Report: Competitiveness of Finland’s IT & Telecom Industries Today and Tomorrow

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This Megasignals Special Edition has been produced in collaboration with The Federation of Finnish Technology Industries, the most important industrial sector in Finland. It contributes 60% of total exports and 80% of total R&D-investments of Finland.

Here is the foreword by Director Jukka Viitasaari:

The world is changing ever faster. The global changes of today can be radical and shocking, and they challenge everyone, everywhere in the world. Those countries which are agile and prepared for discontinuities and changes in the ecosystems of several industrial sectors will win out. Finland has a number of core competencies and advantages which many other nations lack. For Finland, the current global changes can truly be an opportunity.

The Finnish way of life, our organizational structures, and our management processes are lean, open, and agile. In Finland, the top management normally listens to input; it is very much accessible to everyone in the organization, as well as to outsiders. We Finns are creative by nature.

The wealth of nation is derived from innovations – technologies, applications, services, concepts, and process innovations. The main challenge is the capability to think in a new, different, and improved way. We have neither oil nor hardly gold – not even particularly welcoming weather.

Regardless, our base from which to tackle the challenges and changes of today is brilliant: we have an educational system that is cherished as the world’s best. Certainly, we, as Finns, can be content that we have one of the world’s most equal educational systems, in which anybody can become somebody, if he or she so desires.

Corruption is almost nonexistent in Finland, and the country was recently voted the best in which to live. Our government-funded innovation system is well appraised abroad. All of this recognition and these awards are just some of the highlights in a very short time period – only the last couple of years. These aspects are significant core competencies and advantages which we Finns too often take for granted.

Finland is one of the top nations in the world in the IT and telecom sectors. This “world champion”-level of competence and knowledge can also be well utilized in creating value for other sectors of Finnish technology industries, as we create the future’s success stories in products, services, and companies.

Changes naturally challenge us. Even if our starting point is ahead of most other regions and societies, we must continuously strive for a more creative, more efficient, smarter, and more flexible way of working. The Megasignals strategy report will kick off this process. The time to act is now. Let us create the pillars of well-being in Finland for the 21st century.

Director, Jukka Viitasaari
The Federation of Finnish Technology Industries

Download the english report here: “Competitiveness of Finland’s IT & Telecom Industries Today and Tomorrow” [PDF]

Download the finnish report here: “Suomen tietoteollisuuden kilpailukyky tänään ja huomenna” [PDF]

Global, Local, Personal

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What does it mean when we have 30% of the planet on the Internet?

We are all connected. Similar to the Shift Happens production (Did you know?), Global, Local, Personal investigates the latest trends in social media, especially focusing on the changes that modern communication technologies have brought to the Middle East and Africa.

Originally presented at the Elisa ICT Symposium 2011 Conference in Helsinki, Finland. Written and researched by the Megasignals Team for Elisa.

See http://bit.ly/global-local-personal for video download and e-book for Elisa Kirja (available for Android and iOS devices). Share or screen freely.

Produced by Elisa Corporation / elisa.fi
Written & Directed by Teemu Arina / dicole.com
Advisory by Pasi Mäenpää & Jukka Toivio
Project Management by Marja Mokko
Graphic Design by Mikko Kaipio
Music by Matti Paalanen
Video Editing by Teemu Arina
Various Video Renderings Courtesy of iStockphoto
Background Research by Megasignals Team / megasignals.com (Teemu Arina, Juhani V. Parda, Sam Inkinen)

Global Economy: From Turbulence to Storm

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Destruction in the value of paper money

We discussed the inherent challenges of the debt-fueled world economy and the fiat monetary system in our first e-book (February 2011).

Since then, approximately 30% of value of U.S.Dollar has been wiped out comparing to the gold – “the 4th currency” and the only “currency” whose amount cannot be increased significantly by decisions of world politics or central banks. There seems to be no currency in the world that keeps up with the value of gold, that is by many seen as the “real” value, whereas currencies are imaginary.

