Posted by Adam Gordon on Dec 6, 2011 in all, economy & finance, foresight tools & methods, scenario planning
Herman Kahn
Interesting times we live in, when most of the world’s business media has a front-page tab on their Web sites that says something like “Euro Crisis – Live – Follow Here” as if there was a hostage drama or bank heist on the go.
Perhaps it is a bank heist of sorts, in the frantic run up this week and next to the Brussels summit in on 8-9 December, where the 27 Eurozone leaders are expected to make some binding, if not bold, decisions.
There has been short-term market relief following the US and China’s undertakings to make dollars more easily available into the European banking system. But everyone knows that liquidity, while a problem in itself, is a symptom of the larger problem of sovereign debt. And sovereign debt is only a problem when lenders don’t see future growth such that loan capital looks safe at less than, say, 7%.
In the world of foresight we talk about the need to “think the unthinkable,” a phrase coined about Herman Kahn in the 1960s when he was making scenarios about the road to US-Soviet thermonuclear war. So I was curious to see this exact phrase pop up in various media analyses where implications of Euro-demise, such as redenomination risk, cross-border contract liability, and so on are getting a thinking through, at least in the media, for example here in the WSJ.
Adaptive Measures
This is scenario planning “lite”: thinking down the path to, and implications of, a plausible operating environment — even if it is highly unlikely — and determining best responses, necessary hedges, and other adaptive measures. (Non-lite would be to do the background work, not just the journalistic summary.)
As the unthinkable forces itself to be thought, even the Corporate Executive Board was motivated to put the injunction to their executive partners as follows: ”As the threat of a potential euro zone breakup looms, we strongly advise companies to enhance their scenario planning disciplines. Leading companies in our network begin by documenting project assumptions and building scenarios off of those variables to test profitability under a range of outcomes before committing capital.”
But to this they add the intelligent real-world rider, often missed by scenario-ists: ”Don’t make the mistake of assuming that entire projects, P&L’s, or budgets need to be reconfigured under volatile outcomes. Instead, build your contingency plans around critical, controllable line items.”
Posted by Adam Gordon on Oct 25, 2010 in all, foresight tools & methods, policy, scenario planning, social change, strategic foresight, technology change
This week the Association of Research Libraries in Washington D.C. released The ARL 2030 Scenarios: A User’s Guide for Research Libraries.
Source: http://www.arl.org/rtl/plan/scenarios/
Now it would seem that a 20-year-future-gazing process for libraries is a world away from the concerns of managers making today’s critical decisions, but it is not, for two reasons:
First the study deals with the critical trends and forces changing the operating environment in just about every industry today – digitization, sustainability, social media, China, etc. The scenarios are instructive because they lay out forces changing the operating environment not only for libraries but pretty much every significant organization or company going forward.
Second, while four different “futures” are described and investigated, the organizational subject (libraries) are not explicitly written into them. As the user guide comments: “Scenarios created for use in scenario planning intentionally leave the organizations that are planning out of the picture. This allows the organization to better focus on the main forces that are shaping the environment around it. Thus, each scenario has a blank where the library can fill itself in through the planning process…
“This approach means that other kinds of organizations might also find blanks that they can explore through a scenario planning process. ARL can consider its future as an association using these scenarios, but other kinds of libraries, other actors in the research enterprise, or other participants in the scholarly communication system could find value in using this scenario set and the user’s guide.”
In fact, all kinds of organizations and businesses can use the study in this way: inserting themselves into the stories and asking themselves: do “we” still work? That is, is our value proposition, our business model, our resource or alliance base, still valid? Do our success recipes still apply? If not, what are the necessary new ways to be valuable and to engage with consumers and stakeholders? What would we need to do—how would we need to innovate to transform our organization such that it creates value for future users—given the overwhelmingly powerful external dynamics redefining our operating environment?
The organization deferred
Although the ARL doesn’t say it, it’s actually quite remarkable in the scenario world that the subject organization is NOT written into the story. Often scenarios are hamstrung by exactly this problem: Conflating what the world will do and what the firm can do in response, therein becoming no more than wishful-thinking stories. It is much better for the purposes of real-world decision-making when these two questions are dealt with sequentially, as they are here, and organizations can then think through the options and priorities they can shape within the larger future world they can’t shape.
