Why Are We Suddenly So Bad At Predicting the Future?

Imagine that a monkey got into the control room of the universe and spent the year clicking random buttons. Imagine him hopping about on the ‘one musician less’ button, stomping on the ‘auto-destruct’ lever and gurgling while he thumped repeatedly on the ‘introduce chaos’ switch. Close your eyes and picture him dropping a giant poo on the bright red panel marked ‘do not touch under any circumstances’. That my friends is the only way to think about 2016 – after all, it was the year of the monkey in the Chinese zodiac. It was the year when rational thinking took a beating, when meritocracy became a bad word, when liberalism escaped from the battlefield to a cave in the mountains to lick its wounds. And not surprisingly, a year when projections, predictions and polls made as much sense in the real world as an episode of Game of Thrones on steroids.
monkey-prediction
Given much of our lives are spent in productively engaging with the future and making decisions based on big and small decisions about the possible future, this last point is more important than just the schadenfreude of laughing at pollsters and would be intellectuals. The present passes too quickly, so really every decision you’ve ever made in your life is counting on future events to turn out in ways that are favourable. Getting this wrong is therefore injurious to health, to put it mildly. And yet our ability to predict the future has never been under such a cloud in living memory. Why is this so?

Fundamentally, we’re wired to think linearly in time, space and even line of sight. We are taught compound interest but we get it intellectually rather than viscerally. When you first encounter the classic rice grains and chessboard problem, as a smart person, you know that it’ll be a big number, but hand on heart, can you say you got the order of magnitude right? i.e. the total amount of rice on the chessboard would be 10x the world’s rice production of 2010? Approximately 461,168,602,000 metric tons? This problem of compounding of effects is incredibly hard to truly appreciate, even before you start to factor in all the myriad issues that will bump the rate of change up or down, or when the curve hits a point of inflexion. The Bill Gates quote  – ‘we over-estimate the impact of technology in 2 years, and under-estimate the impact over 10’ – is a direct reframing of this inability to think in a compound manner.

Then there’s the matter of space and line of sight. The way the future unfolds is dramatically shaped by network effects. The progress of an idea depends on it’s cross fertilisation across fields, geographies and disciplines, across any number of people, networks and collaborations. These collaborations can be engineered to a point or are the result of fortuitous clustering of minds. In his book ‘Linked’ – Ablert-Lazlo Barabasi talks about the mathematician Erdos who spent his life nomadically, travelling from one associates’ home to another discussing mathematics and ironically, network theory. Not surprisingly, a lifestyle also practiced for many years by a young Bob Dylan, if you substitute mathematics for music. Or consider the story of the serial entrepreneur in Rhineland in the 1400s, as told by Steven Johnson, in ‘Where Good Ideas Come From’. Having failed with a business in mirrors, he was working in the wine industry, where the mechanical pressing of grapes had transformed the economics of winemaking. He took the wine press, and married it with a Chinese invention – movable type, to create the worlds first printing press. His name of course, was Johannes Gutenberg. This kind of leap is not easy to predict, not just for the kind of discontinuity they represent (more on that later), but also because of these networked effects. Our education system blinkers us into compartmentalised thinking which stays with us through our lives. Long ago, a student of my mothers once answered a question about the boiling point of water by saying “in Chemistry, it’s a 100 degrees Centigrade, but in Physics, I’m not sure”. We are trained to be specialists, becoming more and more narrow as we progress through our academic career, ending up more or less as stereotypes of our profession. Yet human progress is driven by thousands of these networked, collaborative, and often serendipitous examples. And we live in a world today with ever expanding connections, so it’s not surprising that we have fallen behind significantly in our ability to understand how the network effects play out.

