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Booz & Company’s Chief and Marketing and Knowledge Officer Tom Stewart moderated the Big Think panel made up of Michael Schrage, MIT Sloan School of Management research fellow, theoretical physicist Dr. Michio Kaku, Peter Diamandis, Founder and Chairman of the X-Prize Foundation, and Isabel Aguilera, former CEO of Google’s Spain & Portugal operations.

Tom Stewart:  Good morning.  We just heard an extraordinary presentation from Gabriel Byrne.  I’m Tom Stewart and I have the honor of presenting and moderating a panel that will discuss some of the issues of the future of business.  What we heard was about three extraordinary developments in the world of bits, in the world of technology.  We heard about mobility, which will quadruple the number of people who have access to the internet, is quadrupling it as we speak.  We heard about the cloud, growing at a rate, a compound annual growth rate, of 16% and hockey sticking.  We heard about what SAP calls in-memory computing and how it’s going to drive quantum leaps in processing speed.

But let’s think also of the world of atoms.  And before I bring our panel out, I want to just point out four megatrends in the world of atoms that will intersect with this world of bits.  Think about the new demographics, for example, thinking about the aging populations in the west and in Japan, and now in China, and contrast that with the growing populations and the growing working age populations in India, Brazil, and various other countries.  Enormous effects are going to spring from this demographic change.  The Arab spring is not a mere random event; it is also driven by the demographic phenomenon.

Think about the fact that what we used to call developing and now call emerging economies will soon be fully fledged and emerged.  At Booth & Company, we’ve calculated that only 52% of the 2,500 largest public companies in the world are now domiciled in the US and the OECD.

Think about inclusiveness.  If you look at the world’s college-age population, college-graduate population, only 17% are white and male.  And think about issues of sustainability.  Not just about carbon and climate change, important as those are, but also generally, about the issues of the company’s relationship to society.

We have an extraordinary group of four people here to discuss the future of business and I’d like to invite them out onto the stage now.  If you will—I’m not sure where they’re going to come from.  But Michio Kaku, whose known to many of you, one of the best known faces in science, the co-founder of string field theory in 1974, currently involved in defining the theory of everything, he’s a best selling author, TV and radio host, whose latest book, The Physics of the Future is a provocative exploration of what the next 100 years will look like.  We’re not going to go to that full-time horizon, but we’ll get out there.

Next to him, Michael Schrage is a research fellow with the MIT Sloan School Center for Digital Business, a thought leader in the world of innovation, a regular contributor to Fortune, CIO Magazine, Harvard Business Review, Strategy in Business Magazine, the author of two critically-acclaimed books, Serious Play, How the World’s Best Companies Stimulate to Innovate, and Shared Minds, on the new technologies of collaboration.

Next to him, Isabel Aguilera, is one of only two women to have ever been chosen as one of Fortune’s 50 most influential executives in the world.  Formerly the chief executive in the Iberian Peninsula for Dell, Google, and General Electric, she’s left mega-corporations to start a start-up called TwinDocs, a cloud-based service for protecting confidential information in the cloud.

And finally last, but certainly not least, on my left, to your right, Peter Diamandis, whose the chairman and CEO of the X Prize Foundation, which leads the world in designing large, incentive prizes to drive radical breakthroughs for the benefit of humanity.  You know of some of the X Prizes he’s funded, the $10 million X Prize for private spacecraft, and for 100-mile-per-gallon equivalent cars, now launching new prizes in exploration, life sciences, education, and energy.

So this is our panel, our topic is the large topic, the future of business.  And what I want to do is just begin by asking, I think I’m going to begin by asking Michio if he would take a look at science and the increasing capabilities of machines.  And if you think about business as sort of a balancing act between what people can do and what machines can do, what are we going to see in the next 10, 15, 20 years that in machine capability, that is going to blow our minds and change the way business is done?

Michio Kaku:  Well, we've just had a very successful space shuttle launch.  Congratulations to the people at Kennedy Space Center.  However, your cell phone today has more computer power than all of NASA in 1969 when they put two men on the moon.  So when I see these old videotapes of the NASA computers of 1969, 64 kilobyte computers, I say to myself, "I wouldn't get into one of those space capsules, given the computer technology back then."  Well, that's Moore's Law; computer power doubles every 18 months.  And it means that even the nature of capitalism itself is beginning to change into something that I call "perfect capitalism." 

When you go into a store today, you're surrounded by products, but you don't know the exact price and value of these products.  In the future, the internet that will be in your eyeglasses, and beyond that, in your contact lens.  When you blink, you will see all the products arrayed with all the prices.  You will know exactly what things really cost.  That's perfect capitalism.  These glasses, by the way, and contact lens, will also identify people's faces.  You will always know who are you talking to, so at a cocktail party, you'll know exactly who to suck up to at any cocktail party.  And the first people to buy these internet contact lenses will be college students studying for final examinations.  They will blink and go online.

