History has many examples of powerful companies that seem to be unbeatable. Then in a short time they become irrelevant due to new companies with new ideas. One of the factors in such transformation is technology. Never in history has technological change been so important in building and destroying companies. We look at few examples of successful companies that fail to address the changing times and become disrupted. We also look at why technology emerges when it does and why some ideas can only be realised when certain conditions are met. In this first lecture we set the tone for the course and define the themes that we will be looking at.

1. NEW TECHNOLOGY
2017

2. Ólafur Andri Ragnarsson

4. LECTURE L01
INTRODUCTION

5. Stephen Elop,
CEO Nokia 2011

7. In 2002 Nokia had 35% of
the worlds mobile market
In 2006 Nokia had 73.6% of the
worlds smartphone market

8. Falling from glory
Nokia stock price 2007-2011

9. 1871: Founded. Spends the next century making tyres, boots and
cables.
1987: Launches first phone. The Mobira Cityman weighs almost 1kg.
1992: Sells non-mobile divisions and launches first digital GSM
phone, the Nokia 1011.
2000: Stock market value hits 186bn euros. Now worth 11bn euros.
2003: Basic 1100 phone launched. Goes on to sell 250 million units
and become the world's most popular consumer electronic device.
2011: Abandons Symbian mobile phone operating software and
switches to the Windows platform instead.
Source: Reuters/Nokia
History of a survivor

10. The iPhone

11. Shift in power
Source: Google

12. Shift in power

13. Early 2011, Elop said
in a memo they were
standing on a
burning platform

14. How did we get to this point? Why did we fall behind when the world
around us evolved?
This is what I have been trying to understand. I believe at least some
of it has been due to our attitude inside Nokia. We poured gasoline on
our own burning platform. I believe we have lacked accountability and
leadership to align and direct the company through these disruptive
times. We had a series of misses. We haven't been delivering
innovation fast enough. We're not collaborating internally.
Nokia, our platform is burning.
Elop’s Memo - excerpts
http://www.theguardian.com/technology/blog/2011/feb/09/nokia-burning-platform-memo-elop

15. Shift in power
The Mobile Industry
before 2007
Hardware
Limitations
Mobile OS
“Mobile” Internet
Walled garden
Predefined functionality
The Mobile Industry
after 2007
Software
Full functionality
Real OS
Internet
Open
App store

16. The iPhone Effect

17. February 11th 2011, Nokia announced
a partnership with Microsoft

18. September 3rd 2013, Microsoft bought Nokia’s Devices
and service business for $7.2 billion

19. Is this new…?

20. Western Union 1878
7,500 offices
12.000 employees
200,000 miles of cable

21. https://thepoliticalcarnival.net/tag/western-union/

22. Alexander G. Bell, 1876

23. "This 'telephone' has too many
shortcomings to be seriously considered as
a means of communication. The device is
inherently of no value to us."
- Western Union internal memo, 1876.

24. AT&T became dominant in US
communications - split up in 1982

25. Actually this is not even rare…

26. Britannica 1990
Sales: $650 million

28. Taken from Mary Meeker’s State of the Internet

29. Printed books, sold in stores Online, access everywhere,
updated in real-time,
crowdsourced
THEN NOW

30. And again…

31. In January 2010, Blockbuster
operated 5,200 stores worldwide

32. By September 2010, Blockbuster
files for bankruptcy

34. TECHNOLOGY
IS ONE OF THE
MAJOR
FACTORS IN
CHANGE

35. Today 3.4 billion people connect to the Internet and in the next few years 3
billions will connect
There are more mobile devices connecting to the Internet than computers
Printed newspapers and magazines are going out of business, those who
survive will go online
Bookstores are closing as sales of books decline
CD sales are dropping rapidly as online streaming increases
TV stations need to go on the internet or out of business
Social networks are shaping our lives in ways we never imagined
Amazon sells more digital books than printed books
Over 6 billion hours of video are watched each month on YouTube
Self-driving cars are taking to the roads
People are starting to lose jobs because of robots
Every day 864 million people log on to Facebook each day
People are tracking the health and activity with sensors and gathering
statistics in the cloud

36. UNDERSTANDING
TECHNOLOGY TRENDS
AND THEIR IMPACT ON
PEOPLE,
BUSINESSES
AND SOCIETY

37. CAN WE
LOOK FORWARD
3-5 YEARS
TO SEE COMING
CHANGES

38. LIVING IN THE FUTURE

39. Living in the future - predict how
technology will impact businesses in
the next 3-5 years

41. “Humanity will change more in the
next 20 years than in the past 300
years” — Gerd Leonhard