If you want to study the way we typically make predictions, you should look no further than sport. In the UK, football is a year round sport, so there are games every weekend for 9 months and also mid week for half the year. And with gambling being legal, there is an entire industry around football gambling. Yet, the average punter, fan or journalist makes predictions which are at best wilfully lazy. There is an apocryphal story about our two favourite fictitious sardars – Santa Singh and Banta Singh, who decide to fly a plane. Santa, the pilot, asks Banta, the co-pilot to check if the indicators are working. Banta looks out over the wing and says “yes they are, no they aren’t, yes they are, no they aren’t…” – this is how a lot of predictions are made in the world of premier league football today. Any team that loses 3 games is immediately in a ‘crisis’ while a team that wins a couple of games are deemed to be on their way to glory. Alan Hansen, an otherwise insightful pundit and former great player, will always be remembered for his one comment “You can’t win anything with Kids” – which he made after watching a young Manchester United side lose to Aston Villa in the 1995-96 season. Manchester United of course went on to win the season and dominate the league for the next decade and a half. Nobody predicted a Leicester City win in 2016 of course, but win they did. The continuous and vertiginous increase in TV income for football clubs has led to a relatively more equal playing field when it comes to global scouting networks, so a great player can pop up in any team and surprise the league. Yet we find it hard to ignore all the underlying trends and often find ourselves guilty of treating incidents as trends.

The opposite, is amazingly, also true. We are so caught up with trends that we don’t factor in the kinks in the curve. Or to use Steve Jobs’ phrase – the ding in the universe. You can say that an iPhone like device was sure to come along sooner or later. But given the state of the market – with Nokia’s dominance and 40% global market share, you would have bet your house on Nokia producing the next breakthrough device eventually. Nobody saw the iPhone coming, but when it did it created a discontinuous change that rippled across almost every industry over the next decade. The thing is, we like trends. Trends are rational and they form a kind of reassuring continuity so that events can fit our narratives, which in turn reaffirm our world view. And unless we’re close to the event, or perennial change seekers and nomads ourselves, it’s hard to think of countercyclical events. It’s now easy to see how in 2016 we were so caught up in the narrative of progressive liberalisation and unstoppable path to globalisation, we failed to spot those counter-cyclical events and cues that were right there in our path.

In fact there are any number of cognitive biases we are guilty of – on an everyday basis. This article just lists a dozen of them. My favourites in this list are the confirmation bias and the negativity bias. Both of these are exacerbated by social media and digital media. While social media has led us to the echo-chambers – the hallmarks of 2016, our projection bias is also accentuated by our ability to choose any media we want to consume, in the digital world, where access is the easy part. Similarly, bad news spreads faster on social networks and digital media today than at any time before in history. Is it possible that despite knowing and guarding against these biases in the past, we’ve been caught out by the spikes in the impact and incidence of a couple of these, in the digital environment we live in today?
To be fair, not everybody got everything wrong. Plenty of people I know called the Donald Trump victory early in the game. And amongst others, John Batelle got more than his share of predictions right. There is no reason to believe that 2017 will be any less volatile or unpredictable than 2016, but will our ability to deal with that volatility improve? One of the more cynical tricks of the prediction game is to make lots of predictions at many different occasions. People won’t remember all your bad calls, but you can pick out the ones you got right, at leisure! This is your chance, then, to make your predictions for 2017. Be bold, be counter-cyclical. And shout it out! Don’t be demure. The monkey is history, after all. This is the year of the rooster!
Advertisements

2016/2017 Shifting Battlegrounds and Cautious Predictions for Digital

Innovation slows down in mobile devices but ramps up in bio-engineering. Voice goes mainstream as an interface. Smart environments and under the hood network and toolkit evolution continues apace.

For most people I know, 2016 has ranged between weird and disastrous. But how was it for the evolution of the digital market?

