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Steampunk Economy

Idedicated the German edition of the book to my children and my wife. And there is absolutely no reason not to do the same with the English edition. So I dedicate this book to my wife Maya, although I suspect she would appreciate a French edition more. But - darling - it's my book and I can't do everything. Further worthy of mention are my beloved children Luca, Lil and Emil who have helped - consciously or unconsciously - to get this edition finished - either through constructive feedback, less constructive feedback or simply by leaving me alone (and being left alone in return). My dear friends, always remember: you are the steampunks of the future…

TABLE OF CONTENTS

Table of Contents

Acknowledgement

A Kind of Preface

WHY?!

PART 1. THE WORLD WE LIVE IN

Of rice grains, water lilies and Moore's Law

Everyday life in the VUCA world

Impact of the VUCA World - Digitalisation, Globalisation, Disruption and Agility

Outcome vs. Expected Value

Steampunk – we live in the 19th century

Ceteris Paribus

Certainty is an illusion

We are not average

Our methods are yesterday's news

Steampunks are results driven

Perception is not reality – and the Earth is not flat

Complex, complicated, dynamic and static

Every cause is followed by more than one problem

Every problem has more than one cause

When the earth is flat

Counter-intuition

Decisions in Dissent

Events come to head

It feels linear - until it explodes

Moonshot - all factor 10

Safety thinking – all on crash

Part 2. … how to get along with it

Organisational change is complex

Let's plan the change linearly

Success with the instruments of the 19th century

Now we make it agile

Nice and slow – let's start on a large scale

Responsible is the one who does it

Linearity in curved space

Capacity to act in exponential worlds

Dynamic Patterns need different Flight Levels

End2End -1 need to see the whole System

Competence on all Levels

Logarithmic planning

Expectations in Curved Space

Performance in Curved Space

Transition in Curved Space

Cultural Hacking

Hack 1: Retrospectives

Hack 2: Visualisation

Hack 3: Daily - the planning of the day

Hack 4: Feedback loops

Hack 5: think systemically

Hack 6: Discover dependencies

Hack 7: Prioritise

Hack 8: Take responsibility

(within the scope of your expertise)

Hack 9: TRUST

Hack 10: Start improving here and now. Immediately.

Literature

Movie Quote Quiz

Register of Persons

ACKNOWLEDGEMENT

Many people were involved in the creation of this book - even if most of them are unaware of it. I have met them in the course of the past 10 years in the most diverse contexts - but what they all had in common was that it was always the others who had to change. They were united in the unimaginativeness of ‘business as usual’ and the dreariness of past success. Manfred, who appears again and again in the course of the book, really exists. I have only changed the name. He is not the result of a literary mix of different people. The quoted coach who advises him is also exactly one person and not the sum of all negative characteristics projected onto a literary construct. I would like to thank both of them on a representative basis. Without you, one or two things would not have occurred to me.

I would like to specifically mention four people who have had a relevant influence on my actions and thinking. First of all, my mentor Jens Petersen, who unfortunately passed away much too early, from whom I learned everything about coaching from a practical perspective. My university mentor William Wallace (no! Not Braveheart), who taught me to focus and concentrate only on the important things. My long-time teacher Randy Williams, with whom I exchanged ideas for 10 years on the topic of economics and wasting energy, and finally Klaus Leopold, who created a lightweight framework into which all my thoughts fit. Thanks for that.

A KIND OF PREFACE

When I wrote the book in German, I was already pursuing the plan to publish an English edition as well. When the first version of the book was finished in October 2020 and it was time to revise, shorten, change and improve it, I made a rough English translation in parallel. The idea was to publish the German version in March 2021 and the English version in May. When I opened the printed book for the first time, an error immediately jumped out at me. And when the first friendly readers gave me feedback, I decided to look through the English version again from page one. And so time went by. Now it is finished - not the translation - but the English edition of Steampunk Economy. And although a translation from German to English always makes a text shorter (what does that say about my mother tongue?), this book is longer than the first edition. I have clarified some explanations, added new thoughts and updated information. And now I am totally curious how this more finished version will be received. In any case, I look forward to your opinions, ideas and exchanges of thoughts.

The Dark Side of the Moon, June 2021

Andreas Rein

WHY?!

In the past, before streaming services in HD existed, when we wanted to buy goods, we had to go to the store. Well, there were the big mailorder catalogues, but that was time-consuming and expensive because usually return shipping was not free. Retail was alive because we needed someone to order things for us or because we bought what was in stock. If it was something special, we had to go to the next bigger town and try our luck there. The concept of the consulting salesman comes from a long-gone era. In the 1920s, you told the haberdasher and grocer what you needed and he took each item out of the drawer one by one. How great was the outcry - almost an affront - when supermarkets and department stores appeared at the end of the 1960s, throwing the concept of individual advice overboard. The customer has to get his things himself - outrageous.