What does that mean?

The situation where value of paper money is getting destroyed has escaped most people on the planet.

Now it is completely plausible that world returns back to normal – or at least to the “new normal” stabile, lower growth. In that case it would be likely that precious metals would stabilize or lose value.

But the extreme strength in precious metals (gold, silver and platinum) is suggesting that the smart money is worried about the stability of the whole financial system of the world and wants to “stack some away for the rainy day.” Gold nearing 2000 USD / ounce hints to the fact that some participants are seriously concerned about end of the world as we know it. Some market participants are worried even the whole fiat monetary system could collapse or seize to exist at least in the form we currently know it.

Why should I care?

Isn’t it strange that people follow the mantra of diversification of their financial assets to avoid big shocks to their overall wealth but then they fail to diversify in terms of currencies, including the fourth (very) solid currency, gold? I know nobody that has their all eggs in one basket when it comes to stocks or bonds, but I know plenty of people that have all their wealth in one basket when it comes to currencies, namely in Euro, Yen or USD, depending if I am talking with a person in Paris, New York or Tokyo.

Even during the boom years of pre-2008 there was wild fluctuation in currencies – euro for example almost doubled in value compared to USD. Gold easily doubled in comparison to USD from 2003 to 2008 and significantly increased in value compared to Euro.

US –based investor might have felt that his or her wealth was increasing at good return on investment every year, but was losing out when comparing to euro or gold at the time.

The common answer would be that it doesn’t matter unless one travels abroad.

However, long term weakness in a currency destroys purchase power in the country. Now there is certainly boost for country’s industry as the currency devalues, but if the difference does not correct itself, eventually prices creep up everywhere in the economy to reflect the lost value of the currency itself.

What should one do?

The solution is obvious – one should consider diversifying not only among asset classes but between different currencies including gold or other precious metals for capital preservation.

Disclaimer: This article as a whole is an OPINION, with the exclusion of the factual past performance data of Euro and gold in comparison to USD and Euro in comparison to gold briefly mentioned. It is merely an article to raise discussion and is by NO MEANS investment advice. One should always use his or her own judgment and consider consult professional advice. The writer have had, currently holds and may continue or discontinue having exposure to different currencies and precious metals through directly owning them and / or through exposure of investment products such as stocks, ETFs, mutual funds and other products.

McLuhan’s Visionary Thinking: New Media as the “New Nature”

Wheel

As a continuation to our marathon of McLuhan related posts, one can justifiably ask what what makes Canadian media guru Marshall McLuhan current in this age of the Internet, social media, simulation technologies, virtual realities, and digital culture?

In the information society and contemporary media culture, it should be stressed that McLuhan is an analyst and spokesman of mediatized culture. He understands media and technology as extensions of man (e.g., the wheel is the extention of the foot and the computer an extension of the central nervous system).

In his texts, McLuhan commented on the general media cultural developments and especially the electric and electronic age. Well known and apt is the theorist’s fateful summarization from the year 1964: In the electric age we wear all mankind as our skin.

In McLuhan’s opinion, the content of every new technology and media is technology that has just been passed and cast aside. Therefore, it follows that movies are the content of television, novels are the content of movies, etc.

The media ecological thinking that is a part of “McLuhanism” attempts to identify media environments as the “new nature.” This is illustrated by citations from Essential McLuhan, the book edited by Eric McLuhan and Frank Zingrone (see 1997: 274):

“The new media are not bridges between man and nature; they are nature.” (1969)

“The new media are not ways of relating us to the old ‘real’ world; they are the real world and they reshape what remains of the old world at will.” (1969)

“It is the medium that shapes and controls the scale and form of human association and action.” (1964)

“The reader of the newspaper accepts the newspaper not so much as a highly artificial image having some correspondence to reality as he tends to accept it as reality itself. Perhaps the effect is for the media to substitute for reality just in the degree to which they become virtuosos of realistic detail.” (1978)

“The news automatically becomes the real world for the TV user and is not a substitute for reality, but is itself an immediate reality.” (1978)

It must be emphasized that McLuhan was a technological determinist. The Canadian media theorist and visionary thinks the most important thing is to understand how digital technologies and extensions transform our culture – not so much what specific content is transmitted through the information and media networks.

