Blockchain: Libertarian, Authoritarian, Or Somewhere In Between?

Adam Winfield

The rise of cryptocurrencies and blockchains has people speculating whether the technologies will lead to a libertarian future, in which governments and corporations lose their grip on centralized power, an authoritarian future, in which they tighten that grip, or something in between.

Cryptocurrencies such as Bitcoin, and blockchain, the unfalsifiable, incorruptible digital ledger designed to facilitate cryptocurrency trading, were created with a libertarian utopia in mind. Early advocates believed they could be the forces that wrestled control away from governments and corporations because they would make individuals less dependent on centralized intermediaries such as banks.

What some of these libertarians perhaps didn’t anticipate, however, was the extent to which governments and corporations would eventually begin embracing the technologies – particularly blockchain. Increasingly, state powers and big corps are recognizing the potential of blockchain to restructure their operations, making them more efficient, transparent and secure, and could – advertently or not – be solidifying their rule in the process.

The libertarians who pioneered blockchain aren’t happy about this, as it goes against everything they believe the technology was created for (though some argue the intention was to sidestep state-backed currency systems, not replace them). As Ian Bogost writes in The Atlantic, “the irony would be tragic if it weren’t also so frightening. The invitation to transform distributed-ledger systems into the ultimate tool of corporate and authoritarian control might be too great a temptation for human nature to forgo.”

Such a dystopian accusation deserves an opportunity for rebuttal from the side of the corporation. James Zdralek, a Montreal-based software designer for the global tech company SAP, believes the idea that blockchain could lead to total control is flawed because anything made up of individual units – including corporations and governments – cannot have a unified conscience that chooses good or evil. “It’s like judging a group of mold – it either gives you cheese or anthrax,” says Zdralek. “Either result was not the conscious choice of the group of mold cells.

“As members of the group, we just do our best to influence, and hope we don’t end up as anthrax,” he continued. “Humans organize, and governments exist. The net benefit of having governments outweighs the costs. A good government will prevent corporations from spying on people, which they tend to only do to determine who wants what stuff and how to make them buy more anyway.

“The same charges being levelled at corporate interest in blockchain today were thrown at the internet in the 1980s, saying that ISPs recording our names and addresses would lead to 1984. Instead we have targeted advertising, Twitter and fake news. Not utopian, but not dystopian either, and certainly not planned or predicted in advance.

“Furthermore, totalitarian regimes are becoming harder to maintain with the ever-vigilant internet. The ‘dark spots’ – finance, North Korea, Tunisia – are getting smaller, and more people are believing that technologies like blockchain can be used to track and snuff out corporate and government corruption.”

Wendy McElroy, a self-described “individualist anarchist” who writes for Bitcoin News, isn’t quite so hopeful. “A digital currency under their control could be a stride toward a cashless society in which all white market transactions are tracked by avaricious banks, states and corporations,” she warns. “It could usher in unprecedented financial control. Statists have awoken to the power of the blockchain, which would make their usurpation of money and power more efficient.”

Andreas Antonopoulos, a well-regarded figure in the blockchain community, offered a decidedly less bleak and more harmonious vision when speaking to The Telegraph for its thorough examination of blockchain’s anarchistic potential in 2014. “Most of the hierarchical institutions we have built around finance are there to regulate the fact that if you [put a lot of money] under the control of a single person … they tend to steal that money. This technology makes it largely unnecessary. There’s nothing particularly libertarian about that. It’s simply a recognition that you can achieve in software what regulation has failed to achieve.

“This is not some kind of libertarian manifesto, or anarchist manifesto, saying that we don’t need mechanisms for achieving social cohesion,” Antonopoulos continued. “It’s simply recognising that we can create better mechanisms as we solve problems of scale. That’s all. It’s not some kind of crazy ‘we don’t need governments’ manifesto. It’s simply that we can make better governments when we don’t concentrate power as much in the hands of a few people.”

Antonopoulos’ lofty hope seems to be that blockchain and digital currencies can bring international banking to the six billion-plus globally with no access to it, dramatically improving their standards of living. Such a feat, surely, would require a high level of corporate and governmental influence to pull off. Whether it would lead to a global authoritarian regime in the process is anyone’s guess at this point.

