NEX Markets - Prague Conference Keynote With Gerd Leonhard

I'm going to introduce a motivational speaker by the name of Gerd Lenhard. Is that how you pronounce it, Gerd, who is what's known as a futurist. You may ask yourself the question, what on earth is a futurist? But I'm sure he's going to explain that to us as soon as I get off the stage. He focuses or he makes nowist observations is the way I've been told to describe it. Anyway, he is number 21 on what is called the global list of futurists. I wasn't aware there was a globalist of futurist, but I am now. And he is also an author of the book that you have all been presented, which obviously I'm expecting all of you to do a write up on by the close of business tomorrow with your views and comments on not only the underlying message, but the narrative and the prose that Gert has used in his publication. So on that note, I'd like to welcome Gerd on stage.

Thank you. All right, not so sure that we actually needed the trailer, but we had it so we had to use it. So it's a really great pleasure to be with you today. You may know the saying, the future is already here. It's just unevenly distributed. This was by William Gibson, a science fiction writer who says that basically today a lot of things are going to happen in the future. We already see, like we speak to Siri or Cortana to give commands and it's not working so great. But the future is that we're going to speak to machines. We're not going to actually type or download apps. We're just going to say, hey, Google book, my flight to Tel Aviv. Boom, off you go. And machines are becoming smart. They can start thinking, not thinking like we do to be sure, but thinking machines means machines are not programmed that actually make up the tasks themselves. Google DeepMind won against the world champion, Go. I think his name was K something or the other Chinese guy. 19 year old guy, kid. 3 to 0 in a very short time. And the Chinese game Go is a very complicated game because it's not actually mathematical. It's not like chess. It's strategy. 3.5 trillion possible moves. Also, six weeks ago, Google Machine won against the world champions in poker. Of course, you know, poker isn't really a smarts game, it's a bluffing game. Right? How can a computer play a game where it has to lie? That's kind of interesting. So we're moving into a future that is really vastly, dramatically different. And I would say to you now that just from the beginning, the future is better than we think. You know, there are so many people worried about the future because apparently the robots will take over the world and then they will kill us, of course, and we won't have jobs and of course global warming. And that is of course going to be a certain factor. But I put a little bit of asterisk and the future is better than we think. Except for Donald Trump. But I will not talk about Donald Trump here. I will not make any further comments on this. So this is my job to think about the future. And really what I do is best described in this very simple image here. I listen, I don't Predict. I spend 95% of my time with things that are not quite here yet, but almost here. So I used to be a musician and producer. I worked in the music business. I made 20 records as a musician. And in the mid-90s the Internet came up. You may remember 1999, Napster, free downloading clout music in the cloud. And I realized very quickly that music on the Internet was going to be the next big thing. So I built about a dozen Internet companies in digital music. That's all before Spotify. And all of it failed of course was too early. But out of that I wrote a book called the Future of Music and that's how I became a futurist. So point number one, I think we should think about maybe a little bit more of that would also be good for you to think about. Listen to the future. It's funny how culturally different that is. In the US looking at the future is just normal. I mean everybody wants to be the future in the U.S. right? It's the whole mindset of being a pioneer. In Switzerland, I live in Switzerland. We don't do anything that is a risk. And in Germany we don't do it. I'm also German. We don't do anything that's not perfect, which means there's no future. We can't really think about the future. It's much harder to think about that. So it's really very important to get this attitude of saying can we understand the future? Because it's going to happen much, much faster than ever before. I mean, you can see in a very short time the car industry mind boggling in five years. The number one objective of the car industry is to sell mobility, not cars. To sell autonomous vehicles, shared vehicles, electric vehicles, flying vehicles. First flying taxi in Dubai later this year. I would not recommend you try this but that's their bid for the future. So in a very short time you can see the car industry is going from selling nice cars to people like us that enjoy driving them to selling the public car for Singapore or Beijing that people share. It's completely different business and I think the software industry in general is making that shift. And of course your main industry, the financial industry is in the midst of this gigantic change. Again, I would say 90% opportunity. But understanding the future will be very helpful. Just picture yourself in the shoes of the oil industry. In the oil industry as we know, it's just a question of time when it's really going to end. Some people saying roughly 20 years. And the whole conflict between Qatar and Saudi Arabia is all about oil now. But in 20 years it's quite clear we won't need oil in the same way that we do today. So that's Talking about roughly $30 trillion of sunk assets, you know, pipelines and rigs that you won't need. So that's very important to think about that. There's a great saying here by Paul Graham who says when experts are wrong is often because they're experts on an earlier version of the world. I like to say sometimes because I work a lot with companies to discover the future. Every time we meet an expert we always hear that can't be done because an expert knows why it's impossible. Startups on the other hand, if you talk to a 20 year old kid, whether they are Tel Aviv or San Francisco or Beijing, everything can be done. So we have to go back to that. Of course your company started like this also, right? So we have to think more about this. That's why I wrote the book. In the last five years I do about 100 engagements per year talking to companies, CEOs and events like this. The number one question I get what's going to happen to us when technology becomes perfect? That's 10 years away. Today technology is not really that capable of substituting people. It's actually pretty dumb for the most extent. Most of what we see today is artificial intelligence. It's really just fancy software. It's kind of working and it's pointing in the right direction. But we have a few other things like quantum computing that we have to invent and better connectivity. So let's say five years for this point of convergence of manned machine. In fact, Ray Coatswaller, one of my colleagues futurist says that we're going to be approaching this event called the Singularity, which to the convergence of man and machine in terms of power, the first machine that can have the computing power of the brain, then we have to think about, okay, what do we do when machines can do all these routine jobs? And I'll talk more about this, but I hope you enjoyed the book. If you do, drop me a note or maybe write a review on Amazon. So first of all, I