Futurist Speaker Gerd Leonhard At SAP Executive Summit 2017 Exponential Technological (r)evolutions

Good morning. It's a great pleasure to be with you today. What a beautiful place. Italy is a beautiful place. We have a vacation home right around the corner in Lugano. So it's a different country, but same thing. So it's really great to be here. First of all, I want to say many of you know the future is already here. We just haven't noticed. I mean, if you're going to other countries like Silicon Valley or China, robotics and all the things are already part of our lives. And predictions have it that robotics will be as common as using WhatsApp in 10 years. So if we look around our world, I mean, clearly, if you have any mobile device like this, this is your external brain, this is your second brain. In many ways. We keep our data here, we do our dating here, we have our music, here, Spotify, we have our films here we have our news, we do our banking. And this machine has the same power than a mainframe computer that the President of the United states was using 20 years ago. And in 10 years, this machine will have a million times the capacity of computing. It's hard to imagine this future. I mean, we're talking about a time frame that we have to really understand what it means. So my work is based on the idea of saying, well, not predicting the future, but developing foresights. Here's the most important curve of the day, the exponential curve. You've heard about this before, of course, Moore's law, Metcalfe's law and so on. But the reality really is this. In the beginning of this curve, you notice nothing like the paperless office. Not much changes when you get to the takeoff point. That's today, you're at 4. The next step is 8, 16, 32. In less than seven years, we're going to be at 128, and at 30 steps, it's a billion. So our curve is going here, from here. You see, basically, the changes in the next 10 years will be mind boggling. I'll tell you why. But vertically up in 30 years, a billion. That means the kids of my kids will never know how to drive a car themselves. They will never know what a book looks like. That's kind of sad. They will definitely not know what a CD looks like. They'll live in a whole different world. And so if you run business today, you have to actually be good at seeing the future. Because the chances are in five or seven years, your company will make money in completely different ways. I used to be in the music business. I was a musician and then producer. And today music is no longer about selling music. Music is basically free. YouTube, of course, Spotify. You guys are using Spotify, I'm sure. What a gift. 20 million songs for €8 or €10amonth. You know, it used to cost €20 for once a D with 12 songs. So if you're in the music business, you're no longer selling music, you're selling what? Access, experience, context. That's going to happen to everyone. To banking, to insurance, maybe even to government. It's going to happen that these changes are mind boggling. If you just look at some of the graphs. If you're in the media business, I hope you're not in the media business, but that's really the hardest place. Look at this graph. Google and Facebook are making 90% of the digital money of advertising. 90%. Talk about exponential. The change in view on the car business. Transportation, logistics, advanced battery technology. Hugely exponential. As I like to say, science fiction is becoming science fact. In a couple years we'll be able to drive our car 2000km on one charge. In 10 years there will probably be one charge when you buy the car and it will cost one tenth of the money. Exponential change of artificial intelligence. Mind boggling explosion of how that's happening in commercial use of artificial intelligence. Generally, the accelerating growth in technology. So that basically means this. Keep it very simple. In 10 years, nothing is impossible anymore. Pretty much nothing. Genetic engineering of humans possible beating cancer. Give it a bit more time, 20 years maybe. Artificial language understanding. We can speak to computers. That's one or two years from today. You notice 35% of American kids, they speak to their computer, they don't type. Language recognition is just about perfect. So in the next few years you'll see customer service. Basically you speak to a computer like we'd already know the Amazon Echo. You just say, hey, I need insurance and you speak to the computer like a friend. That's the idea. I mean strange ideas, basically science fiction becoming science fact. The best example is energy. On the left you have the OPEC graph. You know OPEC are the guys that make the oil, run the oil, take the oil out, right? Of course, their graph says we're going to use oil forever. Obviously they make it or that's in their interest. But here, the graph of solar energy, this is a little bit optimistic. Basically it says in 20 years we can cover the world's energy needs with solar energy. And most scientists are saying that's probably accurate. Maybe 25 years, it's the end of oil, we're still going to use oil. But the oil companies are the next music companies. I mean, think about that change. We're talking about $7 trillion of fossil fuel. That's quite a bump in the road. So which one do you believe when you talk about science fiction? Science fact. We have robotics. We've seen that they can act like people. This is Boston Dynamics. And this, This is the world's first autonomous aerial flying vehicle. Of course. Guess where? In Dubai, where else? I mean, if they're going to lose the oil, they have to do something, right? So now they do this, I suppose. I don't think I would take a test flight in this, but be my guest. Especially not in Rome. But who knows? So basically what's happening is that now we're living in a world where we have to do two things. We have to think of the old business and then we have to think of the new business. If you're an oil company, you're lucky. Today, 84% of the world's supply of energy is fossil fuels. Coal, gas, oil and nuclear. To some degree. You know that in 20 years it's going to be over here. Now, this is a huge pain. Imagine that. I mean, Shell and ExxonMobil have already announced transition plans, and the country of Saudi Arabia has said they want to transition to a new economy without oil. I