Future Savvy: Quality in Foresight

I’ve been flying across the world recently, which has given me a few quiet moments to read a real bona fide book, and the one I have been busy with is Peter Bernstein’s Against the Gods: the Remarkable Story of Risk (Wiley, 1996). It’s aclaimed all over the place, particularly in risk management circles, but I’d never quite got to it.

Anyway, this is in the intro (p5), and I found it a perfect encapsulation of a core problem in foresight thinking — quantitative vs qualitative methods — well worth retyping out to have on hand for reflection. Here goes:

“The story that I have to tell is marked all the way through by a persistent tension between those who assert that the best decisions are based on quantification and numbers, determined by the patterns of the past, and those who base their decisions on more subjective degrees of belief about the uncertain future This is a controversy that has never been resolved.
The issue boils down to one’s view about the extent to which the past determines the future. We cannot quantify the future, because it is an unknown, but we have learned how to use numbers to scrutinize what happened in the past. But to what degree should we rely on the patterns of the past to tell us what the future will be like? Which matters more when facing a risk, the facts as we see them or our subjective belief in what lies hidden in the void of time? Is risk management a science or an art? Can we even tell for certain precisely where the dividing line between the two approaches lies?
It is one thing to set up a mathematical model that appears to explain everything. But when we face the struggle of daily life, of constant trial and error, the ambiguity of the facts as well as the power of the human heartbeat can obliterate the model in short order.”

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I’m pleased to have been invited to be one of a dozen or so regular contributors to the blog ‘Risk Matters,’ because, well, risk matters. It’s a key part of the reason why anyone or any group would look to the future… which of course also conditions how we look, what we look for, and what we find or miss.

So this stimulates me to put down a few thoughts about risk assessment and its relationship with industry and strategic foresight as a whole. This is a big topic of course, but seeing as the categories are confused a lot, it’s worth tackling even if just in summary terms.

When I reach the topic of Risk Assessment in my ‘Industry Foresight and Business Future Strategy’ MBA elective, I use the ‘Adidas-Salomon: Incorporating Risk into Corporate Strategy’ mini-case [Ref: ICFAI 304-141-1; sourced via Cranfield’s Case Clearing house.]

The case is a useful baseline in risk assessment because it describes the various risks a multinational company typically faces: marketing risks (market change, brand image); operations risks (quality; reliability of processes and suppliers); social & environmental risks (workforce & natural resources compliance); legal (liability, regulation, patent); information technology (compromise or disruption); and financial risks (currency, interest rate, credit).

Business disruptors
In sum these are the things that could damage or disrupt the business. Isolating such factors, keeping vigilance over them, and having thought through or enacted counter-measures in advance, allows the organization to better control or reduce the impact should risk become reality.

All risks are future events, so a risk assessment is undoubtedly a future study, but assuming a company looks diligently across all these categories for potential and emerging hazards, how prepared is it for a changing world? What kind of industry foresight does this give managers? Is a risk assessment a futures assessment?

The obvious first answer is that a risk assessment is only half the equation. It’s oriented to the downside potential of changes not the upside; looking for threats not opportunities. Obviously that means that opportunities are less likely to be identified.

The second thing is that a standard risk assessment operates in the realm of known risks, in known categories, that may cause disruption and damage in a known way. It doesn’t have the mechanism to expand conceptions of what could go wrong, or how it could go wrong, or what the full knock-on effects will be. The types of mental-model-expanding techniques that fuller foresight offers are not built into a typical risk assessment.

Strategy questions
Third, risk assessments never really broach the question: is the business idea or business model good and will it keep on being good? That is, what products or services will be appropriate going forward, or how will models of supply or manufacture or marketing or fulfillment need to change, due to technology change or shifting consumer preferences.

In other words, risk assessment doesn’t ask strategic questions of managers. It is part of the day-to-day management vigilance necessary with reference to the future – the hygiene factors in running an organization. It is about keeping the business going as is, not about changing it for a changing word.

There’s nothing wrong with this. The point is, it’s just ‘first base’ in building a quality view of the future, and therein a robust point-of-view about what to do next. Although no doubt companies such as Google or Apple or Virgin, etc., assess and mitigate their risks, they didn’t become successful in their future by doing risk assessment and saying ‘That’s it, were done. We’re ready for the future.”

