Work, business & professional services

The Rise of the Digital Nomad

Sometimes what you are looking for is hidden right in front of your face. A case in point is the mobile phone.People tend to think of mobiles as just another technology but Internet and GPS enabled phones are changing how we live, how we work and how we think. The big picture is fairly clear. The future will be faster and more connected. There will be fast cellular networks connecting with a host of devices uploading and downloading information. This ubiquitous connectivity will allow us to work anywhere we want because people and information will be within easy reach. Thus offices will disappear and so too will ‘flesh meetings’. But I don’t think so.Mobile connectivity is indeed blurring the division between work and home and it is now physical time not physical space that is in short supply. However, business is inherently social and new ideas thrive on the close physical proximity of people.

Thus predicting the death of office buildings or physical meetings is probably an exaggeration. Similarly, whilst mobile networks and permanent connectivity may bring family and friends closer together this could mean that encounters with people and ideas that are ‘outsiders’ will become less common in the future. Equally, while GPS and camera equipped mobiles mean that everyone now has the potential to become a journalist or filmmaker this easy connectivity may also mean that our digital privacy is eroded. The future therefore looks like it will be the best of times and the worst of times.

For digital nomads many of the things that used to be done at home will be done in the office and vice versa. Home working will become more popular, partly because companies will want to reduce costs, but also become working from home allows employees flexibility. This has been talked about before, most notably in connection with telecommuting, but the difference is that fixed phone lines and dial up Internet still tied people to a specific location. The key point here is, I think, the fact that the phone isn’t merely a phone any more than the car was a faster horse. The ‘phoneness’ of phones hides the fact that they are subtlety changing almost everything in the same way that the car did. The comparison with cars is also quite interesting because while the car segmented towns and cities into work and home areas the mobile phone may be having the opposite effect. Hence we will still have jobs in the future but the where and the when will be left to the individual.

Signals for the Foreseeable Future

The world is changing significantly but sometimes it is difficult to see how and why because we are drowning in data and it’s difficult to separate the signal from the noise. So what are some of the key trends that business should sit up and take notice of? According to Art Kleiner, writing in Strategy + Business, one of the key trends is a surplus of global capital, which is leading to an increased velocity of capital, which in turn will lead to faster financial bubbles. The specific problem here is that financial markets tend to overreact in the short term to bubbles so one needs to design a strategy that is constantly hedging against various potential problems both in terms of geography and sectors. A second trend identified by Kleiner is energy complexity.

From a strategy point of view the issue isn’t so much ‘which fuel?” but rather the ambiguity of choice. On the one hand ambiguity and complexity add to cost but on the other they are spurs to innovation. Third is participative risk. Things are more volatile than they used to be and organisations therefore need to think about risk in new ways. For instance, insurance and healthcare firms are asking their customers to own part of the risk implicit in their relationships.The fourth trend is strategic souring. We have entered a period where supplies, raw materials and even people are of critical strategic importance. For the first time since 1939 companies and countries face growing shortages of key raw materials and business models and relationships with suppliers are becoming more collaborative as a result.

The fifth trend is excellence as a differentiator. What Kleiner is getting at here is that all of the ‘low hanging fruit’ have already been picked and labour scarcity means that there will be a war to attract and retain top level talent. Hence being a ‘great place to work’ will matter like never before and how a company is run (in the broadest social and ethical sense) will be a key differentiator in the future.The sixth trend is Green Technology as the next Y2K. The idea here isn’t whether or not climate change is real. We will never know whether Y2K was a real threat or not but the threat of destruction was enough to become a catalyst for innovation and better housekeeping across the board. Climate change will be the same according to Kleiner. Whether it is real or not is beside the point. The threat will drive change from a risk management point of view but it will also become a spur for innovation more generally. The ninth trend is an IT renaissance driving cost savings and labour productivity and the tenth is consumer-centric digitalisation enabling metrics.

Nine New Trends for 2008

A little while ago Wired magazine published a list of nine new trends driving business forward in 2008. Some of these trends are not exactly new and a couple may not turn out to be trends at all but they are at least food for thought. The first trend identified by Wired is the rise of the open source tycoon. The idea here is that in January 2008 there were more open source acquisitions than in all of 2007. Sun Microsystems bought MySQL, Nokia acquired Trolltech and Wal-Mart is developing an open-sourced approach to help its workers track their healthcare records. Traditional wisdom says that you cannot cash in on open source software because the ethos of open source is not based around financial gain, but perhaps not. Second up is social networks growing up. This is one I violently disagree with. MySpace is impressive from a membership point of view (the site now has 225 million members worldwide) but most social networks are unimpressive when it comes to financially capitalising their ideas. Perhaps this is a good thing too. After all, do you really want your friendships to be turned into commercial transactions? Facebook tried it once with Beacon and Social Ads and not surprisingly it didn’t work. Again, surely the point of these networks is friendship, not money?