Now, if you're a producer, on the other hand, you'll realize that brand loyalty is going to be put to the test.  When people can see all prices inside their contact lens, it means that brand loyalty is going to be very, very important.  You have to establish your brand or else the consumer will instantly go to another product. 

But there's even another transition taking place, and that's a transition from commodity capitalism to intellectual capitalism.  Tony Blair liked to say that England derives more revenue from rock n' roll than it does the coal mining industry.  That's because commodity prices like food, have been dropping for 150 years.  This morning, you had breakfast that the King of England could not have had 100 years ago.  That's how cheap food is today, because of mass production, better containerization.  But the mind, you cannot mass produce the mind.  And that's why intellectual capital is going to be more and more important for the economy.  That means creativity, movies, artwork, software.  That means the ability to product creative, innovative, imaginative new products will be increasingly important in the new economy.  And again, this is so profound; it's even changing the way the English language is spoken.  When chips go into toys, for example, toys become intelligent, it's creating a problem for the English language, a contradiction in terms called "smart Barbie dolls."  Another contradiction in terms is "Microsoft Works," that is also a—no; I have ultimate respect for Microsoft.

The point is, that this revolution is thorough going and profound and it means that business has to keep up with these changes.  It means that you have to have brand loyalty.  It means you have to be in a different competitive environment, where products change all the time with the speed of Moore’s Law.  And remember also that in 10 year’s time, Moore’s Law begins to slow down, and so we have to adjust again.  Silicon Valley could become a rust belt in 10 year’s time, unless science can create a post-silicon era.

Tom Stewart:  So this leads me to a question that I want to throw to you, Peter, and see what you have.  One of the things we’ve seen with Moore’s Law is that information processing becomes essentially free.  Is there something else that might become essentially free?  I mean, could energy become essentially free, for example?  Or is there something else that is essentially free now that might become extraordinarily expensive?  People talk about water being the new oil, for example, and think that water might get very expensive.  As you look across, Peter, at these inputs, some of them physical and some of them informational, do you see any dramatic changes in pricing on something that we all rely on?

Peter Diamandis: We’re going to start to see what I call an age of abundance coming online, where we spoke about the king of any nation having nowhere near the kind of capability we have today.  So if you think about the underpinnings of Moore’s Law, giving us ultimately distributed health, education, I think if you think about energy production, you can look at what’s going on to pick up on that.  We’re living in a time where the cost of solar energy’s dropping at 30% per year.

Tom Stewart:  The cost of solar is dropping 30%, still higher than the—

Peter Diamandis:  We’re still not at a point of grid parity, but you’ve got a reduction of solar, you’ve got an exponential increase in solar production.  If you stop and you realize that the earth, in 1 hour, more energy hits the earth than we consume as a species during the entire year, 6,000 times more energy flux hits the earth’s surface.  If we start to convert that, what’s interesting is that the doubling time on solar, at some point, 20 years out, even though people don’t believe it, we don’t think exponentially, we think linearly, we’re going to reach a point where the cost of solar is far less than the grid parity of coal, and then a couple years later, all of a sudden we end up with twice as much energy that we use on earth, and then 4 times, and 8 times.  So what does the world look like when we have abundant energy? 

Yeah, we talk about water wars, well, the fact of the matter is, we have plenty of water on this planet, it just happens to be 97.3% salt water.  If we can convert that to fresh water, we’ll start all to have, around this planet, that starts hitting health, and all of a sudden we are starting to live into an age of abundance where we’ve got all of us on this planet, energy, water, food, health, education.  And that really begins to change the world.

What happens when a billion new minds come online?  What do they want?  What are they going to produce?  What are they going to consume?  We’re living at a point of rapid change in which billion dollar companies are going to fold overnight and billion dollar companies are going to come out of no place, it’s dramatic.  [00:30:52.10]

Tom Stewart:  So, you somehow react to this.  What we’ve heard are two sort of utopian visions.  Right now it seems like we’ve got a valley of the shadow of death to walk through before we get to, our Sinai Desert to go through, before we get to whatever that Promised Land is, pick your metaphor.  What do you see as the big bumps that we might have on the road to this world of infinite choice of products, infinite food, infinite energy, I mean, this world of abundance?  A) Do you think this is realistic or is it, to use scientific languages, well, nonsense?  Or if you think we actually can get there, what are the big bumps?  Michael, both of you, but Isabel, start. [00:31:48.50]


[00:31:48.70] Isabel Aguilera:  Weil I think, that the massive use of technology somehow, because it’s what’s most **** will give us the knowledge of using that model to predict other unknown hidden knowledge.  Like, how did people react in, as a group?  How can we expand the knowledge of our brains?  Because it’s all related to networks and use of massive technologies.  So we will be able to reach and to expand the knowledge of these unknown things, thanks to the expertise that we will reach with the massive use of other technologies in other aspects of our lives.  And that will be, even first step, to further knowledge, because as soon as we develop the knowledge of our brain, that so far is used about 5 or 10 percent, just imagine how we can bump all this access to better technology, better energy, cheaper access to food or to education, to health. [00:33:07.30]


