When will facebook be pushed from the edge into the core?

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I recently listened to an interview (conducted by Nordic eCommerce Knowledge in Swedish) with Swedish “dot-com-profile” Johan Staël von Holstein and especially one thing he mentioned (approximately at the 1:38:00 mark) got me to think.

He talked about that facebook really isn’t much more than an advanced e-mail system (or chat system like IRC), and just like most people don’t care about which e-mail provider they or their friends use, people shouldn’t need to care about which “social networking” provider they or their friends use. Social networking should “just work” like e-mail or mobile phone calls. He means that it’s time to break facebook’s de facto monopoly (in the West at least) on social networking and push it from the edge of the Internet into the core.

Making social network into a “core service” of the Internet instead of an “edge application” isn’t as far fetched as it seems, because this has happened with many services before. E-mail and mobile phone calls, for example. Imagine if GMail or Hotmail users only could send e-mails to other GMail or Hotmail users or if people only could call people on their mobile phone who were using the same mobile operator as they did!

The fact that e-mail and especially mobile phone services has been “pushed into the core” and become something that just works is interesting, because it was not that long ago that people spoke enthusiastically to their friends and family about which mobile operator they used, why they had chosen it and how much they liked it! They almost sounded like a representative of the mobile operator who was trying to sell the service and they were often proud about the choice they have made! Today no one seems to care.

When people stopped caring about the mobile operators, they started to care about phones and tablets instead, but this is already becoming less common. Soon phones and tablets will suffer the same fate as the mobile operators. People won’t care any longer. People will speak proudly about something else instead. Perhaps which apps they use and why they use them.

Most products and services will suffer the same fate and the downhill process is usually initiated either when a type of product or service has become good enough or when the providers stop being innovative and only focus on adding and tweaking details or copying each other. Good examples of such products are flat screen tvs, cars, mobile phones, laptop computers, running shoes, burgers, soft and energy drinks, etc.

The only thing left for a provider of a mature product or service to do to attract customers and, once again, get them to talk proudly about the choices they have made is to focus on softer issues like image, style and “customer experience”. Perhaps that explains why Apple has launched the colourful c-version of the iPhone 5 and hired Angela Ahrendts from the the fashion company Burberry as their new head of retail and e-commerce?

So, if you really want to be successful – on the Internet or otherwise – and experience a steady growth instead of suffering the same fate as previous products and services, perhaps you should focus on developing core services and products from the start and then license them to others who can focus on tweaking details and competing with each other. That way you will win regardless of who of your licensees comes out on top!

And remember, when facebook issues a press release about hiring Lady Gaga as their new Chief Creativity Officer you know they are doomed 😉

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Is yet another new iPhone version everything our current society has to offer us?

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In a recent discussion, a friend of mine said the following about humanity: “What I’m hoping for is that we put more work into learning how to use our own potential in a better way instead of how to make a new version of the iPhone” (Translated from Swedish by me.)

Tonight I had a similar discussion with my girlfriend, which lead up to the question of “What’s next? What’s the next step for humanity?”.

For a long time, big changes have occurred in the everyday life of humans from generation to generation, but now development seems to have almost stopped or at least slowed down significantly. We have reached all our goals.

Or what will the next generation experience which is radically different from what we do today? Sure, they will have a lot of new technical gadgets,  cleaner energy, smarter transportation, etc., but they will probably get similar education, work as many hours as we do today, eat similar food, live in similar homes, wear similar clothes, do similar recreational things, travel to the same places, etc.

Looking far ahead, we might eventually reach the scenario depicted in the movie Wall-E where we actually do work less (if we work at all), eat completely different food, wear completely different clothes and travel to completely new places (in outer space).

But still, these are just superficial changes in our lives and judging by Wall-E’s vision, they aren’t very good for us!

When will we start focusing on mental and physical advancements? Things which will make us feel great and fill us with a sense of meaning? Things which are good for both our minds and bodies.

The feeling I have right now is that many of us who are “privileged” to live in the “developed world” already have achieved everything that our current society has to offer; an education, a job, a home, a car, a partner, a child, a pet, traveling the world, good medical treatment, etc.

The generations before us have fought hard to get to this point and always had some goals left to reach in their lives, but now there’s nothing left to fight for it seems. No clear next step. Sure, everything is possible to improve a little, but it won’t lead to any substantial changes in the way of life for the coming generations. The improvements will be like upgrading to the latest version of your smart phone; a few new fun features and a bit more modern design. And for the really adventurous, the  colorful version!

