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Updated version of the Third Industrial Revolution with new slides on the future of money, collaborative innovation, and the sharing economy.
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Leading into the 3rd Industrial RevolutionExploring the future of value creation
Dr. Robin Teigland Karinda Rhode in SLStockholm School of Economicswww.knowledgenetworking.orgwww.slideshare.net/eteigland
@RobinTeigland
September 2014www.hhs.se
Who am I? (LinkedIn Inmaps)
SSE
Exec Ed
Swedish IndustryResearch
Wharton
Stanford
McKinsey
vonorange.com
Leading into the third industrial revolution
Part I Background
Part II Collaborative Innovation
Part III The Sharing Economy
Then…
Thx to R. Wieselfors, Ericsson for photos
…Now
Thx to R. Wieselfors, Ericsson for photos
“Old” Film from 2008Did You Know: Shift Happens
http://www.youtube.com/watch?v=cL9Wu2kWwSY&feature=search
1. What trends do you recognize?
2. How are these trends affecting you and your organization?
3. What leadership challenges do these trends lead to?
History tends to repeat itself….Innovation, financial crisis, industrial revolution,
…
Steam engine
Internal combustion
engine
Microelectronics
Late 18th C Late 19th C Late 20th C
Schön 2008
Third industrial revolution?
Valuecreation
People• “Net generation”• 24x7 “mobile”
workforce• Knowledge via MOOCs• Sharing not consuming• Sustainability
Technology • Broadband access• The Cloud• Mobile phones• Internet of Things • Big Data• 3D printing• Robotics/AI• VR/AR
Open Source
• Software • Hardware• Physibles
Convergence of…..
Finance•
Microlending/microfinance
• Crowdfunding/equity/P2P
• Non-fiat cryptocurrencies
• Mobile money/payments
If the rate of change on the outside (of an organization) exceeds the rate of change
on the inside, the end is near....
-Jack Welch
Increasing pace of change
From 1920s to 2010s−Average lifespan of S&P 500 company fell from
67 years to 15 yearsFrom 2000 to 2010
−40% of companies on Fortune 500 list replacedPredictions
−In next few years, 70% of Fortune 1000 companies to be replaced
−By 2020, >75% of S&P 500 companies do not exist today
−By 2025, >45% of Fortune 500 companies to be from emerging markets
Fast Company, McKinsey & Inc
”Bitcoin has made me interested in issues like finance and money – things that I never thought about before. Now I am really curious and questioning why things are the way they are in the finance
world….and wondering what can I do to change them.”
- Bitcoin 2014 Conference Attendee
The genie is out of the bottle….
In just a few years in Sweden alone…
Company Founded Business
Klarna 2005 E-commerce payment services
MyLoan 2006 Loan broker
Trustly 2008 Online payments
TrustBuddy 2009 P2P lending
iZettle 2010 Mobile payments
FundedByMe
2011 Crowdfunding, crowd equity
Kivra 2011 Digital mailbox
Tink 2012 Personal finance
Safello 2013 Cryptocurrency exchange
KnCMiner 2013 Cryptocurrency mining equipment
Toborrow 2013 P2P lending for companies
Banks’ share of wallet is rapidly shrinking
Nordic BanksPay, Save,
Lend, Insure
Nordic Entrepreneurs
International Entrepreneurs
What is Crowdfunding?
Accumulation of small investments in individual projects by large number of
individuals (the “crowd”) via or with help of Internet and social networks (De Buysere
et al., 2012)
Picture: FundedByMe
Four forms of crowdfunding
Form Benefits for funders
Donation-based
Donation Intangible benefits.
Reward-based Donation or pre-purchase
Rewards in addition to intangible benefits.
Equity-based Investment
Return on investment if company does well. Rewards sometimes also offered and
intangible benefits may motivate too.
Debt-based LoanRepayment of loan with
interest. Alternatively intangible benefits if loan given interest-free.