[00:33:07.50] Tom Stewart:  So what I hear you saying, people like to say that one of your former employers, you know, Google, I don’t need to think, it’s all in Google, Google is God, Google knows everything, and so on and so forth.  But what you’re also saying is we have the opportunity for what you might call an inner-Google.  If we could actually harness the network effects of the neurons that we already have.  And you think technology will actually get us there rather than as some people say, “dumb us down,” because I no longer have to memorize anything, because I can look it up. [00:33:35.50]


[00:33:35.70] Isabel Aguilera:  What I think is that there are similarities in the use of massive goods and the way other connections react and we will apply that knowledge to prevent diseases, we will use that knowledge to expand and expedite education, what is really important. [00:33:57.70]


[00:33:57.80] Tom Stewart:  Michael, what do you think? [00:33:57.90]


[00:33:59.30] Michael Schrage:  Well, I now think I’ve been compelled and herded into being a contrarian on this. 


[00:34:04.04] Peter Diamantis:  Don’t do it. 


[00:34:06.03] Michael Schrage:  I’m going to do it.  I’m going to do it.  I’m going to be a contrarian without being a pessimist, because I’m very optimistic about what’s going on, in no small part to network effects and the enabling influences of technology and the innovations of technology.  That said, you know, I think one of the best ways to take the future seriously is to take the past seriously.  And my knowledge of the history of technology is such that I recall the phrase in the 1950’s about energy being too cheap to meter.  That was nuclear energy; the people in the Japan don’t think that’s very funny right now.  So, I think that when one looks at the past, there’s certain important things that can inform how we invest as a business in the future.


[00:34:47.40] Never confuse a clear view with a short distance.  The issue here is not going to be, are we going to hit an age of abundance or are there going to be the ability to harness network effects or intraocular embedded smart retinal implants.  I think the issue is, what kind of market mechanisms, what kind of regulations influence, encourage, and distort the way these things become opportunities?  And I think one of the genius things about Google is that they’ve created something that appears to be free, but what is in fact, the biggest innovation is not their algorithms, but the ability to creatively cross-subsidize their business.  The changing infrastructure of the cloud transforms the way consumers, value chains, providers, can choose or not choose to cross-subsidize their business. 


[00:35:53.02] If I were a lawyer, I would say this creates interesting regulatory issues.  But the point here is, you know, we’ve talked about Moore’s Law, I want to talk about a byproduct of Moore’s Law that everybody in this room has experienced.  The line between an infrastructure and an app has been blurred.  Mobile blurs the distinction between a feature and an app.  What’s the difference between a product and a service when it’s digitized?  It becomes arbitrary.  I like to joke about “provices” and “serducts,” service-flavored produces and product-flavored services.


[00:36:31.90] The big point that I’m seeking to make here, it’s not that the technology vision here presented is incorrect or inaccurate, but it is going to be the innovative, exploitation of market mechanisms and markets that will allow them to come into being.  And that’s going to be as much a function of the design of business models as technical innovation. [00:36:52.40]


[00:36:52.50] Tom Stewart:  And policy.  I think at least, you know, policy, business models, and innovation. [00:36:54.70]


[00:36:54.80] Michael Schrage:  Absolutely, absolutely. [00:36:55.00]


[00:36:55.10] Tom Stewart:  This reminds me, if you want to get into some of the more obscure, but really increasingly relevant areas of strategy literature, you see some stuff about what are called two-sided markets.  And the classic example of a two-sided market is a bank that takes in money from depositors and loans money out to borrowers.  Another one would be a magazine that has subscribers and advertisers.  And the ability to arbitrage across those, or make choices across those, do you have a high subscription price?  A low subscription price?  On which of your revenue streams do you put your most important cash registers and how do you make that choice, is a really interesting strategy discipline that not too many people understand, either in academic life or in the real world.  And building up, and let alone in the world of policy, that tries to say, “These are regulations,” and this.


[00:37:48.00] Isabel, I saw you nodding a lot during this.  Were you nodding in violent agreement or should we— ”  [00:37:54.70]


[00:37:53.07] ****:  She has a crick in her neck.  [00:37:54.06]


[00:37:55.0] Isabel Aguilera:  No, no, no.  I think that he’s absolutely right.  The **** innovation about Google is not only having astonishing product, the big innovation is how to do business out of it.  They call monetized, but I think the real clue, the real innovation was a different business model.  And it’s based on a terrific product, great.  But, you know, the real good thing is make us think about making money in a different way when other things are given, you know?  It’s how to add value on top of what it in Google that is everything. [00:38:31.60]


[00:38:31.70] Tom Stewart:  Alta Vista seemed like a pretty good search algorithm at one point, too.  Yes? [00:38:35.40]


