Luis Iván Cuende must have been born an entrepreneur.
Having no access to capital, equipment, or collaborators in his native Oviedo, Spain, he gravitated toward the first thing he could get his three-year-old hands on: one of his software-engineer father’s old computers. By age 12, Cuende had released his own distribution of Linux. At 15, he won the HackNow award for technical talent. And he spent his 17th year as advisor to Neelie Kroes, then the European Commissioner for
Today the 20-year-old is CTO of Stampery, a San Mateo, California, based startup he co-founded in 2015, which leverages the Bitcoin blockchain—the shared public ledger that records and secures Bitcoin currency transactions—to provide instant data notarization and document certification.
“I’ve always wanted to create things; that’s what makes me happy,” says Cuende, who splits his time between Silicon Valley and Madrid. “I got started with software because it’s easy to launch a product without the need for a factory or millions of dollars.”
Cuende started to see how he could make a big impact when he was working with Kroes, whom he views as one of the most disruptive politicians he’s met.
“She has one of the freshest minds I have seen in the policy world full of suits,” he says.
After his time as one of her advisors was up, he attempted to launch several businesses, which ultimately led to Stampery.
Know Your Strengths— and Weaknesses
Four years ago, Cuende developed Cardwee, an application that enabled companies to provide customer loyalty points via Apple Passbook. “It was the very first one, and it was a very good product,” he says. “But I knew nothing about business or marketing.”
The lesson? You can build a solid product, but if you don’t know how to sell it, you will fail. “It’s the second most important thing in business,” Cuende says. “I’m good at giving talks to big groups, but I’m very bad at selling in person to big clients. My co-founders have much more experience in that, and I try to learn from them.”
Setbacks Aren’t Failures
Cuende met his Stampery collaborators, CMO Tommaso Prennushi, a former marketing executive, and CEO Daniele Levi, a former professional DJ and a cryptography enthusiast, in 2012 at the annual tech festival Campus Party, held that year in Berlin. “We were the only ones talking about Bitcoin in Spain at the time,” Cuende says.
The trio developed several Bitcoin-related products that went nowhere. At one point, they tried to get a banking license to create a Bitcoin exchange, but that required “millions of dollars we didn’t have,” Cuende says.
They tried a new tack, coming up with the idea for Stampery. Cuende calls it “the most obvious” noncurrency application for the Bitcoin blockchain—and one they could develop at low cost. Cuende and his team built Stampery and then secured US$600,000 in pre-seed funding, led by Draper & Associates, in November 2015.
An Upside to Risk
Most successful new business ideas are obvious, Cuende believes. “It’s not that you see something that other people don’t. It’s just that the idea involves risk. It’s something that people are afraid of today.”
A few years ago, most people associated Bitcoin only with nefarious activity, he says. But the blockchain technology underpinning Bitcoin fascinated Cuende and his partners. The blockchain maintains a verifiable chronological record of Bitcoin transactions, and it resists tampering by involving a network of thousands of independently managed computers in securing every update.
“Having an immutable ledger enables you to do a lot of stuff that couldn’t be done otherwise,” says Cuende. This includes transferring electronic money without needing a bank or other institution to guarantee it. “But why should we limit that ledger to storing only financial transactions? Anything that needs to be recorded in order to have a reliable proof of its existence, integrity, and even ownership can benefit from it. It’s the first time in the history of the computer that digital information isn’t necessarily modifiable and destroyable.”
Cuende saw only one downside: “The blockchain is very bad at transaction volume.” Cuende and his co-founders wanted to be able to certify millions of documents at a time; the Bitcoin network was capable of 2.5 per second. That’s where their technological innovation came in. Stampery is designed to stamp billions of data sets per second. In addition, the technology can work with any blockchain network, not just Bitcoin’s.
That makes using the Bitcoin blockchain low risk. “If it goes down tomorrow—which is highly improbable—we can migrate to another blockchain,” he says. In addition, the legally binding proofs that Stampery generates to certify the existence, integrity, and ownership of documents will remain valid and accessible even if Stampery disappears, because it leverages a decentralized technology.
Disrupting Decades of Paper Pushing
Stampery currently has 1,500 customers, who fall into three user groups: creators protecting their intellectual property, attorneys certifying documents, and software developers. Lawyers saw the value immediately.
“They need to create proofs from a lot of their digital documents on a daily basis. Then we have creators who use it to prove that they were the first creating a music track, art, even a process,” Cuende says. “What we’re seeing lately is a lot of enterprise interest for areas such as document management and systems security.”