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Picture: londonfashionweek.co.uk

London Fashion Week, the UK’s slice of the $300-billion global fashion industry, starts today with flash of couture, whirring of camera and, no doubt, glug of Veuve-Cliquot. All the sass and celebrity pizzaz, and the actual catwalk schedule, can be found at londonfashionweek.co.uk

So… it’s teen giraffes tottering around in outrageous stuff, the watered down version of which will be pumped through the supply chain until it appears at your local department store in six-to-nine months. Same as it ever was, right?

In fact, not really. One of the gathering trends of the current era, across many industries, is the empowerment of consumers as ‘taste-makers,’ circumventing designers and specialist advisers. This is currently putting fashion executives through the wringer as “who decides” what is good, what is made and marketed, is being wrested from the fashion elite and from fashion intermediaries (glossy magazines like Vogue and Elle) by the “woman-in-the-street.”

The industry’s longstanding top-down orientation — where “we” told “you” what next year’s ‘look’ will be — is cracking as consumers who can easily access, share, and discuss every fashion preference, including their own, now get ‘networked affirmation’ rather than affirmation from the top.

Internet and mobile communications, and social networking technologies are behind this, of course. Access to style and fashion advice now comes anywhere, anytime. The stuffy catwalk shows are not open to the public (ah, the whiff of elitism still breathes for now,) but as a recent story in the LA Times points out: “Images can be seen online minutes after a designer shows them… The Internet makes it possible not only to read about fashion but to participate in it. The use of sites that enable users to create their own fashion-spreads, share photos of themselves in different outfits and elicit wardrobe advice from their peers is skyrocketing.”

The news for elite arbiters of taste in every industry in the 21st Century: it’s game-over. You will have to participate with your customers in their socially-networked formation of perceptions and opinions, a process you will be able to sometimes lead, but more often have to follow.

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College graduation is a fabulous time and place to think big, and therefore a good place to have a futurist do the thinking. Peter Schwartz recently gave the valedictory address to the 2009 graduating class of Rensselaer Polytechnic Institute (he graduated there in 1968) and offered a grand 10-point challenge list for techies of the future:

Allowing for the usual pep-talk style of these things, it’s possible to boil the list down to five key things, which will indeed be essential to technology enabled industry and social change in the lifetime of today’s college graduates:

1. Non-pulluting, inexhaustible energy. Schwartz mentioned potential sources including fusion and gasoline-excreting molecules. “We need something new for the long run, and it will require new physics, new chemistry, new materials, new biology, or likely some combination.”

2. A “bio-industrial revolution” to make production of goods more energy efficient and environmentally sustainable.

3. Advancing understanding of the human brain, and developing new means to combat aging effects.

4. Improving agriculture to raise yields while reducing environmental costs.

5. Better urban planning, civil engineering, and smart architecture for more sustainable cities.

A fairly well known list – yet these are the key issues. But the most interesting thing of all that Schwartz said was this:”graduates should not assume they can do it alone. Collaboration is a key ingredient of progress.”

“At some point in the next few years, probably by the time you are 30 … you will have to make a life trajectory decision that no one tells you about: Are you mainly going to work on your own or work through others?” Schwartz said. “Many engineers, scientists, artists, poets, writers have great lives working mostly by themselves. But there are many things you cannot do on your own. If you want to lead research teams in larger organizations, or design and construct new buildings, or make movies or start new businesses, the skills of human collaboration are essential to success.”

In other words, collaboration – the means to and willingness to and resources to collaborate (globally) – is a key enabler of important breakthroughs. In theory everyone knows this and everyone agrees. But how much of competitive and legal process is all about protecting individual or national work, that is disrupting collaboration?

So in addition to the grand technology challenges for coming lifetimes, I offer a similar grand policy challenge (perhaps for Kennedy School grads of 2009): create the policies that genuinely promote and encourage collaboration. Do not encourage people, or companies, or countries to see benefit in working on their own. Facilitate and reward information sharing at every level… and then the Rensselaer grads and their equivalent around the country and the world will really be able to create the future that Schwartz envisions.