But with the 1990s, this time passed and suddenly everything was different. And it will not come back. In the 21st century, the trend is towards completely automated department stores or even online retail, which delivers my order free to my door within 24 hours. Like many people, I don't order there because it would be so convenient or easy. On the contrary - I think it's great to shop in well-stocked shops. The electronics store is great - it gets difficult when you have to talk to someone and ask for their advice. Then you are lost. I order because retail doesn't serve my needs, but its own.

‘We don't accept credit cards' - can also be translated as: ‘Please use the means of payment that I accept, not what is most convenient for you’. Really! The customer must meet the needs of the seller?. As a customer, you want me to use a payment method where you have more margin? That’s not my problem! The days of buyers being dependent on sellers are over. The seller who best meets customer needs will be successful. The salesperson who does not will no longer be needed in the market. Not because the customers are all bad or because online trade is ruthless, but because sellers have simply overlooked the paradigm shift, the liberation of the customer, the vicious globalisation, which is also starting on a small scale, and have been unable to react to it.

After a dinner with eight people in an Italian restaurant, the waiter informs me that card payment is not possible. Maybe this is only the case in my home region of Central Hesse, but because of the many hiking trails and recreational areas, the many rural hotels and restaurants, and the relative proximity to the Netherlands, one should expect customers to be allowed to pay. But no. Only cash payment possible. There are really many restaurants here where I can't pay by card.

‘The device broke within the warranty period - we'll send it in for repair’ - no, I want a new device or my money back, it doesn't matter.I bought it because I like it and I'm totally disappointed because it broke practically immediately. If I am unhappy with the product, then you the seller are responsible. Why? Because as a customer I want someone who understands that I am disappointed and who will take care of my concerns, worries and wishes. If the seller doesn't do it, who will? Amazon's vision is to do the best for the customer. Why is that Amazon's vision and not that of all the shops around me? Why does Amazon manage digitally, without human interaction, to pick up and address the customer's concerns, worries and wishes? And why do people in shops often not manage to do that?

Economic life is no longer a stable entity. It is not a house with fixed structures into which one moves, makes oneself comfortable and retires at some point. Maybe that was the case in the past. I didn't realise for a long time that there are organisations that actually think like that. And I also didn't realise for a long time that there are people who expect exactly this kind of behaviour from organisations. At an insurance company, I was told that 30% of employees are like this, refusing to change and practically unable to be dismissed. Such organisations will have a hard time. Normally they have enough capital and can dispose of body parts to prolong their life, but the bank whose value proposition is the office in every village has already lost if it can no longer keep that promise because of necessary mergers. These organisations will become increasingly irrelevant and I suspect that some of them will later cease to exist.

Ialso fear that retail will shrink extremely. I don't fear it because it would be a threat - life punishes those who are too late - but those who don't have concepts to successfully retain customers today will probably be pushed out of the market by the giants. And to oust the giants - David against Goliath - that is an illusion. In retail, I keep hearing that the bad customers get advice and then buy from Amazon. That is true. I do that too. I am perfectly willing to pay for a service, like good advice or a product. But if I don't get that service, it seems illogical to me to be expected to pay for it. If I can get the same product cheaper somewhere else, I would be stupid not to buy it there. What retailers often get wrong is this little detail: customers ask for advice but they don't get it. And what they do get is often inadequate or even bad. If I receive a service in addition to the product, such as good advice, support in using the product or help when something breaks, then I am also prepared to pay a higher price for this additional service. But if I find out that I am only supposed to pay for these additional services, but I don't get them at all, then I just buy somewhere else.

Ihave never bought from another shop or online after receiving sound, committed, competent advice. Unfortunately, I don't get the sound, committed, competent advice in retail at all. I order from Amazon because the retail advice service is poor and does not address my needs. And when I find out that the Blu-Ray player offered to me not only costs twice as much, but is also last year's model, I even feel cheated and am glad I didn't fall for it.

The salesman doesn't advise me at all, he sells me his leftover stock or the products he earns the most from. If that wasn't the case, people would buy from him. It's as simple as that.

Anyone who behaves like a 19th century huckster today, in a world full of ever-growing alternatives, derives their actions from the age of the steam engine. Anyone who behaves like this in economic life today is, in my conceptual world, a steampunk - someone who tries to get by in the new reality with outdated means. The new reality means exponential growth and with it rapid change. Steampunk economists don't understand at all what the exponentially growing companies they are already competing with - without even realising it - are even doing. Granted, steam engines look beautiful and are a feat of engineering. But they are cumbersome, sluggish, slow and prone to error.