Users can stamp up to 10 files monthly and access 1 gigabyte of encrypted storage for free, or pay $9.99 to stamp 1,000 files and access 50 gigabytes of storage. The product integrates with Dropbox cloud storage. Customers can also use Stampery to certify that e-mails were sent and received.
“You can make a deal via e-mail, click a button, and certify it with no one else involved but the two parties,” says Cuende.
Stampery is focusing on nonregulated use cases to establish the market and raise awareness. But the company is also actively lobbying regulators “to see the value of storing truth in a ledger that is mathematically secure,” says Cuende, particularly in Europe where notaries play a bigger role in the economy than they do in the United States.
Pen and paper have been the standard for hundreds of years. Human notaries are not “immutable, but they have these notebooks in which they establish truth, which is recognized by the state. Obtaining this type of trust involves cost and liability,” Cuende says. “Replacing it with math could save billions for whole industries.” Early in 2016, Stampery made a deal with the Estonian government to enable everyone with an e-Residency ID to use the system to certify and notarize personal and business documents.
Learn When to Step Up
Now that one of Cuende’s co-creations has become a full-blown business, he is adapting to 10-hour workdays and managing a growing team. “Being able to attract talent is super important to me. It’s great to work with very bright people that are better than me in many things,” says Cuende. “My days have gotten crazier. There’s pressure from everywhere,” he says. “It’s a challenge. But I love that feeling.” D!
Every two years, almost a million car enthusiasts flock to the Frankfurt International Motor Show (IAA), the world’s largest automotive trade fair, to enjoy the legendary spectacle of automakers rolling out their latest models to an accompaniment of flashing lights, throbbing bass beats, and stylishly dressed dancers.
While the giant exhibition halls on the ground floor echo to the sound of visitors jostling to examine paint work and leather, sleek sports cars, people carriers, electric vehicles, and the ubiquitous SUVs, the atmosphere in the New Mobility World exhibition on the first floor is altogether calmer. Nevertheless, this is where pressing issues about the future of mobility are being discussed.
The exhibitors here include Samsung, IBM, Deutsche Telekom, and – making its debut appearance – SAP. Awake to the far-reaching revolution that lies ahead of the automotive sector, these IT companies are in Frankfurt to showcase ways in which information technology is already making it possible to connect today’s highly digitized vehicles with each other, with their drivers, and with the technological infrastructure around them.
Revved up for a revolution
Chris Urmson considers the convergence of vehicles and IT to be “the most exciting development of our age.” Speaking in Frankfurt, Urmson, who heads up Google’s driverless car program, described the number of people killed on America’s roads every year – 36,000 – as “unacceptable” and stressed that his company’s intensive research into autonomous vehicles was aimed at improving road safety.
Robert Wolcott, Professor of Innovation Management and Corporate Entrepreneurship at Northwestern University’s Kellogg School of Management, spoke of “a new industrial revolution” whose impact would be “on a par with that of the railroads in the 19th century.”
So it’s no surprise that the IT sector is steering its focus toward the automotive industry.
At the IAA’s Smart City Forum, SAP has teamed up with various cities to present solutions designed to put an end to the daily traffic gridlock. And, to judge by the figures below, their capabilities are sorely needed:
By 2050, around 70% of the global population will be living in cities.
The number of cars on the planet is set to almost double by 2030.
Experts predict that the volume of freight traffic on Europe’s roads will increase 80% by 2025.
On average, a car driver in Germany spends 36 hours stuck in traffic jams every year.
Smart cities for a better quality of life
Smart Traffic Control enables cities to optimize traffic-light controls and free up additional car lanes during the rush hour to alleviate congestion, while data collected by RFID chips, sensors, cameras, and induction loops is used to compile congestion profiles and monitor real-time traffic issues. The Chinese city of Nanjing, which is home to 8 million people, has chosen to adopt smart traffic control technology to crunch the 20 billion data points captured in the city every year to produce actionable information for predictively responding to traffic congestion. And the software even learns as it goes along. In June of this year, the city signed a Custom Development Project with SAP. Currently, the SAP HANA platform helps Nanging analyze the data generated by its 10,000 taxis. The plan is for other modes of transportation to provide data in the future too.
“Smart traffic is one of the hottest topics for the world’s ever-expanding cities,” says Norbert Koppenhagen from the SAP Innovation Center Network, who is also at the IAA to showcase SAP’s cooperation with the German city of Darmstadt, near Frankfurt. “If we can keep the traffic flowing, we’ll make city-dwellers’ lives a whole lot more livable.”
The SAP Vehicle Insights cloud application links vehicular data with sensor data to provide actionable insight into driver behavior patterns and efficiency. The software helps logistics and mobility services providers monitor live vehicle conditions and manage their services within the constraints imposed by pollution and traffic congestion. The SAP Vehicle Insights also helps fleet operators manage their fleets optimally.