The iPhone lifecycle has arguably defined the current hypergrowth phase of the digital market. So it’s probably a good place to start. In the post Steve Jobs world, it was always going to be a question about how innovative and forward thinking Apple would be. So far, the answer is not very. 2016 was an underwhelming world for iPhone hardware (though Apple has tried harder with MacBooks). Meanwhile, Samsung which you suspect has flourished so far by steadfastly aping Apple, ironically finds itself rudderless after the passing of Steve Jobs. It’s initial attempts at leapfrogging Apple have been nothing short of disastrous with the catastrophic performance of the new inflammable Note phones/ batteries. Google’s Pixel Phone could hardly have been timed better. By all initial accounts (I’m yet to see the phone myself) it’s comparable but not superior to an iPhone 7, Google’s wider range of services and software could help it make inroads into the Apple market. Especially given the overwhelming dominance of Android in the global OS market. The market has also opened up for One Plus, Xaomi and others to challenge for market share even in the west. Overall, I expect the innovation battleground to move away from mobile devices in 2017.

While on digital devices, things have been quite on the Internet of things front. There have been no major IOT consumer grade apps which have taken the world by storm. There have been a few smart home products, but no individual app or product stands out for me. As you’ll see from this list – plenty if ‘interesting…’ but not enough ‘wow’. I was personally impressed by the platform capabilities of enabling IOT applications, form companies such as Salesforce, which allow easy stringing together of logic and events to create IOT experiences, using a low code environment.

AR and VR have collectively been in the news a lot, without actually having breakthrough moment. Thanks to the increasing sophistication of VR apps and interfaces, with Google Cardboard and the steady maturing of the space. But the most exciting and emotive part of AR / VR has been the hololens and holoportation concepts from Microsoft – these are potentially game changing applications if they can be provided at mass scale, at an affordable cost point and if they an enable open standards for 3rd parties to build on and integrate.

Wearables have had a quiet-ish year. Google Glass has been on a hiatus. The Apple Watch is very prominent at Apple stores but not ubiquitous yet. It’s key competitor – Pebble – shut shop this year. Fitbits are now commonplace but hardly revolutionary beyond the increasing levels of fitness consciousness in the world today. There are still no amazing smart t-shirts or trainers.

The most interesting digital device of 2016 though, has been the Amazon Echo. First, it’s a whole new category. It isn’t an adaptation or a next generation of an existing product. It’s a standalone device (or a set of them) that can perform a number of tasks. Second, it’s powered almost entirely by voice commands “Alexa, can you play Winter Wonderland by Bob Dylan?”, third, and interestingly it comes from Amazon, for whom this represents a new foray beyond commerce and content. Echo has the potential to become a very powerful platform for apps that power our lives, and voice may well be the interface of the future. I can see a time the voice recognition platform of Echo (or other similar devices) may be used for identity and security, replace phone conversations, or also become a powerful tool for healthcare and providing support for the elderly.

Behind the scenes through there have been plenty of action over the year. AI has been a steady winner in 2016. IBM’s Watson added a feather to it’s cap by creating a movie trailer. But away from the spotlight, it has been working on gene research, making cars safer, and even helping fight cancer. But equally, open source software and the stuff that goes behind the websites and services we use every day have grown in leaps and bounds. Containerisation and Docker may not be everybody’s cup of tea but ask any developer about Docker and watch them go misty eyed. The evolution of micro services architecture and the maturing of APIs are also contributing to the seamless service delivery that we take for granted when we connect disparate services and providers together to order Uber cabs via the Amazon Echo, or use clever service integrators like Zapier

All of this is held together by increasing focus on design thinking which ensures that technology for the sake of tech does not lead us down blind alleys. Design thinking is definitely enjoying its moment in the sun. But I was also impressed by this video by Erika Hall that urges us to go beyond just asking users or observing them, and being additionally driven by a goal and philosophy.

2016 has also seen the fall of a few icons. Marisa Meyers has had a year to forget, at Yahoo. Others who we wanted to succeed but who turned out to have feet of clay, included Elizabeth Holmes at Theranos, and the continued signs of systemic ethical failure at Volkswagen. I further see 2016 as the year when external hard drives will become pointless. As wifi gets better, and cloud services get more reliable, our need to have a local back up will vanish. Especially as most external drives tend to underperform over a 3-5 year period. Of course, 2016 was the year of the echo-chamber – a reminder that social media left to itself insulates us from reality. It was a year when we were our worst enemies. Even through it was the Russians who ‘Hacked’ the US elections and the encryption debate raged on.