Instead of semiotic and semantic content analysis, the techno-cultural “meta-level” becomes therefore crucial. This meta-level influences the structures of communities, cultures, and societies.

Marshall McLuhan – a Zeitgeist Figure and Pop Personality

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Herbert Marshall McLuhan was born in 1911 and died in 1980. During the theorist’s lifetime, the mechanical paradigm of technology and machines changed first to electrical and electronic, to start to develop towards the digital paradigm in his autumn years.

Since 1952, McLuhan taught on a regular basis at St. Michael’s College of the University of Toronto. After the publication of his works, The Gutenberg Galaxy: The Making of Typographic Man (1962) and Understanding Media: The Extentions of Man (1964), he became one of the most significant commentators of the 1960s. Simultaneously, however, he became a polemic and controversial media intellectual whose works and thoughts divided the opinions of people.

McLuhan was a combination of scholar, artist, and prophet. He was an academically knowledgeable student of literature, jovial company, and a university professor. To the large audience, he was a confusing pop personality who was known to enjoy the company of the contemporary power elite and celebrities.

McLuhan’s status as a cult personality and key authority in the 1960s is clear. The name of the media thinker can justifiably be linked with the Zeitgeist of 1960s and with as various contemporary cultural thought leaders of the age as, for example, Herbert Marcuse, R. D. Laing, Tom Wolfe, Hunter S. Thompson, Timothy Leary, Andy Warhol, Bob Dylan, Frank Zappa, Mick Jagger, Grateful Dead, and Jefferson Airplane.

McLuhan was an apt and surprising media thinker whose central concepts are known to current readers through such polemic and complex key terms and slogans as “vortex,” “sensorium,” “sensory impact,” “extensions of man,” and “global village.”

It must be stated, however, that even though many were familiar with his name and some knew his dramatically formed slogans and key words, only a small portion of the reading public took the time to familiarize with his deeper mysteries and teachings.

McLuhan read constantly. And it is told, slightly surprisingly, that he did not watch very much television. Like the speakers of the antique, McLuhan loved speech (and liked to refer to Cicero often). Speech was his most important form of communication, in interviews, lectures, and conversations, but also as a typographic flow of thought on the pages of books. Instead of solid argumentation, his publications often represent a kind of theory poetry and poetic word art.

Observations about the Canadian thinker’s life often emphasize his Catholic faith (McLuhan was a convert) as the origin of cultural philosophic ideas pertaining to universalism, electronic technology and the “global village.” The Roman-Catholic faith is an important aspect but the importance of McLuhan’s geographic and socio-economic background is often underestimated.

It is suitable to ask what is left of McLuhan’s varied life – what is McLuhan’s substance as a cultural philosopher, media theorist, or visionary? There are of course many answers and interpretations. The followers and supporters of the “media guru” remember McLuhan’s many books – with the subject matters varying from communication, literature, and art to sociology and pedagogy.

Out of his publications, at least The Gutenberg Galaxy (1962) and Understanding Media (1964) seem to have become classics which have bearing on digital culture and its special characteristics.

Turbulent Mobile

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Written in Cape Town, ”Silicon Cape”, South Africa

We are going through a very interesting paradigm shift in the way the world operates. The catalyst is mobility through devices with new advanced operating systems: Google Android, Apple iOS and Windows Mobile, MeeGo.