I think this is why more and more people feel like we have reached a turning point. We need to set up new goals or help people find meaningful things to do. We need to become creative. Improve the system. Continue building something wonderful on top of the strong foundation we have constructed.

I think this is exactly what comedian Russell Brand is talking about this interview (which my friend from the beginning of the post recommended to me):

It’s interesting that he mentions “instant communication” (twitter, etc.) as one tool for changing the world, because I think that’s pretty close to the fascinating skill of telepathy which often is a property of advanced alien species in sci-fi books and movies. Instant (silent) communication between all people all over the world is probably a good way to organize changes and spread good ideas.

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Win-win recruiting – or – why working for free is the best way to find a job you love

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Having interviewed quite a lot of people for both both full time jobs and internships in software development, the absurdity of the traditional recruitment process finally struck me! What are the chances of finding the right person for a job, or finding a job you will like, after just a few short meetings in the very unnatural and usually quite uncomfortable setting that a recruitment process constitutes?

Or rather, since more and more people realise that personality, enthusiasm and team dynamics are more important than hard skills; what are the chances of finding a team member with a suitable personality or a team with the right atmosphere that you would like to join?

Wouldn’t it be better, for both employer and employee, if the recruitment process was based on a try-before-you-buy approach instead of uncomfortable meetings, guesses, gut feelings and luck?

Why not invite the person you consider to employ to  spend a day with the team that he or she will join? No special planning is even required! Just let someone in the team hold a brief introduction in the morning and then let the person spend the rest of the day together with one or two of the team members.

Take the team out to lunch to let everyone get to know each other a little. This also allows you to ask the person how the day has been so far and if he or she would like to focus on something in particular during the rest of the day.

Near the end of the day, it’s probably good to arrange a short informal meeting to get some instant feedback, but remember that a day like this can quite intense so it’s probably wise to arrange for a telephone follow up the day after as well.

I have tried this alternative once and was totally amazed by the results. The team actually got to know the person and the person actually got a quite good feeling of how things work in the particular team. All this after one day, a minimal amount of planning and almost no waste of time on the team’s part.

Even if there is almost no waste of time on the team’s part, one can argue that this approach has a high cost for the person applying for a job since he or she has to take a day off from his or her current job. However, this can be easily fixed by compensating the person for his or her loss of income. The cost of doing that is tiny compared to traditional recruitment costs or, even worse, the cost of recruiting the wrong person.

Furthermore, since it’s important to find someone who really wants the job, and therefore wouldn’t mind working for free for one day, it’s probably a good idea to wait with offering compensation until directly after the person has accepted the offer to spend a day with the team. Then the compensation will become a very pleasant surprise, which will probably make the person even more committed.

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Charlie Hoehn gives similar advice to young people in his TEDX-talk “The New Way to Work”, where he recommends freshly graduated people to start their careers by working for free instead of trying to find any job based on the skills they acquired in school as quickly as possible. He recommends them to do the work they love or dream about doing, but think they have no chance of getting as a fresh graduate.

But how is this possible? It’s not like you can just walk up to the reception desk at Google, introduce yourself and say that you would like to work for free in the Google Maps team, is it? Well why not? You could at least give it a try! Few people or companies would say no to such an offer from an, obviously, very passionate and curious person. In fact, most people love to share their knowledge and experiences with someone who cares.

In today’s digital age, you could of course start by making a small creative application using the Google Maps API and then send the result to the Google Maps team together with an offer of working for free with them.

If you want to become a baker you could probably find a small bakery quite close to where you live which wouldn’t say no to an extra hand. I actually think small is an important word here. Small companies are usually in much higher need of help than big ones and it’s probably also much easier to find and meet the person who’s in charge of deciding if you can join – for free – their team or not.

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How to know your life meaning (in five minutes!)

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Having recently turned 40 I have, of course, been thinking a lot about the meaning of life and what I really want to do. A friend of mine is on a similar quest so we do our best to help each other and his most recent advice to me was to watch Adam Liepzig’s TEDx-talk.

In his talk, Adam presents a simple and powerful recipe for finding out what the purpose of your life is. In five minutes!