For event report see Rensselaer Polytechnic Institute http://news.rpi.edu/update.do?artcenterkey=2585

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A basic tool of foresight work is horizon scanning, that is, scanning for signals of change, early portent of trends, straws in the wind of change. Futurists do it habitually, and if not habitually then – the wisdom is – do it routinely by consciously scanning sources of information you don’t normally. Buying an agricultural weekly or teen idol rag at the airport, rather than your standard dose of the Economist.

It was in this spirit that I picked up the UK launch issue (aka May 2009) of Wired. Actually it’s not the first launch. Wired was in the UK ten years ago, but Condé Nast withdrew it in the dot.com crash. In the US at the time, I remember when Wired, the poster child of the Silicon Valley / Nasdaq bonanza, was almost as thick as a phone book each month. But those days were soon over.

Anyway, who could resist an offering that was about to tell me about my “Life in the future. “Fake Meat, Robots and Electro-Sex: the World is About to Change.” On the cover are, I kid you not, flying cars!

Now, I wouldn’t take this stuff seriously for a moment, if everyone else promised not to. But they don’t. So here we go. In the “What’s Next?” cover story 46 experts make 99 predictions about the next 40 years, and none of them will happen, or not in the time frame expressed.

Oh, moon settlement?

I shrink from sharing the list. Meal replacement patches, check. Moon settlement, check. The male pill, check. Every techno-fantasy of the jockish sci-fi world, check. Well, let’s stop on the male pill for a moment. Can we not do it? Sure we can do it – today. What’s stopping it is not technology. It is attitudes (machismo, essentially). So Wired experts are telling us that this will go away in a decade. Puh-leez.

I hardly need mention there’s no method given behind any of these expert forecasts.

Don’t you think Wired should be asking themselves why, in 2009, they are producing 186 pages of dead tree and carting it around the country in carbon-emitting trucks? Technology-vision may lead you to a view of the future. But it’s unreliable. The future is determined by what consumers are ready for. Well, that’s one of the 20-or-so key forecast filtering principles of Future Savvy.

Perhaps we should look at the cover story for what it is really about – which is selling magazines. Because, there’s no doubt that tech is changing, and many new capabilities are coming on stream, and this is very, very fascinating to imagine uses for. And this fascination is what Wired packages and sells. Don’t bet any money on the predictions though, certainly not their timeline.

But sturdy in some areas

Aside from the predicting lark, it’s a good magazine of its kind. The features are well-conceived, well-written, for example, one about how the BBC iPlayer business was built; a feature on sea salvage; a profile of PayPal founder Elon Musk; the David X Li formula and how it mis-calculated risk, and so on. Great stuff. Actually quite a sturdy business-oriented-view of techno-change, if you can get past the boys-with-toys riff of the magazine as a whole.

So, actually, much to like. Just, please, don’t think a lad’s mag is going to tell you anything coherent about the future.

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It’s an auspicious time for those of us long convinced that design and future studies are fields with significant overlap whose coordination is helpful in addressing both social and commercial problems and/or future opportunities.

Conference: March 19-21

Tim Brown of IDEO, the the industrial design firm, recently published a Harvard Business Review piece Design Thinking – investigating designer-methods in business innovation. At Davos last month there was a “Global Agenda Council/ Design,” featuring Newsweek’s Bruce Nussbaum and built-environment design firm ARUP’s head of foresight, Chris Leubkeman. (The general agenda may be found here.) Next month, the Association of Professional Futurists are having a “Futures by Design”  conference in association with The Art Center College of Design in Pasadena, CA.

And so on. I’m going to be blogging more about this. But for now I wanted to put out a note-to-self I wrote on the issue about five years ago, trying to briefly define how the fields relate to each other, and what the crossover is. Here goes:

The tools of design and planning dovetail closely with those of industry foresight. The overlap and interaction between these two disciplines is not commonly understood, and so the methods and process insights from design professions that could augment the range of strategic foresight tools is often ignored.

1. Beyond aesthetics
Sunday supplements and glossy magazines often use “design” to mean style and fashion. While aesthetics is important, good design means much more than how products appear. It is about creating better processes, interactions and solutions for human benefit. This often involves experimenting with new technologies, envisaging possibilities under conditions of uncertainty and complexity, exploring and comparing alternatives, and determining the best and most durable solution for the long term.

