The Long Bet
Mar. 20, 2023
The “NRI Dream Up the Future Forum 2022” was held on October 17, 2022, and at this installment of our annual event, we invited Mr. Kevin Kelly, the editor-in-chief of WIRED magazine and author of “The Next 5,000 Days” (published in Japanese by PHP Institute, Inc. in 2021) to be our guest lecturer (I will refer to him in the colloquial as “Kevin” from here on).
According to Kevin, it was 5,000 days after the birth of the Internet that social media (SNS) and smartphones first appeared, and another 5,000 days have now passed since then, which means that the time has nearly come for another technological turning point. The candidate that Kevin envisions for this new leading role to take the place of SNS and smartphones is something known as XR (Cross Reality)—that is, a future in which the real and virtual worlds are merged. He calls this the “Mirrorworld” (a digitalized representation of the physical world). The Mirrorworld will allow us to experience things that can’t be achieved in real life, making it possible, he says, to freely go back and forth between the real and virtual worlds using smart glasses.
The expansion of XR in the world
With XR, meanings will be given to all manner of physical objects using AI. For instance, if you were to wonder what the scenery before you looked like 100 years ago, your smart glasses could recreate the view from that time, as if letting you experience a kind of time travel. When meanings are given to all the stores on the street, or to all the trees and flowers in a park, your strolls or walks will no doubt be more enjoyable.
XR will surely also bring significant changes to business settings, especially to our workstyles. For example, if a platform were constructed that people could freely access across national borders, then AI could eliminate any language barriers, and that AI could even automatically gather the facts needed to take part in the conversation. Nomura Research Institute (NRI) is conducting research on the digital workplaces of the future, which will give people immediate access to collaborative spaces for co-creation from their preferred devices whenever they need, freely bringing top talent around the world together across company boundaries. I believe we’ll see this sort of co-creation space emerging in various business settings around 2030.
While the COVID-19 crisis led unexpectedly to telework becoming more widespread, today’s communication tools only permit us to have “flat” conversations through a computer screen that are limited to just two dimensions. They don’t allow for a natural switching among speakers or for topics to intersect, nor can they allow for the kinds of chance encounters one would have in a real office setting. They prevent communication from achieving any depth, and stifle innovation as well. If new co-creation platforms powered by XR technology were to emerge, that could produce collaborative spaces surpassing real spaces, where various people across the world can transcend geographical boundaries and come together.
How we should innovate for future generations
Incidentally, realizing this kind of space will naturally require innovation. In the SNS era, massive platformers like GAFA that matched together large numbers of people and things dominated the market, and they have driven innovation through the investment of massive amounts of capital. The business model used by this type of platformer is one that involves increasing returns, a matter of “winner-take-all”, so to speak. Meanwhile, in the Mirrorworld, the players that focus specifically on certain niche areas—travel, or office environments, for example—and provide deeper experiential value in those areas will probably be the ones who gain the most popularity. In other words, while they may be starting out small, they’ll need to have the operating concept of becoming the biggest fish in the pond.
In his book, Kevin states that the larger a company becomes, the less innovation it will produce. Innovation demands venturing into a small market with a high risk of failure and little chance of profit, a behavior that’s the opposite of optimization, and that kind of thinking is essentially incompatible with the management strategies that large companies tend to adopt. Innovation is born on the frontier. In that sense, the next main players in the innovation game will likely be startups, or alternatively, it would fall to the members of non-mainstream organizations within large enterprises to take on that role. It will be incumbent on the management of large enterprises to look around their companies as a whole, create an environment someplace where people can continually try new ideas that are the complete opposite of optimization, and then protect and encourage those people.
Kevin concluded his talk at this year’s Forum with the words, “There are no experts on the frontier, and there’s no such thing as being too late.” Whether it’s AI, or whether it’s XR or the Mirrorworld, the leaders of the next round of innovation are only just beginning to emerge. It only takes a little knowledge to be an expert right now, and there are no massive players dominating the market. Right now, it’s fully possible to jump into this market, the only question being whether to undertake such a venture.
Kevin uses the phrase “the long bet”. Future generations will be far wiser in this area than we are today, equipped with problem-solving tools we lack. Even if the solutions are beyond us now, if we just get started with these efforts those future generations will no doubt provide those solutions. In other words, it’s not about whether we can or cannot do it now—simply clarifying the problems and getting to work on them is itself fully meaningful. This is about daring to bet on future generations. Taken to its extreme, this means a company just needs to decide what innovation field it wants to bet on going forward. “Believe in the future, and get moving.” That’s Kevin’s message for today’s Japan.