43. This was in 1991

44. Then in 2016 this happens…

47. Is Virtual Reality really real or just fake?

49. WHY WAS
2016
THE TIME FOR
VIRTUAL REALITY?

50. ADJACENT POSSIBLE
WHEN ALL
THE ENABLING TECHNOLOGIES AND
CONDITIONS ARE READY,
NEW INNOVATION WILL EMERGE

52. ROOMS FAR OUT
ARE SCIENCE FICTION

53. EXPONENTIAL
GROWTH

54. The Age of Information

55. 1947
Programmable all-purpose electronic
computers start to have impact on big
businesses and government
Automation starts, jobs get lost
IBM mainframes
Mainframe

56. 1965
Minicomputers allow mid-sized companies
and academia to have time shared
computing power
Automation continues
Minicomputers

57. Fifth Technological Revolution
starts
Intel 1971
The Technology Trigger 1971

58. 1981
Personal Computer allowed small
companies and individuals to own and
program computers
Generative platform
Opened up a huge revolution - created a
new industry
Personal Computers

59. IRRUPTION

60. 1995
Opened up a new way for people to
communicate and exchange data
Generative platform,
permissionless innovation
Created new industries, transformed
businesses
3.4 billion connected
Internet

61. FRENZY

62. “This time it’s different”

64. 2007
The smartphone revolution takes off with
new possibilities
Powerful computer in your pocket
Access to 4 million apps
Constant access to the Internet
Smartphone

65. PDP-8
Computer from DEC in
March 1965
Cost 18.500 USD
50.000 machines sold
12 bit architecture
32K memory
0,5 MIPS
MIPS: millions instruction per second
iPhone 6
Smartphone from
September 2015
Cost $649
Sold 10 million phones
in 3 days
64 bit architecture
128GB “capacity”
25.000 MIPS

66. From PDP-8 to the iPhone 6
50.000 times faster
50 years
And has camera, sensors, speakers, Wi-Fi, etc…

67. We have a supercomputer in our pocket

68. 2000 2010
iMac iPhone
iMac G3
Mac OS 9.0.4
500 MHz PowerPC G3 CPU, 128MB Memory
Screen - 786K pixels
Storage - 30GB Hard Drive
iPhone 4 iOS 4.0
1 Ghz ARM A4 CPU, 512MB Memory
Screen - 614K pixels
Storage - 32GB Flash Drive
THE SECOND HALF OF THE
CHESSBOARD

69. MUSIC
PICTURES
COMMUNICATION
SMARTPHONES
TV SHOWS
MOVIES
BOOKS
THE DIGITAL DECADE
2000 2010

70. 2000 2010
SOCIAL MEDIA

71. 3+ BILLION PEOPLE
ARE CONNECTED
TO THE INTERNET

72. Mainframe
1947
Minicomputer
1965
PC
1981 1995
Internet Smartphone
2007
The Shortening Waves

73. The Next Wave is built on the Smartphone Wave

74. What does this mean?

75. How will technology
change people’s behavior?

76. WE EMPHASIZE
TECHNOLOGY
BUT IGNORE THE
SOCIAL AND CULTURAL IMPACT

78. Software eats the world

79. Intelligent Software

80. Real-time Software

81. Businesses are going though
Digital Transformation

82. THE TRANSFORMATION
DECADE
2010 2020
BUSINESS
MODELS OF THE
20TH CENTURY
BUSINESS
MODELS OF THE
21TH CENTURY

83. HIERARCHAL NETWORK
20th Century 21th Century

84. THE
DIGITAL DECADE
THE CONTENT
ESCAPES
THE FORM
INTERNET
DISRUPTION
BEGINS
1900 2000
From hierarchical structure to networks
From broadcasting to streaming - long tail
From Read-only culture to read-write culture
The Move to Networks
THE
TRANSFORMATION
DECADE
BUSINESS MODELS
CHANGE
SMARTPHONES
REAL TIME SOFTWARE
CLOUD AND AI
2010

85. 2010 2020
Defined Industry Boundaries
Single-purpose Products
Producers and Consumers
Buying Economy
Hierarchical Structure
Platforms, ecosystems
Connected Smart Products
User as producer, co-creation
Sharing economy
Network Structure
The Transformation Decade
Broadcasting Streaming
Gatekeepers Algorithms
2010 2020

