WRITTEN BYTeemu ArinaSam InkinenJuhani V. Parda

New paradigms, trends, and changes affecting the world.

Glocalization and Opennessin the Age of Turbulence

Q1 2011

What?

Why You are in the now business. The world lacks a straight-to-the-point publication that describes the current paradigm shifts in an understandable way so that you cantake immediate action.

For Our publication is intended for global leaders and business owners who need to make informed decisions under extreme pressure in a short time frame.

Howwww.megasignals.com publishes an exclusive e-book quarterly and a blog expanding on the topics addressed in the e-book and featuring top minds weekly – free of charge.

Stay connected and stay ahead:

Megasignals explore the major paradigms, trends,and changes affecting the world.

Subscribe to next free e-books

www.megasignals.com

• Vice President, Translink Corporate Finance Oy. Investor. Board member, Stichting Braz fund of funds.

• M. Sc. (Eng.), CFA II Candidate, corporate trainer, and coach.

• Has done business on 6 continents. Travelled around the world 55 times,lived in 6 countries, and discovered approximately 100 countries.

• Ex-GM of Nokia Multimedia Service Business in Latin America.Ex-Chief Negotiator Ericsson Telecommunications, Asia-Pacific.

• Key strengths: High growth markets in Latin America, Asia, the Middle East, and Africa.Technology and innovation assessment and investment + market entry process.

3

Authors

• Media scholar, futures researcher, writer, curator, and senior consultant.

• Author, co-author, editor and co-editor of over 30 books. Publications include Mediapolis (1999), Understanding Innovation Dynamics (2009), and the four-volume largeThe Integrated Media Machine (1999–2005).

• Over 100 countries discovered on six continents.

• Key strengths: Media technologies, digital culture, creative processes, open innovation, arts and design, experience economy, foresight, and network society.

Dr. Sam Inkinen

• Public speaker, writer, journalist, and management consultant for digital technologies.

• Given approximately 100 presentations a year at recognized conferences, business summits, and universities in Germany, the U.S., the UK, Belgium, the Netherlands, Finland, and Italy.

• No. 1 speaker on social media at Speakersforum, the largest speakers agency in Finland.

• CEO of Dicole Ltd. and award-winning technology entrepreneur for over 13 years at the age of 28.

• Key strengths: Social media, open innovation, net generation, knowledge management, service design, digital ecosystems, collaborative learning, and e-learning.

Teemu Arina

Juhani V. Parda

Turbulent FinanceWe live in unprecedented uncertainty.

Extreme OpennessOpen systems and mindsets are defeating closed systems.

Megasignals Covered in This Issue

Glocal VillageWe are more connected and nomadic than ever.

Index

4

Glocal VillageWe are more connected and nomadic than ever.

5

www.megasignals.com

Glocal = Global + Local

Our world is global and local simultaneously. We approach global markets, opportunities, risks, and threats often through national and local eye-glasses. This is the starting point and key challenge for business, politics, and product development.

The fashionable and high-flown talk about globalization and technological development often forgets that we view markets deeply from national and local perspectives.

Our planet is more interconnected and multi-cultural than ever. At the same time mother tongues, local histories, and cultural habits bind people strongly with local circumstances.

Things are changing however. “My home is where my hat and mobile phone is.” The next generation of global nomads lives without great focus on national borders or home culture.Many of them live without a traditional “home.”

6

Glocal Village

• real time• connectedness• all-at-onceness• nomadism• peer production• creative tribes• extensions of man• mobile technologies• social media

Common buzzwords:

» For more discussionand details, visit our blog.

www.megasignals.com

Background

Global Village is a key notion closely associated with Marshall McLuhan. His seminal books include the classicsThe Gutenberg Galaxy: The Making of Typographic Man (1962) and Understanding Media: The Extensions of Man (1964).

McLuhan explained and predicted how the planet is becoming an electronically connected village with instant and real-time flows of information. All the continents and communities are connected with each other on mental, social, political, and economic levels.

A global and glocal consciousness emphasizes heightened awareness of the planet, ecosystems, and humankind as interconnected complex systems.

7

Glocal Village

“The new electronic interdependence recreates the world in the image of a global village.”– Canadian author and media scholar Marshall McLuhan, The Gutenberg Galaxy (1962)

www.megasignals.com

Drivers and Examples• Outsourcing

From China and India to Vietnam and Bangladesh.

