Schlagwort-Archive: Acceleration

Unintended consequences

Most of our working time, we take care of routine tasks that need to be done and are not a challenge or a fun factor. Since they are neither difficult nor particularly complex, they are decided and processed on the side without eagerness. Somebody purchases USB sticks for the employees, who quadruple the memory and only cost a fraction. Due to the cheaper Chinese manufacturer, you can save a few Euros based on the required quantity. That afterwards employees regularly lose their data or are not able to connect the stick, that because of that customer conversations fail, that as a result important contracts do not materialize and therefore eventually the company’s turnover slumps dramatically, is incommensurate with the 1250 Euros saved. It’s the old story that short-sighted savings can destroy the basis for business success – just like the supervisor, who shoots a staff member, although the employee is the reason for his own position.

Decisions usually do not only produce the desired results, but you also pay for it with unintended consequences. The reasons for this are manifold.

  • Blindness
    In extreme cases one cannot imagine consequences at all – neither the wanted nor the unwanted. This results from a context-free consideration of a decision: Do I choose solution A or solution B? Since there is an interest behind a decision, it is easy to forget that there can also be consequences which subsequently burden the result.
    For this reason, when a decision is taken you should not only ask what you enable with one alternative or the other, but also whether there are unwanted consequences that you do not want to suffer from under no circumstances.
  • Simplification
    The trivialization of a decision-making is the unintended creation of the aforementioned blindness of the unwanted effects. This happens by oversimplifying the influencing variables through generalizations, stereotypes and ambiguities so that the findings become arbitrary. Although this popularization makes the decisions more comprehensible, it does not improve the decision.
    For this reason, decisions should not be trivialized. There is no guarantee that the forecasts made will come true. However, predictions improve when the decision parameters are adequately considered.
  • Ignorance
    A further variant that leads to a form of blindness is the lack of understanding caused by too little or too much information. How is one supposed to make a reasonable decision, if one does not sufficiently know the circumstances? The butterfly effect has taught us that you can never know enough to make a reliable prediction. However, that does not mean that you should forego more clarity to be able to make better decisions.
    For this reason one should always question the own view. Is the important information available? Is my view consistent? Do I understand everything? Since you can never understand everything, there always remains a residual risk that decreases with more clarity.
  • Acceleration
    Unpleasant decisions are often rushed. You act with the attitude: If you don’t know what the outcomes are going to be, you should at least make the decision quickly. And this, although this form of hurry results in more unintended consequences.
    For this reason, ANY decision should have an appropriate timeframe. In business, there are rarely matters of life and death that should be decided in seconds. Common sense suggests that you should sleep on every decision – in order to come to a better conclusion during the nightly batch processing.
  • Bias
    Opportunities that require a decision are burdened with unconscious distortions of perception, remembrance, thinking, and judgment. These filters are called cognitive distortion or bias. An example is groupthink, in which an individual is influenced by the opinion of the group that leads to making worse decisions than one would make without the group. Another example is the control illusion that tells you that you can control random influences.
    For this reason, a decision should be objectified, for example by taking the neutral positions or those of other people and by creating a Pro-Con list from their different points of view.

Bottom line: Decisions do not only contain desired outcomes, but also consequences, which may have little to do with the result, but can be very harmful. One should ensure that shehe sees the (un)wanted consequences, does not draw conclusions by exaggerated simplification, knows more through adequate information, thinks everything through with sufficient time and avoids distortions of perception, remembering, thinking and judging, in order to not suffer from unintended consequences.

The dimensions of the digital transformation

The search for digital transformation affects many areas of the business. In the context of  the delivery of goods and services as well as in the generation of  revenue and income, traditional notions of the business world dissolve – the size no longer determines the range; Knowledge is not only available to the financially strong ones; Collaboration does not  need the common roof of a company. The society and the politics no longer provide the sense of belonging and social security to citizens – opinions are controlled with new resources, the new normal is the loud otherness; ethical principles are reinforced by the own filter bubble. A look at the dimensions of digital transformation shows that we are already in the middle of change.

