Digital Cities - what’s next?

And this is probably the time when I would go in normally and tell about how you've been at Cisco on the most innovative part of Cisco for the last seven years and so on and so forth. But I want to go a different direction with this. Okay. Because last Wednesday, my midlife crisis started. Over at the footlocker. I saw these shiny white Air Jordans. Yeah, exactly. And I just couldn't resist. It took me back to my childhood. It's kind of like the poor man's version of the red Porsche, I think. You know what I'm talking about. Midlife crisis. You're about the same age as me. Keep on guessing. I was born in the year 29 BG before Google. Anyway. Thanks, Brian. Do you know when Google was founded? September 1998. So you can do the math as to how old I am. Born in the year 29 BG. And I am one of those persons like many other people in this room with one firm leg in an old world and another leg in this new era of digitization. And that provides me with a perspective. If I look back and I look at where we currently stand. I would actually want to argue that there has never been a better time, a more interesting time and a more innovative time than now. The title of my presentation carries that question. What's next? Actually, I think the question is what's now? Because there's so much happening right now that we could probably expand beyond one week of Internet week and be having really fruitful interactions. This is the face of innovation and disruption today. We all know these logos. They have come. They have become common household names, haven't they? But many of those names weren't around just four or five, six years ago. They have emerged into our lives very, very quickly. And a few things stand out when you look at those. First of all, they have all become leaders in their own industry, in their own space. They have done that with a remarkable short notice. First, well, probably the first instrument through which they have done that is things digital. They have become leaders in their space by digital means without exception. And beyond that, they're not just sitting nicely by in their silo. They're moving out. If you were to be a bank, the classic way of thinking of your competition is to look at another bank and look at their particular interest rates, the quality of their coffee and what have you not. But if I were a bank today, I'd be worried about Google, Facebook and Apple, because these guys have the interface with the customer. So competition is changing. It's becoming more immediate. And this is not just true for enterprise. This is true for any organization. Digitization is touching all of us as individuals, organizations, public, private, what have you not. It has become a to be or not to be type of question in our era. And then it would have to translate into to disrupt or to be disrupted. Who are you going to Uber before you get Kodak? Those are the actual questions that are now in our minds or that should be on our minds. It should be because in 10 years, according to some 40 percent of enterprise that exists today will no longer exist. That's a remarkable number. That is huge. That's for small companies, for large enterprise companies that think of themselves as wildly innovative. It will be true for them as much as it will be for anyone else. In the meantime, we find that there is a lot of organizations that are paying lip service to digitization. They have some type of strategy in place. They build apps or maybe something else. But only 30 percent of all those companies and organizations doing that will, in fact, be successful at what they do. Many of them will fail and they will be part of that very large percentage of organizations that no longer exist in 10 years from now. Why is that? Why is that? Because they have not taken innovation to the point where it should be. They have not been disruptive enough. They allowed themselves to be Kodak. And again, this is not just true for enterprise, but it's also true for communities, for cities. They want to be successful. It's a battle out there. So there is no denying. There is no escape. We're entering an era where every company, every city, every country is going digital and it's resulting in new economic models. I would argue that digitization and the very fundamental organizing principles of digitization are, in fact, powering the sharing economy. That sounds like a no brainer, but there's more to it. New business models, new delivery models, new partners, new competitors, new skill sets that are required in order to deliver on all of this. And the impact of this next era of digitization is expected to be five to ten times as large as the Internet to date. So if we think the past 25 years have been pretty cool, well, if all of digitization looks like the entire novel of the Lord of the Rings, Frodo has just left the Shire. That's where we stand. I could talk for a very long time as to what the building blocks are of digitization, but at least I would like to point out to the network paradigm and the rise of the Internet of things. A bit of history on the Internet. 25 years. First, it came into our lives as a gadget landing on top of a very old world, providing basic connectivity. Then it entered our economy, some apps, some e-commerce tools. Then we got immersive experiences. Then the Internet of everything digitization. Do you like the slide? Can I see fingers? Do you like this slide? That's actually quite a good number, but also quite a lot of people that actually perhaps do not like it. I don't like it. I think this is PowerPoint nonsense. Let me tell you why. The growth and the involvement of the Internet was never a linear thing. It was always disruptive, and it was always very difficult to predict as to what would be happening next. And the next several years are not going to be any different. It's just going to be faster. It's going to be as disruptive. And to understand what makes it so disruptive, I would want to take you back very briefly even further down into history. This slide or picture, rather, because slides didn't exist at that time, comes from the 1960s. It was created by the Rand Corporation. And the whole question that was on the table there at the time was, how do we build a military communications infrastructure in the United States that can withstand a first nuclear strike by the Soviet Union? The issue is everything was organized according to the industrial