed to take the young child, train them up to their early 20s to be ready for the existing job market except we don’t know what a job looks like in five years. What do we teach them?

Or religions, we have life extension coming where we have new technologies that will break through the aging barrier. We already have mice that are living to an equivalent of 300 years old so we’ve really broken through that, it just has to be commercialized. This is going to cause enormous problems, you know, retirement planning, unemployment benefits, health insurance, religions. You know, most religions are selling an afterlife as a business model. How do you sell heaven if nobody is dying, right? This is going to be an interesting challenge.

I’ve actually done some workshops at the Vatican where we talked about this, and so really huge challenges, which is an old thing. Both death and taxes, which used to be the only true truths will both look like they might disappear, because we might actually get rid of taxes and have a universal basic income, which will inverse the whole pyramid because technology is delivering so much productivity to the world, we can actually do that pretty reliably.

And the experiments that we’ve tracked on what’s called UBI have been phenomenally successful. The challenge of getting from a taxation labour union job-based environment to that is such a huge leap, we have very little confidence in our political structures to get us there. And so we’re going to have to ride around.

What we’ve noticed and the work that I did when writing this book, “Exponential Organizations” is if you want to do something disruptive do not do it inside the legacy organization or the legacy institution. You’ll just get into a political fight. Do it at the edge, ideally in secret, and then keep just pointing it away and spinning off new ideas, don’t tell the legacy what you’re doing.

Apple does this very well. Their methodology is they’ll form a small team that’s really disruptive, put them to the edge of the organization, keep them completely secret and they’ll say to them, go disrupt another industry. And so they have a portfolio of teams looking at different industries and when they think something’s ready for disruption they enter it in and then fold it all back into the iTunes platform.

And so we’re going to see more and more of that methodology and we don’t advise a lot of big companies but now we’re going to have to start doing that with our institutions, because all of our institutions are breaking. So, one thing is we’ve got the technology kind of hurdling along; second is breaks our institution; the third observation around this is our existing leaders simply don’t cut the mustard on this.

All of our leadership structures today are about training people to operate and lead in a stable, predictable, incremental, fairly logical linear view of the world and the train is pulling into black swan central, and that doesn’t work at all. And the final is that today almost all of the action and certainly most of the implementation is happening at the city level. Our nation states are too complex to manage today.

If you take some of the biggest cities in the world: Shanghai, Tokyo, Mexico City, San Paulo, those are bigger and more complex than any country was a 100 years ago, and democracies don’t work in this world either. We invented representative democracies when information was scarce. If you were in Ottawa or Washington DC you had literally no idea what was happening in California, the speed of a horse was as fast as you found out.

So you had somebody travel across the country, Parliament met occasionally to give people time to cross the country and show up and say, “Here’s what my people are thinking.”

But today we have an abundance of information, we know exactly what people to think here across the country. Except now there’s so much information it could get misused, misinterpreted, faked and we end up in the mess that we’re in around that.

And so we really have to figure out how to navigate that, and the work that I’m doing now is, how do you solve this immune system problem? Because we have the new stuff arriving unrelenting, and so we have to crack that problem. We working on that problem for the last few years, and we’ve cracked it in the private sector and now we’re working on the public sector. We’ve run this process a few times in Medellin in Colombia, we did a process with the mayor of Miami last year and we just finished a process with the president of Colombia and the Supreme Court to redo the justice system in Colombia.

So there’s an interesting challenge to work on. What we’re going to do now is saying, okay, let’s see if we can open-source that methodology so that anybody can pick it up and run with it to address climate change and some of the structural issues that we aren’t able to deal with or any of our political systems today. And so that’s, I think the work. And I think if I summarize where we’re going, it’s One of the massive benefits of technology is that it delivers abundance. And You’ve heard the food discussion, it does do that. We have to be careful and be thoughtful about where it’s taking us.

And so when we have graduates up coming out of singularity, we urge them if you’re using these new technologies, instrument the hell out of it so that you have a feedback loop, you have data to analyze, you can see if something’s going off the rails. If we could go back 50 years ago and know really what all the coal fired plants were doing in the world, we might have done things very differently.

So be very careful about how we instrument these ideas. And I think were we’re at right now is right about a 20 or 25 year period, and if we can navigate this next 25 year period and transition the world from old structures to new, then we end up in a kind of a Star Trek abundance kind of an environment. Unfortunately, right now we’re heading into a Mad Max kind of environment. And that’s pretty clear.

So those are the two futures that we have available to us; Star Trek or Mad Max and we’re going to have to figure out. Right now we’re heading kind of down the wrong direction as you can see from our dear friends in the south. How do you tilt that the other way and that’s, I think the work that we have to do. Thank you very much.

Salim Ismail, Best Selling Author, International Speaker and Founder of ExO Foundation
Salim looks through the lens of the future of work and helps us to understand how exponential technology is already impacting how and why we work. Using the human immune system as an analogy, Salim helps us to understand why it is so difficult to change the ways we work and interact in this ever changing world. A technology strategist, a software engineer, and a successful entrepreneur, Salim spent the past eight years building Singularity University as its founding executive director and current global ambassador, he focuses on how organizations can leverage disruptive technologies to grow ten times faster than their peers. His captivating, educational, and downright jaw-dropping presentations have been called “mind-blowing” and “the best talk I think I’ve ever heard.” His book, Exponential Organizations, quickly reached number one on Amazon’s “Best-Sellers in Business Management” and was named Frost & Sullivan’s “Growth, Innovation, and Leadership Book of the Year.”

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