The world will not be the same just a couple of years down the road: The changes in mobile industry will impact, for example:

  • newspaper, magazine, TV, radio, and other media industries,
  • the Internet sector,
  • camera, paper, electronics, TV, and computer manufacturing,
  • cars and other vehicles,
  • transportation and travel,
  • and home appliances industries.

Most importantly, it will impact the way you and I, we all, conduct our daily lives.

Dominant device

In emerging and high-growth markets the mobile phone will be the dominant device. More and more people own a mobile phone but not a fridge, let alone a TV. Almost everything in life will go through the mobile conduit.

Many emerging markets do not have hardwired telephone systems. Computers are also very limited in most emerging markets. Amount of TV sets as well as quality of terrestrial TV signal as well as choice of channels has much to hope for. Finally emerging markets (which I rather call high growth markets, which is more descriptive) have limited purchase power – so they will simply leapfrog over technologies and focus on mobile.

New mobile operating systems enable a new ecosystem to emerge. In the old paradigm the drawback were the features of the device rather than the bandwidth or the processing power. The new ecosystem is based on creativity – application stores and endless amounts of services for the mobile phone enable developers and end-users to customize their devices with ease.

Mobile phones and tablets will form a platform and an industry that sucks value from all the industries mentioned above and for now it’s not clear who the new kingpins of the new ecosystem will be. However, the situation will also be fruitful: mobile industry adds value to other industries and allows some existing and new industries to flourish. Platform wars will likely be intense in the upcoming months, as we have seen already from the competition between Nokia & Microsoft partnership, Google and Apple.

Whoever embraces new and more efficient working processes through mobility is likely to get ahead.

We are currently working on a new e-book tapping into the challenges in the mobile industry, so stay tuned.

Why Companies Need to Be More Transparent: The Customer Orientation Perspective

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Transparency may gain companies greater reputation, credibility, and trust in the marketplace. However, changing culture and attitudes towards transparency in an organization that has traditionally been closed is a challenging task.

Openness is a key trend of the modern connected age. From transparent firms to open governments, the discussion is on the air: Can companies and governments be more effective, responsive, customer oriented, and profitable by embracing openness?

Many companies have the fear of being criticized publicly or getting bad reviews. Having customer feedback and third-party product reviews right on your site is a radical approach for many. How unpredictable and risky it might seem, the benefits of doing this are the tremendous cost savings in finding early about wrong pricing models, defective products, usability issues, and unnecessary features. If you are honest, transparent, and let people to see that you are serious about getting their feedback, they will increase their trust, engagement, and eventually you will gain greater reputation and profits.

Today customers talk to each other through the internet. Unless you open up channels for listening to them, they will find ways to talk to someone else. The transition is to move away from telling your customers what to do and start listening and embracing the ideas that come from them.

Learning from the markets: Case Nokia

In the last three years Nokia has had reorganizations at least every six months. A reorganization usually means for an employee a possible change in job description and the very real risk of being left without a job. Reorganizations are very stressful events and usually a result of the lack of foresight and ability to make gradual and tiny adjustments to your business based on changing market conditions.

Once the system is out of sync with the market, it eventually succumbs into an expensive reorganization. In the last three years Nokia has lost more than 75% of its market value. By being more sensitive and open to learning from changing customer needs in addition to having a flexible organizational structure, Nokia could have perhaps avoided all of this.

A change in culture of believing that companies create value towards one that understands that the way customers use products creates value is a challenging shift. It is no surprise that companies such as Nokia with a long history in perfecting a different logic will have hard time to understand and embrace a new mode of value creation.

Nokia has been a victim of their own success. Efficient hardware manufacturing and logistics has been in the core of Nokia’s achievements. Now that the value creation has shifted to applications created by their users, Nokia has enormous problems to make the leap to a new mode of value creation based on a developer and user ecosystem. Better hardware and a better operating system no longer counts. It is now all about the move from systems to ecosystems and user-generated functionality based on user context – And this is a process in which companies need to stop talking and start listening.