City App is another innovation being showcased in Frankfurt. Developed in collaboration with the German city of Nuremberg, this app features crowdsourcing functions that allow citizens to report defects and damage in their immediate vicinity. Algorithms assimilate these reports with data about factors such as traffic density in the affected city zone to help municipal authorities optimize their response.
There is also considerable buzz around TwoGo, the mobile app that lets employees at enterprises, institutions, and municipal authorities link up and share their daily commute to the office. “This is an exciting time for TwoGo,” says Alexander Machold, a member of the TwoGo business development team. “We’ve got vehicle manufacturers, parking garage operators, local authorities, and government ministries all looking into how TwoGo could help them cut costs and develop new business models.” What’s more, he says, the app sometimes opens the door to cross-selling opportunities for other SAP solutions.
“The number of connected cars on our roads is growing; more and more vehicles are being outfitted with sensors; and even driverless cars are becoming a genuine possibility. All in all, this is a great opportunity for us to transform cities, industries, and businesses sustainably to create a better future,” says Stephan Brand, Vice President, PI Analytics Applications, Products and Innovation at SAP.
The Internet has changed the way we buy cars, while mobile technology is changing what we expect them to do. Learn more about The Hyperconnected Car.
This story also appeared in the SAP Business Trends community.
Article published by Michael Zipf. It originally appeared on SAP and has been republished with permission.
Despite reports of a turbulent global economy, the World Bank delivered some great news recently. For the first time in history, extreme poverty (people living on less than $1.90 each day) worldwide is set to fall to below 10%. Considering that this rate has declined from 37.1% in 1990 to 9.6% in 2015, it is hopeful that one-third of the global population will participate the middle class by 2030.
For all industries, this growth will bring new challenges and pressures when meeting unprecedented demand in an environment of dwindling – if not already scarce – resources. First of all, gold, silver, indium, iridium, tungsten, and many other vital resources could be depleted in as little as five years. And because current manufacturing methods create massive waste, about 80% of $3.2 trillion material value is lost irrecoverably each year in the consumer products industry alone.
This new reality is forcing companies to rethink our current, linear “take-make-dispose” approach to designing, producing, delivering, and selling products and services. According to Dan Wellers, Digital Futures lead for SAP, “If the economy is not sustainable, we are in trouble. And in the case of the linear economy, it is not sustainable because it inherently wastes resources that are becoming scarce. Right now, most serious businesspeople think sustainability is in conflict with earning a profit and becoming wealthy. True sustainability, economic sustainability, is exactly the opposite. With this mindset, it becomes strategic to support practices that support a circular economy in the long run.”
The circular economy: Good for business, good for the environment
What if your business practices and operation can help save our planet? Would you do it? Now, what if I said that this one business approach could put $4.5 trillion up for grabs?
By taking a more restorative and regenerative approach, every company can redesign the future of the environment, the economy, and their overall business. “Made possible by the digital economy, forward-thinking businesses are choosing to embrace this value to intentionally reimagine the economy around how we use resources,” observed Wellers. “By slowing down the depletion of resources and possibly even rejuvenating them, early adopters of circular practices have created business models that are profitable, and therefore sustainable. And they are starting to scale.”
In addition to making good financial sense, there’s another reason the circular economy is a sound business practice: Your customers. In his blog 99 Mind-Blowing Ways the Digital Economy Is Changing the Future of Business, Vivek Bapat revealed that 68% of consumers are interested in companies that bring social and environmental change. More important, 84% of global consumers actively seek out socially and environmentally responsible brands and are willing to switch brands associated with those causes.
Five ways your business can take advantage of the circular economy
As the circular economy proves, business and economic growth does not need to happen at the cost of the environment and public health and safety.As everyone searches for an answer to job creation, economic development, and environmental safety, we are in an economic era primed for change.
Wellers states, “Thanks to the exponential growth and power of digital technology, circular business models are becoming profitable. As a result, businesses are scaling their wealth by investing in new economic growth strategies.”
Circular supplies: Deliver fully renewable, recyclable, and biodegradable resource inputs that underpin circular production and consumption systems.
Recovery of resources: Eliminate material leakage and maximize the economic value of product return flows.
Extension of product life: Extend the life cycle of products and assets. Regain the value of your resources by maintaining and improving them by repairing, upgrading, remanufacturing, or remarketing products.
Sharing platforms: Promote a platform for collaboration among product users as individuals or organizations.
Product as a service: Provide an alternative to the traditional model of “buy and own.” Allow products to be shared by many customers through a lease or pay-for-use arrangement.
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.
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.
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.
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.
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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.