The following dimensions require rethinking in business as well as in politics – now. Digital transformation will be possible, as soon as obsolete conditions are abandoned – e.g. Preference of long-term frame contracts, high entry barriers for small businesses by purchasing departments, lack of access to financial means and bureaucratic overload through institutional requirements.

  • Scaling for all
    The use of economies of scale was previously reserved for large companies. In order to keep the price for the means of production low, large quantities had to be accepted. Digital components cost almost nothing. This will make even small businesses competitive. Now these new entrepreneurs still have to be freed from the bureaucratic burden of the old economy. Purchasing departments and HR departments need new terms and conditions for these micro-business partners.
  • Limitless cooperation
    The services are complex today, since they are composed of many building blocks. The differences in local or national circumstances that have to be taken into account are made possible by modules and interfaces that fit together because they are standardized. The mandatory cooperation and the distribution of income need new business models.
  • Increasing acceleration
    The virtual proximity of all those involved, who are only one click away, leads to a staggering speed. Established approaches and formal decision-making can no longer compete. This gives unbureaucratic, agile companies a head start. It can only be achieved, if the legal and internal framework conditions are correspondingly debureaucratized.
  • „Soft“ capital
    Since physical assets no longer count in digital markets, „soft“ capital comes to the fore – data, knowledge, software, relationships. The critical key players are the computers, networks and above all the employees, who can be located anywhere in the world. This requires the replacement of a rigid corporate concept with networks that are able to quickly come together and to dissolve again.
  • Homeless values
    The values of a company are situated in the cyber-wonderland. There are no national boundaries or affiliations. Since national laws and regulations lose their effectiveness, we need in the medium term supranational legislatures and tax authorities to take over these tasks. In the meantime, the values are moving back and forth in the twilight zone. Assets are no longer determined by an objective financial value, but by the ability to create something new.
  • Network for everyone
    The minimal effort that is needed to set up a network enables everyone to open their own bubble of information. Over time, there will be powerful creative clouds due to the participants and their networking. This wisdom of the crowd, which is available for free, means the end of many, expensive research sites.
  • Multi-sided business models
    Due to the diverse market, it is increasingly difficult to find the right partner. For this reason, business models will evolve that specialize in the mediation between producers, their suppliers and customers. Proven, close cooperation’s will dissolve in favor of spontaneous, time-limited projects that are needs-oriented. The mediator role can be exercised by all those, who can bring together the relevant partners and will be able to earn a living from it.
  • Site loss
    The classic location and headquarters will disappear. The company headquarters will be located where the founder is currently living without being officially registered, because the business takes place in cyberspace (see above). Accordingly, there will no longer be the workforce with their representatives and regulated employment relationships. Legislation, state power and jurisdiction need to be adapted to international challenges in order to prevent location nomads, who are constantly on the run from responsibility and other duties.

The point in time, when the digital transformation is over, depends on how quickly and skillfully large companies can respond to these new developments. At the same time, government agencies are challenged to create the appropriate framework conditions to support these new developments. It is not the question whether, but when the parties act. In the meantime, the pioneers of these developments will find their way in the Internet and implement their business models.

Bottom line: The digital transformation is happening for years. Like the frog in the Boiling Frog Syndrome, the world is heating up due to increasing digitalization and networking. The dimensions are the scaling for all, the limitless collaboration, the increasing acceleration, the „soft“ capital, the homeless values, the network for everyone, the multi-sided business models and the loss of the site. For the sectors of the economy and the society this requires an immediate rethinking, in order to get the control over the used free space, so far unregulated by enterprises. This applies to tax havens as well as to the providers of illegal businesses in the Darknet. The dimensions of digital transformation are the basis.

(More here: OECD Digital Economy Outlook 2017)