[00:38:35.50] Michio Kaku:  Yeah, you mentioned speed bumps on the way to a digitopia.  Let me mention two possible speed bumps, one is privacy concerns.  Before 1989, the possibility of Big Brother was real.  The internet was a military weapon; it was used to fight a nuclear war with the Soviet Union.  So before 1989, Big Brother was a real possibility.  But after ’89, the National Science Foundation gave away the internet for free.  Now the problem is not Big Brother, the problem is Little Brother.  Pesky neighbors, cyber scammers, criminals.  That’s a real problem, okay?  So I think privacy concerns are going to be more important because for every innovation, you have people who want to, you know, bleed that innovation dry for criminal gains.  The second problem, I think is not a problem at all.  [00:39:31.10]


[00:39:31.20] Peter Diamandis:  Criminals are innovators too, you know. [00:39:33.20]


[00:39:33.40] Michio Kaku:  Yeah, that’s the problem.  [00:39:33.70]


[00:39:33.80] Tom Stewart:  Yeah, but what you said—what you’re talking about is, in the utopian world, it’s a frictionless market, except you have a huge cyber security unit, which adds friction. [00:39:44.80]


[00:39:44.90] Michio Kaku:  And the second problem, as I see it is, well, people talk about a digital divide, we’ll have the digital-raty and we’ll have the digital-poor.  That never materialized because even today, teenagers, young kids are on the internet.  If you’re not on the internet and you’re a kid, you don’t exist.  You don’t have a Facebook, you don’t have a Twitter file, you don’t exist as a child.  The digital divide is not the problem, because access is getting cheaper and cheaper.  The problem is jobs.  Because the economy is making a transition from commodity-based capital to intellectual capital, so there’s pressure on the educational systems.  And not every nation is educating their people for this new economy, so the jobs are a part.  [00:40:25.10]


[00:40:25.30] Michael Schrage:  Do you think too many people go to college? [00:40:27.90]


[00:40:28.00] Michio Kaku:  No, I think too few people go to college. [00:40:30.80]


[00:40:30.90] Michael Schrage:  I disagree. [00:40:31.00]


[00:40:34.50] Tom Stewart:  But I think you’ve actually identified a business question.  Which is, how are you going to employ the person who used to get a pretty good living at a General Motor’s plant and who cannot get a pretty good living now?  And I think that’s a question for—Peter seems to have an idea about where we might find jobs for these people. [00:40:52.00]


[00:40:52.20] Peter Diamandis:  So, I’ll give you an example.  One of the things we’re working on right now, guys, the next X Prize we announced in a partnership with Qualcomm, what we’re developing, is called a tricorder X Prize.  And it’s going to be a device that’s got lab on a chip capability, you can cough on it, you can do a blood finger prick, you can speak to it, and so forth, and it can diagnose you.  So you’re going to start to have a disruption in the entire medical industry.  What happens when this device is better—better—than any group of board certified doctors?  And then all of a sudden this device is well in a village in Africa to a minimally-trained individual makes them the village doctor?


[00:41:27.30] You can take that one step further and you’re going to start to have AI-enabled and technology-enabled devices that basically take people up the employment curve and make them professionals.  Of course, the pressure now becomes, what will happen to the medical profession?  Or the legal profession?  Now, I happen to think getting rid of the legal profession is a good idea, but that’s my own personal opinion.


[00:41:48.30] So, the question really is, you know, as we start to bring technology up, it’s going to move a lot of people up and potentially out over the top, so it’s a creation of new jobs, but it’s complete transformations of industries. [00:42:02.10]


[00:42:02.20] Michael Schrage:  I agree completely with what Peter is saying in terms of technology-enabled, technology-driven, technology-facilitated, economic growth and human capital employment.  What I do not agree with, and I respectfully disagree with my university professor colleague, but certainly not my peer here, is that going to a university and getting a degree in sociology, even if you write really good essays, is not going to help your employability.  [00:42:32.20]


[00:42:32.30] Isabel Aguilera:  I agree.  [00:42:32.50]


[00:42:32.90] Michio Kaku:  I agree.  [00:42:33.00]


[00:42:33.70] Tom Stewart:  Let’s let Isabel, Isabel’s been dying to enter this debate, and let me make sure that she does. [00:42:38.50]


[00:42:38.80] Isabel Aguilera:  I think that our real problem is consistency.  We have reached a level of technology, and we have achieved a level of access to information, but we still have the same regulation.  We have still the same admiration for large companies.  You know, you have mentioned that only 52% of the largest companies in the world are American.  You know, when the real revolution comes from the **** and we really will surpass this crises with the power of many.  It’s not only the crowd wisdom that we can debate afterwards, if you want, but it’s also the power of, it’s more entrepreneurs, the small companies, and we are still dealing with the same ways of education, first problem, same ways and in that type of, or in that way I agree with you, that university, perhaps, is not, is this enough?  The level that we have today?  [00:43:39.50]


[00:43:39.70] Michio Kaku:  Maybe institute of the **** not other things, yes.  [00:43:42.90]


[00:43:43.00] Isabel Aguilera:  And then also, the same way of getting the money, or getting the resources to ****, and that lack of consistency is what are making us suffer and that is what we really need to change.  That is the next generation.  We have to, as Google did, we have to find a new way of improving and taking advantage of all the capabilities that we have now for free. [00:44:11.050]


[00:44:11.70] Tom Stewart:  So, let me ask you a question, which you sort of raised.  10 years ago, I think, our, in many cases, mutual friend, Paul Saffo, told me, it was more than that, it was 15, said that, called the internet a “full employment act for entrepreneurs.”  I think you could now say, you could use that phrase again about the cloud and mobility, you could say, these are also new opportunities for a full employment act for entrepreneurs.