According to Adam you just have to follow the five points/questions below to define your life meaning:

  • Who you are? This is the simple one since it’s just your name.
  • What do you do? What do you love to do? What is the one thing, right now, you feel supremely qualified to teach other people?
  • Who do you do it for? Picture them in your mind.
  • What do those people want or need? They come to you so you can give them this thing.
  • How do those people change or transform as a result of what you give them?

Adam continues by saying: “The fascinating thing about these points are that only two are about yourself. The others, three of them, are about other people. The most successful people in any field always focus most on the people that they serve than on how they are served themselves.”

What affected me most when watching this video was when Adam demonstrated a very powerful way of answering the classic questions: “Who are you and what do you do (for a living)?”

All you need to do is start at the bottom of the list. Instead of starting with stating your name you start by stating how you help transform peoples life, then answer the other questions.

Adam gave the following example of what you can answer when someone asks you what you do if you’re a children’s book author:

  • “I give kids awesome dreams.” (How they transform)
  • “I write books…” (What I do)
  • “…for children…” (Who do you do it for)
  • “…so they can fall asleep at night,…” (What do they want)
  • “…so they can have awesome dreams.” (What do they want from you)

Very simple. Very powerful. Reminds me of the important order of “why, how, what” which Simon Sinek talks about and I wrote about in an earlier post.

Now go watch Adam’s talk while I start thinking about my own answers…

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The powerful concept of progressions

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A few years ago I became interested in parkour, but it wasn’t until recently I started to reflect on the concept of progressions which is often referred to by traceurs and traceuses (male and female practitioners of parkour) as one the secrets behind their amazing achievements.

Progressions in parkour is the act of breaking down a complex movement into parts which can be mastered individually and then combined into one fluid movement again. It can also mean that you first perform an easier (scaled down) version of the movement and then increase the difficulty.

For example, first master a jump of half the distance required to complete the real jump, or first practice and condition your body for the individual parts required to climb a 3 m high wall. Taking baby steps. Progressing. The Tapp Brothers or LaFlairParkour wall run tutorials demonstrates the concept of progressions in parkour in a powerful way.

Progressions is also a strong theme in the very inspiring and absolutely amazing parkour documentary People in Motion.

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How can the concept of progressions be applied to your life in general or anything specific you want to become better at?

The reason for why I write this text now instead of any other day is that I recently received an email alerting me about a new blog post by Logan of Wild Movement where he writes about how progressions can improve your life:

Success begets success. Failure begets failure. And even small progress [emphasis mine] can initiate an “upward spiral” or positive feedback loop that fuels future progress and achievement. And once you have seen enough measurable results…there will come a time where you’ll BUY IN completely. Where you will believe 100% that by taking specific actions, YOU have the power to change your life. And any remaining resistance will simply fall away.

Nothing groundbreaking, but as often with fundamental truths, they are very simple and intuitive. In another blog post called How to Get High Logan continues to describes how something as simple as a morning ritual can transform your life by ““hacking” your brain to create motivation and positive feelings” and that:

How you feel is in YOUR hands. Despite what the drug companies want you to think, you don’t need a pill to feel happy. You can feel happy right now. Or if not RIGHT now…soon. Real soon. And you can control how you feel with two things: (1) your thoughts and (2) your actions.

Again, this is nothing new and similar stuff can be read in thousands of motivational blogs and books, but the reason for why I was affected by his words was that I read them right in the middle of an ongoing email conversation I’m having with a friend where we are discussing how your beliefs affect your life. What a coincidence! (*)

Logan suggests that incorporating physical exercise – or any type of challenging movements – into your daily/morning routine is a cheap and efficient way to “get high”.

The physical and emotional rush you can get from something as simple as taking a run or performing some body weight exercises like push-ups, squats or MovNats of the Day until you start breaking a sweat and panting a little is fascinating.

Personally, I think there’s nothing like it, and if you do it outdoors(**) it becomes even better! You feel strong and really alive!

However, what Logan and many others who talk about how daily routines can affect, and transform, your life fails to consider is that a routine quickly becomes just that – a routine. It becomes a part of your life you stop paying attention to and perhaps even stop enjoying or seeing the benefits from!

This is not good, but one way to overcome the problem is by constantly increasing the difficulty of what you do in your routine. Striving for efficiency or perfection for example. Like Freerunning founder and parkour veteran Sébastien Foucan talks about and demonstrates in the inspiring back to basics interview Retour a la Racine.