Bearing in mind that scenarios are not predictions, and that the whole point is that the most likely future operating environment will combine elements from all, these are the four independent strands that the AFL comes up with:
In Research Entrepreneurs, individual scholars are central and their orientation matters more than institutional or disciplinary affiliations. Research institutions provide support services to these agents rather than driving the research agenda. Scenario 2, Reuse and Recycle, describes disinvestment in the research enterprise. With fewer resources, the crowd-cloud approach is widespread, producing information that is “ubiquitous but low value.” In Disciplines in Charge, “computational approaches to data analysis” force scholars “to align themselves around data stores and computation capacity that addresses large-scale research questions within their research field.” Global Followers describes a world similar to today, but where Asia is prominent in providing money and support for research, and Eastern “cultural norms” govern the process.
ARL 2030 Scenarios: A User’s Guide for Research Libraries is available for free athttp://www.arl.org/bm~doc/arl-2030-scenarios-users-guide.pdf. More information on the ARL project, “Envisioning Research Library Futures: A Scenario Thinking Project” can be found athttp://www.arl.org/rtl/plan/scenarios/.
Posted by Adam Gordon on Oct 14, 2010 in all, foresight tools & methods, history, systems dynamics, technology change
I’m going back to the S+B interview with Lawrence Burns, former GM head of R&D, cited in my previous post, because there is more to be had in understanding how systems dynamics has shaped and will shape the future of the automobile industry.
This not only helps us think about automobiles, energy, public transport, and so on, but also about foresight in all industries.
Asked about the likelihood of “transformational” change in the auto industry—given the historical pattern of slow, incremental change we have seen for decades—Burns says:
“The main reason upheavals haven’t happened is that the automobile transportation system benefited from a tremendous self-reinforcing dynamic: the codependence between the roadway infrastructure, the energy infrastructure, and the machines that we created.”
In other words, systems dynamics were at work, in this case dominated by a deeply powerful reinforcing loop:
“As cars became available in the early 1900s, you needed to build roads suitable for them, and the costs of the roads were paid with gasoline taxes… As more cars were manufactured, more gasoline was consumed; the more gasoline was consumed, the more roads were built. The more roads were built, the more valuable a car became. And as cars became more valuable, it led to more cars being bought… Next thing, you wake up and in the United States you have 250 million cars, and they travel on 4 million miles of road, 3 trillion miles a year…
“So we thought about a new DNA for the automobile, but you couldn’t create that just for the car itself. It has to operate within a new codependent system.”
Too smart to crash
What drives this new system, is of course the core of the debate. In Burns’ view the key issue is vehicles will become “too smart to crash,” allowing them to be built without current safety defences, that is, 75 percent lighter, which drastically reduces energy requirements.
“The problem with batteries today isn’t really the batteries themselves; the problem is the vehicle that we’re putting them in. To power a typical car today, you need a battery the size of one or two Sumo wrestlers, and it takes eight hours to recharge, so you need charging stations in garages or on the street. For the 750-pound class of vehicles that we envision, the battery could someday become small enough so that you could easily bring it into your house or apartment to recharge, and it would recharge in just three hours.”
Everything rests on the assumption of whether “too smart to crash” is possible, and the secondary assumption whether consumers will ever really trust this. The former is surely sound, the latter questionable.
But, no matter. At least this view of the automobile industry evolution, or indeed revolution, is in clear acknowledgement that one will not see the future of the auto industry by looking through the lens of a single issue such as global warming, or any single propulsion or other technology.
The car is inextricably tied to the deeper systems it is part of. Any transformational future proposed or envisaged—whether that of Burns, or environmental lobbyists, or public transport evangelists, or any other—has to show how the whole current reinforcing system behind the car is overcome, that is bettered for most consumers and stakeholders, by a new system.
First posted at Forbes Leadership: http://blogs.forbes.com/adamgordon
Posted by Adam Gordon on Aug 19, 2010 in all, foresight tools & methods, lifestyles & values, politics of the future, strategic foresight
Today I offer a rather naked punt for a site called “Global Voices,” but there is a solid foresight methods reason for doing it.
In its own words: “Global Voices is a community of more than 300 bloggers and translators around the world who work together to bring you reports from blogs and citizen media everywhere, with emphasis on voices that are not ordinarily heard in international mainstream media. Global Voices seeks to aggregate, curate, and amplify the global conversation online – shining light on places and people other media often ignore. We work to develop tools, institutions and relationships that will help all voices, everywhere, to be heard.”
There are of course other places to get local-blog perspectives on current issues and concerns, but this site appears to be the broadest and best, at least at the moment.
.
Why is this important for thinking adequately about the future?
The biggest problem we have in foresight work is the double-whammy that (a) people, on aggregate, choose and make the future, and (b) we don’t know what they will choose because we don’t adequately listen to their concerns and motivations, or worse, are we are deaf to their motivations because they are outside of our frame of reference.