• Net Workers and Virtual CollaborationSkype, Adobe Connect, Cisco WebEx, and Telepresence.

• World Citizens and Young TravellersCouchsurfing, perpetual travelers (PTs), and Global Generation.

• Internet CrowdsourcingDell Ideastorm and Amazon Mechanical Turk.

• Low-Cost AirlinesAirAsia, JetBlue Airways, and airline comparison sites.

• Geolocation and NavigationGoogle Maps Mashups, Google Street View, and Nokia/Navteq.

• Global Nomads and TechnobedouinsInternational careers and country hopping expats.

• Search, Social Networking, and RecommendationsGoogle, Facebook, Blue Lists (Lonely Planet), and Tripadvisor.

8

Glocal Village

www.megasignals.com

Industries and Communities AffectedA more interconnected world through advancements in communication technology and global mindset has wide implications on most industries. For example, consider the following:

9

Glocal Village

Cities and Urban Communities

Hospitality and Tourism

Airlines and Travel

Telecom-munications

Information Technology (IT)

and Software

Media Industries Construction

and Building

Logistics

Fashion, Arts, and

Architecture

www.megasignals.com

Recommendations• Think carefully about mixing and remixing cultural

influences in product development.

• Outsourcing and crowdsourcing may lower the costs of your product development and deliver higher quality.

• Use globally collected and aggregated data to build smarter user interfaces and mobile technologies.

• Build online communities of practice to accelerate learning, ideation, and creative processes.

• Increase productivity and reduce travel costs through virtual conferencing technologies and telepresence.

• Location is king: Consider location aware technologies in advertising, city guides, navigation, and contextual services.

• Increase your organizational efficiency with transparency,a distributed workforce, virtual collaboration, andcloud computing technologies.

10

Glocal Village

www.megasignals.com11

Relevant Books

Bauman, Zygmunt (1998). Globalization. The Human Consequences. Cambridge: Polity Press.

Castells, Manuel (1996). The Rise of the Network Society. Malden, MA & Oxford: Blackwell Publishing.

Castells, Manuel (2009). Communication Power. Oxford: Oxford University Press.

Howe, Jeff (2008). Crowdsourcing. Why the Power of the Crowd Is Driving the Future of Business.New York: Crown Business.

McLuhan, Eric & Zingrone, Frank (eds.) (1995). Essential McLuhan. New York: Basic Books.

McLuhan, Marshall (1962). The Gutenberg Galaxy. The Making of Typographic Man.Toronto: University of Toronto Press.

McLuhan, Marshall (1964). Understanding Media. The Extensions of Man. New York: McGraw-Hill.

Shirky, Clay (2008). Here Comes Everybody. The Power of Organizing Without Organizations.New York et al.: The Penguin Press.

Surowiecki, James (2004). The Wisdom of Crowds. Why the Many Are Smarter Than the Few and How Collective Wisdom Shapes Business, Economies, Societies and Nations. New York: Doubleday.

Tapscott, Don (1998). Growing Up Digital. The Rise of the Net Generation. New York et al.: McGraw-Hill.

Glocal Village

* Click the link to get the book.

www.megasignals.com12

Marshall McLuhan about Global Village (YouTube)

» Open link

Marshall McLuhan – The World is a Global Village (CBC TV / YouTube)

» Open link

Globalization: What Does It Really Mean? (YouTube)

» Open link

Globalization101.orgA website offered by the Levin Institute to promote a greater understanding of globalization.

» Open link

Glocal Village

Useful Links

Turbulent FinanceWe live in unprecedented uncertainty.

13

www.megasignals.com

Challenging Economic Times

Distinguished scholars, gurus, and contrarians have commented that we live in a pyramid economy: The world’s financial system is likely to collapse (again) and the next shock will be worse than previous.

The whole financial system is extremely leveraged to the point where a number of key economies are becoming technically insolvent, running out of money.

The financial markets have become extremely volatile: Sudden crashes and flash recoveries have become typical. Nobel award-winning theories and models of financial markets are questioned. Markets are neither (necessarily) efficient nor distributed normally. Diversification and buy-and-hold strategies are not likely to work in times of extreme crisis.

