Apple’s Irish problem and the end of the tech boom

Source: European Commission

The EU’s ruling on Apple’s Irish tax affairs is a sign of two different sets of change: the ending of the ICT boom, and the decline of globalisation

Silicon Valley seems surprised, and not for the first time, by the fact that the European Union has a different view of its business practices than it does. Apple is perplexed (even maddened) by the decision of the EU’s Competition Commissioner, Margrethe Vestager, that it should pay the same rate of corporation tax as other companies doing business in Ireland–and that it therefore owed €13 billion, perhaps more, in back taxes. Bloomberg explains the issue well.

Google, similarly, has been perplexed by the three separate anti-trust suits that the EU has filed against it. One relates to its advertising business; a second to its shopping service; the third is about whether Google has been giving preferential treatment to both Search and Chrome in its Android operating system.

So what’s going on here? Two separate things: first, it’s about the coming end of the ICT boom that has dominated innovation and culture since the mid-1970s; second, it’s about the limits of corporate power and influence as economic globalisation declines.

Handing knowledge down the years

Cambridge University Library has a small but perfectly formed exhibition called Lines of Thought running until September to mark the 600th anniversary of its founding in 1416. (The longevity does make you pause a moment.) It draws on elements of their fine collection of books and papers, and is built around six themes: communication, literature, faith, gravity, anatomy and genetics. (There’s a short video explaining more.)

The first books in the library were deposited as security in exchange for loans, underlining how expensive books were in the 15th century.

Walking around the collection was a reminder of how effective books, and paper, have been as a way of transmitting knowledge. Tyndale had to leave the country to get printed his translation of the Bible into English, then an infinitely radical act. The first attempt, in Koln, was raided by the authorities, but he succeed in publishing it in the Netherlands in 1534, and copies were smuggled to England. Tyndale was executed for heresy in 1536, but copies survived–Anne Boleyn owned one. When King James I/VIth commissioned his official translation 70 years later, much of it was taken from Tyndale’s version.

The human face of High Value Work

This is a version of a talk I gave in Helsinki at Teknologia ‘15, based on the work on High Value Work that I have have done at The Futures Company with the Association of Finnish Work.

The Futures Company has been collaborating with the Association of Finnish Work for more than eighteen months on the idea of “High Value Work”. We define this as work that is productive (it creates new value); that is durable (it creates value over time); and work that is inclusive (it spreads value beyond the business — or the C-suite. This combination, based on the emerging post-crisis literature, also creates work that is meaningful, for employees and customers.

Slide 1: high value work

In the first of our four reports on High Value Work, we identified four routes to it. These are service innovation, based on a full understanding of the customer and their needs; value in authenticity, based on on a full understanding of cultural context; resource innovation, based on a full understanding of material flows; and rich knowledge, based on a full understanding of the technical knowledge held inside the organisation and a method to capture and codify it.

High value businesses combine these; for example, mastery of resource innovation often creates new technical capabilities that lead to new forms of rich knowledge.

Human capabilities

Slide 2: Theory X and Y revisited

What striking about these routes is that they have human capabilities at their heart. Service innovation and value in authenticity are based on relationships, whether human or cultural, while resource innovation and rich knowledge are based on technical processes and technical understanding. People, in short, are at the heart of value.

Long waves and the innovation question

Stephenson’s Rocket: an abundance of speed.
Image from Caroline’s Miscellany
http://carolineld.blogspot.co.uk/

In my last post summarising some of the key ideas in Joshua Goldstein’s book on long waves, I looked at the different schools and some of the evidence. In this one, I’m going to look at the model he constructs on the dynamics of a long wave, and its link to innovation. (Discussion of the war school(s) will follow in another post). But I also realise that I haven’t spent enough time on his work on whether long waves or long cycles exist at all. So I’m going to start there.

Collecting evidence

In Chapter 4, Goldstein brings together the long wave dates going back to 1485 from 33 different scholars (I added a 34th from a book published more recently). These are data sets that operate at different scales (e.g. national, regional or continental) with different data (e.g. prices, production) and with very differently levels of granularity. The full dataset included 55 series, as follows:

• Prices: 28 series
• Production: 10 series
• Innovation and invention: 9 series
• Capital investment: 2 series
• Trade: 4 series
• Real wages: 2 series

I’ve reassembled the dates he derives from these into a spreadsheet, which still needs some work to extract the dates as charts. But it does suggest that there is reasonable consistency between the dates of different scholars working in different schools, and that there are reasonable regular cycles of downswing and upswing.

Which isn’t to say that cycles are exactly the same length, or would need to be for the theory to hold. Goldstein quotes Kondratiev, who argued repetition is more important than periodicity.