(a) Yes, the future is influenced by new capabilities, driven by new technologies, but technologies come out of societal perspectives (what are we going to invest in or research towards?) and then adoption (which technologies “make it”) is all about social and economic choices. So what defines the future is what most people want. (Not everyone wants the same thing: that’s what politics is about.)
(b) Share of voice is political too, and in our world some people and companies have vast sway over media channels, but most have no voice. But just because they have no voice doesn’t mean they are not making choices as to (a) above. All it means is that if you’re not listening, the future will surprise you.
A “surprise future” = a lack of mental preparation. Without exception.
It is easier both practically and ideologically to listen to ourselves and our micro-communities of associates online or off, which confirms what we think and how we think. It’s much tougher to absorb alternative perspectives. Global Voices is not perfect. It is still, naturally, the preserve of the literate and educated. But it is a first step out of the frame.
.
read morePosted by Adam Gordon on Jun 29, 2010 in all, foresight tools & methods, lifestyles & values, social change, strategic foresight, trend tracking
Anyone can see a trend – a pattern in the data, something waxing or waning in the world. You often see trend lists put out by research organizations or trend-tracking firms that itemize things on the march or in decline: people living in foreign countries up 10%; biodiversity down 30%; numbers of patents filed up 60%, and so on.
The harder task in achieving quality foresight is to judge across such lists what is really going to change the world and therefore the operating environment for most firms, and what is just, well, merely of passing interest. The true test is to get trend impact right, not merely to call the trend.
There is no exact science to this of course. But a good heuristic is to judge the strength of the trend (drivers for vs. blockers against) x change to status quo (how new is this really?) x number of people affected. In this regard, a recent FT article reports on a genuinely world-changing trend.
The story is about how Indian television stations, led by Murcdoch’s Star India and Viacom are writing more independent, assertive roles for women in soap operas to reflect new realities in the Indian middle class. They hope to renew viewer ratings, as this clip explains:
Source: FT.com
Star has recently launched Pratigya (Oath), about an ordinary girl who marries into a rich family and stands up to its chauvinist patriarchs, and Sasural Genda Phool, about a rich woman who marries into a middle-class family but insists on maintaining a modern life.
New womens’ roles and aspirations have permeated Western society in the past generation and a half, and have profoundly changed everything from dress to daycare. Now the other 5 billion are going there too.
I would not (I stress) expect the Western model to be followed to the letter. Cultures always interpret world trends and technologies their own way. But billions of girls are growing up to be unlike their mothers in key respects, and will demand industries — not just the media — move with them, and will reward those that do with unprecedented commercial opportunities. That’s a certain future.
read more
Posted by Adam Gordon on May 18, 2010 in all, economy & finance, foresight tools & methods, leadership, policy, scenario planning, strategic foresight, systems dynamics
The short-term future in South Africa is the Fifa Soccer World Cup, and at the moment it is really hard to get anyone to see or think beyond it. Football is life. Nevertheless a few hundred intrepid thinkers gathered in Cape Town earlier this month to consider South Africa in 2030, under the auspices of the World Future Society, South Africa Chapter, and its very capable leader Mike Lee.
I was lucky enough to be asked to do the opening address at the conference, and even luckier in that this Web site: South Africa – The Good News summarized some of what I and others said:
“Adam Gordon, Foresight Project Director and author of “Future Savvy” gave us some pointers:
.
“The ‘BIG’ question he asks is ‘when do we influence the future and when do we adapt?’ There are big predictable forces out there (like population growth / the diminishing availability of oil etc), and there are big unpredictable forces out there (ja, well no fine!). Importantly, we can design our ability to influence and we can design the way we adapt. It is critical that we are able to do both.
“But managing the future is more than just about scenario planning, it is also about the implementation of the plan. It is about developing a methodology that prioritises, engages with stakeholders, and enables proactive actions on the ground.
So how?
Some important considerations (from various speakers):
.
“What is critical is the foresight process, it must be well-informed so that the implementation strategies that follow have buy-in, are doable, are relevant and far-reaching. There is a very real danger of visions being disconnected, unachievable and, at the end of the day, a pipe-dream.”
Dr Elizabeth Dostal talked of a stakeholder democracy in which she promoted the design of a matrix that recognised different stakeholder levels on the vertical axis and different environmental dimensions on the horizontal axis. A multi-level, multi-dimensional model.
“Imagine” she said, “putting four Nobel Peace laureates together and asking them what the causes of global conflict are. One may argue poverty, another ideology, another resources, and another greed. In no time, they would all be in different silo’s defending their view, in one sense they are all right, but in another sense they have not looked at the whole picture. A multi-level, multi-dimensional model would reveal this, the gaps in their logic, and the opportunities for agreement.”
read more