One of the most interesting talks I attended this year was as the IIM Alumnus meeting in London, where a senior scientist from GSK talked about their alternative approach to tackling long term conditions. This research initiative is eschewing the traditional ‘chemical’ based approach which works on the basis that the whole body gets exposed to the medication but only the targeted organ responds. This is a ‘blunt instrument’. Instead, the new approach takes an ‘bio-electronic’ approach. Galvani Bioelectronics, set up in partnership with Alphabet will use an electronic approach to target individual nerves and control the impulses they send to the affected organ, say the pancreas, for diabetes patients. This will be done through nanotechnology and by inserting a ‘rice grain’ sized chip via keyhole surgery. A successful administration of this medicine will ensure that the patient no longer has to worry about taking pills on time, or even monitoring the insulin levels, as the nano-device will do both and send results to an external database.

Biotech apart, it was a year when Google continued to reorganise itself around Alphabet. When Twitter found itself with it’s back to the wall. When Apple pondered about life beyond Jobs. Microsoft emerged from it’s ashes, and when Amazon grew ever stronger. As we step into 2017, I find it amazing that there are driverless cars now driving about on the roads, in at least one city, albeit still in testing. That we are on the verge of re-engineering the human body and brain. I have been to any number of awesome conferences and the question that always strikes me is, why aren’t we focusing our best brains and keenest technology on the worlds greatest problems. And I’m hopeful that 2017 will see this come to fruition in ways we can’t even imagine yet.

Here are 5 predictions for 2017. (Or around this time next year, more egg on my face!)

  • Apple needs some magic – where will they find it from? They haven’t set the world alight with the watch or the phone in 2016. The new MacBook Pro has some interesting features, but not world beaters yet. There are rumblings about cars, but it feels like Apple’s innovation now comes from software rather than hardware. I’m not expecting a path breaking new product from Apple but I’m expecting them to become stronger on platforms – including HomeKit, HealthKit and to seeing much more of Apple in the workplace.
  • Microsoft has a potential diamond in LinkedIn, if it can get the platform reorganised to drive more value for its, beyond job searches. Multi-layered network management, publishing sophistication, and tighter integration with the digital workplace is an obvious starting point. Microsoft has a spotted history of acquisitions, but there’s real value here, and I’m hoping Microsoft can get this right. Talking about Microsoft, I expect more excitement around Hololens and VR based communication.
  • I definitely expect more from Amazon and for the industry to collectively start recognising Amazon as an Innovation leader and held in the same esteem as Apple and Google. Although, like Apple, Amazon will at some point need stars beyond Bezos and a succession plan.
  • Healthcare, biotechnology, genetics – I expect this broad area of human-technology to get a lot of focus in 2017 and I’m hoping to see a lot more news and breakthroughs in how we engineer ourselves.
  • As a recent convert, I’m probably guilty of a lot of bias when I pump for voice. Recency effect, self referencing, emotional response over rational – yes all of the above. Voice is definitely going to be a big part of the interface mix going forward. In 2017, I see voice becoming much more central to the interface and apps planning. How long before we can bank via Amazon Echo?

Happy 2017!

Mobile Dominates Worlds Top Brands List

The annual list of the worlds most valuable brands have been published, by Interbrand, and this year, the big news is the ascension of Apple to the throne, at the expense of Coca Cola. 

 

Top 10 brands

(http://www.businessweek.com/articles/2013-10-01/the-most-valuable-brands-in-america-2000-to-2013)

 

However a closer look at this highly instructive chart throws up some more interesting insights. 