age paradigm, centralized production, centralized services, a centralized telco switchboard model, which means if that is your military communications infrastructure, you're totally vulnerable. So what they created is the distributed communications network, that network which you can actually use to reroute any type of information as you deem fit. No center, no periphery. If you take 50% out, it continues to run. Most obviously, this big grid became one of the parents of the Internet. That took a few decades more to evolve, but this was one of the parents of the Internet. The interesting thing is this has not just been one of the parents of the Internet. It became a role model. It became an organizational paradigm, which we can call the network paradigm. People, I consider myself to be a net optimist. And the very fact that you've come to this conference for this week, probably many of you are a net optimist as well. But I consider myself a net optimist not because I believe the Internet is a solution to everything, but because I look at the Internet as a role model, as an organizational paradigm that provides a lot of efficiencies, benefits, providing us with the ability to organize ourselves in ways that were previously simply impossible to even imagine. The other component that drives digitization is the emergence of the Internet of Things, the Internet of Everything, whatever you want to call it. And the growth is fundamentally large. We're expecting, and we have been expecting for a while, that by the year 2020, we're going to hit a point where 50 billion objects will have been connected to the network around the world. And that's not just your printers, that's not just your PC or phone, but outdoor light points, sewage systems, jet engines, anything. Anything is getting connected. If you break that down to the growth per hour, we're at this particular point experiencing a growth rate of roughly anywhere between 100,000 and 1 million new objects getting connected to the network every hour. That growth is just huge and it's exponential. Now, the direct value we get out of that connectivity, getting all of these things and people connected is huge. Lots of efficiencies, fantastic. But there is something else to all of these things getting connected. I'm going to quote Jeremy Rifkin. Who knows Jeremy Rifkin? Author of the Third Industrial Revolution and the Zero Marginal Cost Society. Wonderful books to read. I really recommend you if you haven't read them. The Internet of Things is the first platform in history that can potentially take large parts of the economy to near zero marginal cost. I talked to a few people here in this room that are in the retail business. They know. They know what it feels like. They know they've got to up their game and provide value. Otherwise, they're going to be Uber, Kodak, I mean. Before getting the opportunity to Uber someone else. One example. Higher education. I love that example. We've seen some pretty weird developments in higher education around the world in the past several years. The cost have been going up, especially in places like the United States and the UK. It's going up to astronomical levels where it has reached a point where students and their parents are going to say, this is no longer worth our money. We don't want to end up ourselves to the point that we cannot pay this off in the remainder of our lives or we're not sure whether we can do that. There is a phenomenon called MOOCs, massive open online courses. The more you offer that, the cheaper it becomes. This is becoming so popular at such an incredible rate that this may actually become a direct competitor to the traditional institutes of education. The whole point is that once you provide the same course to the 100,000 students, the cost of providing that particular course is close to zero. Therefore, it can be obtained at a level close to zero. Obviously, there's a little bit more to that. It's a little bit simplistic, but it's a great example as to what digitization does in a particular vertical or sector. That goes for many verticals. Energy, smart grids is a beautiful example of the network paradigm applied. No longer just a coal power plant centrally producing energy, losing 40% of the energy before it gets to your front door, but distributed. Having energy produced on top of your roofs, and if you're not using it, feeding it back to the network, rerouting it to the closest point nearby where the energy is actually in demand. That is the internet, but in the shape of energy. It's a network paradigm applied. But also think of healthcare. Healthcare, look, our society is here. We are aging. We have to think of different ways of providing healthcare services. But also think of a place like Bangalore. A city like Bangalore, India, actually becomes larger by 800 citizens per day. 800 new citizens every day in the city of Bangalore, which means you would have to build a new hospital every two years. That's not sustainable. It's not sustainable. You have to rethink how these services are being provided. What can we do with extended care, remote expertise, but also what type of location-based services can we provide? Now, this sounds exciting, but actually this is all pretty, pretty un-innovative. This is existing today. We can do this. What I find most exciting of bringing digitization to healthcare is the very fact that for the first time in human history, we actually stand to have a chance to get healthcare. At this point, we've been having sick care, ladies and gentlemen. We make it to the garage when it's too late. We actually get to a situation where we can monitor our own health in a much better way. We have these little fit-bigger things, and that's just a little start. But imagine a very near future where you have sensors, ways of actually understanding what your health does. You don't have to go to a medical doctor who is in a Monday morning mood and gives you a bad type of advice. Actually, you have all the devices and all of the technology and intelligence around you to actually get to have healthcare for yourself. Completely different example. Who knows blockchain? Can I see fingers? Just to be absolutely sure. Blockchain, it's the tool that powers bitcoin. It is a fundamentally distributed tool of making and validating payments. It doesn't involve all that many people. It's totally distributed. And very soon, you will see in the news the first European city