Ingram & Teigland 2013
Local Stockholm success story: Flippin’ Burgers
Money raised: SEK 36,502 / €4,000
Number of investors: 186
Date funded: September 2011
Sector: Food
Enabling local, small-scale solutions
Top 5 Best American
Restaurants in Europe
http://travel.cnn.com/best-americana-restaurants-europe-023346
Crowd equity taking off
P2P lending in the US and UK…
• USD 3.8 bln in personal loans since 2007
• USD 750 mln growth each quarter
• Now offering business loans
• Strategic alliance with Union Bank
Toborrow.se
Democratizing innovation through access to capital
Kickstarter• Women 13% more likely to to
meet crowdfunding goals than men
• 67% of women-led technology ventures reached goals vs 30% of male-led ventures
Indiegogo• Women 61% more likely than
men to meet goals • Women account for 41% of
projects that meet goalshttp://online.wsj.com/articles/kickstarter-closes-the-funding-gap-for-women-1407949759
Bitcoin = The power of community + open source + internet + CPU
• Developed by self-organizing community of thousands of “strangers” across globe
• Not one but many motivations (intrinsic, extrinsic)• 91 bln SEK in circulation vs SEK 44 bln of Bitcoin in
five years• Approx USD 6.2 bln in circulation (Sept 2014) and
70,000 daily transactions
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2263707
http://techcrunch.com/2014/09/04/kncminer-raises-14-million-to-take-bitcoin-mining-to-the-moon/
Bitcoin – one of many cryptocurrencies
Currency CodeYearEst.
Founder(s)
Active Website PoW PoS
Bitcoin BTC or XBT 2009
Satoshi Nakamoto (pseudonym)
Yes N/A Yes No
Ripple XRP 2013
Chris Larsen & Jed McCaleb
Yes ripple.com No No
Litecoin LTC 2011 Charles Lee Yes litecoin.org Yes No
Peercoin PPC 2012Sunny King (pseudonym)
Yespeercoin.net
Yes Yes
Dogecoin DOGE 2013
Jackson Palmer& Billy Markus
Yesdogecoin.com
Yes No
Namecoin NMC 2011 N/A Yes dot-bit.org Yes No
Mastercoin MSC 2013 J. R. Willett Yesmastercoin.org
No No
Primecoin XPM 2013Sunny King (pseudonym)
Yesprimecoin.org
Yes No
Rise of local currencies
The future?
Facebook + banking license?
The future is already here, it’s just not very
evenly distributed.
- William Gibson
Leading into the third industrial revolution
Part I Background
Part II Collaborative Innovation
Part III The Sharing Economy
Many are stuck in our old ways …
No one knows everything, everyone knows something,
all knowledge resides in humanity.
networks.
Adapted from Lévy 1997
Six degrees of separation
- Milgram, 1967
105 emp350+
Partners
43,900+Communitymembers
15,000+Customers in 130 countries
eZ Ecosystem
• Content management software, #1 in media industry
• 250,000 sites in 170 countries• Customers: UN, FT, WSJ, Vogue, Hitachi, 3M, BMW
• 105 employees in 9 countries (US, Europe & Asia)
Teigland et al., 2014 forthcoming
eZ’s platform for building identity and competence throughout its ecosystem
eZ Software development team
Where have the traditional sources of sustainable competitive advantage been?
#1
InnovationNetworks of relationships
Brand & Reputation
FIRM
Kaye 1993
#1
InnovationNetworks of relationships
Brand & Reputation
FIRM
TWhere are the sources today of
sustainable competitive advantage?
Teigland 2010
Measuring demand in advance
Est. $30 mln sales
30% profit margin in commodity business
20 employees but a 24x7 global “workforce”
of 2.4 million
No internal R&D or sales & marketing
ThreadlessA platform for global community
collaboration
From clothing to home products….
GE opens up patents on Quirky
Innovation in automotive design/production
“Local Motors is the place for people to create influential vehicles together.”
http://www.youtube.com/watch?v=azCRuwtE_n0
DIY 3D printing becoming more commonplace…
DIY 3D printing becoming more commonplace…
http://openfabpdx.com/fffiddle/
“Made in Africa” 3D printer (Togo)crowdfunded through Ulele
Winner of International Space
Apps Challenge
http://www.engineering.com/3DPrinting/3DPrintingArticles/ArticleID/5712/E-Waste-3D-Printer-to-Mars.aspx
Endless possibilities for developing countries
http://opensourceecology.org/
OpenSimulator: A value-creation ecosystem
AcademicEntrepreneurHobbyistLarge FirmNon-profitLocal PublicFederal PublicResearch InstSME EmployeePeriphery
Teigland, Di Gangi, & Yetis 2012
USD 5.5mln in development
costs
What’s around the corner?24x7 Global Internet Collaboration + Open Source + 3D
Printing
http://mashable.com/2013/02/13/robohand/
$60,000
$150
Available for free download on
Where is the
firm?
Leading into the third industrial revolution
Part I Background
Part II Collaborative Innovation
Part III The Sharing Economy
What is the Sharing Economy?