want to say that I think it's really important for great leaders. And this is why we're here, to talk about leadership. We must be experts on the near future, on what might be. Of course, you're all experts in the present, that's why you're here. Maybe the past to some degree, but to be an expert in the future, that's a whole different cup of tea. I, I mean, if I ask you today to write down tonight, what is going to happen to your business and your company in five to seven years, would you have an answer? Well, you have to have that answer because it's going to happen in two years, not five to seven. We're actually at the point where all this stuff that we talked about in the 90s, the paperless office cloud computing machines that can think, it was all just pie in the sky. And you heard about artificial intelligence already 50 times in the past, even in the 30s, never worked, always over promise, under deliver. But now, for the first time in history, we are reaching the point to where all the things are coming together. High speed computing, high speed networks, extremely cheap chips, computer chips, new kinds of power, wireless charging. It's mind boggling when you think about that coming together. So the Hyperloop, for example, transportation system pioneered by Elon Musk, that actually is so far out that most people say no, no, no, it can't be done because this thing goes 860 kilometers an hour from Los Angeles to San Francisco in 30 minutes. It's being built right now. The next one is Abu Dhabi to Dubai and there's one in Slovenia as well. We could not build this in Germany, for example. We don't have the space. There's just not enough room for that. But this is kind of the, you know, the idea of what might be. This is a clip that one of my clients, Mercedes Benz, has made about the future of the van. I mean there, there's probably hard to find a company that's more conservative than Mercedes Benz in terms of how they approached business in the past. Now you can watch this on YouTube. It's called Advance. But the clip, if you hear the music, the clip kind of looks like Blade Runner, you know, the movie Blade Runner. And the fact is, this car is no longer a car. It's a platform for drones, for robots, and for AI to do the work of the driver. I mean, that's a pretty bold mission for a company like Mercedes Benz. And they're not going to sell the car anymore. They're going to split the revenues of what is being done with the car. We talk about a shift of business. So I got a question for you. Maybe there's something you could do next week. If you made a movie like this about your company, what would it look like? This is a fantastic exercise because while you're making a film like this, you could debate how real that is and how you would get from A to B. It's really interesting to see how they are. You know, this is really kind of mixing reality with science fiction in a way that it has a clear vision. But other examples is BMW the competition? This is the car of the future, but it has books in it which I find very interesting. I have no idea, not even my books, just any book, but very interesting stuff. And of course, the wild stories of Success. Tesla is now worth more money than gm. And this happened also in a very short time. So basically, what might be is a key question. We have to answer that question, not just the company, but also you personally. Who might I be in 5 to 10 years? This is an important question, especially when you have kids, because our kids are going to grow up in a world that will be so dramatically different. The kids of my kids will never know how to drive a car. It's extremely unlikely they would ever drive themselves. They probably won't even know what a CD or a DVD is, or a book for that matter. So that world is going to be so dramatically different. Here's the most important thing of today. You've seen this many times before. Moore's law, Metkov's law, the exponential curve. Basically, technology doubling in power every 24 months, becoming half as expensive. You heard all that before. The key point is that we're now at the takeoff point. We're not in the beginning of the curve. We're at the point where things are actually going to start becoming possible. That has to do with things like the Internet of things, artificial intelligence, voice control, quantum computing, nanotechnology. Basically, science is making leaps every week, like battery technology. This is a primary miracle behind the shift to solar energy. Battery technology is now making such leaps that we can expect in roughly two or three years to fill up the electric car every 800 miles. And in five years, maybe every 2,000 miles in 10 years, like once a year, and it'll be one third the price. I mean, who in their right mind would buy a car with a gas engine and all the major. Yeah, yeah, no, I agree. Because it's a different car. That's the reason. Good one. Yes. We could have more comments, you know, if you want to have comments, please. There's microphone on the table. I mean, I have a car with a gas engine, but there's particular reasons for this, like the fun factor, which is kind of removed from the electric car. But in any case, you know, most of the major car companies are now saying roughly in 10 to 15 years, we're going to stop making cars with gas engines. And, you know, that's the death of like thousands of small companies because they make parts for those cars, like clutches. So it's very important to realize this exponential curve. And this is one of the key trends, you know, where we're going towards this convergence of man and machine, woman and machine, human and machine. That's important to realize because your products will change in such a way. And really what's happening here is that a lot of media and films and movies are telling us that, you know, machines will take over the world. But really what's happening is that they've taken over all of the grunt work, the number work, the routine tasks. And enabling us to really do something on top of them can also be quite scary because if you only do routine work, you will be replaced. And that's going to happen to fast food, to a lot of drivers, pilots, even, like freight planes, maybe not commercial. So that is kind of scary when you think about that. But it's a little bit something we have to chew on and realize when we're going up this curve from 4 to 8 to 16 and so on, roughly 7 years, you've gone 30 times as far. And if you go 30 times up the scale, you're at 1 billion. So you can't even picture a world in 50 years based on this scale. And of course, it does have limitations. Moore's Law is kind of ending, but basically, I like to say humanity will change more in the next 20 years than the previous 300 years. Consider yourself lucky, because you're not in that time frame of, say, 1980 to 2000, where it was huge, but now we're basically facing this scenario called the hell. Then the heaven and the hell together could be heaven, could be hell. I mean, clearly for all of us in business, this is primarily heaven. Better data, better margin, lower Costs, cooperation, all of those things that we like. But it could also be hell when we think about the side effects. For example, privacy, surveillance, cyber warfare. I know you're probably familiar with this, but a lot of researchers in the military are saying roughly in 10, 15 years there'll be 80% of the entire military budget is digital. Is that good or bad? Hard to say. But clearly all technologies have this problem. They can be used for good things. I mean, you can use a hammer to build a