For those libertarian dreamers, better living standards around the world would be of small consolation if it meant living under what they consider inescapable rule. As Zdralek implied, however, some form of self-correcting middle ground is the more likely outcome. Like the internet, blockchain will inevitably be seen as democratizing by some, oppressive by others. Some will feel freer; others will feel trapped and spooked. Perhaps the only thing we can be sure of, collectively, is that blockchain will change the world.

For more on how blockchain is transforming finance, see Blockchain? Bitcoin? What Money’s Digital Makeover Means For You.

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About Adam Winfield

Adam Winfield writes about technology, how it's affecting industries, how it's affecting businesses, and how it's affecting people.

A Building-Block Approach To Blockchain

Gil Perez

Beneath the bulletin board covered with gold stars, stacked carelessly between the tiny plastic craft table and a bookshelf lined with Berenstain Bears classics, lay my elementary classroom’s building blocks. Every classroom has them. Yours were probably in a similar area.

Many educators agree that building blocks help children develop critical problem-solving skills. A little girl may aspire to build a tower, but first she must figure out how to achieve that. Will it be a single column of blocks? Will it be shaped like a pyramid? Will one side of the tower be taller than the other?

In a way, we never stop using building blocks. As adults, our blocks don’t have colorful letters or numbers on all six sides. In fact, they’re not even blocks at all. They’re steps we take to reach a goal, whether saving for retirement or adopting an emerging technology such as blockchain to benefit our business.

What is blockchain? And how can your company use it?

You’ve probably heard about blockchain by now. Everybody’s raving about it. Gartner listed it at #6 on its Top 10 Strategic Technology Trends for 2017 list. PCMag recently called it “the invisible technology that’s changing the world.”

So, you know how important blockchain is, but what exactly is it?

Blockchain is a distributed digital ledger that enables and records the secure transfer of data and documents through a public or private peer-to-peer network.

Companies today use blockchain to:

  • Serve as the foundation for cryptocurrency such as Bitcoin
  • Accelerate transactions by eliminating intermediaries like banks and lawyers
  • Increase transparency and provide records for product, asset, and process authenticity by offering transaction participants a full view of transferred data
  • Form business networks across multiple industries or markets and create leaner, more efficient, and more profitable processes

Three is the magic number

While the benefits of blockchain are promising, it’s important to remember that we’re talking about a relatively new technology. You shouldn’t try to revolutionize your entire company overnight. Instead, experiment and determine the best usage of blockchain for your company by taking the following confidence-building steps:

  1. Optimize: Enhance existing processes. Use blockchain to improve the efficiency of your existing processes. By integrating the technology into your digital core, you can determine how blockchain can help improve your company’s current operations. For example, a warehouse distribution center could use blockchain to more easily keep track of purchase orders and enhance product visibility and authenticity.
  1. Reimagine: Disrupt and create new business processes. Once you’ve started making incremental improvements to your existing processes, it’s time to get disruptive and begin building new business processes. A manufacturer, for instance, could use blockchain to create an end-to-end digital manufacturing process – from product inception to end of life and recycling. Blockchain could also serve as the foundation for communicating, transacting, and collaborating with suppliers and vendors.
  1. Revolutionize: Disrupt and create new business models. Continue your disruptive streak and start getting creative. Begin building on your new digital processes by creating new business models and rolling out as-a-service offerings. You could even base a whole new business around blockchain technology. In fact, Israeli company Synero did just that, creating a product called Wild Spark that helps compensate online content creators and curators using cryptocurrency.

Remember: Don’t get ahead of yourself

Companies are beyond excited about blockchain. They have lofty goals and expectations around what precisely they could achieve with the emerging technology. But as Simon and Garfunkel sang in “The 59th Street Bridge Song (Feelin’ Groovy)”: “Slow down/You move too fast.”

By taking a deliberate building-block approach to blockchain, your organization can realize huge value immediately. Plus, before you know it, these small, measured steps will have revolutionized your entire business.