don't know how they're ever going to do that. I suppose it's a Gulf economy or something. So this is a huge challenge, right? But this is happening to every business. Now we have to say, how do we make money today? Tomorrow it could be vastly different. If you're a car maker, you know the story, right? If you make cars, what are you going to do tomorrow? You won't sell cars, you will sell mobility. And that's a substantial change of business model. If you're a bank, what are you going to sell tomorrow? You become a platform for transactions. So that is a huge shift that we're seeing around the world. The future is no longer an extension of the present. Very important to remember. And all the hard work we've put in to make it as good as it is today may be kind of useless in several years because all of a sudden the context has changed. It could or could not have different impact depending on the industry. But clearly we're heading into the future. The music business, again, example, what's called the Valley of Death, people stop buying CDs and stop buying itunes. You see, the red bar here is people streaming music like most of you do now. I mean, in Fact, I would say if you buy a CD for your kids for Christmas, they will call a therapist because they think you're completely lost. Music is basically clicking a button and it just plays. But here's the big deal. If you look at the music business, it's no longer the record companies that will own the future. The new guys are Spotify and YouTube and Baidu and Facebook. So that's the lesson to learn from the music business. And that's a hard lesson to understand because we're going into the future that is exponentially different. This is the wave of change. I like to say if you're in the media business, you're already in that. If you're in the E commerce business, of course the mobile phone business, and of course the car business. But waiting on the beach, education, banking, energy, insurance. If you run an energy company or a bank, look at the music business, that's what's going to happen to you. If you're lucky, you can respond better. Because nobody more stupid than the music companies in their reaction are basically saying that we don't want this to happen, we're going to prevent it. This is definitely happening. Music is now in the cloud. So you have to think about how are you going to go into this digital future? If you have kids, you need to think about what your kids are going to learn in this future. This is a convergence of man and machine, as we heard earlier, in parenthesis convergence, of course. I'll explain shortly. But we have to do this. We have to observe and understand what goes on. If you don't spend 5 to 10% of your time observing, you're going to miss the boat. This has to be part of your job is to observe the key things. The other one is to understand. You know, when you speak to a computer, one of those intelligent machines like Siri or others or Cortana, they're getting better and better all the time and they will get perfect. But there's one thing that they can't do is to understand what hasn't been said. And the most important things between people are those that are not being said. So when you meet somebody in the hallway, it takes less than one second to understand the other person without any communication. That's what humans do. 40 quadrillion calculations per second. And these things are not actually calculations. I don't know what they are. Emotions, I suppose. So this is what your future is. Machines will do all the work that are routine jobs. And I literally mean all the work. Low level banking advice, fast food, checkout supermarket bookkeepers, planes, pilots. Well, it would be hard to figure out how you're going to fly in a plane with a robot. You know, that's a social question. But this is what we're going to do in the future. This is our job, is to understand things. That's why you're here. And understanding is much more than computing, as was said earlier. The other thing is we have to imagine what the future looks like. Without imagination, there is no future. And try to get a machine to imagine things. I think it can be done, but it's quite a bit away. Again, if you have kids, teach them how to imagine stuff rather than to plan stuff. And last one is to have foresights. Talk about leadership. By today, you have to lead into that future. You have to lead your clients into the future. The question I have for you, are your future ready? It doesn't take much. A lot of people are worried about the future because they feel like defenseless or they can't catch up. But if you do this, I think you'll be safe just going along with the future and defining the best future that you want. So we must, in that idea, think back from the future. If you have a bank or insurance company today, or if you run government, you don't want to go forward from today and just put little future things on top of you. Look into the future five years from now, you come back with what it will be. That's the new business, the pearl of hybrid thinking. It's very important. So I want to introduce you to the megashifts. Incidentally, I think all of you have received a copy of my new book, Technology versus Humanity. So all the answers are in there. Of course, now they ask lots of questions as well, but there's a whole chapter on the megashifts, and this is how you can future proof your company. The mega shifts are these. There's quite a few. I won't go through all of them. These are huge opportunities for us. And everybody's talking about digital transformation and digitization. This is just the first of 10. And in the meantime, since I wrote the book, I've made 20. So just time is exploding. Take this one. Datafication. Everything around us that used to be stupid is becoming data. Cars, pipelines, sensors, Smart city, smart farming. And with that becomes a cognification that machines can start to actually understand. Well, think about these things. Automation. Automation is a much bigger factor in society than globalization has ever been. But don't fear. I think it's fine if we automate the routine jobs, we just have to make new ones and we have to spread the benefit of automation to the society. Imagine a world where everything is automated, where your telephone company, Tim, or whatever it would be here, can automate 