When the German manuscript for this book was ready in October 2020, I looked forward to working with a publisher. The logo of a renowned publishing house on the cover would convey a serious air. In a personal conversation I learned that the 2021 autumn programme had been decided at the beginning of November and that I would therefore only be considered with my title in the 2022 spring programme. So I was to wait a year and a half for publication, only to be included in the catalogue of a major publisher. That's crazy. How glad I was that I hadn't written a book about the Corona pandemic or about a more pressing issue. Didn't the classic print and newspaper publishers already come under massive pressure 15 years ago because the internet just wouldn't go away? If it takes 18 months to publish a book, I'd rather do it myself. I may not have the reputation of an established publisher, but I have the book in my hands more than a year earlier and thus have time to work with it.

When we study economics - from retail to business - we learn steam engine techniques, we learn steampunk economy, and we use it to try to make the big leaps that are necessary in an exponentially changing world. We should begin to realise that these methods are totally inadequate to achieve our goals - no matter how hard we try, no matter how many hours we work. We need a new course, a course towards sustainability and innovation. And there, the steam engine is of little help.

PART 1.

THE WORLD WE LIVE IN

„The world has just changed so radically, and we're all running to catch up.“

DR. ALAN GRANT

The world we live in is an increasingly networked world. Information is available at all times because the medium in which information is disseminated is spreading unchecked and in many areas uncontrolled. The unbridled availability of information - and I'm not talking about knowledge, that requires intelligence - is the result of the exponential spread of information media, that is, the technology that makes information available. Anything can reach virtually any place on earth in real time and can be reproduced as often as desired, provided no artificial restrictions on access are imposed. If not all information is to be available, a great effort is made to keep it away from certain groups, networks, countries. As freely as information can spread - regardless of its truthfulness - it is relentlessly censored, as in China, not made available at all, as in North Korea, or distorted and skewed for disinformation purposes, as in our hemisphere. With information available worldwide, practically all product catalogues are available globally - just not in North Korea. From now on, every trader is in international competition and customers are no longer at the mercy of local offers. Information, knowledge and education are virtual goods that are distributed at the speed of light and whose local offerings can be compared with national and international offers.

Our educational institutions are increasingly using the media to make their content accessible to learners. However, it is often overlooked that not only the technology has to be digitally ready, but also the learning content. And this means the actual content, i.e. the topic to be taught, as well as the associated didactics. The content must be contemporary, the delivery format must be appropriate for acceptance and the technology must be functional. Only all three factors together make modern ways of learning and education possible. Otherwise, what happens is that we spread outdated knowledge and teach people methods which are not adapted to the new, fast world.

At the same time, the pressure on educators increases because seemingly more and more is expected of them. The delivery method of teaching is changing - hopefully - and with it the demands on teachers. But is it not a core task of teachers to propagate lifelong learning and to enable learners to do so? As a teacher, must I not first and foremost be able to develop and learn? It is not the content that changes. I don't believe that fundamentally new subject matter is being added in mathematics, physics, biology or politics. It's the form that has to adapt. Prefabricated templates have a shorter half-life. And suddenly, performance in a digital delivery form is comparable, content is almost transparent and teaching quality can be assessed. Why are some teachers not interested in this? Perhaps because it exposes their own inability to develop further.

Trying to grasp a new world with outdated methods overwhelms the possibilities of the methods. The perfidious thing about it is: Up to now, the methods have been correct and have served us well. They have been tested for their correctness again and again over decades and we have rarely had any real reason to doubt. Moreover, in some cases there was simply no alternative. But suddenly we have to realise that our recipes for success from yesterday no longer work today. Obviously, the environment is changing in such a way that standard methods are simply no longer effective. The results are no longer a good basis for decisionmaking and the considerations increasingly contain blind spots. It is not enough to train a little here and learn a little there - we need a different attitude and must establish different methods with it.

Some attempts to face the new realities seem almost tragic from the outside, when a completely unsuitable means is supposed to bring an unattainable goal closer. They are reminiscent of the attempt to reach the moon with a steam engine. But only Doc Brown can build a freezer with a steam engine. We must either change our goals and expectations or rethink the concept of the steam engine. Both are difficult. But only one will succeed in the long run. I can decide whether to cut the world as I know it or to take the risk of breaking new ground and accepting uncertainty.

This book is about that dissent.