Disruptive, digital business models are transforming the banking industry, and banks are responding. But have they gone far enough, and are they moving fast enough? Not according to a video series, produced by The Banker in association with SAP, and its accompanying report. Watch the videos to hear banking leaders and experts discuss how banks such as RBS, Nordea, and Citi are tackling some of the key topics in the industry right now: blockchain, fintechs, innovation, cybercrime, and digital banking.

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Gil Perez

About Gil Perez

Gil Perez is senior vice president of Digital Assets and The Internet of Things (IoT) and general manager of Connected Vehicles and IoT Security at SAP.

Three Digital Innovations That Will Beat 'Rock, Paper, Scissors'

Frank Klipphahn

Rock breaks scissors. Paper covers rock. Scissors cut paper. Those are the rules of Rock-Paper-Scissors, the ancient game people play with their hands. But wouldn’t it be better if those tools could join forces for the common good?

The question also applies to three digital innovations: blockchain, digital solutions based on the Internet of Things (IoT), and machine learning (ML). These are technological tools that support each other in the process of digital transformation (DX).

The IoT connects the users and things across the world. Blockchain helps secure sharing of sensitive information via the IoT. And ML speeds cybersecurity checks to make IoT connectivity safer.

Corporate officers of companies investing in DX may view blockchain, IoT solutions, and ML as competitors for IT budget. Yes, they are distinct digital tools. But together they form a powerful team supporting the aerospace industry and its many clients.

Defense and aerospace contractor Lockheed Martin is at the forefront of companies combining the capabilities of these tools.

Launching into the connected digi-verse

The Internet of Things (IoT) is a vast network of digital objects with embedded intelligence connected to the Internet via sensors. Connected factories, smart equipment, and users connected via mobile devices have been successfully leveraging IoT for years to optimize A&D operations and products.

Other IoT devices range from global positioning systems (GPS) in vehicles to digital twin computer models of aircraft. A digital twin is a software model of a physical thing/asset that relies on sensor data to understand the full state of the thing, enables digital simulations and learning to improve operations, and adds value by aiding predictive maintenance. Engineers can use these IoT-enabled 3D models to visualize where repairs are necessary based on data the sensors produce.

Lockheed Martin has relied on 3D modeling for many years. Until recently, the company referred to its immersion in DX as creating a digital tapestry of seamless connections between the “conceptualization, design, verification, manufacturing and sustainment” of its ideas.

The company made a major announcement at the 2017 ML Summit in early June. A report in the Manufacturing Leadership Council blog indicated that Lockheed Martin intends to expand into the use of digital twins to improve simulations of all its products and processes. The company also announced that the tapestry analogy no longer fits its ecosphere of innovations, which it now calls the Lockheed Martin Digi-Verse.

You might say that Lockheed Martin actually shot off into the digi-verse two months earlier with the launch of its iSpace (intelligent space) software to protect space assets. The company announced that the software “tasks, processes, and correlates data from a worldwide network of government, commercial, and scientific community sensors and command centers.” It added that the system automatically sends users real-time information gathered from “optical, radar, infrared, and radio sensors” and recommends “the best course of action.”

Seeking blockchain protection of data

CNET reported in early May that the company is adopting blockchain as a strategy for speeding the discovery and solution of cybersecurity problems. CNET added that the company is using blockchain to protect its data and “secure software development and supply chain risk management.”

Blockchain is a digital tool for creating decentralized ledgers that are secure. Many industries are exploring potential uses of this tool, which developed as a way to exchange the universal digital currency bitcoin.

It works this way: Participants in a blockchain network add individual transactions (blocks) to a shared ledger. In addition to people, the participants may include machines (ML again!) that can make quick decisions for an organization based on rapid data analysis.

Blockchain technology allows participants to read but not change blocks created by others. This characteristic protects information in a shared ledger.

Blockchain networking saves time and money for individual participants and organizations. It also makes the ledger process transparent for all involved. In aAerospace, it helps to build trust and integrity, and allows cyber-secure provenance and traceability of parts and other assets across shared business processes.

Bitcoin news service News BTC reports that machine learning can team with blockchain technology to ensure the accuracy of data and limit false positive results when testing for cyber threats.

Turning Big Data into action with machine learning

Machine learning is a form of artificial intelligence. ML applications turn computers into machines that can learn from other objects such as Digital Twins without being explicitly programmed.