Learning from your customers and your own actions: Case Zappos

Zappos is the largest online shoestore in the U.S. sold recently to Amazon for $940 million dollars. All their employees have pre-approval of the CEO to do anything to build customer satisfaction and provide a great service. They are not counting minutes on phone support or hours spent in helping customers on social media. Their slogan, “powered by service” reflects their values. Even though they are an online business only, with 365 day return policy and free shipping both ways they have better customer service than any physical shoe store you have ever seen.

Each year they produce a 480-page Culture Book written by their employees, partners, and customers alike and published without censorship to see if their values are visible in their actions. Most of their employees remember their 10 core values by heart. Many companies state in their values and mission statements that they are customer oriented. More often than not, such statements are thin air compared to what real customer orientation is all about.

Glocal Village and Social Media: The Comeback of Marshall McLuhan

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In this series of articles we provide more information about the history and key visionaries we discuss in our e-books.

When discussing Glocal Village, it would be unjustified not to mention media theorist Marshall McLuhan who is now current and relevant in a new way. The Canadian media thinker experienced his fame in the 1960s but he has been re-found (and his writings have been researched enthusiastically) in the discussions on digital culture and new media.

The recent boom around “social media” and “Web 2.0” have even strengthened McLuhan’s significance as an early theorist and visionary of the electronic age. From the perspective of current technology, McLuhan’s writings on the electronic culture, the television age, global village, hot and cool media, etc. have been interpreted prophetic.

Even though McLuhan’s energetic visionarism is often bombastic, hardly anyone questions his significance as a theorist who acted as a catalyst for many good ideas and a creative thinker of the academic world. Against this background, it is somewhat surprising that when he passed away in 1980, McLuhan was (in both the academic and popular sense) a nearly forgotten theorist.

The digital age has changed many assumptions and returned the Canadian theorist to the place he deserves. McLuhan’s “comeback” is centrally tied to the Internet boom, digital culture and the development of new media and ICT.

A Canadian Futurist

The academic comeback of McLuhan has been helped by his fellow countrymen Derrick de Kerckhove, Arthur Kroker and Don Tapscott. Derrick de Kerckhove is an example of a media theorist who continues McLuhan’s legacy. He has presented interesting ideas about the developments of communication culture and the media society. In a digital media culture point-of-view transforms to point-of-being.

It is illustrative of McLuhan’s anticipatory thoughts that the key academic authority of the “Information Age,” sociologist Manuel Castells, refers to McLuhan as one of the early visionaries of the media and information culture. The sociologist has, for example, the following to say about the development of mass media:

[t]heir evolution towards globalization and decentralization was foreseen in the early 1960s by McLuhan, the great visionary who revolutionized thinking in communications in spite of his unrestrained use of hyperbole” (Castells 1996.: 329).

It is symptomatic that the first part of the ambitious Information Age trilogy, The Rise of the Network Society, by Manuel Castells contains a section entitled: “From the Gutenberg Galaxy to the McLuhan Galaxy: the Rise of Mass Media Culture.”

In my view, as significant as the respect to McLuhan given by Manuel Castells is the fact that Wired magazine, which is considered as an important opinion leader and “probe” of the electronic culture, devoted the January 1996 issue to McLuhan.

The highly respected position of McLuhan as an early interpreter and foreteller of the computer revolution and digital culture is clear. The value of McLuhan is increased by how he touched digital technology nearly half a century ago when discussing cybernetics and computers.

It is also noteworthy that the term new media is already present in McLuhan’s terminology from the 1960s – albeit, the meaning of the term has changed considerably during the years.

Literature

Castells, Manuel (1996). The Rise of the Network Society. The Information Age: Economy, Society and Culture, vol. I. Malden, MA & Oxford: Blackwell Publishers.

Age of Turbulent Finance: Case Japan

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Written in Chiba, Greater Tokyo area, midst of earthquakes and nuclear radiation.