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Increasing difficulty is also a way of becoming – and staying(!) – mindful in what you do. But the funny thing is that when you start pushing and challenging yourself, instead of becoming even more mindful you instead become super focused, almost transcending into a zen like state where the you stop noticing what’s going on in the “outside world”.

This means you’re not mindful any longer. You just act. At least, that is what happens to me. Especially when I’m climbing in trees!

Another way of avoiding routines to become routine is by introducing some sort of positive feedback loop or gamificate what you, by creating challenges for yourself so that you can “level up” once you have mastered something.

Some of my own daily routines

A daily routine I introduced into my own life about two years ago was to stand up instead of sitting down when riding the subway to and from work. I use no support for my hands so I have to rely completely on my balanace. This is a fun and quite challenging daily routine which also allows me to experiment with different techniques, meaning that I gain experience from it as well.

There’s also a clear progression path since different parts of the train are harder to balance at than others. This allows me to level up once I have mastered an easier spot. This routine also forces me to be mindful since it would be easy to loose my balance and fall if I stopped concentrating on what I do.

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Another routine I introduced into my life about a year ago is to take the stairs from the second floor to the fifteenth floor instead of taking the elevator. The progression path is clear here also since I want to be able to accomplish this without becoming too exhausted and preferably only using nose breathing. So far I have “leveled up” to 100% nose breathing, but have to work on the exhaustion bit.

Something which hasn’t become a daily routine yet, but which I enjoy doing from time to time when going from the subway to my office is to jump on the concrete structures and the stairs I pass on my way.

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All these routines are examples of simple and fun(!) things which will make you feel better both through the physical challenge itself but also from the feeling of having accomplished something!

“Getting high” on movement is indeed a wonderful way to start your day!

(*) Was receiving this email really a coincidence or just a proof of my argument that how you perceive the world is a function of how you choose to perceive it and how open your mind is? Probably a topic for a blog post of it’s own, but for now I will leave you with two of my favorite cases in point:

  • If you only pay attention to the negative things happening around you, you will think that the world is a horrible place filled with bad people. Does this mean that there are no good people and that nothing good ever happens in the world. Probably not.
  • If you’re considering to do something specific you suddenly start hearing and seeing references to it and related stuff all around you, all day long. Does this mean that people weren’t talking about it before? Probably not.

(**) By outdoors I don’t mean that you have to take a trip to a perfect forest or beautiful lake. Your balcony or the street/lawn in front of your home is all you need, or at least open the window to let in some air!

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3D printing as the next “equalizer technology”?

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(Image courtesy of Nike, showing their partially 3D-printed shoe Vapor Laser Talon)

Ever since I watched the last part of the Zeitgeist film series I have been thinking about how 3D printing might affect the world in the future. My biggest hope is that when the technology has advanced enough to make printing of quite advanced objects very cheap, today’s status associated with owning specific objects will seem ridiculous.

Why pay a hundred dollars for a pair of shoes if you can print them for one dollar?

However, I’m not hoping for a world where everyone mindlessly prints everything they want just to end up with thousands of pairs of shoes in their wardrobe. Instead I’m hoping for a world where it becomes meaningless to print everything you want since you know that you can get it whenever you “need” it.

If something is free or very cheap, you won’t become obsessed with owning it like it is today with many highly commercialised items.

For example, in countries where clean drinking water is available very conveniently and for a very low cost almost no one thinks about the price of it. In fact, I think many (most?) people considers it as something completely free! Still, this doesn’t mean that people waste water. Instead they use it quite efficiently since there is no status/meaning associated with spending/wasting it mindlessly. On the contrary, if you do spend/waste it meaninglessly, other people would probably consider you to be quite irresponsible or even call you an idiot.

When anyone can acquire anything it becomes meaningless to acquire more than you need.

Sure, some people will always associate some status with owning something “real” or something that cannot (currently) be 3D printed very cheaply, but the number of things this is valid for will decrease as technology advances.

Furthermore, when you think about it, what does “real” mean when almost everything we buy and own is manufactured (by machines) in a factory? Considered as a black box, a factory is nothing but a very big 3D-printer where input is the raw materials required and output is the manufactured objects.

Future things retaining some degree of status might be the same high status items as of today – for example real/natural pearls and diamonds instead of artificial ones – even though there is no rationality behind it.

