Decision-Making in the Digital Disruption Era: "Thinking Ahead to the Future"

Is Technology Friend or Foe?

Big data, AI (artificial intelligence), blockchain, IoT... Recently, discussions about disruptive innovation driven by various technologies—digital disruption—have surged dramatically.

A famous exampleisthe news that Google's AlphaGo defeated a professional human Go player.Public opinion also reflects a sense of threat among people,with concerns like, "The evolution of technologies like AI will take all human jobs!"

Is the future brought by technology a dystopia like the worlds of The Terminator or The Matrix...? Personally, I find such sci-fi-like debates fascinating, but let's set that aside for now...

My personal observation is that rather than taking away jobs, technology is rapidly increasing the need for work that "streamlines, enhances, and creates new business operations."

In this environment, faced with technological progress advancing so rapidly that even the next year is unpredictable, I believe concerns like "What should I decide right now, and how?" are also increasing on the business front lines.

This time, using "Thinking Ahead to the Future" (Discover 21) by Koyo Sato—who leads FinTech and space development ventures at Metaps—as our reference, we'll explore hints for navigating this uncertain era.

99.The Law That 90% of People Misjudge the Future

"It will take a million to ten million years before flying machines are invented through the cooperation and unceasing efforts of mathematicians and mechanical engineers." - The New York Times, 1903 (published weeks before the Wright brothers' first flight) (P.3)

This article, written by a reporter for the prestigious New York Times, demonstrates that the future arrives at a pace far quicker than most people imagine.

Incidentally, after the Wright brothers' first flight, the question of spacecraft naturally became a hot topic of public discussion... yet many people reportedly said the same thing: that such a thing was nothing but a pipe dream. It's quite interesting that this book defines 99.9% of people as misjudging the speed of progress toward the future.

So, what about the remaining 0.1%... How exactly have disruptors like Apple, Google, and Amazon, who have brought rapid innovation through technology, managed to foresee the future?

0.To be in that 1%, you must understand technology from its fundamental principles.

Nowadays, many people use PCs and smartphones. Beyond simply using them, there are also many businesspeople who can speak knowledgeably about the latest trends in apps and other technologies.

However, very few people can meticulously explain the "fundamental principles" of how computers, smartphones, and apps themselves actually work, including their electronic circuits. According to this book, this is defined as one "barrier" separating the 0.1% from the 99.9%. And those who can understand and execute development across the entire process are even rarer.

In every modern market, the ability to understand technology from its fundamental principles and actually build products with your own hands is expected to become an essential skill going forward.

For example, even in non-tech companies, the need to overhaul business processes through digitalization is increasingly common. Personally, I believe the concept of "digital" itself will eventually become so commonplace that it will fade into the background.

When investing in technology to streamline marketing or other functions, should the return be targeting a threefold improvement in current operations or marketing, or aiming for a hundredfold increase? Even when introducing similar "technology for marketing improvement," making sound investment decisions is difficult without understanding the underlying principles.

Furthermore, it is essential to know "by when" and "to what extent" technological innovation will occur. Decisions not grounded in the value delivered by current technology are meaningless. To avoid being trapped by short-term efficiency gains and ending up with obsolete, ineffective solutions, it goes without saying that merely "knowing the technology" or "having used it" is insufficient.

Today, understanding technology is crucial precisely on the business side of investment decisions, where boundaries like liberal arts or science backgrounds no longer hold sway.

No matter how much you modify and maintain your bicycle, you will never be able to go into space.
No matter how fast you pedal, the bicycle's structure absolutely prevents it from floating in the air.
If you want to go to the moon, you first need to get off the bicycle you're currently riding. (P.208)

 

0.To be in the top 1%, you must recognize patterns and understand the fundamental principles by which the world changes.

Understanding multiple social change triggers—including economics and human emotions—equals discerning "the patterns by which the world changes." This is said to be the second condition for being in the top 0.1%.

To read patterns and see the world as a line, not just dots, the book suggests "questioning logical thinking" as a crucial point.

The "logic" one can construct inherently carries the risk of being limited by the scope of information one can gather. Furthermore, the judgment of whether something is logical depends on the "literacy" of that population. (P.220)

Naturally, leveraging technology to extract patterns—sometimes involving the analysis of vast amounts of information known as big data—becomes crucial.

In 2012, Facebook acquired Instagram, a photo-sharing app company with 13 employees and zero revenue, for $1 billion. At the time, Instagram had around 30 million users worldwide, and investment analysts reportedly gave it highly critical reviews. However, as you know, by June 2016, it had grown significantly to 500 million users.

(Reference: http://blog.instagram.com/post/146255204757/160621-news )

This unique decision, which defied conventional logical thinking, was one only Facebook could make. It required deep technological literacy and distinctive pattern recognition (spotting the signs that photos would become killer content on SNS).

Aim for that 50/50 decision: Technology understanding/pattern recognition and gut feeling...

Today, uncertainty is growing exponentially due to the wave of digitalization, making decision-making increasingly difficult—not just for major acquisitions or business investments, but even for allocating operational cost budgets six months ahead (e.g., marketing budget distribution or introducing new solutions).

Within business organizations, literacy inevitably varies across hierarchical levels, and the decision-making process often stalls. This phenomenon is expected to become widespread across many organizations going forward. Furthermore, especially in large corporations, even if an investment decision is made for a particular business, a strong performance-driven culture persists. If results aren't achieved within a certain period, investment in similar categories is often frozen for some time afterward.

Looking at the real-time situation, no one, including myself, would think that way. Yet, it is precisely in the future where, if you pursue the principles to their logical conclusion, it will inevitably happen that investment is necessary. (P.244)

In conclusion, the book suggests that a decision-making model aiming for a "50-50 split" between intuition and principles may be effective. Even if technology enables pattern recognition based on unique variables, the final decision-maker remains human.

Currently, even with deep technological understanding and the ability to extract patterns of global change, it seems practically impossible to completely predict the future and consistently make perfect business judgments—factoring in organizational realities.

On the other hand, within such organizations, developing and possessing a unique "decision-making equation" could be the shortcut to anticipating the future and surviving this era of high uncertainty.

【Dentsu Inc. Modern Communication Lab】