These programs access the flood of information created by IoT objects, which is called big data. They sort, analyze, and learn from it automatically. Big Data is so massive that it takes rapid computing power to process it in real time. People cannot do it.

Lockheed Martin says that ML “turns data into action.” In a post about warfare innovation at its blog, the company notes, “Today, the military gathers data through sensors on a range of platforms, including aircraft, weapon systems, ground vehicles and even troops in the field.”

Lockheed Martin defense products use ML to aid military intelligence gathering and identification of threats. The company reports that the goal is to increase automation in decision-making.

Speed in decision-making decreases damage to targets, whether they are troops and cities in warzones or databases concerning company inventions and operations. Lockheed Martin uses the IoT, blockchain, and ML to protect people as well as products. Together, these digital tools are a powerful force.

It quickly becomes clear that topics like the Internet of Things, machine learning, blockchain, analytics, artificial intelligence, and Big Data often need to be viewed in combination: This is the key to creating a framework for harnessing the latest digital breakthroughs.

Learn how to bring new technologies and services together to power digital transformation by downloading The IoT Imperative for Discrete Manufacturers: Automotive, Aerospace and Defense, High Tech, and Industrial Machinery.

Explore how to bring Industry 4.0 insights into your business today by reading Industry 4.0: What’s Next?

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Frank Klipphahn

About Frank Klipphahn

Frank Klipphahn is the Senior Solution Manager for the Aerospace and Defense Industry Unit at SAP.

More Than Noise: Digital Trends That Are Bigger Than You Think

By Maurizio Cattaneo, David Delaney, Volker Hildebrand, and Neal Ungerleider

In the tech world in 2017, several trends emerged as signals amid the noise, signifying much larger changes to come.

As we noted in last year’s More Than Noise list, things are changing—and the changes are occurring in ways that don’t necessarily fit into the prevailing narrative.

While many of 2017’s signals have a dark tint to them, perhaps reflecting the times we live in, we have sought out some rays of light to illuminate the way forward. The following signals differ considerably, but understanding them can help guide businesses in the right direction for 2018 and beyond.

When a team of psychologists, linguists, and software engineers created Woebot, an AI chatbot that helps people learn cognitive behavioral therapy techniques for managing mental health issues like anxiety and depression, they did something unusual, at least when it comes to chatbots: they submitted it for peer review.

Stanford University researchers recruited a sample group of 70 college-age participants on social media to take part in a randomized control study of Woebot. The researchers found that their creation was useful for improving anxiety and depression symptoms. A study of the user interaction with the bot was submitted for peer review and published in the Journal of Medical Internet Research Mental Health in June 2017.

While Woebot may not revolutionize the field of psychology, it could change the way we view AI development. Well-known figures such as Elon Musk and Bill Gates have expressed concerns that artificial intelligence is essentially ungovernable. Peer review, such as with the Stanford study, is one way to approach this challenge and figure out how to properly evaluate and find a place for these software programs.

The healthcare community could be onto something. We’ve already seen instances where AI chatbots have spun out of control, such as when internet trolls trained Microsoft’s Tay to become a hate-spewing misanthrope. Bots are only as good as their design; making sure they stay on message and don’t act in unexpected ways is crucial.

This is especially true in healthcare. When chatbots are offering therapeutic services, they must be properly designed, vetted, and tested to maintain patient safety.

It may be prudent to apply the same level of caution to a business setting. By treating chatbots as if they’re akin to medicine or drugs, we have a model for thorough vetting that, while not perfect, is generally effective and time tested.

It may seem like overkill to think of chatbots that manage pizza orders or help resolve parking tickets as potential health threats. But it’s already clear that AI can have unintended side effects that could extend far beyond Tay’s loathsome behavior.

For example, in July, Facebook shut down an experiment where it challenged two AIs to negotiate with each other over a trade. When the experiment began, the two chatbots quickly went rogue, developing linguistic shortcuts to reduce negotiating time and leaving their creators unable to understand what they were saying.

Do we want AIs interacting in a secret language because designers didn’t fully understand what they were designing?

The implications are chilling. Do we want AIs interacting in a secret language because designers didn’t fully understand what they were designing?