Digitalizing physical objects by providing downloadable blueprints which can be feeded to a 3D-printing will most probably disrupt many physical object based businesses in the same way as the digitalization of music and movies have disrupted the music and movie business. New players arrive. New payment models arrive, but eventually all 3D-printable things will be made available for a flat rate monthly fee. There will probably also be a free – advertising sponsored – alternative where a small ad or logo will be added to everything you print.

It’s hard to say how long it will take before consumer 3D printers are good enough to produce some of the physical objects most coveted by consumers today, but it’s safe to say that the technology will follow all other new technologies adaption pattern. First big corporations will use it, followed by early adopters and then mainstream consumers.

Since I’m a fan of 3D-printing I would like to speed up the adoption process by suggesting a way to make state of the art 3D-printing available to mainstream consumers without having to wait until the technology becomes cheap enough.

It seems as if E-bay have similar thoughts since they have launched their EXACT-service in beta. This service allows customers to customize products and then have the products 3D-printed and sent to them via traditional shipping methods.

E-bay’s experiment is a small taste of the future, but I would like to take it a bit further. Why not build a “network” of state of the art 3D-printers covering the major cities of the world? This would allow consumers to “order” stuff online and then collect them at their nearest state of the art 3D-printing provider. This would also make it possible to “ship” 3D-printed objects all over the world in a much more efficient, cheap and environmentally frinedly manner since it would allow you to “send” the object (actually the object’s blueprint) over the Internet to the 3D-printer closest to the consumer and then print it there and then send it using local delivery/postal services for a fraction of the international shipping cost.

So, will 3D-printing disrupt the physical object business to such a degree that no more objects are created or that creative people will find other ways to make their living? Well, did musicians stop producing music after the advent of flat rate music subscription services? Did movie/tv studios stop producing movies?

Not at all! Personally I think this will unleash creativity in a revolutionary way, allowing anyone with a computer to create an physical object which can become instantaneously available all over the world at a very cheap price. Think “App Store” for physical objects…

Welcome to a brand new – truly creative – world!

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How to kickstart a developing country

ImageI recently finished the book Dead Aid by Dambisa Moyo and really enjoyed its honest tone and the very down to earth suggestions on what many African countries could do to improve their situation in the world.

The book really inspired me! Together with Niall Ferguson‘s TED-talk “The Six Killer Apps of Prosperity” it inspired me enough to formulate my own “killer apps” for kickstarting a developing country. I will present these below, but first a few words about Dead Aid.

The book, as the title suggests, is very – and I mean very – critical to the aid programs that have been going on since the 1940’s or so. In these programs “the west” have more or less given (thrown!) away money to most African countries completely without thought. In fact, as Dambisa, says (my interpretation), the west really didn’t care what happened with their money – they just kept on giving so that they could get the African problem out of the way quickly each year when it came up for discussion again.

Each time I read a book a few things stick in my mind forever and some of the things I will remember from this book are:

– The African aid programs were inspired by the highly successful Marshall Plan where America helped Europe rebuild its economies and societies after the second world war. If it works in Europe it should work in Africa, right? Wrong! Why? Because Africa didn’t have anything to rebuild – what it needed was help building an economy and societies from scratch. More than 60 years have passed since the major African aid programs was started and they still just continue since no one cares about it any longer. Totally irresponsible!

– China alone accomplished more in Africa during five years around year 2000 than 60 previous years of aid did. Why? Because China came to Africa to do business – not to “help”. The dominating forces of our world require everyone to do business or be hopefully left behind or even ruthlessly exploited. China of course doesn’t care about Africa – China only cares about itself and what it can get from Africa – but that really doesn’t matter since some business is better than no business for Africa.

– African countries need to first help themselves and then start helping each other, starting with their neighbours. By encouraging trade between the people in the country itself, things will start happening! People will start making money by selling things or services, taxes will be paid, etc. By cooperating with neighbouring countries, they can more safely and more profitably start playing in the international financial markets, by issuing bonds, etc. Cooperation with neighbouring countries will of course also increase trade between the countries, by, for example, eliminating custom charges and all other trade barriers.

– Many Africans own property – the land they live on and where their relatives have lived for many generations – but today in many African countries there are no real property rights. This makes it impossible to use land – the only thing of worth many Africans have – as a collateral for bank loans, meaning that most Africans won’t get a bank loan or will get one with horrible conditions (interest rates around 20% is quite common). By ensuring proper rights to their land, many Africans would be able to unlock huge economic potential and start doing business by their own power.

