Speaker – Kjell A. Nordström

Intro

Recently (16 Jan) I attended the Nordic Business Forum  in Stockholm and I had the opportunity to listen to Kjell A. Nordström´s speech on the future. Nordström holds a doctoral degree in International Business from the Stockholm School of Economics, has written several books and articles on the internationalization process of firms and was ranked among the World’s Top 30 Management Professionals in 2016 [1].

I have edited the speech below.

The Nordics

If you aggregate the 5 Nordic countries:

  1. We have a population of 26 million
  1. Pooling our economies together creates the ninth largest economy in the world, this means that we are light weight boxers doing heavy weight.
  1. We outperform, given our economic size per capita, which is probably due to our population being ultra-modern. There is no good or bad in being ultra-modern, it just means that we do things slightly before other people do them in other parts of the world. Additionally, the ultra-modernity is probably a growth driver.

“Take safety as an example of the ultra-modernity, in history there have been all sorts of cars. Cool cars, sexy cars, small cars, big cars and then these guys in Gothenburg came up with the idea to make a safe car. It looked like an East German tank on four wheels but the Volvo 240 is probably one of the greatest industrial successes in Sweden´s history.“

The world

Technology is constantly changing the rules of competition. “Soon, the former owner of miss universe will step into the White house while all the organizations that built their success on centrefolds such as Playboy are almost bankrupt. Why would you buy something when there are thousands of people with cameras in their bedrooms who are willing to offer the same thing free through the internet? How do you compete for attention when your competition offers the same thing as you but free?”

How do you compete for attention when your competition offers the same thing as you but free?

The design of hardware will become less important while software will become very personalized; this is potentially true for most industries that digitalize. “Have you thought about that smartphone all look roughly the same? Ten years ago the mobile phone market, was rather diverse in terms of design and functionality. Now, on the outside, all the phones look the same. On the inside, mobile phones have become super personalized however.

I advised a car company before summer and the assumption is that cars will move the same way as mobile phones. They will all look the same on the outside while the car will be in the key. It is the key that will transform that anonyms piece of technology into a personalized piece of technology which would be your car with your lights, your Spotify list, your seat settings etc. So when you turn the car off it goes back into an anonymous piece of metal that looks almost the same as any other anonyms piece of metal. I can promise you that the two designers in the meeting did not look very happy.”

Computers will be everywhere. “Some would say that it is truly a weird world, take the idea of computers being everywhere. They are in your home appliances, they are already in your car, soon in your clothes and even in your dog´s collar. Add that computing power decreases in size over time and we end up with smart dust, then we can paint the walls with them, use them for cosmetics and you know as I do that it is just a matter of time before we can do that.”

People feel liquid fear partly due to the speed and power in which new technology is changing society. “All this weirdness creates fear! The polish sociologist Zygmunt Bauman argued that our time is filled with “liquid fear”, it is liquid in the sense that you cannot define it. It is just a feeling that something might go to hell. It is important to note that the perceived threats that cause the fear are just a perception because the world is safer than ever! There are less wars than ever, more democracies than ever, more stable institutions than ever, criminality is falling in every area that we have reliable statistics and in particular the heavier crimes. All of this is facts and still we live with the perception that “there is something horrifying that might happen any minute”.

we are looking at something 3000 times more powerful than what fundamentally changed our society last time so it should come as no surprise that some of us feel a little liquid fear in the mornings.

One more thing, there has been a lot of research done in understanding industrialization. To the best of my knowledge and according to the best estimates that we have today:

  1. The speed of change is about 10 times faster compared to when we industrialized.
  1. The technology that we are dabbling with now, IT, mobile phones, AI, computing etc. is 300 times more powerful than the technology that we were dabbling with during the industrialization.
  1. Now 10 times faster and 300 times more powerful become 3000 times the force hitting our political and economic systems, our businesses, organizations etc.

Consequently, we are looking at something 3000 times more powerful than what fundamentally changed our society last time so it should come as no surprise that some of us feel a little liquid fear in the mornings.”