In this context, the healthcare community’s conservative approach doesn’t seem so farfetched. Woebot could ultimately become an example of the kind of oversight that’s needed for all AIs.

Meanwhile, it’s clear that chatbots have great potential in healthcare—not just for treating mental health issues but for helping patients understand symptoms, build treatment regimens, and more. They could also help unclog barriers to healthcare, which is plagued worldwide by high prices, long wait times, and other challenges. While they are not a substitute for actual humans, chatbots can be used by anyone with a computer or smartphone, 24 hours a day, seven days a week, regardless of financial status.

Finding the right governance for AI development won’t happen overnight. But peer review, extensive internal quality analysis, and other processes will go a long way to ensuring bots function as expected. Otherwise, companies and their customers could pay a big price.

Elon Musk is an expert at dominating the news cycle with his sci-fi premonitions about space travel and high-speed hyperloops. However, he captured media attention in Australia in April 2017 for something much more down to earth: how to deal with blackouts and power outages.

In 2016, a massive blackout hit the state of South Australia following a storm. Although power was restored quickly in Adelaide, the capital, people in the wide stretches of arid desert that surround it spent days waiting for the power to return. That hit South Australia’s wine and livestock industries especially hard.

South Australia’s electrical grid currently gets more than half of its energy from wind and solar, with coal and gas plants acting as backups for when the sun hides or the wind doesn’t blow, according to ABC News Australia. But this network is vulnerable to sudden loss of generation—which is exactly what happened in the storm that caused the 2016 blackout, when tornadoes ripped through some key transmission lines. Getting the system back on stable footing has been an issue ever since.

Displaying his usual talent for showmanship, Musk stepped in and promised to build the world’s largest battery to store backup energy for the network—and he pledged to complete it within 100 days of signing the contract or the battery would be free. Pen met paper with South Australia and French utility Neoen in September. As of press time in November, construction was underway.

For South Australia, the Tesla deal offers an easy and secure way to store renewable energy. Tesla’s 129 MWh battery will be the most powerful battery system in the world by 60% once completed, according to Gizmodo. The battery, which is stationed at a wind farm, will cover temporary drops in wind power and kick in to help conventional gas and coal plants balance generation with demand across the network. South Australian citizens and politicians largely support the project, which Tesla claims will be able to power 30,000 homes.

Until Musk made his bold promise, batteries did not figure much in renewable energy networks, mostly because they just aren’t that good. They have limited charges, are difficult to build, and are difficult to manage. Utilities also worry about relying on the same lithium-ion battery technology as cellphone makers like Samsung, whose Galaxy Note 7 had to be recalled in 2016 after some defective batteries burst into flames, according to CNET.

However, when made right, the batteries are safe. It’s just that they’ve traditionally been too expensive for large-scale uses such as renewable power storage. But battery innovations such as Tesla’s could radically change how we power the economy. According to a study that appeared this year in Nature, the continued drop in the cost of battery storage has made renewable energy price-competitive with traditional fossil fuels.

This is a massive shift. Or, as David Roberts of news site Vox puts it, “Batteries are soon going to disrupt power markets at all scales.” Furthermore, if the cost of batteries continues to drop, supply chains could experience radical energy cost savings. This could disrupt energy utilities, manufacturing, transportation, and construction, to name just a few, and create many opportunities while changing established business models. (For more on how renewable energy will affect business, read the feature “Tick Tock” in this issue.)

Battery research and development has become big business. Thanks to electric cars and powerful smartphones, there has been incredible pressure to make more powerful batteries that last longer between charges.

The proof of this is in the R&D funding pudding. A Brookings Institution report notes that both the Chinese and U.S. governments offer generous subsidies for lithium-ion battery advancement. Automakers such as Daimler and BMW have established divisions marketing residential and commercial energy storage products. Boeing, Airbus, Rolls-Royce, and General Electric are all experimenting with various electric propulsion systems for aircraft—which means that hybrid airplanes are also a possibility.

Meanwhile, governments around the world are accelerating battery research investment by banning internal combustion vehicles. Britain, France, India, and Norway are seeking to go all electric as early as 2025 and by 2040 at the latest.

