REVOLUTIONARY WEALTH Alvin and Heidi Toffler by. We Share Ideas.

REVOLUTIONARY WEALTH

Alvin and Heidi Toffler

by

We Share Ideas

We Share Ideas

Wealth1. This book is about the future of wealth, visible and

invisiblea. Invisible wealth is a revolutionary form of wealth that will redesign our lives, our companies and the world b. Invisible wealth cannot be measured in financial terms

2. Wealth usually refers to financial assets, and often carries a connotation of excess a. For some, having wealth may mean having more than they needb. For some, no amount of wealth sufficesc. For the mother who is starving, a daily handful of rice may be wealth beyond measure

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Definition of Wealth

1. Money is not synonymous with wealth2. Wealth is any possession, shared or not, that has

what economists call “utility”—it provides us with some form of well being

3. Wealth is the child of desire. Desire begets wealth4. For centuries, eastern religions and philosophies

taught that happiness comes from reducing, not fulfilling, our desiresa. The Buddha said that the source of all suffering is desireb. As a result of their value systems many of these societies lived in unbelievable poverty and misery

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Definition of Wealth

5. Protestantism in the West taught through hard work, thrift and virtue, God would help you to fulfill your desires

a. These values created a tremendous amount of financial wealth

6. Advertising is the machine that creates even more desire

a. 3500 times a day Americans are told the key to happiness is to acquire more things

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Wealth Systems

1. Wealth is anything that fulfills needs or wants

2. A wealth system is the way wealth is created

3. True wealth occurs when man is able to create an economic surplus

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Three Wealth Systems

1. Agriculture a. Ten millennia ago, a woman planted the first seed

in what is now known as Turkey b. Instead of waiting for nature to provide, man could make nature do what he wished c. Agriculture allowed man to settle into communities d. Agriculture created trade, barter, buying and selling e. In some years, there was an excess of food f. War lords, nobles and kings were able to become rich by stealing the excess wealth created by agriculture

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2. Industrialism

a. This second wave of wealth creation brought mass production, mass education, mass media and

mass culture

3. Knowledge

a. This third wave substitutes knowledge for the traditional factors of industrial production –

land, labor and capital

b. This third wave de-massifies production, markets and society

Three Wealth Systems

* The first wave was based on growing things, the second was based on making things and the third is based on serving, thinking, knowing and experiencing

*

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Changes in Deep Fundamentals

1. Work

a. Until field labor was replaced by factory work, few people ever held a job

b. A “job” in today’s sense of formally committed work in return for pay is a recent innovation

c. For centuries, most labor was forced labor (slavery for example)

d. Work has moved from outdoors to indoors

e. More people will work in the future but there will be fewer jobs

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2. Time

a. Never have the pressures been greater for organizations to speed up their operations

Quality

CostTime

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2. Timeb. Relative speed of current organizations

100 mph – American business 90 mph – Non-governmental organizations (NGOs) 60 mph – American family -- Fewer than 25% of

American families have a working father, stay-at-home mom and two children under the age of eighteen

30 mph – Labor unions 25 mph – Government bureaucracies 10 mph – American school system 5 mph – Intergovernmental organizations (IGOs)

such as the United Nations, IMF and WTO 3 mph – US Congress and White House

1 mph – The Law

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3. Place a. Wealth creation in the world continues to move west b. Cleveland, a second wave city, is listed as

the poorest large city in the US

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Unique Characteristics of Knowledge

1. Knowledge is inherently non-rivala. Millions of people can use the same chunk

of knowledge without diminishing it b. The more knowledge is used, the more

knowledge is created. This is not true of food or “things”

2. Knowledge is intangiblea. We can’t touch, fondle or slap it, but we can (and do) manipulate it

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3. Knowledge is non-lineara. Tiny insights can yield huge outputsb. Yahoo was started when two college students simply categorized their three favorite websites

4. Knowledge is relationala. Any individual piece of knowledge attains meaning only when juxtaposed with other pieces that provide its context

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5. Knowledge mates with other knowledgea. The more there is, the more promiscuous and the more numerous and varied the possible useful combinationsb. Giving rise to “Meta-solutions”