CHAPTER 1

OF RICE GRAINS, WATER LILIES AND MOORE'S LAW

„The world is changed. I feel it in the water. I feel it in the earth. I smell it in the air. Much that once was is lost, for none now live who remember it.“

GALADRIEL

We are surrounded by constant change. Constant change drives development and without development there is no progress. Without constant change there would be no progress. Without constant change, there would be no intelligent life - even if it is sometimes hard to find. Change as we know it is evolutionary. It happens in many small steps over such large periods of time that we don't even notice the change. Mountains erode, continents drift - at two centimetres per year, this movement is not noticeable to humans in their lifetime. Yet it is there, unstoppable and constant.

From a human perspective, based on our horizon of experience, the continents have always been where they are today. Even if we ask our grandparents, they will confirm the existing structure as unchanged. That is why it is so difficult for us to accept that things are not unchanged and therefore not unchangeable. The theory of plate tectonics was not first formulated by Alfred Wegener in 1915 in his book The Origin of Continents and Oceans [1], but it was widely disseminated and made known to the world. Not to mention that it was aptly rejected and antagonised in scientific and intellectual society. People feared yet another crazy idea without any substance.

Barely 50 years earlier, in 1858, both Alfred Russel Wallace [2] and Charles Darwin [3] had published theories on biological evolution, which has been irrevocably linked to Darwin's name since 1859 with the publication of his magnum opus On the Origin of Species. Not only does the world change - so do all the creatures that live in it. And this change does not happen by chance - it is only based on random mutations of the genome. Evolution is controlled by natural selection and without a goal in mind, it strives for constant improvement. Because constant improvement increases the chances of survival of a species.

And some 60 years later, Richard Dawkins describes in his book "The Selfish Gene" [4] and the subsequent expansion "The Extended Phenotype" [5] that evolution is driven primarily by competitive situations and depends less on group selection. According to Dawkins, the expression of external traits is not only influenced by natural selection alone, i.e. the focus on survivability, but also by competitive situations within a species. He extends the biological phenotype to include the influences that life takes on its environment and adds these to the phenotype. Thus, it is not only the bushy tail that makes the beaver attractive, but also the size of the beaver’s lodge. This evolutionarily favours beavers that have both physical (perhaps character) traits and environmental traits. So influencing our environment influences our evolution.

So the world really is changing - geographically and evolutionarily Galadriel is right. But unfortunately no one is alive to remember what it was like when the world was markedly different. But socio-culturally and technologically, we are feeling the change ourselves - and not just in the water, the earth and the air, but in our immediate surroundings, at home. The changes in communications, the car and entertainment industries, the radical changes in medicine and computer technology are just a taste of what is to come. None of this existed when I was at school. Communication, knowledge sharing and "spending time together" worked completely differently in 1990 than in 2020, so I perceive a generation that behaves and does things radically differently than my generation did. And what does the Steampunk do now? S/he invokes his/her experiences and points to his/her successes to push through his/her concepts, ideas and ways of doing things. After all, what made him/her and his/her generation successful can't be bad and one would be well advised to follow his/her suggestions, advice and instructions. Precisely not.

Our environment has long since ceased to be just our cave, our house or the huge area we destroy for lignite mining, but also our social environment. Our massive impact on communication, availability of knowledge, cultural exchange and comparability also requires new strategies, new behaviours to be successful in this world. So new preferences are emerging - and whoever best serves these preferences will be evolutionarily more successful.The digital environment that we have created and that we increasingly link with our analogue environment, the analogue space, also influences our behaviour and thinking with increasing intensity. For younger generations, digital communication is on an equal footing with analogue communication. Asynchronous communication was first accepted only in letters, then in emails and now even in voice communication. I record my sentence, send it as a voice message and receive a spoken reply sometime later. This results in an asynchronous conversation - this term alone makes me shudder. But just because I don't like it, and maybe don't do it, doesn't mean it's not relevant. So the digital world is becoming increasingly linked, connected and inextricably integrated with the analogue world. The digital part of our environment obviously also influences our evolution.

Evolutionary change is steady and slow and is not perceived by us. When we dig up fossils or carry out DNA analyses, we can make evolution explainable and then also experienceable through models. Nevertheless, we cannot comprehend the drama of the five great mass extinctions - periods of millions of years are too abstract. Since Jurassic Park (1, 2, 3 as well as Jurassic World 1 and 2), every child knows that the dinosaurs died out some 65 million years ago. Too bad. The T-Rex was really cool. The Cretaceous period ended with the extinction of the dinosaurs - out of 2500 genera, 1100 became extinct and the mammals were able to make their rise after being subjugated by the big lizards. No one remembers that either. Because of the long periods of time, we perceive change as linear.