In the meantime, expect huge investment and new battery innovation from interested parties across industries that all share a stake in the outcome. This past September, for example, Volkswagen announced a €50 billion research investment in batteries to help bring 300 electric vehicle models to market by 2030.

At first, it sounds like a narrative device from a science fiction novel or a particularly bad urban legend.

Powerful cameras in several Chinese cities capture photographs of jaywalkers as they cross the street and, several minutes later, display their photograph, name, and home address on a large screen posted at the intersection. Several days later, a summons appears in the offender’s mailbox demanding payment of a fine or fulfillment of community service.

As Orwellian as it seems, this technology is very real for residents of Jinan and several other Chinese cities. According to a Xinhua interview with Li Yong of the Jinan traffic police, “Since the new technology has been adopted, the cases of jaywalking have been reduced from 200 to 20 each day at the major intersection of Jingshi and Shungeng roads.”

The sophisticated cameras and facial recognition systems already used in China—and their near–real-time public shaming—are an example of how machine learning, mobile phone surveillance, and internet activity tracking are being used to censor and control populations. Most worryingly, the prospect of real-time surveillance makes running surveillance states such as the former East Germany and current North Korea much more financially efficient.

According to a 2015 discussion paper by the Institute for the Study of Labor, a German research center, by the 1980s almost 0.5% of the East German population was directly employed by the Stasi, the country’s state security service and secret police—1 for every 166 citizens. An additional 1.1% of the population (1 for every 66 citizens) were working as unofficial informers, which represented a massive economic drain. Automated, real-time, algorithm-driven monitoring could potentially drive the cost of controlling the population down substantially in police states—and elsewhere.

We could see a radical new era of censorship that is much more manipulative than anything that has come before. Previously, dissidents were identified when investigators manually combed through photos, read writings, or listened in on phone calls. Real-time algorithmic monitoring means that acts of perceived defiance can be identified and deleted in the moment and their perpetrators marked for swift judgment before they can make an impression on others.

Businesses need to be aware of the wider trend toward real-time, automated censorship and how it might be used in both commercial and governmental settings. These tools can easily be used in countries with unstable political dynamics and could become a real concern for businesses that operate across borders. Businesses must learn to educate and protect employees when technology can censor and punish in real time.

Indeed, the technologies used for this kind of repression could be easily adapted from those that have already been developed for businesses. For instance, both Facebook and Google use near–real-time facial identification algorithms that automatically identify people in images uploaded by users—which helps the companies build out their social graphs and target users with profitable advertisements. Automated algorithms also flag Facebook posts that potentially violate the company’s terms of service.

China is already using these technologies to control its own people in ways that are largely hidden to outsiders.

According to a report by the University of Toronto’s Citizen Lab, the popular Chinese social network WeChat operates under a policy its authors call “One App, Two Systems.” Users with Chinese phone numbers are subjected to dynamic keyword censorship that changes depending on current events and whether a user is in a private chat or in a group. Depending on the political winds, users are blocked from accessing a range of websites that report critically on China through WeChat’s internal browser. Non-Chinese users, however, are not subject to any of these restrictions.

The censorship is also designed to be invisible. Messages are blocked without any user notification, and China has intermittently blocked WhatsApp and other foreign social networks. As a result, Chinese users are steered toward national social networks, which are more compliant with government pressure.

China’s policies play into a larger global trend: the nationalization of the internet. China, Russia, the European Union, and the United States have all adopted different approaches to censorship, user privacy, and surveillance. Although there are social networks such as WeChat or Russia’s VKontakte that are popular in primarily one country, nationalizing the internet challenges users of multinational services such as Facebook and YouTube. These different approaches, which impact everything from data safe harbor laws to legal consequences for posting inflammatory material, have implications for businesses working in multiple countries, as well.

For instance, Twitter is legally obligated to hide Nazi and neo-fascist imagery and some tweets in Germany and France—but not elsewhere. YouTube was officially banned in Turkey for two years because of videos a Turkish court deemed “insulting to the memory of Mustafa Kemal Atatürk,” father of modern Turkey. In Russia, Google must keep Russian users’ personal data on servers located inside Russia to comply with government policy.