6. Knowledge is more portable than any other producta. It can be distributed for a very small price

7. Knowledge can be compressed into symbols and abstractionsa. Try compressing a toaster

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8. Knowledge can be stored in smaller and smaller spaces

9. Knowledge can be explicit or implicit, expressed or not expressed, shared or tacit

10. Knowledge is hard to contain -- it wants to be free of boundaries

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The Storage of Knowledge

1. Thirty five thousand years ago an unremembered genius drew the first pictograph on a stone to memorialize an event, person or thinga. This was the beginning of the storage of non-oral memories outside the human brain

2. The invention of writing led to the invention of libraries, indexing and printing

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The Storage of Knowledge

3. The Web has led to the creation of a “mega brain” outside of human brains

a. This mega brain is expanding at unbelievable speeds

b. Will human memory become irrelevant?

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Knowledge Obsolescence

1. Every chunk of knowledge has a limited shelf lifea. Despite the floods of data, information and knowledge crashing over us every day, a greater percentage of what we know is, in fact, less and less true

2. Hunters and gatherers needed some knowledge to be effective, but once it was learned it could be used for centuriesa. The cycle time of biological evolution is millions of

times longer than the cycle time of human learning

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Knowledge Obsolescence

3. Factory workers needed knowledge to run their machines, but that knowledge changed very little over time

4. For knowledge workers, learning is a necessary and continuous endeavor

5. All the greatest thinkers in the past were limited by what they knew at the time

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The Information/Knowledge System is Unique

1. The information/knowledge wealth system is the first system to be driven by an inexhaustible and unlimited resource

a. All other wealth systems were based on scarce resources such as food and raw materials

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Prosumers

1. More than a billion humans live on less than a dollar a day — they consume only what they are able to produce– Many live without money at all

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2. Ways to move into the money economy:

a. Create something saleable — grow excess corn, make a pair of sandals

b. Get a job — work and get paid money in return

c. Inherit — your rich uncle

d. Obtain a gift

e. Marry

f. Get on Welfare

g. Steal

Prosumers

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The Prosumer Economy1. The prosumer economy is a massive “hidden”

economy in which large amounts of mostly untreated, unmeasured and unpaid economic activity occurs

2. Just a few of these activities are:a. Baking a pie — when a commercial baker makes a

pie it is included in the GDP. When a housewife bakes a pie it is not includedb. Caring for an ill parent — when a nurse does it, it is

counted. When a son or daughter does it, it is not countedc. Fixing a leaky faucet—professional plumbers are counted — Do-it-yourselfers are notd. All volunteer activities are excluded

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Nongovernmental Organizations (NGOs)

1. The Internet makes it possible for people with common interests to find, communicate and organize each other throughout the world

2. NGOs need not be tied to any geographic areas or governments

3. The most threatening and menacing NGOs are militant religions and their spin-off terrorist organizations

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Our Third Job

1. Job one is paid work2. Job two is unpaid household work3. Job three is work that has been outsourced to the

consumera. Many companies now require their customers to

do work that was previously done by their employees

b. Bank of America used to have eight hundred employees locating cancelled checks for customers (1) The customers are now required to look

up cancelled checks themselves, either online or at an ATM

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Our Third Job

c. In the United States, bank customers in 2002 executed nearly 14 billion ATM transactions

(1) Assume that, on average, a simple face-to-face transaction at the bank might have taken two minutes

(2) That means customers performed 28 billion minutes of unpaid work that would

otherwise have required banks to hire more than 200,000 additional full-time tellers

(3) Banks frequently charge customers an extra fee for the privilege of doing the extra

unpaid work

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Our Third Job

d. In l977 there were zero personal computers. By the year 2003 there were 190 million in use in the United States and 150 million people knew

how to use them. They learned outside the formal educational system

(1) The learning process was controlled by nobody, led by nobody and organized by

nobody

(2) It took a long time for schools to buy computers, develop curricula, reorganize schedules, train teachers and raise money even after they “got the word”

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The End of Capitalism

1. No human creation lasts forever

a. Could capitalism cease to function as a viable economic system?