 

First, that Coke has dropped two spots, and Google is now the second most valuable brand, after Apple. Neither of these two brands were in the top 10 in this chart before 2008. The visual itself shows the 2 dramatically steep rises for Apple and Google, compared to anything else in this picture. I believe Warren Buffet once said he would not invest in something he did not want his family to use. It is more than likely that Apple and Google pass this test with flying colours. 

 

Second, the dominance of technology in this decade is brought sharply into focus in this chart. There are a number of Automotive, Entertainment and Telecom companies in the mix, but with the exception of Coke, the top half of this is increasingly dominated by technology companies. IBM is definitely more of a technology company than a “business services and diversified” company. GE too has an increasingly technology focus. In fact, in 2013, GE formed a Science and Technology Committee within the board and elected among others, Francisco D’Souza, CEO of Cognizant to the commitee. 

 

Third and most tellingly, a closer look at the top 10 brands of 2013 suggests that 6 out of the 10 companies have a strong link to mobile technologies. Apple, Google and Samsung define the mobile industry today. IBM’s advertisements such as this highlight the focus on mobile technologies. Microsoft’s recent $7.2 billion acquisition of Nokia and it’s Windows 8 strategy leave no doubt about it’s intentions. (Remember, the PC market is shrinking at over 10% year on year). And Intel too, is seeking  to escape the downward gravitational pull of the PC market. The new CEO, Krzanich has already announced the focus will be on mobile and wearable chips. 

 

Even for the other four companies, Mobile is increasingly at the heart of their strategies. Coke feels that mobile is the closest they can get to their customer, calling it “between reach and desire”. McDonalds is experimenting with mobile payments at some outlets. Toyota, like many other major organisations have rolled out BYOD systems and led large scale mobile marketing initiatives. In fact you could argue that the likelihood that these companies will stay in this top 10 list in future may well be linked closely to their proficiency in the mobile space. 

One More Thing – What Next for Apple, and For Your Mobile Strategy?

It takes greatness for a man to change the course of a river.

If that river is actually the flow of human endeavour that is the web and the inexorable drive towards the principles and technologies it symbolises and engenders, then greatness is too small a word for that achievement.

Steve Jobs did it. He took by the scruff of it’s neck all that technologists, philosophers, designers and businesses across the world were seeking to do, and he yanked it like a magical cloak to unveil his own version of the future. Along the way he reinvented mobile phones, the music industry, the applications universe and our very relationship as people, with technology. Steve Jobs was Prometheus.

But in doing so, he convinced us that the way forward was away from open standards, lowest common denominator tools, democratic access to content, and a low cost model of internet services. He gift-wrapped proprietary standards, expensive gadgets, walled garden access and a hard bargain to boot, into a lickable form that very few could resist. (He even changed the lexicon – he made lickability a real word.) And he took 30% of the top. And it was willingly paid. In fact, if Steve Jobs had created the web, rather than Tim Berners Lee, the Internet would be sold in a little white box that you could only get from Apple. It would be near perfect. And you would be in the lucky/ rich 40% to have it, because you would pay through your nose.

The iPod, iPhone, iPad, iTunes, the App Store – every one of these was a “new to the world” product in it’s own way. There are too many reasons to list here all the ways in which they departed from anything before. But the word revolutionary can be applied to most of Apple’s products, without much exaggeration.

Steve Jobs is no more. And the impact of his achievement is starting to become apparent as the world slides back towards the web, eschewing increasingly, the expensive and proprietary model of Apple. Like the tide reclaiming land where the fortress has crumbled.

No longer does Apple seem to produce a product which is scarcely believable in it’s distance from the present and the understood. What was your first reaction to the iPad when you heard of it? Surely you thought “I’ve got a phone, I’ve got a laptop, this seems like an indulgence!”. And soon you succumbed. As somebody said, every year, you expected apple to create a product that you’d never heard about before but suddenly couldn’t live without any more.