house or to kill somebody. And now we have tools that do the same. So now you see companies like Cisco, Microsoft and Google coming forth and saying we are responsible for what we make possible. So big tech companies, for example, have launched an initiative, it's called the Partnership on AI to benefit humans and society. It's a long title, sounds like a bunch of greenwashing or let's say red washing in this case. But still, I think this is something to look at and see what it means for us. If you're looking at this trend map here from my friend Frank Diana, it's basically every week another term is being added. It's mind boggling to see. I mean if you put this map out to people like, God, it's like the land of opportunity. Pick and choose what you want to do. The reinvention of financial services that's just now happening. Insurance to go right after that, government after that. I mean if you're looking at the media business, the publishing industry, travel, e commerce, that's now going to happen to financial. So here's a couple of bullets. I think really what we're seeing is exponential change, combinatorial, so amplifying each other and interdependent. The future is not about what's called ecosystems. Large companies that run everything, all the money goes to them like we had many times. Now it's about creating an ecosystem about collaboration. So it's really interesting. I kind of think, you know, in your position, you know, I've put some bullets here as to where I think, of course your, your business could be going mobile, cloud, that's obvious. Analytics, the Internet of things, cognitive systems, the blockchain, virtual reality. I'm sure you have lots of those things on your roadmap as to where you want to go. But it's primarily opportunity. And of course there will be new challenges coming up as well. So just to give you an example of what's happening, I'd like to say that science fiction is increasingly becoming science fact. This is Boston Robotics, used to be owned by Google. They have Achieved that robots can walk as well as humans, which was impossible until just five years ago. I mean, this is one of the big limitations of robots is to actually move. It's very complicated. So the next thing is, of course now we have self flying airplanes like this one. This is being trialed in Dubai and we're going to see this becoming a worldwide occurrence with drones that carry people. I think that's highly risky at this point. But this guy seems to be happy, so we'll see about that when he arrives. On the other end, we have technologies that used to be military entirely now becoming part of consumer goods and software packages like face recognition. Banks are using this now to scan people's faces while they're having a debate about investments with permission of the client. This is like a lie detector essentially, so you can immediately get feedback about whether the client really likes the product or not. This is being used in supermarkets to look at your face while you're looking at the product to see what you're saying about the product. Is that good or bad? That's a difficult question. Could be useful, but if it can be taken to the extreme, you can give that to the Turkish government. And that would also be a tool of oppression. Not to say that Turkey is entirely in that direction. Not at all. I'm a big fan of Turkey, in fact, but Facebook, same thing. I don't know if you watched the F8 conference just a few months ago where he showed the augmented reality apps. And now with these apps you can essentially zoom in on products like a bottle of wine or a coffee and you can identify it and you can use this augmented camera to essentially augment the world around you and read the data. And this is pretty interesting stuff because it's basically allowing sort of, you know, you to capture things and imagine this in the business context, like at a trade show, you can capture people and see their data around this and, you know, lots of implications as to what it could mean in the medical business. We finally have the tricorder from Star Trek. These are 27 companies that are building a machine that's better than a team of 10 doctors. So you cough into it, you prick your finger and you put on your Fitbit and stuff. It goes out to the cloud and says you're okay, you don't have to go to the doctor. If this happens, and it looks like poised to happen in a year or two, it's being trialed in China. It can lower the cost of medical care 90%. But it will also result, of course, in A certain kind of anonymous behavior, which may also be a strange thing I've talked about. Go already. So that's basically. That used to be all kind of very far away. So the motto of my company, which is based in Switzerland and San Francisco, is, it wasn't raining before Noah built the ark. In other words, this quote that I have here kind of goes with that. The CEO of GE said, you go to bed one night as an industrial company, the next morning you wake up as a software company. That's how quick the change is now. So the question I have for you, you go to bed as a software and financial tech company, how do you wake up the next day? What are you becoming? It's a key question because obviously your clients are in a huge amount of change. I mean, retail banking is dramatically changing. Investment banking is changing. Money is going digital. I think we're going to see waves of changes like we have already in the past, in the previous waves, of course, music and the car business. And. And now you have the ones on the beach that are being next in that wave of change. It's interesting. I used to be in the music business, and when I was there, we were still selling CDs, you know, those round plastic things. Remember that? Okay. Or downloads, for that matter. And the industry was $43 billion. And then downloading came with digital music and it shrunk to 4, 14, I think 13 billion worldwide. And now, if you're a subscriber to Spotify, how much do you pay for the music? Well, it's basically free. It's 20 million songs for €8 or €10. So the music business of selling music is over. There's no such thing. YouTube is free. So that's going to happen with banking, with insurances. Of course, there's a big difference in financial markets in terms of what is possible. But this wave of change, we can learn quite a bit from the first edition of that. So here's a music business example, a great lesson from this. You can see that there is kind of, you know, everything was declining for a long time until we started streaming. And now there's 100 million people are paying for Apple Music and Spotify. Some of you are probably paying to stream music. And we're doing it because it's easy, it works, not because we want to pay. But here's a key learning from this. The learning is that the companies who controlled and owned the music business are no longer that relevant, because now it's the platforms that run the business. So in 10 years, very few people will talk about Sony Music or EMI or Warner Music or Bertelsmann, or they will have the catalog. That's it. And you can see the revenues of Spotify. You know, Spotify is vastly unprofitable because they basically have to pay all of the revenues to the record labels. So it's kind of a problem there. Even though they have subscribers, you know, it's very hard for them to think of a profit there. But it's very interesting, you know, this transformation is happening. You can see better here on this chart. You probably notice the. There was a release of this new deck from Mary Meeker, from Kleiner Perkins Yearly or