b. Every key feature of capitalism, from property, capital and markets to money itself, is

becoming nearly unrecognizable

2. Property

a. Property is often defined as “a thing or things belonging to someone”

b. But property has an intangible aspect as well. There must be property rights laws because

without them property has no value

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c. In 2004, hordes of people clamored to buy into Google, a company whose property and operations are almost entirely intangible

d. Spending is shifting from produced goods (tangible) to services (intangible)

3. The capitalist law of supply and demand assumes a limited supply

a. Knowledge and information is unlimited

4. Whole industries are in trouble when new technologies make it possible to end-run the traditional intellectual-property protectionism copyrights, patents and trademarks

a. File sharing of music is an example

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5. John Barlow, once a lyricist for the Grateful Dead, says “otherwise intelligent people think that there’s no difference between stealing my horse and stealing my song”

a. As property, the horse is both tangible and rival. The song is neither

6. What if someone claimed the rights to the numeral “0” or the whole alphabet?

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Customized Pricing

1. In mass-production economies, “one size fits all” was paralleled by “one price fits all”

a. There is now a move to customize with products and flexible, personal pricing

2. US airline ticket prices vary depending on distribution channel, time and individual customer characteristics

3. Prices are now often set by auction (eBay) and reverse auctions (Priceline)

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Tomorrow’s Money

1. Money, a key element in capitalism, is undergoing significant change with new forms of money, new ways to pay and more and more business opportunities that use no money at all

2. Money has costs that include the cost to collect it, store it and keep track of it

3. The amount of money traded in the global currency market is thirty times the amount traded on the New York Stock Exchange

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Tomorrow’s Money

4. Para-moneya. Americans spend more with credit cards than they do with cashb. Frequent Flyer points and other legal programs

have created a whole new system of para-moneyc. Consider PayPal – a “currency” with no substance

whatsoeverd. Payments can now be made by cell phones rather than credit cards

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Nongovernmental Organizations1. In recent centuries, nations have been responsible for

how wealth is distributed in the world

a. Nations form economic blocks, play currency games, impose tariffs, grant subsidies and

wage wars to gain access to natural resources

b. In the future, nations will lose a lot of their power to NGOs

2. The proliferation of NGOs is just beginning

a. The Internet, the Web, mobile phones and improved connectivity make it easier and cheaper for people to identify common goals or grievances, to find one another, link up and organize

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Nongovernmental Organizations

3. NGOs can permeate every part of the world and society because they are not constrained by physical borders

4. NGOs can act much faster than the bureaucracies of nation states

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Religio-Economics

1. While the rate of increase in global population is slowing, the rates of growth for the world’s two largest religions—Christianity and Islam—are escalating

a. All religions will be influenced by technology and the radical redistribution of world wealth

2. The World Christian Encyclopedia forecasts that 2 billion Christians in the world today will grow to 2.6 billion by 2025

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Religio-Economics

a. Islam is growing at a much faster rate. It is expected to go from 553 million in 1970 to 1.8 billion by 2025

b. A third of all Muslims live as minorities in

non-Muslim countries

3. The critical centers of Christianity have moved to Africa, Latin America and Asia, each of which has many more Christians today than North America

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Religio-Economics

4. The Muslim population is growing most quickly in the East—especially in Malaysia and Indonesia

a. These countries have a more moderate form of Islam compared to the countries in the Middle East

5. As the price of oil continues to rise, new energy technologies will be developed and the power of the oil producing countries will decrease

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Observations

• Businesses confined to “tangible” products are limited by scarcity of people, property and capital

• Knowledge-based businesses are built on an inexhaustible and unlimited resource

• Which are likely to grow faster?

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Questions

• What are the “knowledge” components of my business vs. the “tangible” components?

• What can I do to move my business to a “richer mix” of knowledge vs. tangible?

• How can I protect and leverage my company’s knowledge base?

• What can I do to reduce cycle times of both “learning” and “doing” in my company?

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Questions

• Blue Ocean question – How can I add or raise the importance of knowledge-based deliverables in my product/service offerings?

REVOLUTIONARY WEALTH Alvin and Heidi Toffler by. We Share Ideas.

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Transcript of REVOLUTIONARY WEALTH Alvin and Heidi Toffler by. We Share Ideas.