[00:44:40.70] But the question is, as we see the rollout of technologies and also as we see the continued story of globalization, and like the internet, you know, globalization is a 25-year-old story and you ain’t seen nothing yet, as we see these rollout, are we seeing more, in the business of the future, are we going to see large companies?  Will large companies still play as big a roll in the business eco system that they do now?  Or will we see many more small companies networked together?  Is it a big company future or a small company future? [00:45:12.80]


[00:45:13.30] Michael Schrage:  The answer to that question, of course, is yes, but I think that you framed it in exactly the wrong way.  Because you’re going to have very large companies that don’t employ a fraction of the people that large companies employed in the year 2000. [00:45:27.70]


[00:45:27.00] Tom Stewart:  So sales huge, employment small? [00:45:29.50]


[00:45:30.40] Michael Schrage:  The revenue to employee ratio is going to be transformed because of the brilliant innovations from people like SAP and the entrepreneurs represented here.  And the one other area where I’m going to disagree with Professor Kaku is, you know, you can’t mass produce minds.  Forgive me, but my serious academic background was AI.  You know?  And if there’s anything that we’re focusing on, it’s the ability to algorithm-ize, to use technology as a vehicle to either leverage individual minds or to usefully and cost-effectively automate or augment how people make decisions and how people create.  So the economics are being transformed for this and I think it’s going to be a very interesting challenge how people are going to find jobs.  I don’t know what the answer to that is, but I know what the answer is not.  The answer is not four years in college.  [00:46:23.90]


[00:46:24.10] Tom Stewart:  I’m going ask… I’m going to pick a little quarrel with the word jobs, because I think that may be the model that doesn’t work. [00:46:32.10]


[00:46:30.50] Michael Schrage: Oh, I thought you meant Steve Jobs, sorry. [00:46:31.40]


[00:46:33.30] Tom Stewart:  No, one never picks a quarrel with him.  But it may just be that the idea that a, for those of us who are Americans, the idea that the choice between a W2 and a W9 may just become a different choice, in terms of how you add value.  But, yes? [00:46:48.40]


[00:46:49.00] Michio Kaku:  I must disagree with my esteemed colleague here.  First of all, let me say that science is the engine of prosperity.  From steam power to electricity, to the laser, to the transistor, to the computer— [00:47:00.00]


[00:47:02.40] Michael Schrage: That’s science, that’s not true, we’re talking about technology. [00:47:07.70]


[00:47:07.90] Michio Kaku:  Hey, can I have my—you had your say, let me have my say.  However, the information revolution has a weakness, and the weakness is precisely the educational system.  The United States has the worst educational system known to science.  Our graduates compete regularly at the level of third world countries.  So how come the scientific establishment of the United States doesn’t collapse?  If we’re producing a generation of dummies, if the stupid index of America keeps rising every year, just watch network television and reality shows, right?  How come the scientific establishment of the United States doesn’t collapse?  Let me tell you something.  Some of you may not know this.  America has a secret weapon.  That secret weapon is the H1B.  Without the H1B, the scientific establishment of this country would collapse.  Forget about Google!  Forget about Silicon Valley!  There would be no Silicon Valley without the H1B.  And you know what the H1B is?  It’s the genius visa.  Okay?  You realize that in the United States, 50% of all PhD candidates are foreign born.  At my system, one of the biggest in the United States, 100% of the PhD candidates are foreign born.  The United States is a magnet sucking up all the brains of the world, but now the brains are going back.  They’re going back to China; they’re going back to India.  And people are saying, “Oh, my God, there’s a Silicon Valley in India now!”  “Oh, my God, there’s a Silicon Valley in China!”  Duh!  Where did it come from?  It came from the United States.  So don’t tell me that science isn’t the engine of prosperity.  You remove the H1B visa and you collapse the economy. 


