The company projected sales of 13m Wiis, but moved just 9.8m; and sold about 80% of forecast 3DS handhelds and 50% of forecast DS machines.

In industry foresight we know that projections are reliable when nothing fundamental changes during the forecast period. Where the underlying changes, the forecast becomes ridiculous, leaders look stupid, and investors lose money. That’s why we use non-extraplative tools more suitable to complex situations.

So, what has changed? Rapid, worldwide smartphone and tablet adoption of course, particularly Apple devices. A bespoke hardware-based game company becomes vulnerable when users can play desirable games on the same handheld they use for everything else.

This is familiar ground in media-entertainment, a field that defines itself in part via the ongoing strategy debate of bespoke platform vs. open systems. Yes, if you can win with your own platform, as occurred with Wii, that’s beautiful. But the aggregators like iOS and Android stalk you.

Nintendo is not going to suddenly turn around and license Super Mario and other games for non-Nintendo devices, not least because it has a $14bn cash cushion as a result of the Wii success, so no need to panic.

Cannibalization

When it comes to leaders managing the future, cannabilization of past success in the service of future success, is the hardest thing to do.

But, even leaving aside platform aggregation, there are underlying market change-drivers that are far bigger thanNintendo, that will vigorously shape its future outcomes, which suggest bold leadership moves are required.

These are, first, the inexorable popular drive to ‘social’ – can I easily share what I’m doing, or playing, with others? The second is ‘mobile’ – can I do this wherever I am, and keep doing it as I move through my day and my week?

Reuters reports that a recent survey by mobile gaming site MocoSpace asked 15,000 gamers where they gamed: 53 percent said they played in bed, 41 percent in the living room, 72 percent commuting and 5 percent on the commode.

What goes from the bedroom to the bathroom, to the car, to the office, to the gym, the restaurant, and beyond? The one and only smart phone.

Experience shows that an apparently small leadership move that misses the future can quickly eviscerate a company, no matter what its cash position. Just ask Kodak, or Blockbuster, or even Encyclopedia Britannica. $14bn today… gone tomorrow.

Cursed Pages

Nintendo of course has its plan to turn things around. The company says it will continue its strategy of “Gaming Population Expansion,” growing its market by offering products across age, gender, and gaming experience segments. Later this year it will release the Wii successor, Wii U. Hoping a weaker yen and new games, including Mario Party 8and more Dragon Quest from Square Enix will boost sales, Nintendo’s president Satoru Iwata expects the business will return to profit next year.

In other words, business as usual. But, I look at the new “Spirit Camera” game blurb and I read… “terror from all directions,” “haunted visions,” and “cursed pages,” and I think, yeah, that about sums it up.

Fired – Villas-Boas. Picture: uefa.com

The leadership brouhaha of the week was the sacking of Chelsea Football manager André Villas-Boas after only 8 months in charge. This means the London soccer club is looking for its eighth manager since Russian billionaire Roman Abramovich bought it in 2003.

When not firing managers, Abramovich is famous for, among other things, spending $52,215.34 on a lunch for 6 in at Nello’s in Manhattan.

Villas-Boas’ error, like those fired before him (bar one who quit) is he didn’t win enough fast enough. In his charge the team won three of their last 12 Premier League games, and face exit to SSC Napoli after loosing the first leg of their UEFA Champions League round-of-16 tie.

Villas-Boas’ remuneration for the year, including severance, is around the $20m mark.

In industry foresight, noticing extremes helps us see and interpret less visible changes in the world. Stellar pay and commensurately rapid churn at the top of Chelsea FC clues us in to what is going on in the daily mainstream that we may be too immersed in to register.

High pay is nothing new. Also, evidence of high CEO churn is on the radar. A 2006 University of  Chicago study showed CEO turnover was 17.4% per year 1998-2005, implying average tenure of less than six years. It related CEO longevity to three components of stock performance – performance relative to industry, industry performance relative to the overall market, and the performance of the overall stock market.

More recently, executive search firm Crist|Kolder studied Fortune 500 and S&P 500 companies and found that while average CEO churn dipped during the recession it was back on the way up, hitting 13% in 2011.

“Win Now”

What is less clear at this point is the correlation between higher pay levels and higher churn, that may play out more fully in the future. But if the trend is that CEOs are increasingly paid like sports (or sports management) stars — and they are — it’s reasonable to anticipate that this will be on an ever-increasingly short-fuse “win-now” basis.

If the analogy holds, we can expect chief executives to face shorter and shorter periods to justify their pay; probably the higher the remuneration the shorter the justification period. Where eye-watering sums are changing hands, fingers will be itchy on the trigger.

The poverty of management decision-making here is not just in embracing and fostering short-termism, the cancer of management. It is in prejudging and potentially wasting leadership talent, because short-term data is effectively no data. Put it another way, short-term wins or losses are at the mercy of randomness, such that what looks like good or bad results are almost always part of normal near-term fluctuation spread, as argued by Nassim Taleb in his book “Fooled By Randomness.”