These are quite major issues which might take a lot of effort to change, but Dambisa also lists many smaller things that are much easier to implement, but please see the book for those – it’s a great read even though the first third was a bit uninspiring.

Below is my own list of killer apps which I think would help kickstart a developing country. As Niall argues in his speech, the order of which killer apps like these should be introduced probably is crucial, so I have tried to list them in order of introduction:

  • An electronic market place where individuals can sell “stuff” to each other. Ebay (or blocket.se in Sweden) is an example of what I mean but it has to be dead easy and cheap to use and should be probably be tailored for mobile/sms use. The electronic market can easily be enhanced with real life events where people actually bring their stuff somewhere to meet potential buyers – like a flea market
  • Pawn shops which allow people to trade items for money instantly without having to find a buyer.
  • Delivery services and freight companies which can “grease” the individual to individual trading by offering simple and cheap means of moving stuff between people.
  • Micro job agencies which can help people to find short term jobs (minutes(!), hours, days, weeks, projects). I think this is great way of transferring money from wealthier people to poorer people because if it’s easy to get a job done, jobs will be created! Don’t have time to run down and buy your own lunch? Send someone to do it! See, a job was just created out of thin air!
  • Micro lending to individuals. Not much need to be said about this, proof of its efficiency can be found all over the world.
  • Simple pre-packaged business ideas which allows an individual to try if a certain idea is something they would enjoy doing or could become successful doing. Coca cola is more or less doing this by making it very easy for someone to go to a central location, buy a box of bottles/cans, take the products back to their own village/part of town and re-sell the product. If sales are good, the same individual will probably come back the day after. If not, someone else will probably take his/her place. This could be done for large range of products and by coordinating from a few central points the outcome could be optimised by, for example, avoiding two individuals to sell on the same street, etc.
  • IT/entrepreneurial activities: competitions, education, networking, financing, mentoring, micro loans to companies, crowdsourcing, etc. This more or less closes the circle since many of the points above require IT services to be conducted efficiently, so perhaps this killer app should be introduced first? 🙂 The idea of this point is to find talented individuals in the society and introduce them to the wonders of IT since this will help them unleash their true potential by quickly implementing their ideas.

The big difference between my list and Niall’s and Dambisa’s suggestions is that my list can be implemented by the people themselves, with virtually no help from the government. This will hopefully ensure a quick and cheap transition for the country which embraces it!

When presenting this list for a friend of mine he asked me if these really are the first things needed by a developing country? Isn’t a proper legal system more important he argued? He’s probably right, but I actually think that’s a luxury reserved for developed countries! Too many laws and legal systems might actually be a hurdle for countries who want or need to develop quickly. Also, for me, the practice of law often seems more like a competitve debate rather than the blind justice my friend was aiming/hoping for. Even if you are right you often end up loosing since you couldn’t fight well enough for your cause.
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Is TED becoming another online filter bubble by censoring Nick Hanauer?

As a TED-junkie I was a bit disappointed when I received an email from a friend who informed me that a Nick Hanauer‘s TED-talk had been “banned” from the TED web site.

What’s going on? Is TED turning into yet another online filter bubble where the TED staff decides which talks are appropriate for its online audience based on what they think the audience wants to hear? Did someone powerful enough dislike the talk so much that he or she forced TED to remove the talk? Or is this just some self censorship going on? I guess we’ll never know since Chris Andersson, curator of TED, apparently didn’t want to comment on the subject.

Now, banning the talk from the official ted.com site of course doesn’t mean that the talk is unavailable online – you just have to watch it on YouTube instead.

So what is this controversial talk about? Well, Nick is talking about one of the most politically sensitive subjects in the US; taxation of the rich – the capitalists.

He’s also talking about the relationship between wealth and job creation, since a lot of (mostly rich) people argue that the more wealthy capitalists a country has the more jobs will be created (actively by the wealthy capitalists). The reasoning goes something like this; the wealthier a capitalist gets the more he or she will invest in new companies and thus new jobs will be created.

When one first hears this argument it sounds quite reasonable, but one important factor is forgotten about and that is basically the main point of Nick’s talk; without enough consumers (with enough money to spend) there is no need for a capitalist to start a new company since no one will be able to buy the products or services the new company produces. Nick compares this to a complex eco system where everything depends on something else – remove something and everything will be affected.