For thousands of years, humans have perceived change, if at all, as a slow, steady process that we can calmly get used to and then adapt too. If change happens too quickly, we can no longer keep up. If cultural change happens too quickly, defence mechanisms become active because we feel attacked in the values that have guided us so far. I am by no means suggesting that we have vigorously questioned these values and also examined their moral correctness. Value systems are the glue of a society - they by no means have to be morally impeccable or ethically clean. Although that would be very nice, of course.

The fact that women in Germany, mind you one of the leading industrial nations, at least still, have not had to take their husband's name since 1994 and that marital rape was exempt from punishment until 1997 is just as disconcerting as the fact that homosexuality was punishable until 1994 (64,000 people were sentenced under the so-called ‘gay paragraph’ §175 StGB) and that the state actually wanted to regulate something as simple as ‘being happy’. Oh yes - since November 2000, children have also had a right to non-violent upbringing under section 1631 of the Civil Code. This makes bringing up children under state orders much more time-consuming.

And today? Women no longer have to ask for permission if they want to take up a job. Fine. According to the Federal Statistical Office (Destatis), women in Germany earn on average 18.2% less than men on the occasion of Equal Pay Day on 10 March 2021, based on updated results of the Structure of Earnings Survey. Furthermore, the majority of interruptions in work in favour of raising children are taken by women. Whether this is wrong or right is debatable, but what is certainly wrong, if not downright stupid, is to practically deny the parent who is bringing up the child the opportunity to participate in working life. If anything positive can be taken away from the Corona pandemic, it is the steep learning curve that work can also be done from the home office and that work can be organised much more flexibly. With unequally poor pay, the attitude that parenting is a woman's job and the inability to integrate the parent into working life, we are amputating 50% of our own brains. We simply don't let them think. And not letting a brain think - well, you can't really define stupidity any better than that. But even the inclusion and consideration of the female half of humanity in language is so threatening to some that they speak of gender madness. Hopefully, this too will soon cause people to shake their heads in incomprehension. Society is changing. But why is this increasingly overwhelming us as a society and economy? After all, as seen above, we are creatures of change. That is true, but we are creatures of evolutionary change, of slow and steady change. If this change happens too quickly, it overwhelms us. If the change is too fast, we cannot cope with it. But what does ‘too fast’ actually mean?

We all know the story of the Indian scholar who taught the Maharajah how to play chess and was allowed to ask for a reward. He was modest. He asked the Maharajah to put grains of rice on the squares of the chessboard: one on the first, two on the second, four on the third, eight on the fourth and so on. 2, 4, 8 grains of rice - the Maharaja looked at the chessboard, thought of a bag of rice and laughingly accepted the demand. He was delighted that the scholar asked for so little or simply could not appreciate the value of rice. When he started to pay his debt and put the rice grains on the chessboard, he must have stopped laughing. At the latest when he realised that he was bankrupt, he must have realised his mistake. Why was he bankrupt?

Because with a doubling per field with 64 fields, there are 263 grains of rice on the last field alone. That is 9.223.372.036.864.775.808 grains. If each grain weighs 0.3 grams on average, there are 277 billion tonnes of rice on the sixty-fourth field alone. If you add the 63 fields before that, you get 540 billion tonnes. In 2018/2019, the global harvest amounted to 499.2 million tonnes of rice. 540 billion tonnes divided by 499.2 million tonnes/year gives about 1081 years. So the Maharaja gambled away the next 1081 years' harvests of all the countries in the world - therefore bankrupt. But why didn't he notice this? Because we are used to linearity. But doublings reflect exponential growth. It looks like linear growth at the beginning because the scales are so small - it takes a little while, but then it explodes.

In 1965, Gordon Moore [6] of Intel formulated the law in Electronics magazine that the number of integrated circuits (in computer processors) doubles about every two years. In 1972 there were about 2500 circuits in a processor, in 1974 there were 5000 and in 1984 there were just over 100,000. That is about when society started to notice microprocessors in computers and game consoles (Atari rules!). In 1994, there were about 500,000 circuits - enough to give the operating system a fancy interface and make the computer comfortable to use. Up to this point, you had to know some kind of computer language - you had to know the commands and follow their syntax. If you couldn't do that, you couldn't open or process files. With a user interface, the use became visual and accessible to a wider mass of people. We can remember symbols more easily than abstract abbreviations. From this time onwards, the internet also emerged, something like the extended phenotype of integrated circuits. One development makes the other possible and an exponential parallel evolution takes place. In 2004 there were a hundred million circuits, in 2014 five billion transistors and today we are close to the 50 billion mark. Thanks to high computing power and storage capacity, the internet has established itself as a real business location to which entire industries have migrated or been substituted.