“Financial systems are more interconnected (i.e., globally) than ever. Changes that affect the whole world can and do happen in a matter of minutes and seconds.”
Megasignals – Glocalization and Openness in the Age of Turbulence
, T. Arina, S. Inkinen, J. Parda, February 2011

The recent events in Japan, North African and Arabian countries highlight what we published timely just about a month ago.

In Japan, TOPIX dropped over 7% in the day of earthquake and then over 12% more on Monday 14th. The financial markets have become extremely volatile. Since the financial systems are so extremely interconnected, wipe out of wealth can happen literally in matter of minutes and seconds. Moreover, The whole financial system is extremely leveraged, which causes further amplification of excessive flash crashes and flash recoveries – TOPIX then rebounded on today Tuesday massive 6% almost just as easily as the sell-off occurred.

The key point to take away from this is markets are neither necessarily efficient nor distributed normally. That changes the whole outlook how one should view investing and trading of financial assets. Buy-and-hold strategies are not likely to work in times of extreme crisis, because diversification and long holding period strategies rely on theory of normal distribution and efficient markets. Years of market value accumulation in a common stock of a company and stock index can be wiped out in matter of seconds, changing ones retirement plans and dreams for good. Similarly it can change fortunes of a company for good.

Furthermore, Japan case highlights that markets are not necessarily efficient – sell-off spread first to all Asian markets and all financial assets everywhere, including the ones that have absolutely zero-exposure to Japan. This naturally creates possibilities for smart investors to buy stocks which intrinsic value is higher than price quoted in extreme shocks and offload them when flash recovery occurs. Stocks, commodities, currencies, and other financial assets that have almost no exposure to the event but move in tandem with rest of the market in global sell-off are likely to offer best returns.

One may be able to create more profits from investing in matter of days than from buy-and-hold strategies in matter of years – major stock indexes are pretty much where they were 10 years ago.

Pyramid economy?

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

In current financial system, 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. Due to quantative easing by governments (printing money in common language), we have enormous leverage and liquidity in the financial systems.

Therefore, smaller events lead to massive crashes. The challenge for investors and traders is the kurtosis risk, that the flash recovery will not occur and the wealth is wiped out for a very long time, or for good, as happened in early 2000 tech sector crash (“.com crash”). Investors investing with well-diversified buy-and-hold strategy within the sector lost most of their money invested in the sector as most .com companies of that time never recovered, but went bankrupt.

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 next financial tsunami may be created by “9.0 on Richter scale” financial earthquake like the Japan tsunami. For example, default of a large country for example, that could trigger further defaults in the banking sector and possibly defaults of other countries would fit the bill.

Financial tsunami walls

As tsunami walls in coastal cities here in Japan were designed almost for anything, but not for extreme 9.0 earthquake and tsunami following it, financial models resting on normal distribution, are designed almost for anything, but not for the real world, which includes numerous extreme events. Unfortunately, very large part of the financial models in use today and investing & trading logic (or lack of it) derived from it rest on relatively efficient and normally distributed markets – i.e. not for real world.

The highly improbable events, aka “black swans,” have become highly probable with excessive leverage and liquidity and practically complete interconnectedness of financial systems.

One should build solid financial tsunami walls to prepare for the next larger financial tsunamis.

Megasignals e-book: Glocalization and Openness 
in the Age of Turbulence

Megasignals e-book Q1 2011

We are happy to let you know that Megasignals is releasing its first free e-book exploring the major paradigms, trends,
and changes affecting the world entitled “Glocalization and Openness 
in the Age of Turbulence“.

Megasignals covered in Q1 2011 issue:

  • Glocal Village
    We are more connected and nomadic than ever.
  • Turbulent Finance
    We live in unprecedented uncertainty.
  • Extreme Openness
    Open systems and mindsets are defeating closed systems.

We 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.

We’d love to hear about your comments regarding the e-book below.

Download the e-book at our free e-book page.