Steampunk Economy: Steam Engine to the Moon

By Andreas Rein

Many executives, organisations and companies believe that the economic demands of the digital age can be met with diligence, skill and, above all, experience. They build on expertise, established structures and processes that they have been able to rely on for decades. They perfect the known methods and procedures and strive for the highest degree of flawlessness. However, they overlook the fact that striving for perfection is not only counterproductive, but even harmful.

In times of digitalisation and the accompanying globalisation, products, goods and services are not constantly getting better, they are constantly getting different. The processes and business models that drive the economy are continuously changing. Those who focus on perfecting familiar methods, both in production, but even more so in organisational design and leadership, are training a racehorse and do not realise that they are competing against a Formula 1 racing car.

Economics, management and human resources are based on 19th century theoretical foundations. They are perfected steam engines - smooth running, enduring in operation and elegant to look at. And completely unsuitable for flying to the moon. In short: they are representatives of the steampunk economy.

In his book, Dr. Andreas Rein debunks the steampunk economy and impressively explains how to recognise it. He explains why all companies and organisations are affected by disruptive changes - regardless of sector and industry. He shows that in a digital, fully networked world, the goal must not be the moon, but at least Mars. In his passionate plea for unleashing innovative potential, he shows how to overcome the steampunk economy and create sustainability. For neither human nor earthly resources are unlimited.

• Language: English
• Publisher: tredition
• Release date: Jul 8, 2021
• ISBN: 9783986310028

Book preview

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