2. Future focus
Whether planning a building, or redesigning a product, or innovating a process, the designer is called on to anticipate a solution that caters to future needs ­ often responding to futures issues, for example environmental-sustainability pressures and changing social values. In other words, design methods, like futures tools in general, form the bridge between current products, systems and practices and what it will be required and desired in the future.

In achieving this future focus, designers, like good “futurists,” must use techniques of imagination, creativity and intuition to generate and evaluate future outcomes. Like futures professionals, designers are called on to practice original thinking, imagine the world differently and see possibilities that others don’t. They are required to take risks, negotiate change and challenge the status quo under conditions of ambiguity and uncertainty. And like good foresight work, design succeeds only if it finds the right tradeoffs between technology possibilities, economic realities, and social needs.

3. Rendering
More than merely anticipating the future, designers and planners are practical agents of visual imagination, creating the blueprints for the objects and experiences of tomorrow. From product creation to urban renewal, designers and planners have tools and experience translating abstract future concepts and ideals into visible or tangible form ­- “making the invisible visible.” Through this rendering function they are primary agents in articulating the future, and therefore in helping us see and negotiate (or refuse) the transition.

4. Systemic innovation
Design is about systems and practices as much as products: better-designed systems improve utility, cut costs, and improve resource use. Designers play a key role in the organizational innovation process as a whole, including the development of integrated product and services, or inventing new types of value chains, alliances, and collaborations.

In sum, much of what foresight professionals are trying to do every day is already being done by design professions. Their methods and process insights should be integrated into the foresight field as a whole.

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A fascinating 1981 two-minute KRON news story about home computers and the future of newspapers appeared on BoingBoing a few days ago. The clip is here:

The story covers the pilot project of two San Francisco newspapers seeking to create an online edition. The presenter starts: “Imagine if you will sitting down with your morning coffee and turning to your computer to read the day’s newspaper. Well it’s not as far fetched as it seems…”

28 years later it’s exactly what we do. But it seemed far-fetched then, and this was not a misjudgment: it has taken us until now, the full 28 years in most developed countries, to get to the point where mass online newspapers rival mass print editions in the market. What might that tell us about what seems far-fetched now, whether it will happen or not, and how long it will take? How does it improve our foresight?

$10 plays 20c, but not for long
The news clip features early 1980s computers – the text-only green screens – and achingly slow phone-set modems. A newspaper takes two hours to download (with no picture, ads, or comics). So there are technology limitations.

Then there are economic barriers: the local-call hourly charge is $5 (=$10 for the paper) while the print copy costs 20c.

And there are system-wide market-adoption issues: there are only “two to three thousand” home computers in the Bay Area at the time. Home computer penetration is obviously related to utility (usefulness/cost) of the machine.

But in 1981 home computers were about to get a whole lot better for a whole lot less – and with this programmers would be drawn into turning the technology into something we actually need, and ultimately can’t do without – all driving towards the utility jump that signals mainstream adoption. But at the time home computers were an unimaginably small niche of the total media market.

Fast forward to 2037 and what might we be able to say about it? First, that the pilot projects of important new mainstream markets already exist today (along with great business opportunities). The technologies involved are, now, incredibly clunky and expensive, meaning consumer utility is laughably low. But this will steadily unravel to the point where the technology is fantastic and affordable, and voila! We will have fundamental transition and entirely new mainstream markets.

But the most important lesson of all is this: it will take a generation. The future never cuts corners. All fundamental changes in social and market patterns take at least a generation, if not more. There’s a well-known truism in foresight work, which is this: we tend to overestimate the pace of change, but underestimate how all-encompassing it will be, once it comes.

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Review: The Age of Heretics, (2nd Edition), Art Kleiner, Jossey-Bass, 2008

One of the conundrums of foresight work is that it demands a macro-perspective, but real change requires focus. In order to get the breadth of view across society and technology to think adequately about the future, the futures analyst is forced to forgo much of the detail, while implementers are thinking: “this 40,000 ft view is very illuminating, but how do I land the plane?” What changes do I make, in my organization, in my industry, on Monday morning, and how do I not get fired for making them?

Kleiner’s updated The Age of Heretics, (2nd edition, Jossey-Bass, 2008) is the modern history of people who find themselves – or put themselves – on the focus side of foresight: who work practically on the ground inside corporate institutions to achieve change, which means by definition challenging the methods and perspectives of their institution. It is not the story of foresight at the lofty level of ideas, but the altogether grittier and more interesting story of how macro-change consciousness meets real institutions, real organizational dynamics, real industry pressures, and real career considerations, in the history of US corporations since 1945.

