Megashifts and Game-Changers: The next 10 years with futurist Gerd Leonhard 17 OCT, 2020

Hi, I'm Gerd Leonhard Futurist. Welcome to the CSCMP roundtable on the future of supply chain. I hope to have an inspiring talk for you today about the future of the entire tech spectrum and what supply chain means in that context, what the next couple of years are bringing. My preview is roughly about the next 10 years and I'm going to see if I can touch the future for you and help you understand where things are going. So first, let's start here. We're clearly in a period of total and utter uncertainty. We're living in a world where nothing is like it used to be. Things are constantly changing and that's causing a lot of irritation and rethinking about how we're going to tackle this. Like my own job, I used to travel to places like Italy, Milano, very close to here, to Zurich and speak. And now I'm speaking here remotely through this set up here. Our world is completely uncertain and volatile and this is our future. This is what we have to contend with. I mean, it's safe to say, I think that we are in a world where normal is no longer a good word. Normal is kind of gone away. It's the end of normal and it certainly is the end of business as normal. We're starting to question everything. The state is telling us what to do. The there's new regulations all the time and it's not going to return to the old normal. I think we can safely forget this idea that we're going to go back to what was before the crisis. We're moving into a new world and we have to get used to what that means, whether it's in supply chain logistics or indeed in tourism. Look at the stats here from Racontura saying 51% of supply chain professionals expect that the circular economy, the green economy, will be a focus over the next two years. And I would definitely agree. I'm going to talk about that later. 73% of people that's probably 100% now is that they are struggling because of COVID 19 clearly that's the case. 93% plan to increase resilience and this is not just because of COVID I think there's many other pieces and I'll talk about that and what that means. Basically we can say this kind of obsession with efficiency that we've had in the past to make it efficient and fast and the lowest possible cost and that's kind of gone away now, again, not just because of COVID but also because of COVID Now it's Much more about resilience, being able to adapt, being able to change, and also about responsibility, for example, responsibility for the food system, for supplies, and responsibility in a larger way. And that's become a new topic. I think that's going to really impact what supply chain will do in the future. And globalization, even though I talk about that later, I think it's probably a temporary hump on the globalization that will return when the crisis is a little bit more under control. But clearly in this upside down world, we have three waves, or four rather. We have the COVID health crisis, we have the recession. That is going to be a very, very big impact, especially on Italy, but probably quicker than we think. I think probably late 21, early 22, where we can look at some kind of rebound and recovery. But then climate change is the next big thing. This is the wave that's coming next. And after that wave, it's going to be about technology, what's called a singularity, an artificially intelligent machine that's about 20 years away or so, but still that's going to impact the way that we work. And you may think that this is all bad news. It's not. I think there's lots and lots of good news where we can actually rethink how we do things in a fundamental way. Because now that we're realizing it's up for grabs, there's a possible disaster, or there is a disaster with COVID and maybe a likely demise. But we're a lot more ready for a reset to rethink. Because this is what happens with humans, of course, when things are not working, we're finally ready to actually do something about it. And this is really what's happening today. We're rethinking how this could work better, a better future, not a replay to normal. And we're going warp drive into that future. If you've seen Star Trek, you know what I mean? You hit the button, you go off into like unprecedented speed. And this is what's happening here with the warp drive. You know, we're having four big things, I call them the four bigs in the warp drive. Big tech, big health, big state. And this is a very, very big challenge, I think, for many, especially in Italy. But yeah, we don't necessarily always want a big state, but the state has a lot of power now, that's for sure. And the most important thing is big green right after big tech. And this is coming together. This is a unique opportunity for us to transform the way that we think about the world and what we want from it. And I think Italy is so well positioned for this actually because of all of the small and medium sized enterprises, both in technology as well as in green technology and of course in many other segments of society and the inventiveness of those small companies. So I think this is going to be an interesting opportunity. We're definitely moving into sort of a floating stage where everything around us is perpetually changing and those paradigm shifts are not the same in different countries. And I'll tell you what that means in a minute. We have to adapt even within Europe and of course outside of Europe for the different realizations of what people want. Look at this chart. Apparently it seems, I don't know if you would agree that Italians agree with that climate change and protecting the environment has a lower priority right now. I don't know if you would agree with that. I probably wouldn't from my point of view, but along with India and Japan and Russia as a way of saying, well, maybe we have more important things to do right now. Of course the Germans and the Spanish and the Chinese are the opposite. They, they disagree that protecting the environment should be downplayed right now. But clearly this is going to be a very big change also because we're going to see this kind of thinking about the future here. We have on the left, Europe and the us Sustainability as a