We are in the process of developing a new, extended phenotype - a digital one. Through smartphones, wearables and constant involvement in the flow of data, we are linking the digital with the analogue reality and making both interdependent. We influence the digital reality and thus also the analogue reality. Dating on the internet, by selecting the best matches, leads to perfect couples (QED), creating the next generation of digitalos. If only people who are a Perfect Couple approved by apps and who have a Super Social Score in the form of many Likes reproduce, then the digital world has a massive impact on our old analogue world - to the point of evolution or devolution. The digital phenotype directly influences our digital, but also biological development - with increasing speed and intensity. If that's not an extended phenotype, I don't know what is.

The mathematics behind what we still call artificial intelligence dates back to the 1950s. Much of these theories, concepts and ideas were hidden in papers and textbooks and for a long time were effectively without practical relevance because there was no technology to enable their application [7]. Until today, although, actually, until yesterday. Yesterday we were at the beginning of what we call artificial intelligence. Today we are one step further. It took 70 years to develop AI on paper, invent the necessary technology and see the first tender shoots sprout. In a linear world, the world of our brain, perception and consciousness, we can sit back without worry. In the exponential world of the chessboard, we should be very mindful.If the water lilies in a water lily pond are thriving, doubling in size every day and covering half the surface of the lake after ten days, then we must act today, because tomorrow the lake will be completely covered with water lilies, suffocating all life in it.

 

EVERYDAY LIFE IN THE VUCA WORLD

„Roads?

Where we’re going we don’t need roads!“

DOC BROWN

In a world where it is not a stigma to have no idea about science - some people even flirt with it - it is naïve to expect a basic understanding of statistics and probabilistic thinking. The relationships in aristocratic houses or the latest baking recipes of Z celebrities are discussed in detail, but why one is weightless in the ISS, even though 90% of the earthly gravitational forces are still at work in a 400 km orbit, produces perplexed silence. Sometimes also mad giggles. Now you might think that COVID-19 and the pandemic that accompanied it was a game-changer. Because suddenly, instead of football and royal weddings, exponential growth and doubling rates were being talked about on TV. But it was amazing that even those who reported on it in the Corona era don't seem to have understood the concept of the doubling rate. The doubling rate is about something doubling in a certain period of time. The water lilies on the lake or the number of people infected with COVID-19. The aim of the containment measures was to bring the infection rate to 1, so that one infected person would only infect one uninfected person. In addition, the doubling rate was to be slowed from an initial four days to ten days. Later, the number of new infections and the 7-day incidence value were consulted. The 7-day incidence value is the arithmetic mean (more on this later) of the new infections of the past 7 days. And indeed the numbers are going down. But the number of infected people is not. It is increasing. If the number of newly infected people is lower today than yesterday, then there are fewer people in comparison, but the total number of infected people becomes larger, because those newly infected today are added to those newly infected yesterday. The total number of infected people is climbing - and climbing rapidly. It's just not increasing as fast as it could if it were allowed to. If I could manage to halve the doubling rate of water lilies on my pond, I would be given until the day after tomorrow to save my pond. I gain exactly one day and I should use it well.

These mechanisms require an early understanding of the interrelationships and possible effects of events. I have to recognise the connections - the effects of the growth rate. As soon as I spot the first water lilies and notice their spread, I inevitably have to act. Hesitant waiting allows the situation to escalate so that I can no longer reverse the trend and possibly suffer great damage. This is exactly what happened in the COVID-19 pandemic. First it was in China - too far away to be relevant. Then in Europe - can still be ignored. Then the first hotspots came and the spread went into full dynamic. It calmed down in the summer and the second wave from autumn 2020 hit Europe even harder than the first. And again and again people advised not to listen to science, because that too was just an opinion. It would have been easy to ward off the second wave - all that was needed was a behavioural adjustment.

With enough time, I can observe a development, analyse it and think about how to deal with it. In 1877, the first telephone call was made in Germany with a Bell set and from 1881, the first public telephone networks were built. In 1930, there were around 3.2 million telephone connections in Germany. The instant messaging service WhatsApp, launched in 2009, cracked the 30 million user mark in Germany after five years and is used by almost all German users of communication services in 2020. The platform TikTok had 5.5 million users in Germany in 2019 - after two years. So the question now is whether the rapid spread is in the nature of the service or whether the speed of spread has increased in general. Is my boat that fast or am I riding a tsunami wave? Has there always been a doubling rate and have we always moved forward one square at a time on the chessboard?