Kurwan's, where she gives prognosis of the nests and analysis. This is one of the charts. And so the lesson really is new revenue streams are happening and the music business will go up to another 50 billion again. But the old players are not getting the money, just like there's a huge growth in digital advertising. But who gets the money? Facebook and Google. Not the New York Times or the Economist or the publishers or magazines. So this is very important to realize. When you have that shift happening, you have to be part of the shift to get the new money, because a lot of times that shift kind of happens. You can see here, basically what's happening is that I'm sure you're aware of this. The power of technology now is basically running the world. This list here, and you can see later when we distribute the slides, the top 30 companies in the world are really Internet platforms now, and they're poised to take over, of course, the financial industry as well as they have in China. So that's one of the key challenges. So I would maintain. And maybe we can, you know, if you want to comment or throw in a question, be fine with that. I think that our ability to think from the future, as opposed to about the future, is becoming important. Thinking from the future means you know what's going to happen in five years, roughly because you have observed things and then you work backwards thinking from the future. So good exercise for the night. Write in five points on a piece of paper about what is going to happen in five years so you can work backwards from there. Positive things. Okay, good things. So here are some of them. The shift of the entire world economy away from oil and banking to technology. The big money is now in all the tech platforms. Social media, of course, data mining, search, artificial intelligence. And the next couple companies down this pillar here, this row, they're all Chinese companies, primarily American and Chinese in terms of the power, the Internet of things, connecting cars, sensor networks, everything. $14 trillion economy, smart cities, smart farming, artificial intelligence, machines that can make decisions and learn. Huge growth. So I would say, for example, the last one is clearly in your turf. I'm sure you have initiatives there. But, you know, financial industry and Machines that Can think is obviously a very good match, and it has been for a long time. But now we're getting serious with this. It'll be a while before a machine can give good investment advice to an individual that has $100 million. But for a machine to figure out how to spend €10,000 in a risk free environment on an investment that's not so hard. It's actually being done by all banks already. Transactions are being handled differently. So this is really a big deal. And so moving into this world of five major game changers. Artificial intelligence, the Internet of things, machine learning, quantum computing, and brain computer interfaces. Sounds very techy, but actually there's nothing to it because we already live in that world a little bit. Machines that can learn means that machines can look at what we do and they can collect all of the data and then they can say, well, let me simulate what would happen if. And they can make an experiment and basically come up with a new way of doing things. The city of Los Angeles put all of the traffic lights on in an online system. And this system observed the traffic for roughly nine months. We're talking about several hundred billion data feeds, video on the whole nine yards. And then it went through that and said, okay, what if we change the rhythm of the lights? Could we save energy, make it more fluid? And they came up with a plan that ended up saving 12% of gas for commuting. That's not something that humans can do. You can't watch that many videos, come up with the conclusion. Very powerful stuff. And in your turf primarily, the blockchain will be that major movement. I'm sure you've discussed the blockchain to no end. Let me say one thing about the blockchain. My colleague Don Tapscott wrote a great book about this. There's a quote that basically means we should not confuse a clear view with a short distance. As far as the blockchain is concerned, it's pretty clear that we could save a lot of transaction costs and we could really make this work. But to really get that approved and regulated and with government authority and regulated and compliance and all that, I think it takes roughly about five years, but it will happen. So I think digital money is pretty much as certain as digital Music, it's just a little more complicated because we also have issues like we don't want to track all our spending. So that's one of those things. The digital money is clear view the short distance. Something we have to get ready for. This is a graph that kind of shows the, the outline there. That's roughly a five year time frame. Because basically when we move to digital money, the lead currency will be digital. It's going to change our entire financial logic. Think about that becoming an algorithm essentially like already. It is to some degree, but in a much different way. The other thing that's happening with technology is that we are moving towards abundance. There's a great book on this topic you have to read called Abundance by Peter Diamandis. It's basically saying that whatever is happening, for example in music, where we have abundant music, or films, where we have endless stuff on Netflix, you can binge on House of Cards just came out, the latest season. It's great, isn't it? I've watched all of them already, but it's really abundant. There's a lot of it. So we have abundant music, abundant films, free phone calling, abundant travel. Travel has become so cheap here in Europe. You can take Ryanair from Manchester to Mallorca for £2. You just have to book when it comes out at that very same day. It's crazy. So basically we have unlimited choices. That's going to happen to your clients, it's going to happen to you. Even though for you I think it's a little bit safer, given that the clients have to solve that problem first. For example, financial transactions. I think roughly in three to four years we'll have unlimited choice of how we're going to send money to whom at almost no cost. That takes out a couple of hundred billion right there. I use Transferwise, you may know Transferwise, it's a platform for sending money for businesses. If I send money through my account at Credit Suisse in Switzerland, if I send 100 bucks to my son in California, I pay 20 bucks to Credit Suisse. I mean, I could send $1,000, but it's still 20 bucks. But still I use Transferwise, it's almost free at 100 bucks. Otherwise it's a very small piece. Google is building money transfer into the app. Apple Pay was just announced again yesterday at the big event. So when this happens, and this is going to happen to you and to your clients, when things become abundant, they become cheap. So then you have to invent a way of creating other values. For example, now in the Music business rather than having just music, then you can say, well, I want high definition music, classical music, jazz playing at Wave files rather than MP3s. I want to be able to go backstage at the concert, join a fan club, upselling. So the same thing. This is kind of also from the deck from Mary Meeker. The key for not being dispensed with because of abundance is to create new values, intuitive experiences. And that's what all the startups are doing. For example, Stripe, the payment mechanism, I mean anywhere you go around the world. And taxis are now using Stripe to make payments because of the interface. All of these examples, you can get this from the Mary Meker deck. Just Google for mary meeker with two e's and one k. 2017 is like 380 pages. So not something you want to do now. So very important for all of us is to create indispensable experiences. So for your clients, the question is, how do you create an experience that only you can provide and then they'll never leave. That's true for B2B and B2C. Really. I mean if you look at Amazon, for example, Amazon prime, you probably are Amazon users. For 70 bucks they give you one present after the other. Free films, free shipping, free streaming. And of course in the end they are in control. It's not really a present, it's more like, like a Trojan horse. But It's a genius. 