[00:48:55.00] In Wall Street Journal, editorialized against a congressman who wanted to ban the H1B, saying they’ll take jobs away from the American people.  The Wall Street Journal said, “Look, there are no Americans who can take these jobs.  These are at the highest level of high technology.  They don’t take away jobs for Americans, they create entire industries.”  And so that’s why we have an Achilles heel, and that’s the educational system.  And again, sociology majors are not necessarily going to be the ones determining the future Silicon Valley, but physicists, the engineers; we need more of them, not less. [00:49:35.40]  


[00:49:39.90] Michael Schrage:  The irony is, I agree with the immigration issues to what you’re saying, and I’m at a school, of course, and Peter’s a graduate of a school where, indeed, immigration is— [00:49:50.50]


[00:49:50.70] Michio Kaku:  Your school wouldn’t exist without the H1B.  [00:49:51.10]


[00:49:51.30] Michael Schrage:  Of course, but I’m not— [00:49:52.90]


[00:49:53.40] Tom Stewart:  We’ve got to get back to the future of business.  [00:49:55.80]


[00:49:55.90] Michael Schrage:  No, no, no, I’m not arguing against an H1B, I completely agree with this issue and the point on the future of business that he’s making, which is very, very important, is the nature of human capital.  What is misunderstood here is again, how poorly run schools are—MIT is a notable exception in this regard—his school is not.  Because what happens is, they run in these introductory science and engineering classes, at Illinois and Wisconsin and Michigan, they run freshman and sophomore years as flunk-out operations.  They do it to, they run it as a boot camp, and then people are surprised that people don’t take science, that they don’t take the stem courses.


[00:50:35.80] The point that I’m trying to make is, which I think is an important one in this regard, is that the way educational systems are set up right now, is that we have distorted incentives that undermine the ability for America to have a homegrown science and technology center.  Immigration is a wonderful— [00:50:59.40]


[00:50:59.50] Tom Stewart:  I want to move this, just a second; I want to move this from an American conversation to a global conversation.  It is a global economy, and so on, I mean, obviously to those of us who are Americans, this matters hugely, politically, but as we talk about the future of business, one pretty clear thing is, and it’s going to be increasingly borderless, and one of the questions we sort of want to ask is, if you’re wearing your CEO hat, some of these implications might be, where are you going to put your headquarters, are you going to put your headquarters in Bangalore, or in Buenos Aires, and in Silicon Valley?  You’ve got a lot of issues around that.  I’d like to move it to that.  Peter, you had your hand up first and I know you want to comment on this, and then I want to start asking about the, some questions about where the big industries will be in the future.  But, yeah. [00:51:43.80]


[00:51:45.20] Peter Diamandis:  So, to bring this back to the focus on SAP and mobility and cloud, the fact of the matter is that the rate of changing is increasing.  The rate of change is increasing, period.  And we’re working into a day and age where the ability for, again, an individual or small team to innovate and build a company is greater than ever before.  The cloud and mobile computing, 3D printing, AI-enabled capabilities, are going to allow for the birth of extraordinary industries.  And the fact of the matter is, there is no industry that’s safe.  Medicine, I just got finished speaking to a group of 500 medical CEO’s, over the next 10 years, medicine is going to be completely redefined.  And the fact of the matter is that when regulations are holding an industry back, like it is in medicine, it simply means it’s going to be redefined in a different country.  There are no boundaries any more, companies are multinational, individuals are multinational, ideas go across the globe at the speed of light and we’re going to see a rate of change that is not stopped by regulation, especially when governments can no longer regulate at the speed of change that’s going on right now.  So I think you’re doing a pretty good job from where I sit. [00:52:59.20]


[00:53:00.10] Tom Stewart:  And it may actually be interesting to see, for example, one of the most regulated industries in the world is education. And the education industry itself is not immune from these disruptive forces.  But Isabel, you wanted to comment.  And if I may, what I’d like to do, is I’d like to exploit your gender to say, let’s talk a little bit about the role of women in the corporation of the future.  And I hate to just put you on the representative spot, but you’re on it.  But as we think about some of these issues, let’s talk about half of humanity, and is there a particular, are there things that we need to bear in mind as we look at the business in 10, 15 years?  Are we going to see a step change finally in the participation of women in corporate life or in economic life generally?  [00:53:56.40]


[00:53:56.60] Isabel Aguilera:  Well, let’s say that thanks to SAP and other technologies, technology is the best friend of a woman, so probably companies will be more transparent, will be more **** so let’s back to technology, which is more interesting than this topic.  And I will continue his thoughts, you know, and collect yours, because big companies will have less employees, perhaps the reduction will come in the headquarters, because thanks to technology, we can have centralized processes, but not centralized headquarters, it can be decentralized.  And that’s part of the changes that we will have to face in the future, how to learn to deal without headquarters, because people and talent will be distributed all over the world. [00:54:47.20]


[00:54:47.90] Tom Stewart:  So the old centralization/decentralization debate is over, it’s the wrong debate now, we can centralize and decentralize just as we can do business models in whole new ways. [00:54:57.90]


[00:54:58.00] Isabel Aguilera:  That depends; you know, according to efficiency, we will decide what to centralize and according to the reach that we want to get, we will decentralize some other activities that make sense.  But, you know, it has nothing to do with the physical big building, large people, that is somehow—  [00:55:15.40]