While China is a pioneer in the field of instant censorship, tech companies in the United States are matching China’s progress, which could potentially have a chilling effect on democracy. In 2016, Apple applied for a patent on technology that censors audio streams in real time—automating the previously manual process of censoring curse words in streaming audio.

In March, after U.S. President Donald Trump told Fox News, “I think maybe I wouldn’t be [president] if it wasn’t for Twitter,” Twitter founder Evan “Ev” Williams did something highly unusual for the creator of a massive social network.

He apologized.

Speaking with David Streitfeld of The New York Times, Williams said, “It’s a very bad thing, Twitter’s role in that. If it’s true that he wouldn’t be president if it weren’t for Twitter, then yeah, I’m sorry.”

Entrepreneurs tend to be very proud of their innovations. Williams, however, offers a far more ambivalent response to his creation’s success. Much of the 2016 presidential election’s rancor was fueled by Twitter, and the instant gratification of Twitter attracts trolls, bullies, and bigots just as easily as it attracts politicians, celebrities, comedians, and sports fans.

Services such as Twitter, Facebook, YouTube, and Instagram are designed through a mix of look and feel, algorithmic wizardry, and psychological techniques to hang on to users for as long as possible—which helps the services sell more advertisements and make more money. Toxic political discourse and online harassment are unintended side effects of the economic-driven urge to keep users engaged no matter what.

Keeping users’ eyeballs on their screens requires endless hours of multivariate testing, user research, and algorithm refinement. For instance, Casey Newton of tech publication The Verge notes that Google Brain, Google’s AI division, plays a key part in generating YouTube’s video recommendations.

According to Jim McFadden, the technical lead for YouTube recommendations, “Before, if I watch this video from a comedian, our recommendations were pretty good at saying, here’s another one just like it,” he told Newton. “But the Google Brain model figures out other comedians who are similar but not exactly the same—even more adjacent relationships. It’s able to see patterns that are less obvious.”

A never-ending flow of content that is interesting without being repetitive is harder to resist. With users glued to online services, addiction and other behavioral problems occur to an unhealthy degree. According to a 2016 poll by nonprofit research company Common Sense Media, 50% of American teenagers believe they are addicted to their smartphones.

This pattern is extending into the workplace. Seventy-five percent of companies told research company Harris Poll in 2016 that two or more hours a day are lost in productivity because employees are distracted. The number one reason? Cellphones and texting, according to 55% of those companies surveyed. Another 41% pointed to the internet.

Tristan Harris, a former design ethicist at Google, argues that many product designers for online services try to exploit psychological vulnerabilities in a bid to keep users engaged for longer periods. Harris refers to an iPhone as “a slot machine in my pocket” and argues that user interface (UI) and user experience (UX) designers need to adopt something akin to a Hippocratic Oath to stop exploiting users’ psychological vulnerabilities.

In fact, there is an entire school of study devoted to “dark UX”—small design tweaks to increase profits. These can be as innocuous as a “Buy Now” button in a visually pleasing color or as controversial as when Facebook tweaked its algorithm in 2012 to show a randomly selected group of almost 700,000 users (who had not given their permission) newsfeeds that skewed more positive to some users and more negative to others to gauge the impact on their respective emotional states, according to an article in Wired.

As computers, smartphones, and televisions come ever closer to convergence, these issues matter increasingly to businesses. Some of the universal side effects of addiction are lost productivity at work and poor health. Businesses should offer training and help for employees who can’t stop checking their smartphones.

Mindfulness-centered mobile apps such as Headspace, Calm, and Forest offer one way to break the habit. Users can also choose to break internet addiction by going for a walk, turning their computers off, or using tools like StayFocusd or Freedom to block addictive websites or apps.

Most importantly, companies in the business of creating tech products need to design software and hardware that discourages addictive behavior. This means avoiding bad designs that emphasize engagement metrics over human health. A world of advertising preroll showing up on smart refrigerator touchscreens at 2 a.m. benefits no one.

According to a 2014 study in Cyberpsychology, Behavior and Social Networking, approximately 6% of the world’s population suffers from internet addiction to one degree or another. As more users in emerging economies gain access to cheap data, smartphones, and laptops, that percentage will only increase. For businesses, getting a head start on stopping internet addiction will make employees happier and more productive. D!