80% of their work. And they will. Are they going to keep the money? They're going to pay an automation tax. Should they pay automation? I don't know. Nobody likes taxes. Well, some people, but. Hard question. So all the stuff that's happening here is augmentation of humans and this idea of virtualization. These are all good things, but they can also be terrible things. So finding a balance becomes crucial because technology is extremely powerful. The main thing is we're moving into the age of smart machines. And I'm talking about smart machines, like smart computers. I'm talking about machines that can actually program themselves to understand what is going on. Thinking machines. Let's make no mistake about this. These machines are not thinking like we are thinking. Not at all. They're thinking in their own way. They're thinking like machines. We think with our body, as was said earlier. And this is very important to keep in mind the difference between those two things. If you're looking at this graph, you see how our world has changed. The age of tech. On the left, it used to be all the oil companies and the banks were the most powerful companies in the world today. Who's the most powerful company? That's obvious, right? Technology, platforms, digitization, that's our future. And that's going to be a huge shift in our society in many ways. I think I call this sometimes a smart converter. Basically, whatever business you're in, all you have to do is put smart in front of it and put it through the converter. And that's the future. Smart city. Smart banking, that's an oxymoron. Smart science. I mean, this is something that we're seeing all around us. And it's basically based on this idea that data is the new oil. I've said this for 15 years and that's what you see around us. And this is of course, what SAP does, looking at, working with data. So very powerful opportunity here. Something that we're going to see unfold in a very large way in the near future. So let's talk about artificial intelligence. This is a Wikipedia definition. Very simple. Something that usually requires human intelligence that can be emulated by machines. Very simple. I could talk about that for three hours. But this is what happens in history. The machines can tabulate, that are programmed, machines that can think, that are cognitive. IBM calls it cognitive computing, it's very good for marketing. We're not really sure what exactly that means, but machines that can actually simulate what we're doing. And the CEO of Google keeps on saying we're going into a world that is no longer about just mobile, the telephony, the smartphone, but about artificial intelligence. Every single company in the next five years will use computing power to get smarter, quicker, more efficient, and basically change the world using artificial intelligence. Now, if we use mobile phones, we use artificial intelligence in a simple way, and of course, robotics do. So here's a challenge. The human cards that we're holding, these are very old cards. They hadn't really changed very much. Ethics, values, beliefs, assumptions, emotions, compassion, they're down here. And technology has a new card every week, there's a new card. Geoengineering, nanotechnology, uploading your brain to the Internet, simple things like that. But basically, intelligent machines will change our world more than anything else we've seen develop in the last 50 years. And I would tell you, I think 90% of that is extremely positive. We can change global warming, we can fix the energy problem, we can solve diseases. But there are 10% left here that are issues like privacy, data protection, application. And we have to watch that as well. Because the problem is, of course, if you are my age, you are going to see this. This is not that far away. This is years, not decades. It's already here. So this is not a scary. I think this is a fantastic opportunity, but we have to put it in with a balance of a sort to say, well, what exactly are we doing in this convergence of man and machine? How far should we take this? If I ask you personally, how far would you go? Would you like to connect your brain to the Internet so you can think faster? If you're a professor, would you like a Wikipedia implant? If you're a doctor, would you like to have virtual reality glasses that can see every operating room in the world? Would be fantastic. I mean, imagine, imagine you could think a thousand times as fast. Who would not want to do that? It's a super drug, you could say. Permanent, legal drug. But who decides this? Who is mission control for humanity? Well, you know who it is right now? Silicon Valley. Everything that we do gets one way or the other decided in Silicon Valley or in China. So right now we're operating under a framework of legal rights of the US as far as security and data protection is concerned. So that's a very big question for us. How can we make that safe in the future? And then their Question is really, when we think about us, is human existence. What they call in German dasein, which is really the best word to explain it, is human thinking and existence. Is it actually computable? Are humans just fancy data? Here's a key question. The CEO of IBM says every important decision in five years will not be done by intuition or experts, but by thinking machines, which they happen to sell. Of course. Makes good sense, right? But this is a key question. Well, I think really the reality is really this. We think like this and we don't even know how that happens. We think with the body. So let's not be afraid of thinking machines, because we can use them, but we shouldn't let them do what we're supposed to do. This is a very important distinction. We have to keep in mind where we're going with this. J.P. morgan has software now developed for contracts, and this is going to happen absolutely everywhere. If your business is very complicated today, tomorrow it will be a contract machine that has learned it from you. That's in some cases five, seven, ten years away. That's not a bad thing. I mean, who really likes to do their routine monkey work, really? But still, it's a job. A job is a job. So what would that mean in Italy, where we already don't have enough jobs? The key question is what should not be automated and what should be automated? This is a