Nick also made a very funny and insightful remark about the capitalists view on job creation; a capitalist sees hiring someone as a last resort – they only hire new people if it’s absolutely necessary to do so. If they are forced to do so.

There are a few other potential problems with the relationship between wealthy capitalists and job creation:

– Wealthy capitalists often prefer to invest their money in the financial sector instead of starting new companies, for example buy buying stocks, bonds, etc. There are many reasons for this, but if you have a lot of money it’s often easier since starting new companies doesn’t require that much money and often takes a very long time to generate profit.

– Wealthy capitalists often prefer to create jobs in low wage countries rather than their own , so why should the people of their own country subsidize their activities by allowing them to pay as little tax as possible?

– Wealthy capitalists pay as low wages as possible, often forcing people to take multiple jobs and thus increasing competition for jobs among the workers. In effect this might mean that even though more jobs are created, fewer people are employed!

Let’s return to taxes for a short while since I’m currently reading the book “Dead Aid” by Dambisa Moyo and one of the most intriguing things mentioned so far in the book is the relationship between taxes, the government and the people of a country. My interpretation of what she writes is this:

– In a well functioning country both the people and the government respect each other and know that they are dependent on each other.

– The people thinks it’s ok to pay (high) taxes since they know the government will spend the country’s money wisely and thus the people will benefit from it.

– The government realises that they are dependent on the people to get the money the require to build the country they want and thus have to spend (enough of) the country’s money on things that benefit the people.

A similar reasoning can probably be used for wages, capitalists and workers where each part realises that they need each other and capitalists understand they have to pay quite high wages in order to get consumers with money to spend on the products the capitalists produce. The workers understand that they cannot have too high wages since the company wouldn’t survive and then they would lose their jobs.

Just like the eco system Nick is talking about!

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“Shared value” as a fix to capitalism?

Since I recently have become interested in the future of economic systems and our societies themselves, my better half showed me a video interview with Michael Porter where he presents his ideas (nicknamed CSV, Creating Shared Value) on how to “fix capitalism” by focusing on the real needs of the society and the people in a society. In the interview and the article which is the base for the interview, he argues that there are huge untapped profits to be found for companies focusing on these “new areas” of capitalism.

Skärmavbild 2013-01-05 kl. 03.02.42

I really liked a lot of what he said and was actually surprised to hear these thoughts from a Harvard professor since Harvard isn’t known for caring about people and the society but rather caring only for businesses and their needs. I was even more surprised when I found out that Michael apparently has a strong following among many of the world’s largest corporations which means that his ideas can potentially have a big impact!

I was very disappointed though when he was asked to give a concrete example of this paradigm shift and he started to talk about fair trade involving a poor farmer somewhere in the world. He said that instead of focusing on giving the farmer a bigger piece of the pie in order to improve the farmer’s profit as fair trade works today, a company should focus on creating a bigger pie and thus improve the farmer’s profit by expanding the farmer’s business. He also argued that the company should help the farmer improve his production and quality in order to be able to sell the farmer’s goods at a higher price.

This is easier said than done since it would not only require existing customers to pay more for the company’s products, but it would also require the company to find completely new customers who are willing to pay the new higher price.

Overall a pretty bad example for such a new groundbreaking idea!

When I’m reflecting on these things, I instead usually try to envision a situation like this: Identify a real problem, like bringing cheap electricity to developing countries. Spend the company’s money on finding the best solutions for the problem, focusing on the needs of the people and the society where the problem exists and don’t forget about the environment! After this, educate the people on how to use the products, and even how to manufacture/assemble them and do maintenance on them – involve the society and they will reward you handsomely by becoming loyal!

So how does the company make money from this? Well, for example, all components in a solar power plant (big or small) will probably not be possible, or even meaningful, to manufacture locally. This enables the company to sell those components to this completely new market! The company will make more money by finding a new market and the people “in need” will get an improved situation in life both by having a major problem solved and by getting a new source of income through their newly started solar energy company!

A traditional, capitalistic, profit focused company would of course try to get as much profit as much possible from this critical component, but that is just stupid since it probably would kill the new market instantly. It would probably also try to protect this component with their life and crack down on pirated versions on the component, etc. What the company instead should focus on is building relationships with these new customers by helping them rather than fighting them in every possible way. This again created loyal customers, and loyal customers is the best asset any company can have – just look at Apple!