About the Authors

Maurizio Cattaneo is Director, Delivery Execution, Energy, and Natural Resources, at SAP.

David Delaney is Global Vice President and Chief Medical Officer, SAP Health.

Volker Hildebrand is Global Vice President for SAP Hybris solutions.

Neal Ungerleider is a Los Angeles-based technology journalist and consultant.


Read more thought provoking articles in the latest issue of the Digitalist Magazine, Executive Quarterly.

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Death Of An IT Salesman

Jesper Schleimann

As software shifts from supporting the strategy to becoming the strategy of most companies, the relationship and even the sales process between the vendor side and the customer side in the IT industry is subsequently also undergoing some remarkable changes. The traditional IT salesman is an endangered species.

I recently had the pleasure of participating in a workshop with one of Scandinavia’s largest companies to create new business models in the company’s operations business area. As an IT vendor, we worked with the customer in an open process using the design thinking methodology—a creative process in which we jointly visualized, defined, and solidified how new flows of data can change business processes and their business models.

By working with “personas” relevant to their business, we could better understand how technology can help different roles in the involved departments deliver their contributions faster and more efficiently. The scope was completely open. We put our knowledge and experience with technological opportunities in parallel with the company’s own knowledge of the market, processes, and business.

The results may trigger a sale of software from our side at a point, but we do not know exactly which solution—or even if it will happen. What we did do was innovate together and better understand our customer’s future and viable routes to success. Such is the reality of the strategic work of digitizing here on the verge of year 2018.

Solution selling is not enough

In my view, the transgressive nature of technology is radically changing the way businesses and the sales process works. The IT industry—at least parts of it—must focus on completely different types of collaboration with the customer.

Historically, the sales process has already realized major changes. In the past, you’d find a product-fixated “used-car-sales” approach, which identified the characteristics of the box or solution and left it to the customer to find the hole in the cheese. Since then, a generation of IT key account managers learned “solution selling,” with a sharp focus on finding and defining a “pain point” at the customer and then position the solution against this. But today, even that approach falls short.

Endangered species

The challenge is that software solutions now support the formation of new, yet unknown business models. They transverse processes and do not respect silo borders within organizations. Consequently, businesses struggle to define a clear operational road. Top management faces a much broader search of potential for innovation. The creation of a compelling vision itself requires a continuous and comprehensive study of what digitization can do for the value chain and for the company’s ecosystem.

Vendors abandon their customers if they are too busy selling different tools and platforms without entering into a committed partnership to create the new business model. Therefore, the traditional IT salesperson, preoccupied with their own goals, is becoming an endangered species. The customer-driven process requires even key account managers to dig deep and endeavor to understand the customer’s business. The best in the IT industry will move closer to the role of trusted adviser, mastering the required capabilities and accepting the risks and rewards that follow.

Leaving the comfort zone

This obviously has major consequences for the sales culture in the IT industry. Reward mechanisms and incentive structures need to be reconsidered toward a more behavioral incentive. And the individual IT salesperson is going on a personal journey, as the end goal is no longer to close an order, but to create visions and deliver value in partnership with the customer and to do so in an ever-changing context, where the future is volatile and unpredictable.

A key account manager is the customer’s traveling companion. Do not expect to be able to reduce complexity and stay in your comfort zone and not be affected by this change. Vendors should think bigger, and as an IT salesperson, you need to show your ability for transformational thinking. Everyone must be prepared to take the first baby steps, but there will definitely also be some who cannot handle the change. Disruption is not just something you, as a vendor, deliver to a customer. The noble art of being a digital vendor is facing some serious earthquakes.

For more on how tech innovation is disrupting traditional business models, see Why You Should Consider Disrupting Your Own Business.

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Jesper Schleimann

About Jesper Schleimann

Chief Technology Officer, Nordic & Baltic region In his role as Nordic CTO, Jesper's mission is to help customers unlock their business potential by simplifying their digital transformation. Jesper has a Cand.polit. from the University of Copenhagen as well as an Executive MBA from Copenhagen Business School.