86. MANY 2 MANY:
PEER INTERACTION
ESTABLISHED
BUSINESS MODELS
GET DISRUPTED
READ WRITE CULTURE
ONE 2 MANY:
BROADCASTING
BUSINESS
MODELS GET
ESTABLISHED
READ ONLY CULTURE
BEFORE NOW
CONTROLLED BY
GATEKEEPERS
CONTROLLED BY
CONSUMERS

87. Desktops, heavy laptops Lighter, smaller, portable
BEFORE NOW
THE WORLD IN YOUR POCKET

88. Keyboard, mouse Touch, sound, gesture
BEFORE NOW
CHANGE IN USER EXPERIENCE

89. OUR
DEVICES
ARE
GATEWAYS
TO
THE
CLOUD

90. FUNDAMENTAL
SHIFT
IN
PEOPLE’S
BEHAVIOUR

91. FUNDAMENTAL
CHANGE IN
CONSUMING
CONTENT
Picture by Flickr user Shaggyshoo

92. FUNDAMENTAL
CHANGE IN
PRODUCING
CONTENT
Picture by Flickr user Shaggyshoo

93. FUNDAMENTAL
CHANGE IN
CONNECTING PEOPLE

94. END
OF
CONTROL

95. The Smartphone

96. 4+ billion people have
smartphone
Source: ITU, a16z, Benedict Evans slides

97. If you want to get customers to use software,
you cannot ignore mobile
Source: ITU, a16z, Benedict Evans slides
The Internet Bubble

98. Source: ITU, a16z, Benedict Evans slides
And we are talking about apps not mobile web - its not a
technical question

99. People check their smartphone
over 100 times per day

100. Internet of Things

101. Everyday objects get sensors and
software and connect to the Internet

102. Thing
Smartthing
Processors
Sensors
Software
Connected smartthing
Processors
Sensors
Software
Source: HBR
Farming
system
Planters
Tillers
Tractor
Combine
harvesters
Ecosystem

103. Smart farming

104. Accelerometer
Gyroscope
Magnetometer
Barometer
Proximity
Light sensor
Touch screens
GPS
WiFi
Bluetooth
GSM/CDMA Cell
NFC - Near Field
Camera front
Camera back
Sensors

105. Fitness tracking – healthy
lifestyle

106. Jawbone UP fitness tracker

107. Philips HUE light system

108. iGrill thermometer

109. Sonos sound system

110. Real-time algorithms

111. Using computers in the Information
era: you sit down and use the
computer just as any tool

112. Using computers in the digital era:
The computer tells you what is
happening and what
you need to do
Real-time Algorithms

113. Rise of online ordering and delivery
services

114. Transformation from Hierarchical to Networks

115. The 20th century society structure was
hierarchical – government, companies,
any form of communication
Coordination cost is high

116. The 21st century society becomes a
network – software connects individuals
Coordination drops to zero

121. UBER protests

122. Any business that is built around a
hierarchy with high coordination
cost, will be crushed by a networked
software solution with low
coordination cost

123. The Physical blends with the Digital

124. Augmented reality – overlaying digital
over the physical

125. Microsoft HoloLens

126. Gaming, instructions, design, prototyping
etc. will fundamentally change

127. Virtual reality - completely enter the virtual world

128. Gaming, learning, travelling, exploring,
movies, entertainment, etc. will
fundamentally change

129. NBA is experimenting with VR

130. Ever wanted to be in a formula 1 race?

131. Virtual Reality surgery

132. Virtual Reality for training and better information

133. Machine Learning

135. Artificial Intelligence has
been a failure for decades
– but now it is starting to
work

136. Powerful Neural network algorithms
Cluster of thousands of fast GPU machines
Big data – lots of data
And you get something clever

137. Learn how
to play
video
games

138. Learn language translation – in real-time

139. Learn language translation – in real-time

142. “The business plans of the next
10,000 startups are easy to
forecast: Take X and add AI.”
-- Kevin Kelly

144. Chatbots

145. Interact with business services and experts
like you do with your friends
Facebook released an API
for chatbots
Wit.ai Bot Engine for natural
language assistance
900 million people use
Messenger

147. Amazon Echo
Device that you can
speak with
And listens to all your
conversations

148. We are seeing the transformation of old
established physical ways of doing business into
new ways that are optimized around real-time
software systems – this is called Digital
Transformation

149. New Technology
2017