340 million people do this, indispensable. So yes, I mean they're a bit of a cartel now, which is as a result they've become too good in a way you could say. But this is very important. I'll give you some examples. This is also from the Mika deck here, which is really great. It actually talks about your business. It says basically enterprise software users expect the products to be as well designed as consumer apps. There's a whole list of things. What that means is basically becoming smart and liquid. And this is something I think that's very hard to do because people are now expecting that to be as simple as say a Google assistant. So in your business, I think the first one to launch an assistant, a digital assistant that does some of the work for your clients, could basically clean out that whole environment because clearly that is the future. I mean, if you see what you can do with a digital assistant, it's mind boggling. It's not quite working yet, but will be very soon. So picture yourself in this world. You speak to a computer. I mean computer could be anything. It could be the wall, it could be a Wristwatch or doesn't you speak to the machine? Like this example Amazon Alexa Echo is now being used for medical purposes. So my grandmother, for example, I could put such a device in her living room. The machine always listens, which is a strange thought, but it could say, hey, you sound weird. Maybe you had a problem. Is that good or bad? That's also one of those things. Where is that going to be a good purpose but digital assistance? You can see here what's happening of course, in the banking industry. Every major bank I've looked at in the last six months has a robo advisor. And first this will be just retail and then it will be in asset management, mortgages. I mean basically these machines will learn how this works from us and they'll do a pretty good simulation. It's not the real thing, but it'll be as real as TripAdvisor or maybe a little bit smarter, hopefully than TripAdvisor. But that's something for you to look at. Can you build such a B2B application, a bot? I call this the IDA Intelligent Digital Assistant. There's lots of software companies that are already offering this. You can see here the growth and, and I think you'd want to be part of this growth of Intelligent Digital Assistants. There's BFSI Financial Services. Basically that's the blue pillar growing very nicely. So that's definitely something to look at in the future. So I like to say that we may soon forget what it was like when we didn't speak to computers. Maybe very soon we'll just think with computers, you know, that's kind of the next level. You know, some people are proposing, which I don't like the idea of, but so here's an example of an app that's already working on the Amazon system. Just say Alexa Open Capital One and speak your personal key to get started. Alexa open capital one. What's your four digit personal key? 4281. What's my account summary? The current balance on your silver dollar. The capital one skill makes account management as easy as speaking up. Just ask Alexa to find out for yourself. Well, this is obviously kind of primitive, you know, to get the balance or so, but this is just the beginning. Pretty soon you can have your body monitoring system. You can speak to the, to the machine and say, well, how have I been doing? Will I be sick next week? The machine would have a pretty good clue and about money. Yeah. Question. Use the microphone if you can. You hear me better now? Okay. Okay. By way of average kids per family. So what you're describing now is really disturbing by way of how it is going to impact the families, the humanity. Not from a business perspective, but from a family. Kind of the small family and the bigger family. It's really very good question. That's what my book is all about, right? So basically it could be heaven, it could be hell. I mean, clearly you see when you go out for dinner, for example, in Germany or France somewhere, there are some people playing with their mobiles, doing stuff like mostly us, but you go to Asia. In some places where families go, every single person has at least one phone or a tablet. Not talking to each other, but talking to the tablet. So in other words, we're building relationship with the screen but not with people. And that is significant. I mean, imagine if this takes off and we could speak to machines. They could become friends. In fact, that's the advertising of those companies. This is not a robot, it's a friend. Then you end up with a black mirror. You have the TV show kind of like. But I think really what this is all about is finding a balance, finding a use case that is not going to be an addiction and that will be not so easy. How exactly we do this, I mean, it's a question of social contracts, of regulation, of discipline. It could be very addictive. However, having said that, we still have about five to seven years for that to become as good as a person would possibly do. We're not quite there yet. These are simple applications like mapping. So yes, I mean, the question stands, of course. I think it could be great for business, but not so good for people. You probably don't want that. I think you would want to have a company that's also good for people. But how to do that I think is an ethical question. So in the book I say basically we should not replace human interactions with machines just because it's more convenient. But then there are many interactions that humans do that are not really required to be human. For example, driving a car is not a human necessity. I mean, for Germans it is, of course. I mean, driving a car is kind of like, okay, I enjoy driving a car, but it's not a human requirement like free speech or giving birth. That's not the same reach of requirement there. So if we lose driving a car, I think we could probably live with that, at least some of us. But we would not want to lose the authority over our body. For example, genetics. That's really an ethical question, but very good. We'll return to that in a second. But here's the bottom Line, basically, what's happening, I think, in pretty much all business because of digital technology that makes everything mobile and digital and virtual and automated and intelligent. The value is moving up from here, goods, services. It's moving to experiences and transformations. So the most successful companies will be those that provide experiences and transform the business. And that goes for your clients as well as for yourself, because when you do that, you become human, because it's very hard to copy experiences. It's possible to copy technology, obviously, or products, especially with 3D printing and those kind of things. So I think that's kind of the idea. What if your company became