Printing money (quantitative easing) & financial crisis in Europe, the United States, and Japan are likely to emphasize the importance of growth economies in Latin America, Asia, the Middle East, and Africa. After “creative destruction” and despite recurring shocks the world economy will likely emerge healthier, fueled by population growth (i.e., population reaching 9 billion by 2050) andincreased efficiency.

14

Turbulent Finance

• financial crisis• pyramid economy• quantitative easing• kurtosis risk• black swans• deficits and defaults• new world order• BRIC and extensions• flash recoveries

Common buzzwords:

» For more discussionand details, visit our blog.

www.megasignals.com

Background

The world financial system became a fiat monetary system in 1971, when the exchangeability of the U.S. dollar to gold was terminated. Now currencies have value only because of government regulation or law – and basically trust.

In a fiat monetary system the amount of money can theoretically be increased to infinity. Incorrect monetary policies will lead to asset bubbles, overall debt in the system and a quicker loss of value of currencies (i.e., inflation). The highly improbable events, aka “black swans,” have become more evident.

The financial crisis since 2008 has highlighted the risks of the current system.

15

Turbulent Finance

“I believe that basically the system is broken and needs to be reconstituted. We cannot afford to have the kind of chronicand mounting imbalances in international finance.”– Hungarian-American investor and visionary George Soros (October, 2009)

www.megasignals.com

Drivers and Examples• Economies in Trouble

PIIGS (Portugal, Italy, Ireland, Greece and Spain), the United States, and Japan.

• Quantitative EasingA massive injection of liquidity into the system (in 2008).

• Non-Performing Loans in Real Estate MarketsSubprime, Option Adjustable Rate, Alt-A, and Interest-only.

• Flash RecoveriesBrazil Bovespa, Thailand SET, and Turkey XU100.

• BRICSA VINSAM TASKNew economic powers in the top 20 by 2050.

BRICSA = Brazil, Russia, India, China, South AfricaVINSAM = Vietnam, Indonesia, Nigeria, Saudi Arabia, MexicoTASK = Turkey, Argentina, South Korea

16

Turbulent Finance

www.megasignals.com

Industries and Communities AffectedFinancial systems are more interconnected (globally) than ever. Changes that affect the whole world can and do happen in a matter of minutes and seconds. In a capitalistic system, capital is the base foundation of all industries. For example, consider the following:

17

Banking and Finance

Service Industries

Airlines and Travel

Materials & Manufacturing

Industries

Energy

Advertising and Media

Turbulent Finance

www.megasignals.com

Recommendations• Be prepared for credit squeezes – Industries and companies

are affected by sudden financial shocks.

• Be aware that BRICSA, VINSAM, and TASK countries will be increasingly important areas for companies to penetrate.

• For entities with high leverage, consider your position carefully.

• For companies with laser sharp focus on only one industry, reconsider your strategy so that you can weather financial shocks.

• Assess risks born by counterparty risk in hedging(e.g., swaps) and other defensive strategies.

• Consider that many old investment strategies such as buy and hold, may not perform properly.

• Take note that commodities and energy prices are likely to remain volatile and impact profitability.

• Be agile – Cost-efficient operations with low fixed costsabsorb financial shocks better.

18

Turbulent Finance

www.megasignals.com19

Relevant Books

Beck, Ulrich (1992) [1986]. Risk Society. Towards a New Modernity. London & al: Sage Publications.

Doz, Yves & Kosonen, Mikko (2008). Fast Strategy. How Strategic Agility Will Help You Stay Ahead of the Game. London: Wharton School Publishing.

Mackay, Charles (1852). Memoirs of Extraordinary Popular Delusions and the Madness of Crowds. London: Office of the National Illustrated Library.

Perez, Carlota (2003). Technological Revolutions and Financial Capital. The Dynamics of Bubbles and Golden Ages. Cheltenham & Northampton, MA: Edward Elgar Publishing.

Roubini, Nouriel (2010). Crisis Economics. A Crash Course in the Future of Finance.New York et al.: Penguin Press.

Soros, George (2009). The Crash of 2008 and What it Means. The New Paradigm for Financial Markets. New York: Public Affairs.

Taleb, Nicholas Nassim (2007). The Black Swan. The Impact of the Highly Improbable.New York: Random House.

Tapscott, Don & Williams, Anthony D. (2010). Macrowikinomics. Rebooting Business and the World.New York: Portfolio.