The iPad Mini, which is Apple’s first offering post Steve Jobs, isn’t any of that. It’s actually a me-too, a shinier, sexier, apple-ized version of the Kindle. I bought one, but only as a replacement for an iPad). The iPhone 5 launch was dogged by the problems with the map. The refrain on the street was unanimous. Would have never happened under Jobs.

The competition, which earlier found itself nearly out of the race, is suddenly roaring back. Samsung have not only taken over the smart phone market in terms of value and volumes, they are also neck and neck with Apple on innovation. The very fact this should be a debate is a sign of the erosion of Apple’s position. The HTC One, though not as loudly touted, is also a device on par with or ahead of the iPhone in many ways.

Two years ago, Apple sued Samsung for copyright infringement. At the time it was an open and shut case – Apple created, Samsung copied. Now, every week there’s a settlement and a counter settlement. Courts all over the world are coming to their own conclusions about the intellectual copyright sparring and the decisions are rarely unanimous. It’s hard to stay enthused any more about who won which lawsuit and what was paid in which currency.

The most damning pointer of all, is possibly Apple’s stock price. It looks like the market no longer believes that Apple can walk on water. Consider the performance of Apple’s stock versus Google’s up to 2012
Apple stock vs google stock 07 12
…. with that since 2012. There is clearly an element of value migration from Apple.
apple-google-2013.jpg
Every other day, people are taking pot shots at apple. Are apple too defensive now? Are they having to fend off the constant jabbing by Samsung? Have they lost their marketing mojo? No uber announcements just when everybody else was out trying to make news?

None of this is to take away from Apple’s current management. Tim Cook is said to be the guru of Apple’s supply chain which combines over hundreds of suppliers into the flawless whole that is an apple product and still manages to retain absurdly high profits for contributing very little to the physical product. The iPad Mini by any definition is an excellent product. The immediate future of the iPhone and iPad family may well be safe thanks to the lead Apple already have in design, vision, operational sophistication and technology. All of this makes Apple a pretty good company. One of the best, in fact.

But not years ahead of everybody, where Steve Jobs had them.

No disrespect to Cook and co. It’s like taking over from Alex Ferguson, Jack Welch or Steve Waugh.

Maybe I’m wrong. Maybe the iWatch will herald a whole new generation of technology. I believe firmly that personal and home tech is the next frontier. Google Glass and Apple’s iWatch may be the headline acts of this next wave. But while we would all love to see another world changing device from Apple, my gut says it could be underwhelming.

There are still organisations buying iPads by the thousands. Armies of sales people and relationship managers are now going to battle with a shiny apple device rather than an “old fangled laptop”. In fact I asked a room full of executives why they would choose a device for an enterprise when it didn’t connect to the network, didn’t run any standard enterprise software, couldn’t print very easily and was unnecessarily expensive. The answers were unfailingly emotional. “Because it’s so simple my 5 year old daughter can use it”, or “it passes the mum test” or “it’s the only device you can caress”. Will companies continue to invest deeply into Apple devices? Or will they start to look around for alternatives soon? The jury is out on that one.

Meanwhile, it wouldn’t hurt to revisit your enterprise strategy. If, like a lot of companies, your mobile strategy basically reads “get apps out on apple devices, and we’ll worry about the rest later”, this is a good time to rethink the approach. Here are 5 things you should be doing.

1. This is the most important. Get prepared for a swing back to HTML5 and web standards over native iOS/ Android development. Make sure all your vendors have a clear HTML5 roadmap.
 
2. Ensure you have an HTML5 reference architecture for what you are trying to do in your business, even if you don’t use it right now.

3. The same is true of Android. Create a reference architecture, build a route to market on the android ecosystem. But remember that Android is almost like a counter point to apple. If the iOS native development declines, so might Android, in favour of HTML standards.

4. Start exploring the non-apple device landscape. The phone space is turning already, but the tablet space may be interesting in the next 12-18 months.

5. Watch the HTML app stores such as AppsFuel, for reusable apps and components.