Range of services that facilitate peer-to-peer transactions through the Internet
USD 335 billion by 2025 in top five sectors
https://www.youtube.com/watch?v=LWD-I5qPCfw
http://www.torbenrick.eu/blog/strategy/the-sharing-economy-is-changing-consumer-consumption/
UberGlobal platform for local community
collaboration
Launched June 2010
USD 17 bln valuation
43 countries globally
Limited physical assets
UberPop, Uber Rush, ??
UberGlobal platform for local community
collaboration
DHL’s MyWays
Internet – A Technical Glue
Petra Sundström
Bitcoin – so much more than a “coin”
From dumb to smart moneyUnderlying Bitcoin protocol holds
real transformative powerTransfer property rights (e.g.,
shares, certificates, digital money) fast, transparent and very securely.
http://thenextweb.com/insider/2014/02/15/bitcoin-platform-currency/
Big Data is now big money
Tomas Larsson, Sep 2012
http://hbr.org/2012/10/data-scientist-the-sexiest-job-of-the-21st-century/ar/1
Thomas Jefferson (1816)“Laws and institutions must go hand in hand with the progress of the human
mind.”
The problem is that the human mind itself can’t keep pace with the advances
that computers are enabling.
http://wadhwa.com/2014/04/15/mit-technology-review-laws-and-ethics-cant-keep-pace-with-technology/
Knowledge becomes quickly outdated
Ray Kurzweil, Singularity Institute
http://motherboard.vice.com/read/driverless-cars-are-going-to-kill-insurance-companies
Institutions
Emergent Collective vs
E.g., Central Bank~ Long-standing financial
institutions and regulations
E.g., Bitcoin Community ~ Emergent collective of users across globe connected through internet
Challenges to institutions?
Teigland, Yetis, Larsson, 2013http://papers.ssrn.com/sol3/papers.cfm?
abstract_id=2263707
Increasing pressure due to variety of new financial instruments
Forces for change
• Cryptocurrencies
• Community currencies
• Crowdfunding• Microfinance• P2P lending
• Sharing
The status quo
Forces for stability
• Governments• Central banks• Multinational
financial actors
• Legal system• Mindset
How should organizations react?
Strategic partnership
+
Internal corporate crowdfunding
iFundIT
More than 300 participantsEntry-level workers to VPs
Given $2,000 to invest over 8 week period
Choose internal projects in which to invest
“Keep your enemies close…”
Some questions…
What basic assumptions about value creation will no longer hold?
What opportunities are there for your company related to the future of money, collaborative innovation, and the sharing economy?
What strategic challenges are there within the nearest 2-3 years in connection with the future of money, collaborative innovation, and the sharing economy?
What will you do tomorrow at work as a result of today’s discussion?
ExploitationImproving
existing value creation activities
ExplorationDeveloping new value creation activities
Adapted from March 1991
What’s around the corner?24x7 Global Internet Collaboration + Open Source + 3D
Printing
http://mashable.com/2013/02/13/robohand/
$60,000
$150
Available for free download on
Where is the
firm?
The Firm
The Collective
vs
E.g., Microsoft~ Built by employees within
organizational boundaries
E.g., OpenSimulator~ Built by users and distributed freely regardless of affiliation
Models of Knowledge Creation
Teigland, Di Gangi, & Yetis 2012
Moving into the Third Industrial Revolution?
O’Driscoll 2009
From the mobility of goods to the mobility of financial capital to …
Teigland, JVWR, 2010
...the “mobility” of labor?
Overview− EU funded, 3 year multilateral and transversal network (LLP EACEA,
KA3 (ICT))− December 2011 – December 2014− Project Leader: University of Hull (Darren Mundy, Luisa Panichi)− 19 partners from Austria, Cyprus, France, Germany, Israel, Italy,
Netherlands, Norway, Portugal, Sweden, UK Network Aims
−Collect good practice examples in teaching and learning in virtual worlds from different subjects and national and local contexts− Facilitate transfer of core knowledge to new contexts− Provide framework for creation of pan-European virtual-world university
Expected Outcomes− Increased number of experts in virtual world education− Policy for long-term sustainability of network and its outcomes− Model for knowledge transfer− Range of dissemination events
More information: http://www.euroversity.eu/
Published by Palgrave Macmillan
http://www.amazon.com/dp/1137283017
Some things do not change
Innovation Exchange
Exchange Trust
Trust RelationshipsRelationships Interaction
Robin [email protected]
www.knowledgenetworking.org
www.slideshare.net/eteigland
www.nordicworlds.net @RobinTeigland
If you love knowledge, set it
free…
If you like this presentation and would like to contribute to our research, we accept bitcoins: 14hs4JbnQLXE87GGzu84uXGaspmxmnLpwC.Thank you!!!!!