a provider of experiences and transforms the business of your clients? I mean, this is really what you already want to do, obviously. But how do you go about that? There's a simple question you have to ask. Are you a thought leader? You want to be a thought leader? I'm sure everybody does. Maybe not. This is becoming the number one question. If your clients looks at you and says, these guys know what the future is and they will help me get there, then you're safe. It's funny, that's what people say about Google, for example, right? Even though you could argue then maybe that's just their future you're going to be part of. That's a very important question. So here's a great example of a company that has been very successful, Airbnb from the consumer space, but still applies also to B2B. And they launched three months ago a new product. It's called Airbnb Experiences. And what they do is they don't actually sell the flat that they're staying in. They do that anyway. They sell a personalized experience provided by the people that run the flat. So, like, a guy is a fisherman, he takes you along on a fishing cruise. If he's a car enthusiast, then you go for a car ride. And they sell that along with the flat. This is the trailer. You can turn it up a little bit. It's a cool track, which you enjoy. It's very interesting, you know, because how in the world do they make money with this? They don't own the guy with the experiences. They don't create the experiences. They're a database, basically. But I tried it all the other day when I was in Bali, and I booked an experience with a fisherman who did not speak English or German or anything really, through Airbnb, to go fishing with a bunch of other people through the house that we had reserved. And it was amazing because it's kind of like it's facilitated A little bit. But there's a huge value in the trust relationship because it goes through the system. It's vetted on both ends. So the guy can see that I'm not a fool, that I'm not going to, you know, dishonor his intentions. And it's a really interesting balance between those two things. So this is something I would keep as a, as a put on the whiteboard. Create experiences. And you're already doing that with your products, of course. I mean, it's baked into all products. But how can you build something that is not copyable? So in my book I talk about the mega shifts and I started a new microsite a few weeks ago, megashifts.com you can read more about this, but basically there's 10 different trends that are outlined in the book. You can read the chapter four, I think it is. And they're basically. I'll go into a little bit of detail on those, but they're all amplifying each other. And here's the key. If you understand the mega shifts, you can create entirely new business models and I'll put them in a little bit more, less animated way so you can actually capture them. So the key is that we have to understand what they do and how they would impact, for example, financial services and markets. So they require a paradigm shift. For example, digitization mobilization is a key driver. And we already know that it's kind of an old hat. But the next one, datafication, that means things that used to be between people have become data. For example, we used to talk about our jobs and what we want to people. Now we do that on LinkedIn. And LinkedIn is capturing all that data, turning our information into data cognification. That means the data becomes smart. Now we can put everything together. We can make sense out of it. I don't know if you know this, but there's roughly about 96% of what we call big data. All the data is completely unstructured and unused because we don't really know what goes where and why it's there at the beginning and who made it. And now computers can actually go through that and create patterns and analyze it because we finally have enough juice and enough data and we can make sense out of it. That's called cognification. Automation anticipation. Your systems that predict they will come as normal as WhatsApp. The question is, what do we do about predictions? Anticipation? That's a huge question for financial markets. Should that be allowed? And how far does the automation of the market go? Augmentation virtual reality and robotization. So those are all the key trends there. Basically what they all have in common is this. And this is kind of the recipe because of all of this. Basically this is happening to all successful companies. You become fluid, open, seamless, real time, scalable, smart. You learn, irresistible and indispensable. That's kind of the success formula. And if you could see all the companies that have been successful the last 10 years, they all have a combination of these things. How you do that in a second I will explain in a second because this is really all about leadership and how we can actually do this in the future. So very important here that computing has completely changed. The primary factor here is what IBM calls cognitive computing. I'm sure you've talked to IBM about cognitive computing. They talk to everyone about cognitive computing. They're very good at marketing. And just sort of as a nutshell of what is actually artificial intelligence is to do things that normally require human intelligence of some sort. CEO Google Sundar said, we're moving from a mobile first to an AI first world. In fact, two weeks ago Google announced that their primary purpose of life was not to structure and capture information, but to build intelligence. I mean this is basically a shift for the entire industry. Think about that for a second. What does it mean when everything becomes intelligent? What's going to happen to your products? What are your products supposed to be doing? That's a key shift. We've come up with this cartoon like film here what we call the smart converter. Basically you have all of the old businesses are now being put through the converter and they come out smart. And this is roughly $40 trillion opportunity. So smart cities, smart farming, smart health, smart retail. And that's basically what's happening to you because it requires software solutions. The smart financial business is a huge opportunity. The cognification of network machines, intelligent assistance, what I call IA rather than AI, that's very simple artificial intelligence, like mapping automated responses. If you're a Google mail user, you can actually have a canned response now on the Gmail app, right? So it actually says yes, no and it gives you. And that's very interesting because it's very trivial but works right. So that's the low hanging fruit. I would recommend you invest there in intelligent assistance of what you currently are doing with your software and with people. Because I mean it's quite clear the growth here, you know, intelligence becomes a utility. It's funny now we used to talk about software being a utility. Now it's the intelligence that's the utility, it's the thinking that goes on. So I talk about this in the book a lot, is that the fact is that data has become the new oil. Data is the most powerful thing in the world. In fact, data is going to be as regulated as oil as we go down because so far it's heavily unregulated, which is a problem. And artificial intelligence is the new electricity. So that's two action items for you right there. Of course, you're in the data business. Nothing new there. But artificial intelligence and what does it mean? How can you combine those two things and where do they go? I think very soon we're going to end up in a place like this, pretty