In the 1990s, the acronym VUCA emerged at the United States Army War College as an abbreviation for voltility, uncertainty, complexity and ambiguity. The term was used to teach and describe the changing strategies of warfare. In the past, in a proper war, two armies would face each other. Then one would give the command, all would run and at the end there would remain a red field of honour (please forgive my cynicism). Okay, not red when gassing each other, but those are details (again). With the Vietnam War and at the latest with the invasion of Iraq, the concept changed. Suddenly there were no more uniformed armies, but women and children with explosive belts and alliances that changed daily. Sometimes friend and foe also differ regionally. The same people who are my friends and allies in one city can be the enemies in the other.

At the United States Army War College, one spoke of volatile situations, of conditions that could change very quickly. Supposedly safe missions could turn into combat missions through attacks and sudden assaults, which posed completely different challenges for people and material. Changes are unpredictable and cause-and-effect relationships practically impossible to name. The lack of cause-effect relationships makes action in the VUCA world uncertain. In a non-linear world, i.e. a world without recognisable cause-effect relationships, planning actions in response to future developments is almost impossible. Likewise, it is virtually hopeless to make predictions about the future based on past observations. The future is not a repetition of the past.

If there is a lack of linearity, then causes have more than one effect and effects often have more than one cause. Changing one factor can cause a completely unexpected reaction or create ten new problems with the solution of the first problem. When causes and effects interfere, we speak of complexity. A complex system cannot be properly understood by pure observation. In a complex system, all or at least many parts interact with each other. They influence each other and depend on each other. When I turn a knob, I see effects in several places. But it is by no means certain that twisting the same knob at a different time will trigger the same effects. We have no idea what the consequences of the great species extinction we are witnessing will be.

The ambiguity of the VUCA world results from the fact that standard procedures no longer exist in a volatile, uncertain and complex world. A standard procedure is characterised by a certain longevity. How can something long-lasting last in a volatile, i.e. rapidly changing, uncertain, complex world? Basically, in a world that is constantly changing, there are no real standards any more.The time periods in which standards retain their validity are becoming shorter and shorter until they are no longer sufficient to develop standards at all.

Rapidly changing societies also lead to a rapid magnification of differences. This coupled with technological weapons development has resulted in a grandiose evolution of the WUSHU - the art of war. And the rapidly changing art of war has produced the VUCA world model. The exponential growth of technological possibilities and the expanded digital phenotype have completely changed the permanence of products and their life cycles. Start-ups can launch highly complex products and shake up long-established corporations. Traditional brands and products disappear without a trace and completely new industries with new business models emerge. In the last ten years, a completely new way of doing business has emerged with entirely new business models that were unthinkable in the 1990s and 2000s.

Since 2010 at the latest, the term VUCA world has also been used in business [8]. Rapid change that enables completely new products and manufacturing processes, platform technologies that enable completely new business models, and global structures that open up completely new distribution channels make global trade independent of one's own company size and make it basically accessible to everyone. In the process, the distinction between analogue and digital goods is becoming increasingly blurred. Whether I stream films, buy digital music as a stream or pressed onto a CD, book a holiday or buy office furniture - the actual purchasing process is no longer different. If I buy a physical good, there is still a logistics service provider who delivers the goods to me - otherwise the processes no longer differ. The ability to deal with rapid changes, uncertainties and complexities is the key to long-term survival. The most obvious fast-moving change is the digitalisation of the economy and society. It now forms the backbone of technological, but also social developments.

The digital economy is borderless and inevitably drives globalisation. Many countries are experimenting with digital administration to make government records digitally available to their citizens. Some are doing it faster, others are lagging behind. But there is no country where the relevance of the topic has not been recognised. Many companies are developing many products and testing new business models all over the world. Occasionally, they are capable of completely wiping out traditional industries. In these cases, the term 'disruption' is used. And the strategy for surviving in such a world is usually described as agility, i.e. the ability to change and adapt as an organisation - not at the pace of a regular restructuring, but driven by the impulses of the market and more specifically one's own customers. And this has to happen so rapidly that one adapts to customer needs before they have evaporated - in other words, very quickly.

 

IMPACT OF THE VUCA WORLD - DIGITALISATION, GLOBALISATION, DISRUPTION AND AGILITY

„I repeat: this is not a drill. This is the Apocalypse. Please exit the hospital in an orderly fashion.."

HOSPITAL P. A.