Trend three is Green on the inside. The idea here is that whilst being ethically and socially aware is the thing to do these days the reality is that most companies still make money by doing business the old fashioned way. Moreover, a shift towards being green can hurt your sales and share price and the market is not currently rewarding businesses that are deep green. Despite this some companies are moving rapidly forward. Wal-Mart, for instance, is asking suppliers in the US to increase the energy efficiency of the products they supply by 25% over the next three years. Of course, given that Wal-Mart buys vast amounts of products from China where the rules are more lax means that this isn’t exactly a level playing field.Trend four is the invisible internet. This is all about the fact that electronic devoices are increasingly web enabled but the trend is towards predetermined functionality not open wen access. For example, you can’t browse the Internet on a Kindle but you can download books and magazines from the web. In other words, devices that do less sell for more than those that do it all. Trend Five is the rise of the instapreneur. Once upon a time it cost a lot of money to set up a store selling something. These days barriers to market entry are falling and the old idea that you need volume to support factories and shops just isn’t true anymore.

The longtail is a well-documented idea but the thought goes way beyond online and digitally based businesses. The long tail applies to making things not just selling them. Trend six is building better web advertising. This bores me silly although the growth of behavioural targeting frightens the pants off me. Trend seven is China. Everyone knows about China as a source of low-cost labour and manufacturing but China is also, increasingly, a source of finance and a source of upstream innovation and intellectual property. Trend eight is VC firms moving into seed funding and angel territory and trend nine is the human touch.This last trend is really interesting. Companies are starting to use people to filter information. The internet can do lots of things but critical thinking isn’t one of them. Hence the growth of firms like Brijit that use human curation rather than algorithms. Even Google is in on this. The search firm is planning to introduce something called knolls – a tool that allows human experts to write about certain topics.

Is History a Good Guide to the Future?

According to the economist JK Galbraith, the majority is always wrong. If you hear that everyone is buying something you should thus ask yourself who is selling?Taking a long-term view this is undoubtedly correct and one of the reasons for this is that we tend to get caught up in the present and forget about both the past and the future. Things often run in cycles but individually and collectively we have great difficulty recognising a changing environment. In short, we assume that things will always be as they are now and cling to what we know even when it’s fairly obvious that things are changing.

Of course knowing precisely when to react is difficult. Saying that the US economy will go into recession in one thing but getting the timing right is quite another. As JK Galbraith also said: “Successful investing is the art of anticipating the anticipations of others”. This is difficult because the news and media are obsessed with the here and now and our short-term focus means it is hard to sift through the trivial details and see the bigger picture. Good forecasters have a very acute sense of history but the very best also know when its time to forget the past before it gets you into a whole heap of trouble. Age and experience come into play here, as does the discipline of patience. There are many trends around at the moment but we should remember that many of the most important drivers of change do not change very much or very often. When new trends do arrive they should be taken seriously but equally we should not all be seduced by things just because they are shinny and new.

The New Model of Innovation

I’ve been writing about open innovation for a number of years and whilst it’s still too early to draw any firm conclusions about where this trend is going there are a few ground rules emerging about how companies can shift away from innovation as an activity conducted within fixed boundaries to one that is delegated to a fluid network of suppliers, specialists and customers. Open innovation (sometimes called distributed innovation or customer co-creation) is in many senses not new. Boeing, for example, has always built planes with many of the components being produced by and even invented by its suppliers. What is relatively new is being open to new insights and ideas from any source, including those of the final customer.So what are the hurdles in terms of co-created products and services and how can companies capture more value either directly or indirectly through the co-creation process? The first issue is that a company must structure a problem for people to collaboratively contribute to. Second, is the issue of attracting, motivating and retaining the right people to act as co-creators and it looks as though non-financial rewards are often the best way to do this. Clear rules, goals, leadership and conflict resolution processes are also important although this can be tricky given the distributed (and often virtual) nature of these teams.