topic is refreshed. I would definitely agree with that. I don't know about Italy, you have to tell me, but India and Brazil are less excited about that now because clearly their funds are missing for this. But right now sustainability is a bit of a positioning, a branding play and a story. But it is absolutely going to explode when we get out of the COVID hump, maybe in 22. This is the number one topic, climate change, global warming. So let's go back to technology futures for a second because there are a bunch of really interesting things happening here. First of all, we've had more digital transformation than in the past six months than in the previous six years. And that has been said many times now. We work differently from home, we're shopping differently, we're learning, we're living at home. Their home has become work. I mean, it's been a bit much actually. Technology absolutely everywhere. Especially I think for Italian communities, the life is outside. What are we doing now in the winter? This is going to be quite a challenge. This transformation is gigantic and we're generally living in the biggest transformation period in human history. This is going back to the invention of the wheel or the steam engine or The Internet. But now we're inventing 10 things at the same time. Blockchain, genome sequencing, robotics, energy storage. I mean it's really exciting and there's lots of great research and great solutions coming up. So it's a very good time to start a business or to be in business. But here's the principle of the future. Those three different things. Exponential change. So 4, 8, 16. It is not going gradually. We are thinking linear, but it's not. The changes applied to your life are going to be so exponential that in 40 years we're going to be 1 billion x exponentially up the scale. Convergent industries, for example biotechnology and other technology is converging. The car industry is becoming a technology industry and so on. You can feel those changes around Italy everywhere. And combinatorial products, things that combine together, for example quantum technology and nanotechnology, creating new products like concrete. Right now you can actually use printable and recyclable concrete and construction. So this is going to be mind bogglingly different. Print this out and put it on your wall. This is the future of supply chain in a nutshell. In terms of technology, what you can expect in the next decade or five years even. And of course we're going into the world of the smart converter. This is a bit jokingly, you stick in the old industry and out comes a new one. Just by converting everything that used to be dumb and disconnected, making it smart. By 2030, every industry, whether it's retail or health or logistics or transportation mobility, will be connected and smart and remote. Except for us of course. We're going to stay human, hopefully on top of all of these. But this is what's going to happen. And basically anything that can't be automated will be. And we have to get used to that for our jobs. It does not mean the end of our work. It does not mean that we're not going to work. It just means that the commodity work, the routine work, will be done by machines, by robots, by artificial intelligence. And there is something to get used to. But looking at these things, the 10 game changers. And you can find out a lot more about that just by looking for game changers and Gerd, my name Gerd. But here's a brief summary. This is all happening at the same time. It's not just thinking machines, it's not just virtual reality. It's not just being able to speak to machines, natural language processing. It's not just that, it's all of it together. And the impact on supply chain. Each one of those Will have fundamental impact on everything that we're doing is going to make business faster, quicker, cheaper, and also more advanced and probably more competitive. Think about blockchain smart contracts. 3D printing means that we don't have to ship a few things in the future. Augmented reality means we can see much faster. Think of Tom Cruise and Minority Report. Right? So the top 10 game changers. I always say you ain't seen nothing yet. You know, I used to be a musician and this is a famous song. And we are just at the beginning of this. The next 10 years will be mind boggling. And you better understand what the game changers mean. And you can read a lot more about that in my books, but also in my various videos. But going back to what I said earlier, I read exponential changes, combinatorial change, convergent technologies. That is all going to happen at the same time. So let me bring it down to the bottom line for you from those 10 things as we're going warp drive into an entirely different world Again. Data is the new oil. I've said that many times before. I've been saying that for 10 years. People used to laugh about that, but also now it's the new plutonium. It can't be used as a weapon. Look at social media. They're using data as a weapon. Not good. So when you use data, be careful about how you use it. Safeguard people's privacy. That is absolutely crucial, especially now that it's going to be about the new level of logistics and supply chain. Artificial intelligence, thinking machines. Well, they're not thinking, they're pretending to think. They think in their own binary machine way. Not at all like us. Don't worry too much about that for the time being. I think we've got at least 20 years for them to think like us, maybe 30, but that is an issue. But anyway, AI is the new electricity. It's the power of the Internet and we have to use it. Think of it as intelligent assistance, super smart technology, not anything like humans. The Internet of things, everything connected. Supply chain, traffic, transportation, the products themselves. It's like a new nervous system of the world. And there's numbers showing we're roughly going to have 300 billion devices connected in five years. I think it's going to be a lot more than that. But again, we have to safeguard it and control it. And virtual reality, being able to see things within you, whether it's Facebook, Oculus Rift or any of the other ones. What is it called? Mind lab. Many of the