* Click the link to get the book.

Turbulent Finance

www.megasignals.com20

N. N. Taleb: “Black Swan” Author Says Investors Should Sue Nobel for Crisis (Bloomberg.com)

» Open link

M. Faber: About printing money, value of different asset classes and owning of gold (YouTube)

» Open link

A Layman’s View on Quantitative Easing (YouTube)

» Open link

G. Soros: “Basically the system is broken and needs to be reconstituted.” (The Financial Times)

» Open link

The World in 2050. Beyond the BRICs: a broader look at emerging market growth prospects (PricewaterhouseCoopers LLP – March 2008)

» Open link

Useful Links

Turbulent Finance

Extreme OpennessOpen systems and mindsets are defeating closed systems.

21

www.megasignals.com

Open Everything and EverywhereSome of the key notions in the third millennium are without doubt openness and transparency in a network society.

Information has become an abundant commodity. As a consequence, the focus has shifted to IPR issues (copyright and copyleft), open content, social technologies, and consumer generated media (CGM).

The latest trend on openness has an obvious influence on corporations and government institutions. Open innovation is a new term and paradigm promoted by American scholar Henry Chesbrough. It assumes firms can use both external ideas and internal ideas for their benefit.

The information access in our socio-technical context is fulfilled with mobile phones, ubiquitous technologies, urban informatics, and information design. In an open society watching the watchers and preventing an Orwellian Big Brother from emerging is important.

22

Extreme O

penness

• open data• open source• open society • open government• mass leaks• transparency• agile strategies• open innovation• free culture

“Most innovations fail. And companies that don’t innovate die.”– U.S. Prof. Henry Chesbrough, Open Innovation: The New Imperative for Creating and Profiting from Technology

Common buzzwords:

» For more discussionand details, visit our blog.

www.megasignals.com

Background

The open society is a concept based on the ideas of philosophers Henri Bergson and Karl Popper. An open society respects democracy and openness. As opposed to a closed society, its political mechanisms are transparent and tolerant.

The open source movement, which started with Free Software (Richard Stallman), Open Source (Eric S. Raymond), and Linux (Linus Torvalds) has grown into domains other than software such as the wiki philosophy (Jimmy Wales), free culture in general (Lawrence Lessig), and open data on the governmental level.

David Brin is the author of the book The Transparent Society (1998). In his work he explores the developments of privacy erosion, social transparency, and surveillance technologies. Brin emphasizes equal rights for every citizen and stakeholders to access and analyze data resources collected about them.

23

Extreme O

penness

“The open society is one in which men have learned to be to some extent critical of taboos, and to base decisions on the authority of their own intelligence.”– Austro-British Philosopher Karl Popper, The Open Society and its Enemies (1945)

www.megasignals.com

Drivers and Examples• Open Systems vs. Closed Systems

Apple iOS vs. Google Android vs. Nokia MeeGovs. Windows Phone.

• Consumer Awareness and Firm TransparencyMyStarbucksIdea, Zappos.com, and JetBlue support on Twitter.

• Open Government vs. CensorshipObama as a YouTube president, Queen Rania on Twitter, Wikileaks, and Challenge.gov (people solving public problems).

• Crowdfunding and MicrofinanceTikTok+Lunatic Wristwatch on Kickstarter and Kiva.org.

• Magical Devices in an Open SpaceReality browsers (Google Goggles) and augmented reality.

• Privacy ChallengesFacebook privacy settings, identity theft, digital cameras as “little” brothers, digital sensors, and the Internet of Things.

• Open R&DThe open source movement (Linux and Firefox), open research, open blueprints, and Web services (APIs and mashups).

24

Extreme O

penness

www.megasignals.com

Industries and Communities Affected

Openness enables organizations to rethink the way they engage in innovation management and research, creative processes, and product development worldwide. New collaborative technologies and social media have become central for many industries. For example, consider the following:

25

High-TechCompanies

Service Industries

Military and

Security

MediaIndustries

Government and the Public

Sector

ConsumerDiscretionary

Extreme O

penness

Retailand

Wholesale

Urban Planning

CreativeIndustries

www.megasignals.com

Recommendations• Note that today’s consumers (prosumers) are well informed and

traditional advertising is no longer as effective as it used to be.