moral, ethical, political, social decision, not just a technology decision. I mean, this is a decision that we have to make together to figure out what the future holds and where we're going with this. Because technology is what I call hell, then, you know, hell and heaven. Technology can work in both ways. Right now we're at the 1090 status, kind of since Trump, we're at 2080. But we don't want the 10% to be 50. That would be a very, very bad world. We're going to need some sort of balance, something that makes it work for us to actually find the decision. Because here's the thing, technology is morally neutral until we use it. It's our job in business is to say we're going to use this for the good of our customers and of society. Because ultimately, customers are not machines. They're people. And they, they are your customers because of trust and because of relationship, not because of some stupid algorithm. Right. You're going to use the algorithm to make it better. Of course. So that's really the challenge for us where we go with this for our own jobs. It really means this. Anything that can be digitized, automated, virtualized, or robotized will be. That is what I call digital Darwinism. That's just as certain as now. You have electronic books, electronic newspapers and Spotify. Same thing. But here's the flip side. Anything that cannot be becomes extremely valuable. And what cannot be automated? Well, this is 98% of our lives. Mistakes, lies, accidents, invention, compassion, emotions, empathy, creativity. Yeah, you can say a computer can learn that, and they probably can, but they can only serve it on one channel. You know, the, the channel says I'm going to be compassionate, but it doesn't really exist. So it's completely different. Let's keep that in mind where we're going, especially when you have kids. Where we are going with this, a lot of people are saying this is going to be a problem. We become useless humans. Great book, Homo Deus that some of you may have seen, talks about this. I don't think we're going to be useless humans. I think we're going to be able to take technology and move up the food chain. I think most of our jobs will be automated so that we can create new value. Human value, Human only value. Remember, the purpose of business is not automation. The purpose of business is not efficiency. Efficiency is for robots. Your CFO would love efficiency, loves efficiency because that's part of business. But the purpose of life isn't efficiency. Purpose of life is happiness. And your customer happiness is a lot more than efficiency. So this is our job future. And with that we'll have some questions very soon. On the left you see the stat from the Economist. Clearly showing what's happening. Anything that's routine is not a good idea. Non routine cognitive work up and non routine manual work. That's carpenters, plumbers. It's very hard to fix your toilet with a robot. But the banking relationships, looking at funding and investment, a good robot could be quite helpful there up to a certain level like TripAdvisor turn up. So this is the skills of the future. You have to teach your kids and yourself. And this is how you're going to become indispensable. Point number one here is of course creativity, always has been, especially for us. But the next one is critical thinking. You know, 10 years ago if you would have gone to a major company and you said you should hire more people who are critical thinkers, they would have said no, absolutely not. We don't want people with emotions. We don't want people throwing sand in the gearbox. But Picasso already said computers are really stupid. They only have answers. We want people who ask questions. So these are the people you gotta Hire people who are saying, we're gonna do things differently. The third one, most importantly, emotional intelligence. We talked about this earlier in the other talk, actually, to have emotional intelligence, that's not something you can just stuff in like a probe, like a chip. So let's use technology, but let's put more emphasis on the human things. I sometimes call this exponential humanity, just like exponential technology. So the end of routine, especially if you plan on the next 10 years, anything that's routine in your company, get rid of it using technology because somebody else will do it otherwise. This is the key to the future. So as a summary, this is where we're going. Our world is rapidly connecting. We are rapidly getting more data, information, and more machine heads. That is not going back. There's no way out here. We're not going to say, well, let's put the tech back in the box. That's just not going to happen. Yeah, you can opt out if you're rich or Amish. But the other thing that's really important, let's put the human back inside. And what we're doing, this is a really important question. So finally, as a word of advice, using automation, robotics and technology, let's give the routines to machines. But that doesn't include many things that are important to us. We don't delegate trust or relationships or emotions through machines. Positive psychology says, this is really why we're happy. This is Martin Siligman. You may have heard about his work as a psychologist. Positivity, engagement, relationships, meaning accomplishment. In today's digital life, we often say that loneliness kills because loneliness is actually something that we have in social networks now in a different way, because we don't have relationships. So very important to keep that in mind, I think this is where we go. As a final word, I want to say this very, very important. We have to use technology to get better at what we're doing. We have to use technology to be quicker, faster, more efficient. But we don't want to embrace it. We don't want to become it. Sorry, that's a good Freudian mistake. So embrace technology, but don't become it. That simply means we use technology, but we stay clear of becoming it ourselves and becoming too close, so we can't live without it. I want to thank you very much for listening. And I want to close with a quote of my mentor, David Bowie, who said shortly before his death, rest in peace. The future belongs to those that can hear it coming. I think if you can hear the future coming, you'll be safe in that future. And the same I would wish for your kids. Thanks for listening.