other ones, it's like having new Eyes to see, data to go inside the data. And so we moving into a world like this. This is virtual reality as promised by Facebook, Oculus Rift. It's called the Infinite Office. In showing us essentially what the world could look like, never mind zoom or any of those things, but these things would be truly mind boggling. I think that's going to be a little bit too good. You know, once I'm inside of that world, would I ever want to leave? Then I'm going to end up with uploaded, you know, the Netflix prime series or Black Mirror to where we are very likely to never want to leave this because it's so cool. That may be a little bit of too much of what's called too much of a good thing. We do have to ask that question a lot. But Here are the 10 mega shifts as a result of all of this. What's happening to logistics, supply chain and manufacturing, of course, pretty much the entire business. And this was chapter three in my book a couple years ago. You can download the free chapter at Megashifts Digital in Italian and of course 10 other languages. But basically the result of all of this is that we're moving into a world that is constantly moving around in combining things like augmentation and cognification, which means that machines are becoming smart. Well, really smart like a machine smart like a self driving car or, or smart like Google Maps. Not smart like humans. No, but think of this as intelligent assistance. Think of this as a way that machines can support us by not being so utterly stupid that they would confuse a cat with a rain with an umbrella. So this also means virtualization, like having digital twins in production. And that's going to be extremely powerful. Also with climate change models and of course with logistics to be able to simulate, to robotize and to make sure that we can automate more. This is not going to make humans unemployed. It will make certain human skills less needed, like this sort of commodity work, the simple work that we used to do, that's probably going to be less needed. But we're going to move up the food chain like we always have. We're going to need a lot more education for this. And that's true when we see about augmentation and, and automation. So very, very important part when we think about this megashift and you should download the chapter and read more about this. But clearly UPS is a great example in this project called Orion, which has been around for a while. That's just a smart way for drivers to interact and customize their routes. And so on. It's going to save millions, 75 million per year in savings. And it's basically about smart everything and it's about intelligent assistance. It's not about AI as you know it from her or from Ex Machine or any of those things. It's basically this. And here's a great chart showing me what it's all about. Automating, tedious tasks, machine learning that can enhance forecasting, analytics, automated manufacturing, basically cobots, bots that we can work around and the Internet of things and all that. And it's just kind of nuts and bolts. Better technology, that's the next five years and that's where you should be investing and not think of machines as replacement for humans. We're going to go down this road of the game changers and gradually slow now as we've been going for the last couple of years. But now with COVID there's like a speed up because technology is absolutely everywhere and we are not expecting this. We're thinking that it will continue kind of a gradual rise, but it's not, it's exponential. It's like putting the gas pedal right off the last bar here. It's going to take off like a firecracker. And in a year or two, all of a sudden the speed is basically the entire thing here in one second. I think it's pretty safe to say our world is going to change more in the next 10 years than the previous 100 years. And does that scare you? Yes, it does. It scares me also. But think about how we can understand this. I think that we are still very much as humans ahead of the machines because as Moravec said, whatever is simple for a human is hard for a computer and vice versa. That's going to remain true. So we just have to be prepared and embrace it and also get used to what it can do and what it should not do. Let's talk about AI. It's a very good chapter here. In this wave of changes as we are going from COVID to climate change to the sort of new economic logic that we're seeing here, we're clearly going to see AI play a major role in climate change. In Covid already has helped us with the data, making sure that we can prevent the spreading of diseases, analyze and develop a vaccine much faster with what's called cloud biology. Mind boggling possibilities. Clearly here as we're moving up this curve, this is how I would explain AI. And it's sort of a combination of all of those things. It's amazing data and deep Data. This is why China has such a powerful position. It's everything in the cloud, everything connected, everything networked. And on top of that is everything smart, not intelligent, just connected and smart. And on top of that is the fact that we're going to be able to compute just about anything that will be able to put computing power behind things. That is unheard of with quantum computing and supercomputing and so on. Clearly, clearly, this is a world where I say, okay, AI as defined by Demis Hassabis from DeepMind, that's computer systems that turn data and information into knowledge. This is something that should both excite and worry you. Because we are proud of our knowledge. Computers will start to have simple knowledge and they will do kind of simple learning. What's. Yeah, deep learning. Yeah. That's the kind of whole debate about what computers can and cannot do. But basically they're going to develop a kind of knowledge that is not like ours, but it's very useful for us. I mean, we're going to see examples like this where AI is going to be able to help us with the supply chain. $1.3 trillion revenue generation and supply chain and operations. Here's from the Economist. And clearly the bottom line is that we're going to see revenues increasing and cost decreasing. And this is definitely a power tool that we