Kleiner, the editor-in-chief of Booz Allen’s Strategy+Business, is no stranger to the foresight field. He is the ghost-writer behind an eye-popping portion of the futures canon, including The Art of the Long View; The Fifth Discipline, and its Fieldbook; and The Living Company, and so on, (source: http://www.well.com/~art/) so it’s no surprise that the fabric of his text is lush in its familiarity with the players and ideas in the field.

The common thread he follows – through figures like Herman Kahn, Willis Harman, Amory Lovins, Oliver Markley, and so on, is that of the heretic, the maverick against the machine. Intriguingly, along the way, Kleiner gives us a worm’s-eye view of the genesis of many new management ideas, from “lean production” to the “balanced scorecard” to “scenario planning’ – showing how they emerge from and have been engendered by the forces of institutions in productive conflict with their heretics.

The political history of truth, and its future

Philosopher Michel Foucault catapulted our understanding of institutions as a political field, using insights from the history of prisons, hospitals, and asylums to show the relationship between power and knowledge in the evolution of institutional forms. But he never dealt with the modern business corporation. It may be overstating it, but not by much, to say that Kleiner updates Foucault for corporate America. The themes he carries: the role of the deviant, transgression, the evolution of truth, and discursive struggles between insiders and outsiders, are highly resonant. In his previous book, Who Really Matters (Doubleday, 2003) Kleiner developed other parts of this same perspective: showing how every organization’s identity and choices can be understood as driven by the interests of its core group – its powerful insiders.

The Age of Heretics is an engrossing history of change-agents in companies in strategic and organizational transformation. But it’s not just a history. In the future – while the names of the players, and their issues, and the institutions themselves will change, the productive articulation between the heretic and the institution will remain the format of change in big groups. So the lessons of the book are well taken and very highly recommended.

[This review, authored by Adam Gordon, first appeared in The Association of Professional Futurist's Compass Magazine]

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Microsoft - Computer Electronics Show 2009

Product prototype communication is a close cousin of scenario building. Typically the company creates their product or service in action, in the future, being used by happy customers, their “preferred future” scenario. Prototype communication doesn’t typically build in alternative scenarios, the litmus test of strategy-based scenario work. It’s more a kite-flying exercise, designed to put out a future-oriented message to stakeholders and the public, garner broad feedback, and (if you’re powerful like Microsoft) put up “this-is-the-future-of-the-industry” markers.

Nevertheless, with the caveat that they are one among many plausible outcomes, product showcase scenarios can be an eye-opening guide to what’s actually possible and what the future will be like.

A newly released Microsoft “Future of Computing” video, showcased at CES 2009 in Las Vegas in the past few days, is an example. The 10-minute piece, presented by Janet Galore, Program Manger: Strategic Prototyping, takes us through a scenario of interactive education in the future (when, exactly, is not said but the implication is it’s not too far off) showing how participants would find, use, and share information across devices and across platforms.

What we see is a tablet PC that can communicate seamlessly with other electronics and interact with Web info on the fly. Okay nothing new there. What’s interesting is how it’s all held together by surface computing, a smart desk with a screen, which allows information to be viewed in the process of collaboration, sharing, and filing.  In some futurist fantasies it is thought that communication is ideally invisible (my phone e-handshakes your phone without me doing anything, etc.) But actually humans mostly seem to prefer to see what’s happening, and to have the choice to interact with what is happening while it’s happening – not least so they know what machines have done and don’t have to pull their hair out before they find their precious work buried four subdirectories into the Temp folder… sheesh. But I digress.

The scenario focuses on organizing and sharing multiple inputs, therein making a pretty clear statement about the future: what will be really valuable is not access to information anywhere, anytime (an assumed, table-stakes factor), but a way to share and collaborate with the information in an productive way. It refreshingly assumes that whiz-bang graphics – they are there too – are the easy stuff, but that collaboration and teamwork are the hard things to get right, and the truly valuable service given the chaos of billions of voices and trillions of data objects that pertain in any human-work future.