• Encourage openness in your organization with your employees, customers, partners, and even competitors.

• Avoid “not invented here” syndrome: Utilize innovationboth within and outside your organization.

• Let the people watch the watchers. A wise society encourages openness and avoids bureaucracy.

• Remember that open platforms and standards typically end up dominating and winning over closed alternatives.

• Leverage the wisdom of crowds and collective intelligence in product development and decision making.

• Open up underutilized information reserves as open data for outside innovation and experimentation.

• Consider commons-based peer production as a new economic mode for value creation (wealth of networks).

26

Extreme O

penness

www.megasignals.com27

Relevant Books

Barabási, Albert-László (2003). Linked. How Everything Is Connected to Everything Else and What It Means. New York et al.: Plume.

Benkler, Yochai (2006). The Wealth of Networks. How Social Production Transforms Markets and Freedom. New Haven and London: Yale University Press.

Brin, David (1998). The Transparent Society. Will Technology Force Us to Choose Between Privacy and Freedom? New York: Basic Books.

Chesbrough, Henry (2003). Open Innovation. The New Imperative for Creating And Profiting from Technology. Boston, MA: Harvard Business School Press.

Chesbrough, Henry & Vanhaverbeke, Wim & West, Joel (eds.) (2006). Open Innovation. Researching a New Paradigm. Oxford, New York et al.: Oxford University Press.

Hsieh, Tony (2010). Delivering Happiness. A Path to Profits, Passion, and Purpose. New York: Business Plus.

Lessig, Lawrence (2005). Free Culture. The Nature and Future of Creativity. New York et al.: Penguin.

Popper, Karl (2011) [1945]. The Open Society and Its Enemies. London: Routledge.

Raymond, Eric S. (1999). Cathedral and the Bazaar. Musings on Linux and Open Source by an Accidental Revolutionary. Sebastopol, CA: O'Reilly Media.

* Click the link to get the book.

Extreme O

penness

www.megasignals.com28

A Shared Culture (YouTube)

» Open link

Lawrence Lessig: How Creativity is Being Strangled by the Law (TED / YouTube)

» Open link

Chris Anderson – Free: The Future of a Radical Price (RSA YouTube)

» Open link

The Wikileaks Documentary (SVT / YouTube)

» Open link

The Future of Publishing (DK / YouTube)

» Open link

Useful Links

Extreme O

penness

www.megasignals.com29

Summ

ary

Conclusion: Glocalization and Openness in the Age of TurbulenceWe now live in an absolutely interconnected world where people, knowledge, and assets flow freely and openly in a matter of seconds and hours.

This has profound impact on the way businesses and global leaders need to act to survive and thrive. Even the most local communities and businesses will be impacted by absolute interconnectedness.

Do the following:

Leverage the global resources and talent pool: Utilize global outsourcing, net workers, and crowdsourcing through the net.

Prepare your personal and business finances for the next financial crash: Question the validity of old thinking and models. Remember that agility is key, as well as finding opportunities in growth economies.

Cultivate an open organization and an open mindset and avoid not-invented-here syndrome. Use external information reserves to your benefit. Build your success on open systems.

Share this e-book with your friends:

Share Copyright Share This Material FreelyThe copyright of this work belongs to the authors.

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Unported License. To view a copy of this license, visit Creative Commons.

For licensing alternatives (modifications, commercial intent etc.), please contact the authors at info@megasignals.com

You are given the unlimited right to print thise-book and distribute it electronically (via email, your website, and through any other means). You can hand out copies to everyone you meet.

You can use parts of it in your presentations or articles but you have to display the “megasignals” logo or provide a reference to megasignals.com.

However, you may not alter this e-book in any way and you may not charge for it.

About the AuthorsMegasignals is a joint book and media project initiated by three internationally known writers, consultants, and researchers:Mr. Teemu Arina , Dr. Sam Inkinen, and Mr. Juhani V. Parda.

The authors live a nomadic lifestyle exploring markets, cultures and societies, writing articles and books, giving presentations at major conferences, and providing advice to leading organizations on all continents. They have a background in the high-tech, media and telecom industries, and the academic context.

Share onTwitter

Share on Facebook

Like us on Facebook

Follow us on Twitter

Left wanting more? Visit: www.megasignals.com

Subscribe to next free e-books