The elegance of the term - VUCA - is certainly debatable, but no other socio-economic development of the last 50 years has brought such rapid, far-reaching and, above all, irreversible change. VUCA can be translated into our everyday world with four terms: Digitalisation can be used as a general synonym for increasing permeation of technology, also robotisation. Globalisation stands for unrestricted expansion. Globalisation does not mean the customs clearance of goods, but the unlimited availability of the most valuable commodity of our time: data and its linking to information and its linking to knowledge. By Disruption we mean the sudden appearance of unexpected innovations as a direct result of digital globalisation.Economic striving is no longer characterised by looking in the rear-view mirror to see if the competitor is catching up. Economic striving is threatened by turning out of the side road. Even the biggest global players can be faltered and even brought down by small competitors. So we need to choose organisational structures that allow us to deal with constant change and adapt to new circumstances. Plan-driven work is not flexible enough to adapt to rapid change. Therefore, methods and frameworks are needed that can deal with constant change without being undermined or corrupted. This organisational culture is called Agility. In the VUCA world, agility seems to be the only

DIGITALISATION

„And the world was more beautiful than I ever dreamed, but also more dangerous than I ever imagined.“

KEVIN FLYNN

The dream of digitalisation seems as old as the Commodore 64, which from the mid-1980s onwards could be found not only in domestic children's rooms but also in one or two offices. While the 5 1/4 inch floppy disk quickly became popular among gamers, professional users were often content with the much slower Datasette. In the 1980s, digitalisation still meant a paperless office. And in a presentation of a physicist I was recently allowed to attend, he first described how analogue waves with certain sampling rates can be converted into digital signals and then stored and copied without loss. In fact, he then also had a lot to say about the PDF format and, as the managing director of a medium-sized mechanical engineering company, also about the paperless office. That is the technical process of digitalisation. But that is not what is meant here. Digitalisation is not (only) the provision of fibre optic technology and fast mobile data networks. This is only the infrastructure that digitalisation requires. Digitalisation in a socio-economic context means the exploitation of these infrastructures to digitalise entire economic sectors, business models and corporate processes.

It's about the increased performance of digital processors that can and will deliver unimagined computing power, storage power and ultimately learning power. I am concerned with the digital, enhanced phenotypes of processor performance, such as digital data processing, data transmission and pattern recognition by artificial intelligences.

We have known for a long time that computers can play chess. The rules of chess are relatively simple and can be explained algorithmically. However, working through the rules of chess is not enough to win against a chess master. A certain amount of experience is necessary, and experience is acquired over a period of time. You can't shortcut experience either. To become a chess master, in addition to the necessary talent, you need about 10,000 hours of playing to build up the experience. IBM's Deep Blue did not have to build up this experience in tedious hours, but had this experience thanks to thousands of stored games and thus won an entire competition of six games under tournament conditions against the reigning world chess champion Garri Kasparov in 1997. From today's artificial intelligence perspective, this is almost primitive, because Deep Blue had simply stored everything known about chess. When Kasparov made a move, Deep Blue could compare it with all possible countermoves and thus statistically evaluate the course of the game. The move with the highest success rate was then selected. Actually, this is not intelligent behaviour, at least it is neither complex nor creative. Knowing the phone number for each name is not a problem if you can simply look it up in the phone books.

20 years later, AI implements machine learning. The much more complex game of GO (Everything must GO!) compared to chess has been mastered by computers since 2006, but also on the basis of statistical evaluations of stored moves. In 2015, the European champion Fan Hui was beaten by the AlphaGo programme after it had been trained by humans and other Go programmes. I have to pause at this thought - humans train a machine because the machine can use the trained behaviour much more efficiently once it is learned. In 2017, AlphaGo Zero was released. And at this point at the latest, we should sit up and take notice. Because AlphaGo Zero was neither trained nor fed with databases. AlphaGo Zero learned the game for itself using the rules - and beat AlphaGo after only three days. AlphaGo Zero is therefore a self-learning machine. AlphaZero from the same year learned both chess and Go and beat all programmes published to date. When a machine knows all possible moves and then selects their application via probability distributions, it's as impressive as a memorised phone book. When the machine is trained by humans, it simply mimics the known strategies. It looks at future games as variants of past games. New strategies do not emerge with this approach. But AlphaZero is different - AlphaZero develops new strategies on its own. It does not imitate games, but reinvents them independently. That is creative behaviour.

Since 2018, we have found reports of computers composing music in the style of Bach, without experts being able to tell Bach and the AI apart [9]. Also in 2018, a painting by an AI was auctioned at Christie's auction house with an expected price of up to 10,000 US dollars. Music is based on patterns that can be explained using mathematics.

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