The other real strength of the prototype and related scenario is its close attention to natural (or, at least, strongly socialized, conventional, classic) human ways of doing things, which are slow to change, and therefore will change slowly. The smart desk is something one can really see oneself sitting around, because this is what we already do. Also this future of computing envisages no stylus, no mouse, no magic wand to master. Rather, we move digital stuff around the desk with our hands. We point to it and we shift it. That is, digital capability accommodates and interlaces with Stone Age human and organizational patterns. That’s why this view of the future is persuasive.

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I finally got to look at Kevin Kelly’s TED presentation on “the next 5,000 days of the Web,” and bring it up here because it’s really worthy of comment from a foresight quality – Future Savvy – point of view.

Kelly needs no introduction. He’s the executive editor of Wired and a core who’s-who in the new media technology world. The first lesson he has to share is a key one: the Web is only about 5,000 days old – that’s about 13 years (the Internet, DARPA, etc., is older) – and all the stuff we have and now take for granted, from online investing to social networking to Wikipedia has happened in this short time.

The video is available here:

As Kelly says, and he’s undoubtedly right: “if I had predicted all this would be there (and free) nobody would have believed it. It’s impossible. The lesson is that very big changes do occur in fast-moving industries when considered over a decent-length (e.g. 10-15 year) timeframe. So let’s not kid ourselves: mere extrapolation of current trends doesn’t take us to the future. A leap – a paradigm shift – a willingness to anticipate fundamental shifts in technologies, institutions, and business models, is required.

So, against this, it is interesting that much of what Kelly predicts for the next 5,000 days of the Web is fairly conservative… but he does build in the idea of a new, fundamental shift.

The Web in 2020

What does he see coming in the next 5,000 days?

1. First thing is what Kelly calls “Embodiment” of the Web, by which he means that every device, every screen (laptop, phone, iPod, sat-nav, etc) becomes a “window into the machine” rather than a stand-alone device. There will be one Web, one machine, and everything will go through it. Part of this is that the Web will be embedded into the physical world – inanimate objects from cars to shoes to will have connectivity. Whether through RFID or other technologies, “there will be an Internet of things.”

Hello? We’ve heard this all before. Many times. In fact we were hearing it in the 90s. This doesn’t mean it’s wrong. In fact if we’ve been hearing it for so long, and the trend is still clearly in this direction, the forecast is probably right. What’s interesting is how non-radical it is.

2. Next he talks about “Restructuring” which is his term for the “Semantic Web” or what some call “Web 3.0” The idea is: first we linked computers (the Net), then we linked pages (the Web), and next we will link all the data or information or ideas anywhere on the Web to all relevant data /information/ ideas elsewhere on the Web. (This made possible by technologies such as XML, RSS, OWL, API, RDF)

One of the payoffs of this, says Kelly in an illuminating example, is that we won’t have to “re-friend” in each social networking platform. The technology will know we’re “friends” with Warren Buffet and Tom Peters and Malcolm Gladwell (…lol) as we move from Linked-In to Facebook to Technorati, and so on.

3. Kelly’s final point is that humans will be co-dependent with the Web. It will be always on, always there, ubiquitous, and the single fundamental tool we depend on to do everything.

Again, there’s nothing new in these points. It’s all been said before. In fact, as is often the case in good futures thinking, the value in Kelly’s forecast is that it is a carefully considered “cut” from what is usually forecast, leaving behind the wilder things that are said. Kelly on Web 2020 doesn’t say “expect digital human implants; ‘conscious’ devices; retina-as-screen,” and so on – the beam-me-up-Scotty kind of foresight that unfortunately often gets the headlines.

The next stage
Nevertheless, he is equally not saying the next 5,000 days will be “like the Web, only better.” The capabilities, the embodiment, the dependency, imply a new stage, he says. What that new stage will look like at the business and institutional level – what products/services/delivery will be possible via Web 3.0 – what the Yahoo or Google or Facebook or similar iconic institutions will there be, Kelly does not get into.

Fully thinking through the next 5,000 days of the Web involves going from the capabilities to what is built on them. But all in all this is a classy, integrated piece of future thinking (that easily fulfills the Questions to Ask of any Forecast checklist in Chapter 11 of “Future Savvy”) and is a solid foundation on which to consider future business and organizational implications.

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