much, whether that's business to business or consumers, where we have a cloud that's smart helping us on every single part of our lives and that has huge social consequences. Also, do we still talk to people? I think actually it sounds worse than it is, but we're all going to need some guidelines here. For example, you're familiar with the dating service Tinder? Maybe you're not, if you don't have to do any dating. I'm married, I don't use it. But Tinder is an app where you swipe to find a partner that's basically like a catalog. So it turns out in many major cities around the world, a lot of guys between say 20 or 40 don't do any more regular dating because Tinder is so easy. So they get to the goal, whatever that goal is. I'll leave that for you to imagine quickly. But it changes society. Is that good or bad? Big question mark. But basically what we have here is sort of a global brain. It's a way of tapping into information. Now imagine for a second if you had the global brain of financial services, of transactions. And that kind of exists already, of course, with various networks that do this. But this will be the ultimate place and there will be several. Google is building such a brain for search. Facebook is building it for social. LinkedIn is building it for business and jobs. So that's a huge opportunity and it really means for us as people is the end of routine. You can see that here. You know, this is a robot that pours the weizing beer in Germany, you know, tries to be a bartender, but of course a bartender does a few more things than pour the beer. But you can see here on this stat what's already happening. And this is very much about our jobs in the future. Non routine cognitive work is exploding in importance and also non routine manual work that's craftspeople, plumbers, electricians. I mean, the bottom line basically is non routine. So in your business, if you can substitute routine with software, that is the key, because that's what's going to happen. And that will be brutal for some jobs, because some jobs are just routine. But in general, the end of routine is not a bad thing, as Luciano says. A colleague of mine who does AI research says that algorithms outperform human intelligence when it is not about understanding, about emotions, about intentions, interpretations. This is when algorithms and machines work the best. So I think that shows the future for us. I think we're going to move up the Maslow pyramid towards the understanding the emotions, the discussion. I mean, in the end, ask yourself. Of course your customers have a relationship with you. They don't have an algorithm with you. I mean, you sell them an algorithm. But in the end, the business is about the relationship, the trust, the meaning, the purpose. Human things, I call those the Android rhythms, you know, the human things. And basically what's happening now is that we can see this kind of technological brain developing. But the bottom line is we actually have three different kinds of intelligence. We have social intelligence, that means we don't do certain things because they would be weird. We have emotional intelligence, that means understanding each other without saying anything intellectual, of course, but this is really what computers do. They have a fourth kind of intelligence. Very large numbers, huge amount of data, new combinations, primarily binary zeros and ones. That's not at all like us. Humans are actually not binary. I'm sure you agree on that. Most people would. The way we think is not even clear how we do this. Like for example, when we meet spontaneously, it takes roughly 0.4 seconds for one person to evaluate the other without saying anything. It's just realizing who we are from a spontaneous connection without actually exchanging data, so to speak. So maybe artificial intelligence will just take our tasks, not our work. And that would be good, or that would be also bad if they take tasks that we get paid for, right? Clearly, I think that is something that software is going to do, especially in the financial service. So the most powerful combination in the future for our work will be humans on top of technology. You know, the most unbeatable combination in chess today is not a computer playing against a computer or a person against a person, but a person on top of a computer playing against another team. That is a computer and a person. That's how you get the real games now. So think about that for you for a second. You have to have emotional intelligence or eq emotional Quotient that is extremely important now because that's what machines can't do. The IQ. Machines have a hard time with the IQ for the time being, but in five years that's solved. Maybe 10 years, maybe 15 years. But you know, that's kind of a terminal situation. We know that's eventually going to happen for machines and that's also what our kids should be doing. Not that they have to have iq, obviously. Right. But they have to be emotionally intelligent to actually do the future. So how do you do that? I put together a short description. Maybe we can have some questions afterwards. So first I think we need to observe, to learn how to observe. You wouldn't believe how many people I talk to that run pretty large companies. They don't actually observe what is happening, they just observe the balance sheet or the sales funnel. If we do that too much then we miss actually what may be possible. And this is what startups do, right? They observe the future, they don't have a present. Of course, that's a huge advantage. It's probably less dangerous. Understanding you don't know how to be indispensable in the future is by understanding stuff. It's extremely difficult for a computer to really understand human relationships. A computer can win against the world champion and go. But it will not understand what a 2 year old is trying to say. It will not understand the things that I don't say. You would. If we talk and I don't say certain things, you would say, I see what you're trying to say, but not actually saying. That's a key skill. Of course also in business, imagination. Einstein said imagination is more important than knowledge. And that's what you have to build, you know, in the end to transform. So we're going to this world. You know, this sometimes has been referred to as the Vuca world. This comes from the military, right? Volatile, uncertain, complex, ambiguous. Now we're able to go into that new sort of, I call the flip in the velocity, unorthodoxy, co creation, good old American word, awesomeness. That's what we need. And I think when you talk about leadership, that's the skills you need. Fast new ideas, unorthodox, change the system, co create. And that's all the skills that we have to practice and think about this because now we're going into this world, this is going to be extremely important for us to understand. We're living now in a world that's 84% fueled by fossil fuel. All our energy needs, so gas, oil and coal, some nuclear, but you know, this is the future, 100% renewable in roughly 20 years. That's a certainty. This is not. No matter what Trump does in the Paris Agreements and whatever you have right, this is a scientific reality that we can do this in roughly 20 years. Imagine if you were actually on the left side of that business. How do you make that switch? So it's also very likely that your business is going to be what it is today, 90% of that old business, and then in 10 years it be half different. What would that be? We have to invent that. So I call this hybrid thinking. You do what's important today and then you