have to put to work. The stats on this are really quite clear. So looking back, what I said earlier about the four bigs, now we're moving into a world where that's going to be basically everywhere. Right? AI is going to be smart. Everything is inside of everything. And that's going to make gigantic changes for us in terms of how we approach things and how much we can save and how many new things we can do. Here's a great chart about the future of supply chain in a nutshell. Well, I'm sure discussing it all day. Artificial intelligence, predictive analytics, robotic process automation, the blockchain. I'm less big on the blockchain, but I think it belongs here. Robotics and remote operations, virtualization, essentially the mega shifts I talked about earlier here. A word of caution. Technology can be a gift, but if we use it too much and we get carried away and we don't have control and we don't have ethics and we don't have supervision, it could be too much of a thing. It could become kind of a bomb. Too much of a good thing can be a very bad thing. You know that about smoking and drinking and. Yeah, let's keep a good eye on this. Make sure that we keep it reined in. So the new normals that we're looking at today, they're already quite clear in this wave. The next new normal is that everything is going to be about this climate change and how we can contain the climate and make it smarter and more connected and do what it takes to solve the global warming problem and stay under the 2 degrees. COVID 19 is a test run for climate change. It's basically just the first edition of having to sacrifice and making deep changes. I think climate change is a thousand X and that's something we have to get used to and it's going to have deep impact on supply chain and how we're going to approach the things that used to be unthinkable, like carbon tax. That's going to happen with all airline flights, all, all transportation, all diesel trucks, even electric ones eating meat and so on. The carbon tax is here, and what used to be unthinkable will become the new normal. You don't think that's good news? Probably not on the surface, but I think in a more holistic thinking it makes a lot of sense as I think that sustainable becomes the new profitable. This is clearly a world that is stretching out in front of us the next 10 years. And whoever gets started on that now, especially in Europe, I think will win. Because in Europe, this is our paradigm. We want the collective good. We're humanists. And now next thing of course, is that we're going to become out of sort of United States of Europe. I know that sounds crazy right now. It does, yeah. But I think if we band together, we can be equally as strong as America and China and we can have one common zone where we can sell our products. And this is a very unique opportunity, the COVID 19 crisis, to think about a new logic of our lives and of supply chain and business. What I call the quadruple bottom line. People, planet, purpose and prosperity, all of those things together into what's called, by Al Gore, sustainable capitalism. Here's Peter Evans, the CEO of Orderly. He says the social contract between customers and businesses has changed. Sustainability is no longer just an option. It's not an afterthought, a must. The pandemic has opened the public's eye to how we must work together. I think that is so true, and you'll be judged by that in the very near future. I think right now sustainability is a strategic play or a branding play or a philosophy play, if you want. And it's already been expanding a lot. But now, after the COVID Crisis, end of 22. 21. Sorry, maybe 22. It becomes an existential play, a branding play. It becomes the new economy. A circular economy is the new economy and supply chain. I touched on that earlier. I think what we're seeing right now clearly is that countries and regions want to be more autonomous. And there's clearly a reset here to where globalization is in a slowdown, but it's not going to go away. The big issues we can only solve together on a global level, they will return in a much more balanced and a hybrid model. So self sufficiency, diversification, localization, clearly something all of you are working on. But it's not either or. I think it's going to be a both. Let me give you the final thoughts on this. First, to look into the future, we must understand that there is no future for business as usual. There is no such thing as, not just because of COVID but because of everything else that's happening around us. Because we're going warp drive into the future of technological change. The next two years will be about this. We have to observe, we have to survive. Of course, first of all, we have to adapt, make changes and some of us have to pivot, you know, turn the boat around because the old boat is gone. So that's going to be strong public services. All of that has huge impact on supply chain and, and on needs that are going to be there. Deep geopolitical changes, the United States of Europe, a reboot in America, hopefully for next year. Decisive action on climate change, sustainable economics and digital ethics of technology. That's all going to be impacting production, manufacturing, logistics and supply chain that we have to keep. In the narrative of what I call the future mindset, let me wrap up by going back to what I said earlier about the three future principles. I'm going to add three other ones. Future business is going to be holistic and circular and human. And this is really what it comes down to. Six future principles of supply chain, of business in general, business models that work in the long term, that I have a long term view, a sustainable view, and I'm with Marc Benioff when he talks about the future. He says you need to get to the future ahead of your customers and be ready to greet them when you arrive. That is so crucial when it's about taking thought, leadership and supply chain and logistics because the time for that is now and the future will arrive quicker than we thought. Thanks very much for listening. And now I'm ready to dive into a conversation if you're ready to have one. Thanks very much for listening to me and tante. Grazie and see you next time.