I think there are far reaching positive effects from acting like this. Not only will the company get a new market, loyal customers, a lot of goodwill, etc. but the company will also get a lot of new experiences and knowledge. I think this is real “shared value” – by giving something away you can get more! In the solar energy example, the company will have to produce more of the critical component and the increased production will probably lead to lower production costs which in turn might lead to higher profit in the established markets or a lower price and thus an improved competitive position.

When researching this blog post I quickly stumbled upon Steve Denning’s article where he criticises Porter’s idea quite intensely. Denning’s article is very insightful and I especially appreciated the references to similar historical “new ideas” which were embraced by big companies but typically only made the management consultants richer. Some of the comments to Denning’s article are also quite good.

So is “shared value” (in its broadest mean) a “fix for capitalism”? Well, it depends on how you define capitalism. In general capitalism is about maximizing profit and guaranteeing a modest increase of wealth (typically around 3% per year) and using that definition I don’t think it will fix capitalism. But if you’re interested in making the world a richer place (in its broadest mean) instead of just making the company and its shareholders rich I think it is a good idea.

Realizing that you can get further by sharing is such a basic concept so why just restrict the profit sharing to your current shareholders – why not include the whole world?

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Life in the “developed” world

Many years ago I heard a statement along the lines of “In the stone age people spent about four hours a day finding food [and doing other things required to survive]”. That immediately got me to think about how much time people in modern societies spend on “finding food”. Since hearing it, it has also been my favourite reason for thinking that something in our modern “developed” society is horribly wrong.

Most of us work eight hours a day and if you include the trips to and from work it easily becomes nine to ten hours a day. This means stone age people spent 28 hours per week “working” (four hours a day, seven days a week) while modern men spend 45-50 hours a week (nine to ten hours per day, five days a week). To put it simple, the stone age people only worked half as much as we do today – for the first time it seems as if things actually were better in the past!

ImageA few days ago I decided to search for the source of the statement and it seems to originate from Marshall Sahlins book “Stone age economics” published in 1972. The Wikipedia article on “Original Affluent Society“, which talks about the book, also came up high in the search results and sums up Sahlins’ theory by saying that hunter-gatherer societies were living affluent lives with plenty of leisure time rather than hard lives where they were constantly striving to survive:

“Sahlins argues that hunter-gatherer and western societies take separate roads to affluence, the former by desiring little, the latter by producing much.”

This idea of course appealed to me since I like simplicity and desiring little is much simpler than producing much.

Humans need food and water to survive and we of course have to work a little to acquire both, but isn’t it reasonable to think that the more “developed” a society is, the simpler it should be to fulfill these basic needs? If so, we seem to be moving in the wrong direction, since people seems to be working more than ever in these times even though we have access to highly advanced technology and think we are very efficient in producing food.

What’s even worse is that the time we spend at work isn’t enough to survive – it’s merely a means for acquiring the money required to actually buy the food and water we need!

Of course, the money we get from working is also used for all the other stuff we “need”. No, food and water are far from enough for modern men! There are so many things we “need” nowadays. Things worth working hard for it seems since we typically spend 40-45% of our awake time working (based on nine to ten hour work days and eight hours sleep per night). Stone age people only spent 25% of their awake time working (based on four hour work days).

If you start looking at the required “supporting activities” of working things get even worse. Things like taking our kids to kindergarten or school, waking up or going to bed at unnatural times, thus disrupting our natural sleep patterns which in turn probably leads to negative stress and inefficiency.

What I’m trying to say will all this is that truly developed societies should aim for as short working days as possible in order to get as much leisure time as possible. This leisure time should be spent on what we want instead of just on what we need. Spending time with our loved ones, playing and exercising, reflecting on things and “evolving” ourself and our societies. And let’s not forget: having fun!

I wonder what people in the “primitive” societies did with all their leisure time? Nobody knows, but judging from some of the artifacts still remaining from their cultures it seems as if they reflected on important things ranging from the wonders of nature like astronomy or the healing powers of herbs to how to build pyramids!

What do modern people in developed societies do with their very precious and hard earned leisure time? Watching funny clips on YouTube? Updating their statuses on facebook? Buying more stuff they don’t need?

The funny thing is that youngsters often get the advice to choose a fun education and try to get a job which matches their interests rather than just getting any job. This is a great idea since if everyone would be paid to do what they want we have managed to eliminate work and offering everyone 100% leisure time! 🙂

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