think about what might be important tomorrow. Don't make a mistake about this. I live in a country where we don't do much of that for a long time because we like to make it perfect for today. That has worked for a long time because the exponential curve wasn't there. It was at the beginning of the curve and it didn't matter. But now change is going to be so fast and furious that while you're observing the future, it's already here. I mean, the German car industry is going to have to spend roughly in the neighborhood, about $2 trillion to catch up with the likes of Tesla and Google and General Motors and Toyota on all these technologies. And some of them will not survive that because of that paradigm. So bottom line is this is a great chart here by a colleague that I picked up where essentially he calls it pulled into two directions. I call it hyper thinking. So there's a core business that you traditional business, and then there's the edge, the new business. And it's about value creation, about risk, about adapting, about exponential. And now you have to do both. Probably a very good theme for your discussions for later. In other words, you can't afford to slack off on the current stuff because that's where the business is. But if you only do that, you don't have a future. So this is a very important hybrid thinking, the approach of this in the financial industry. Companies are already doing this, JP Morgan and Goldman and this Norwegian bank, dmb. They're saying basically we're going from being a financial institution to being a tech company. This is the bank saying that they're going to become tech companies like you, essentially, but for retail. And now the tech companies, the platforms, you know, all the top 50 of the world, they're saying we already are tech companies and platforms. We're also going to do banking and financial transactions are right in the middle of this huge change loop. So I think it will be important we use this paradigm with our clients. We should assume less and discover more. You can safely assume that the future is different than the present because the history shows the last 10 years that companies change fundamentally in revenue streams. Apple, for example, 10 years ago, computers today, iPhone computers have. I think they're like 17% or so of the revenue streams. IPhone, iPad, in 10 years. What's Apple's future? Health, artificial intelligence, medical and some devices. I mean, it's kind of a stretch to think that far out. Tesla has made a very good example. Sometimes you have to break routine. Tesla, for example, went out and published all of their patents for batteries, $2.7 billion worth of patents. And they said, if we publish a patent, then other people can use it and we can be quicker in going to market. So General Motor and Toyota and Volkswagen are using the patents of Tesla to build batteries. Are the assumptions still fit for the future? That's a key question. You know, my own business, we have 47 people that work with me on future scenarios. About three years ago, we realized that our assumption was faulty. And that assumption was that we know about the future and the client doesn't. That's no longer true. Most people actually know pretty well about the future when they have time. The difference is now that we try to understand the future, which takes more time. But knowing about the. You can ask Google, I mean, you can ask IBM, Watson. It will tell you what the future is in a nice female robot voice. We'll actually show you that hyper collaboration, I mean, in your business, clearly, whoever collaborates the widest and the deepest will win because the job is too large for one player. Lots of things happening, especially in this whole blockchain scenario. So I'll come to the end and we'll skip some of those. But bottom line on this is, you know, I think that anything that we're going to see around us will become automated and digitized. The most important thing is whatever cannot be digital or automated becomes very valuable. So we should not be afraid of technology there because technology will make it easier, but our human skills will be even more important, at least for the next 50 years, I think. Very important. In the US they have this kind of funny meme in Silicon Valley. If you can describe your job, it will be automated. Our jobs have to be creative. They have to think like people, which is quite different than what machines can do. So to summarize, basically, what's happening here is that technology is at this point where we can safely say it has no ethics Technology don't understand values or morals or mystery or stories or we can safely say technology does not understand 95% of what's important to us because we don't understand it ourselves. It's very important that we realize the difference. In the end, what's really happening here is that we're moving into a world that's much more going to be about ethical decisions, the things that we want to do. And I think it's also very important for companies like yours to understand that human purpose is not a liability, it's not a break, it's a catalyst. I want to talk about efficiency briefly and then I'll do the wrap up. So basically this obsession with efficiency is interesting. I'm sure you're very familiar with that. This is how we think of technology. We think of technology as being something that creates hyper efficiency so it makes it cheaper, hyper higher margin and that's good, but it's a little bit short sighted because in the end technology allows us to also not make things more efficient. But we should not put efficiency over humanity in the sense of that it allows this. Right? Technology allows us to do the things that we really care for. In psychology it's called perma, positivity, engagement, relationships. It's a tool. You're building tools, you're not building life or purpose. That is part of what we create with our business. But I think it's very important to realize where this could be going in the long run. So as a summary, this is basically our future. What I call the algorithm and the androidms, the human things and the machine things to bring those two together. I think that's the mission. Because what really counts between people is really more of what I call the andro rhythms, the human relationships. So summarize what I already said. Exponential curve point number one. We're here and because we are here, you can't really like wait and see to see what happens on the other end because it'll come very quickly, man and machine overlapping to think about from the future rather than about the future. The mega shifts. I think that's a great source of inspiration for new business ideas moving towards experiences. I think this is the most tangible for lots of companies to think of their products as experiences and causing transformation for their customers. Data oil and AI as electricity. The hybrid thinking, being able to describe your future as different from today. And here's sort of the recipe for the future, right? So connectivity, intelligence and humanity together, that's kind of the recipe for the future I think especially in your business because in the end it's really about this. You know, we are in a situation to where technology is exponential, but we are linear. We're never going to be as fast or as quickly growing as a computer. So one of my key motto is that I say think exponential, but live linear. Steve Jobs used to say stay hungry, stay foolish. And I sometimes say stay hungry, stay human. Thanks very much for your time. So I'm ready for your questions or comments.