The Matrix

Nordström further presents a framework for analysing our time and is inspired by the movie The Matrix where humans live an evil system that they cannot affect. There are three dimensions setting the rules of the Matrix:

  1. One economic system
  2. Urbanization
  3. Digitalization

1. One economic system – “This is the first time in human history where we have one planet and one system. Well, except North Korea all other countries are now capitalist market economies. It does not matter if you go to Pakistan, Kenya, Morocco, Canada or Burundi; we play according to the same set of economic rules.

Capitalism is not an ideology but rather a machinery, think of it as a machine that is very good at one thing and one thing only. It can sort things into two piles: efficient and inefficient. However, the remarkable thing with the machine is that we can feed anything into it: restaurants, jogging shoes, auto manufacturers, business schools, hotels, anything can be put into the machine and it will be sorted into inefficient and efficient. The only thing that we have done over the course of our lifetimes is that we have increased the speed of the sorting a little bit with the help of technology so the scrap pile is a little bit bigger than it used to be.”

Capitalism is not an ideology but rather a machinery, think of it as a machine that is very good at one thing and one thing only. It can sort things into two piles: efficient and inefficient.

2. Urbanization – “We are in the beginning of the fastest urbanization in human history and it will all happen during our lifetimes. We will transform this planet from 200ish countries to 600ish cities and that will be humanity on planet earth. Those 600ish cities will account for 80% of the world population and about 90-95% of the world’s economic activity. It will take us about 30 years from now to get there so in 2050ish, the larger Stockholm area will have a population of about 4,5-4,8 million people. Sweden´s population at the same time would be around 11 million that means that almost half the population will be located in and around Stockholm. Tokyo will have a population of about 50-55 million people, they are 37 million today, and given that Japan will have a population little less than 100 million which means that over half their population will be concentrated into one city area. The city is a place where stranger meets stranger, that is the whole point of a city and part of how we define a city. Given the definition of a city being “a place where there are more people in transit than the local population”, Stockholm is now a real city since more than 50% of the population is born somewhere else.

You don’t need to be a rocket scientist or a professor of anything to realize that urbanization will profoundly change transportation, politics, education and any other human activity as we will be living on less than 1,5% of the world landmass. The growth of a few urban environments also means that other places don´t grow so much. In Sweden, such places are most parts of Värmland, Dalarna and other semi-rural areas where there is little economic activity, no universities, no fun, no nothing but trees. If you go there, you usually find three alcoholics, a couple of kids and some weirdos because everybody else has left. I´m not saying that it is good or bad, I’m just saying “get used to it” because urbanization will be a fact of life whether we like it or not. “

3. Digitalization – “Anything that can be digitalized will be digitalized! The only thing we have to keep an eye on is FAANG (Facebook, Amazone, Apple, Netflix and Google). They have such a firm grip on respective markets that they set the standards, whether you like it or not.”

The art of making money

“Finally, the art of making money will be affected in the matrix. The art of making money is a remarkably stable recipe over time. It looked exactly the same 50 years ago or 150 years ago, you make money if you have a monopoly. “But that is illegal” you might say! My monopolies are different however, how many times have you thought “I hate Ryanair!” or “I hate IKEA!” and whether you like it or not you will still buy your next flight to London from Ryanair and your next chair from IKEA. That is called a temporary monopoly and it is all in your minds which is why, according to research, 30% of you will feel stress if you were forced to use an Android phone instead of your iPhone. Creating a temporary monopoly is a principle and has nothing to do with the size of the company or industry. However, creating a temporary monopoly in the matrix will be a little bit different compared to what we meant by creating a temporary monopoly 5 years ago. Nevertheless, the principle will be the same. That is to identify a sameness and create something that feeds on that sameness in order to create a temporary monopoly in our minds.”

//Sammy-Sebastian Tawakkoli

Resources

[1] www.nbforum.com/sweden2017/speakers/kjell-a-nordstrom 2017-01-16, 14:23

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s