that is going to introduce blockchain in order to manage its public finances. I find that revolutionary. I couldn't think of a more conservative world than the world of financial management at public sector institutes. To actually introduce blockchain in that world, I find revolutionary. We're going to see much of that happen this year. Very exciting. So is the future here today? Partially so. But that does not mean we're without challenges. There are many challenges. I don't have the time today to go into all of them. And probably on many of those challenges mentioned here, you have an opinion yourself. But let me just share very quickly a number of them. First of all, cybercrime. I think it's on all of our minds. But we talk about it a lot. But what do we do about it? Way too often we create something and then we have security come in as an afterthought. It shouldn't be. We should start out with security, building a network, building an architecture, building the solutions that are pretty secure. There are only two types of organizations. Organizations that have been hacked and organizations that do not know that they have been hacked. Prepare. It's no longer a business of a bunch of 17-year-olds zipping away on a diet coke. This is a very professional $1 trillion economy. Jobs, IT skills, not just the traditional IT sector, but the expanded IT sector, software development, data scientists. We're going to need a lot of them. The European Commission believes that by the year 2020, we're going to have 1.2 million open jobs. We have to address that. This is a challenge. But it's also an opportunity for those that can create their courses, their training, the academies, their old power. Data. Data is a topic of many conferences. We talk about it a lot. We call it the new oil. And we can talk about things that happen beyond data. We can talk about virtual reality. We can talk about drones. But there are a lot of things we have to solve in this particular level. We have a lot of questions around privacy, security, ownership, especially when you have public and private data coming together in a city. How do you deal with that? I believe that solving that puzzle is one of the most fundamental societal organizational challenges of our time and generation. Let's face it. We have not figured out the Montesquieu for data. We have not defined who's going to be the guards of our data, let alone have we figured out who's going to be the guardians that guard the guards. We have to figure that out. And if it comes, don't be surprised if it comes in a very disruptive and digital way. Finally, there is the opportunity and challenge of connecting everything. And it sounds like a very, very easy thing, but it's actually can be quite complex because we think in silos. And on purpose, I take a smart city architecture, as we call it. A smart city architecture because you see so many things that could go right, go wrong. So many things happen in silos. We have access technologies that are treated and leveraged and procured in silos, whether it's 4G, fixed access, city Wi-Fi, but also a lot of new access technologies, Wi-Fi P for road to vehicle and vehicle to vehicle communications or LoRa for long range sensor communications. All of these access technologies come into our lives and come into our streets. But the point is, they're not always talking together. And sometimes we're using the dead wrong technologies to power particular use cases. So we have to bring that together. We've got to drive that convergence. We've got to bust the silos. That drives a convergence of solutions. Solutions like if you would do this in the streets of AHS could be smart parking, smart light, air quality sensing, and to use that one architecture to actually power multiple solutions, even if they're actually not having a very good business case. But by converging this within one architecture, you can do so much more. And all of that drives a convergence of data, which has you have your future ready. This art of connecting everything is very important to get it right. It requires a breaking down of silos and that starts within the city itself. So for those of you that represent a municipality, a city or a region or another administrative body, this is a very important point. Digitization and disruption very often starts with killing the silos. Here's a good reason why. Very nice example, and I'm very proud of this one, is the Denmark Outdoor Light Lab, DAL, the DAL living lab. Who's heard of DAL? Can I see fingers? A lot of you haven't. This is happening in the small town of Albert's Lund to the west of Copenhagen. It is an actual live lab, three square kilometers, 10 kilometers of road, 37 smart outdoor light solutions, free parking solution, two way solutions, air quality, and a lot more. And it's all live. It never happened before. They have driven the convergence, brought together all the access technologies, making it work, and they have a license to fail. They provide others with a license to fail because it's a lab. 300 visiting delegations in the past 12 months alone. CNN, New York Times, they've all been down to cover this. It's a great Denmark invented best practice. It has a visitor center. If you're in the business of smart solutions that are street-based, you should have a talk with them because they do this for a living. They demonstrate this. They bring this out to the open for multiple delegations from around the world. So what's next? What's next is first of all an understanding of what's now. What's happening now? What does it mean for you? What does it mean for your organization? What does it mean for you as an individual? If you're still in university, what are you going to learn? How are you going to make sure that things digital are part of your curriculum? If you're in an organization, what can you do? To actually breach the silos. What can you do to actually arrive at a digitization strategy that will get your organization at the right side of the line in 10 years from now? How can you ensure that you're competitive or providing the right public services in several years from now? Take time to plan because vision without action is a daydream. A lot of PowerPoint. But action without vision is a nightmare. So get that plan together. But then don't wait too long because digital Darwinism is unkind to those that wait. And let's agree to this. There has never been a better moment. Act now. Thank you.