The “regularity “of long waves should refer not to periodicity but to “the regularity of their repetition in time” and to the international synchrony of different economic series.

Back to the future

In the last edition of The Guardian of 2014, the writer David Boyle offered two unfashionable propositions about change.

The first: that “we cling to the real world more tightly as the virtual world presses its claims.” Sales of computer tablets are on the slide, he says; sales of e-books are declining; sales of vinyl records are at an 18-year high. And he references the French historian Jean Gimpel, who died almost 20 years ago, who had anticipated the return of many physical technologies that were supposed to be on their way out, from trams, to cycling, to cotton and natural fibres, to cooking. (Says Boyle: “Those Smash robots, which used to fall about laughing at potato peelers, must be rusting with chagrin.”)

Slowing

The second: “despite what we are told, technological change is slowing down.” This is a theme of mine here on the next wave, and there is abundant evidence to suggest that the wave of innovation that spanned my great-grandfathers’ lifetimes was far greater, and had far greater impact on everyday lives, than the one I’ve seen, no matter how insistent the Silicon Valley boosterists are on the subject. (See: Hans Rosling, Robert Gordon, David Graeber, for starters.) And also, come to that, that the wave of globalisation in the late 19th century was far more disruptive than its equivalent phase in the late 20th century.

Dubious factoids

Boyle looks to the transport sector for his example:

I’ve been travelling on Boeing 747s and driving Minis my entire life (I’m 56) … If I was born in 1858 would I still be struggling along in my wagon at New Year 1915? … The notion that technological change is accelerating is based on dubious factoids about the idea that mobile phone penetration into the American market was faster than it was for radio. In reality, the reverse was true.

Of course, the really disruptive technologies of the 20th century were the washing machine and the fridge. And perhaps the vacuum cleaner. And now I need to go and find out more about Jean Gimpel.

Happy New Year!

The image at the top of the post is from Death to the Stock Photo.

The end of the future

One of the most tiresome tropes on the futures circuit is the idea that the world is speeding up, often accompanied by a dodgy video with dodgier data. It’s one of those things that almost every generation in history has believed, along with the notions that young people are less respectful than they used to be and that society is going to the dogs. It also helps to sell books and consultancy projects. And broadly speaking, it is just plain wrong. To borrow Sohail Inayatullah’s terminology, it is a “used future”, borrowed from someone else.

Anticipating the next wave of technology

Regular readers of the next wave will know that I am a fan of the work of the economic and technology historian Carlota Perez, who developed a model that explains the processes by which new technology platforms first emerge, then become dominant, and then become superseded. There have been five of these “technology surges” since 1771; the present ICT surge is the fifth.

Her model is a historical one. This isn’t a complaint: she is a historian, and she did the analysis of the historical data to propose the pattern she describes in her book. But when I was asked to contribute to an Association of Professional Futurists workshop that used the Three Horizons method to explore candidates for the Sixth surge, I wondered if it was possible to identify future-facing characteristics in her model.

Gutenberg’s complete system

It’s well past cliche to commend Johannes Gutenberg for his invention of the printing press, but it was only when I read Just My Type, by Simon Garfield, that I realised how inventive he had been. As the management theorist Peter Drucker once said, innovation is about building a whole new system, not just having a single good idea. As Garfield observes, “Gutenberg’s vision concerned automation, consistency, and recycling.” He set the mould for printing technology for almost 500 years – a long time for a technology innovation to remain dominant, and he was the first person in Europe to use mass production. 

The long view of technology

I’ve just finished working on a thought leadership paper, Technology 2020, for The Futures Company with my colleague Andy Stubbings, and we’ve published an extract in the company’s quarterly newsletter, FutureProof (free, but registration required). I’ve republished this as it appears in FutureProof below the fold. In a couple of lines, I draw on Carlota Perez’ view of technology change to argue that we need to understand the ICT revolution as a long wave – following the same pattern as previous dominant technologies – which is nearing the end of its period of dominance. And secondly, that looking at the previous technology waves, it is only now – close to the end of the wave – that we will start to see new business models which will stick.

Hacking the low tech future

What will happen to the technology industry in an age of expensive energy?

The technology industry has grown up in an age of cheap and abundant energy, and that has shaped, deeply and fundamentally, the way it sees the world, what it chooses to make, and how it designs what it does. You have to think only of the short lifespan of the devices, the fact that they are discarded, not upgraded, when technology moves on; or the emerging service designs based on the world of the cloud; and always on, on demand access. But the age of cheap and abundant energy is coming to a close. It is about to become scarcer and more expensive. How does the technology energy need to respond?