[00:55:15.50] Tom Stewart:  So if I put on my consultant hat, it’s a 2 by 2 with efficiency in reach, right?  I mean, I have to do it 2 by 2 **** and so we have efficiency, and we have reach, and we have centralization and decentralization, we have different solutions in organization design, depending on how we make those trade-offs. [00:55:31.10]


[00:55:31.20] Isabel Aguilera:  And new capabilities, because we will need to coordinate and to communicate in a different way. [00:55:37.80]


[00:55:39.00] Michio Kaku:  I’d like to raise the larger issue of globalization?  Because that’s what we’re tiptoeing around.  Let me give you two examples of globalization, Japan and India.  In Japan, we have, in some sense, a negative example, where we have very large corporations that are incapable of making very small, rapid changes to the economy.  And one reason why the Japanese economy is stagnating is because of the **** distribution of goods, the fact that competition is not allowed, rice, for example, is artificially propped up.  It means that you cannot have a free marketplace.  And that’s one reason for the stagnation of Japan for the last 15 years.


[00:56:15.60] Now look at India.  There was a big debate years ago when India about whether or not to set up an optical fiber network, connecting India with the rest of the world, fiber optic state of the art.  People said, “It’s too much money, it’s useless, India doesn’t need such a thing.”  And now look, that is the lifeline, the life blood, the life blood of the new generation of Silicon Valleys in India is precisely because of the investment they made in the highest technology getting fiber optic cables and getting India wired up to the rest of the world.  And that’s a challenge for all businesses, all nations.  The playing field is going to be global.  The playing field is going to be international.  And unless you can compete on the international stage, you’re going to be out faster than you realize.  [00:57:03.70]


[00:57:03.80] Tom Stewart:  Go ahead, I’m sorry, finish.  I’m sorry, I thought you had finished, so I didn’t mean to interrupt, go ahead.  [00:57:08.80]


[00:57:08.80] Michio Kaku:  So, what I’m saying is, in a situation where we have perfect capitalism, perfect knowledge, the knowledge about all products, goods, services, marketing, I mean, people’s instincts to buy and so on and so forth.  In a situation where they have perfect capitalism, perfect knowledge, it means there’s going to be enormous pressure on the global marketplace.  And nations which cannot compete are going to see their economies stagnate, like what happened in Japan.



[00:57:36.50] Tom Stewart:  So let me ask you this question, we don’t have too much time left.  And what I’d like to do is I’d like to give each of you a choice between two questions.  Answer one, or if you can answer the two at the same time, and what **** one question, if the sort of venture fairy came down and gave you a large sum of money, whatever a large sum of money is, a billion dollars, a hundred million dollars, if you had a big amount of money to invest, where would you put it? 


[00:58:03.05] And the second question is more about organizations.  If you go back 100 years ago, people working in groups did not know how to create or run multidivisional corporations, that’s something we now know.  If you go back 25 years ago, people did not know that they could create an encyclopedia or create an operating system without a corporation, so we have new forms of collaboration.  What new form of collaboration might exist in 20, 25 years that we can barely imagine now?  So one question is, where would you bet?  And the other question is, do you think that mankind, humankind, will be able to collaborate in some striking new way in the future?  And you can pick either or both or whatever, but who wants to grab it?  [00:58:47.20]


[00:58:47.40] Michael Schrage:  I’ll start, be very quick on this.  The first one, on the 100 million, is easy, I bet on people.  You know, there are certain people, and I think the difference between now and 20 years ago, is between LinkedIn, Facebook, and Google, the new genres of social media, my span of knowledge, my span of influence, my reach, has been dramatically changed.  So the whole notion of what it means to bet on people has been globalized, with or without H1B visas.


[00:59:19.50] The collaboration, I’ve written a book on collaboration, and I want to come on that question from an orthogonal attack.  What I think is a profound revolution, and I hate that phrase, but it is a profound revolution, so when I went to school, the engineering paradigm was systems integration.  Now what we see is, and what the cloud is a manifestation of is, interoperable systems.  Interoperability is going to be the vehicle and medium for linking medical devices, to IT, to new materials.  Having API’s, new genres of interoperability are going to facilitate new genres of collaboration and innovation. [01:00:03.10]


[01:00:06.30] Michio Kaku:  Yeah, I would bet on three industries that are going to be big.  One is biotech, in the coming years; all of us will have a CD ROM with every single gene in our body listed.  It’ll cost about $1,000 in a few years; it’ll cost $100 perhaps in 10 year’s time.  That’s going to open up bio-informatics.  It’s going to revolutionize medicine.  Medicine is going to be reduced to computer science.  Computer science will dominate almost all medicine in the future.  We’ll have a human body shop, able to grow new organs of the body, extend the human lifespan, control cancer; we’re talking about a revolution in biotech.


[01:00:43.30] Second is entertainment.  Entertainment is going to be huge in the future, because everyone likes to laugh, everyone likes to communicate, and entertainment is intellectual capital.  Robots cannot make intellectual capital; entertainment is something that is going to be huge.  Social networks, all of that is going to be wrapped up in this gigantic entertainment industry.


[01:01:03.40] And third, further down the line, maybe in 20, 30 years, robotics is going to be big.  I think it’s going to be bigger than the automobile industry, but not today.  Our most advanced robots today have the intelligence of a cockroach.  A stupid cockroach. [01:01:22.80]


[01:01:23.40] Tom Stewart:  Isabel? [01:01:23.60]


[01:01:24.10] Isabel Aguilera:  If I were rich, I would spread the money, because I don’t think that putting to much money on any small company is good for them.  I think that, you know, the intellectual goes faster when you have to speed up the resources and to improve the resources that you are given.  But I would choose something to do with cloud funding, or something to do with cloud learning, because we need to speed up the way we learn.  We invest 20% of our life in just learning, not, well, we have to continue learning all our life, but just learning, we spend, we invest 20% of our life, and that’s perhaps too much for the future. 


[01:02:03.10] Something to do with recycling, because we are going to be much more people consuming much more goods, so probably something about recycling.  Something about water, because it’s the new gold of the future.  And something to prevent diseases, or something to, early diagnosis of diseases.


[01:02:29.30] And what I imagine for the next 20 years is some way to improve our delivery cycle.  You know, we spent 20% of our life just learning, when we are more productive, more imaginative.  And then the last 20% spent on the entertainment business, but on the other side.  So I would like to see how can we improve 40% of our lives in a more efficient way. [01:02:55.00]


[01:02:57.10] Tom Stewart:  Peter, give you the last word, except for mine.  [01:02:57.50]


[01:02:57.70] Peter Diamandis:  Three years ago, Ray Kurzweil and I started a new university called Singularity University in Silicon Valley, to look at exponentially growing technologies and how they affect businesses and individuals.  And we challenge our graduate students to build a company that can affect a billion people within 10 years, that’s the metric for success.  And we looked at these next decades, and this next decade, as you said, biotech, cloud computing, and then the internet of everything, embedded network systems are going to give birth to the next $100 billion industries.  The decade after that, distributed manufacturing, 3D printing, AI robotics, are going to give birth to a multi, $100 billion industries.  And the decade after that, we start to really play into the nanomaterials, nanotechnology arena.  Each of these decades, again, disruptive, and amazing potential for transforming humanity.  [01:03:49.10]


[01:03:49.30] Tom Stewart:  And what are the difference, six of the top ten companies in the Fortune global 500 are energy companies.  And I don’t imagine that that will be true at the end of any one of those decades as we go forward. 


[01:04:03.10] We’re just about out of time, I want to try to summarize a couple of themes that I heard and put them in a little bit of different context.  One, as Gabriel Bryne said at the beginning when he was talking about the imaginations in this room and the imaginations on the web, and the imaginations around the world, is the power of intellectual capital, the power of creativity, the power of the people in whom you might invest in a world in which we’re surrounded and by systems and by a seemingly ever-growing computing power, the power of the individual and collective intelligence as an economic engine seems to be paradoxically rising enormously.


[01:04:39.80] Second, the theme of urbanization.  In the next 20 years, in the coming decades, there will be more city building than in the whole history of humankind beforehand.  That represents, we’ve calculated, about a $350 trillion business opportunity.  It shows up in many of the industries described here, but think of that opportunity as the biggest B2B play in the history of capitalism.


[01:05:02.20] The biggest B2C play in the history of capitalism, we’ve also talked about indirectly, which is the emergence of a global middle class, and a truly global middle class.  The Gen Y, the millennial generation, in sheer numbers, is the biggest generation ever to exist, and by 2030, 85% of the global middle class will live in Brazil, Russia, India, and China.  That’s a lot of households to furnish, a lot of tourists to fleece, a lot of makeup and household goods to sell.  It’s an extraordinary B2C opportunity.


[01:05:41.20] And a third one that we sort of mention, and even though Isabel said it was boring, I want to bring it up, is what I like to think of as the third billion.  If women ever fully enter into economic life as talent, as participants in corporation or as consumers, it will be the equivalent of adding another India or China to the global economy, a non-trivial addition.  And all of these things play into those, I think of those things as three huge opportunities, and we’ve heard an awful lot about how industry might reconfigure itself in order to take advantage of those opportunities. 


[01:06:20.00] Based on all you’ve heard this morning, it’s apparent that technology is going to change our world and our organizations in the years to come and we’ve got to be ready.  These next few days are an opportunity for you to explore how you can ready your business for the future now. 


[01:06:38.90] I’d like to invite you, on SAP’s behalf, to attend ASOG’s keynote session this afternoon with great speaker Michael Eisner, which will be followed by a special ASOG 20th anniversary celebration.


[01:06:49.20] Before I let you go, I want to ask you to join me in thanking this extraordinary panel for a conversation that was just brilliant.  Thank you very much.  And now, for all of you there, and those of you attending virtually, we wish you a wonderful sapphire now.


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