Over the long term, twists of fate, or twists of ankles are ironed out, and quality prevails. Nobody would argue that Steve Jobs was not successful or not worthy of star pay. But Villas-Boas … won championships for Porto FC in 2010 and lost championships for Chelsea FC in 2011, and neither results tell us or Abramovich whether he’s any good or not.

The only thing we can expect with confidence is that where the sports-star model of remuneration migrates, Boards (or shareholders) will be eager to read too much into early data, and prone to make Abramovich-like decisions.

Martin Sheen as Josiah 'Jed' Bartlet. Picture: @Pres_Bartlet

Even by the standards of modern political media prattle, this was odd: the Guardian yesterday invited and ran a “response” to Barak Obama’s State of the Union address, from Jed Bartlet the fictional president in The West Wing.

One should immediately add that the response was not that of Martin Sheen (the actor who played Bartlet) or anyone from the show. It was that of an unnamed tweeter who can be found here.

The reader vox-pop box was quick to cry foul, asking what next: a piece on space exploration by Captain Jean-Luc Picard, or 007’s analysis of the War on Terror?

Fair enough. But if there is a serious point to be made, and I think there is, it is that fictional leaders do have a role in real world business and policy leadership.

Fiction and storytelling is important and enduring in all human societies because it is an excellent vehicle for considering complex human situations, reflecting on competing motivations and interpretations, assessing choices made with incomplete information, and following these through to their win-or-lose conclusion. Fiction allows multifaceted situations to be captured without losing the complexity.

Parallels

Incidentally, this is why scenario method, which tells stories of alternative future situations, is such an effective planning device. But the point here is that fiction captures complex human situations and senior executives would be the first to recognize parallels between the challenges that imaginary leaders are put through and what they do in a real working day.

If fiction captures and communicates tricky situations well, it therein becomes a learning vehicle. Whether reading a difficult modern novel or watching a soapy TV show, we put ourselves in others’ shoes, vicariously experiencing their conundrums and learning from the outcomes of their decisions.

Would-be successful leaders could do worse than take note of the leadership attributes of winners such as Sherlock Holmes or Superman or Andy Dufresne; or unpick the illusions and ultimate failures of dark lords such as Voldemort or Mr Kurtz.

Furthermore, a good way to learn is to judge real performance against an ideal template. (Judging me against my clarinet teacher, for example.) Whether your politics aligns with the positions and preferences of The West Wing White House or not, there is no denying that Bartlet is set up as a model president in a model administration. He is thoughtful, caring, effective; manifests an ideal balance of intellect, EQ, and decisiveness; is respected and loved by his staff who will go to the ends of the earth for him. He is a template leader.

So it’s hardly off-the-wall to wonder what Bartlet would have made of Obama 2012. That said, it would have been far more interesting to know what West Wing screenwriter Aaron Sorkin or even Sheen, rather than abitrary unnamed tweeter, thought of the State of the Union address.

For the record:

The Lion: President Obama. Mangy, patchy, apparently underfed. Definitely caged. But he has a heart. Whether it is the lion heart of the ruler of Narnia … time will tell.

The Witch: Here we have to go with Shakespeare; in fact there are three witches: Romney, Gingrich, Santorum. On Tuesday Obama called for a fairer country. Notice they responded: fair is foul, and foul is fair.

The Warmonger: he that exited the presidency in 2008, having wasted 4,000 lives and $800,000,000,000 on a war as poorly judged as that of Douglas Haig at Somme, 1916.

Stan Litow, Director, IBM Corporate Service Corps

Warren Buffett surprised pundits when he revealed last month that Berkshire Hathaway had acquired a $10bn, 5.5% stake in IBM. “They have laid out a road map and I should have paid more attention to it five years ago… They’ve done an incredible job,” Buffett said during an appearance on CNBC’s Squawk Box.

Many of the dimensions of this incredible job – transition to service orientation and renewal of company culture, initiated by Lou Gerstner and advanced by just-retired CEO Sam Palmisano – have been well chewed over.

But one subtle and no less important part of Palmisano’s legacy has yet to play out. This is the renewal in leadership development itself at IBM, specifically via the IBM Corporate Service Corps (CSC).

Once upon a not very long time ago, IBM, like other classic Western multinationals, structured executives into the field for ex-pat experience in the form of long-term postings: a 1-3 year tour of duty in some far-flung office before recall to the mother ship.

The CSC format, since 2008, forms teams of 6-10 young executives from IBM offices around the world and sends them to emerging market locations where they work intensively for a single month on a high-profile local assignment.

“It’s not a business trip” says CSC Director Stan Litow. “They rent a house, live together, focus 24/7 on the problem. They make an impact. They learn to deliver value on the ground as a team in a global situation.”

CSC programs have run in more than 25 emerging market countries, from BRICS goliaths to African minnows such as Kenya and Tanzania. In Kenya, for example, CSC provided advice on implementing a “Digital Village”; modernized the postal service; and establish a framework for e-government and electronic voting.  In Tanzania, CSC helped develop an eco-tourism industry, and has put cutting edge technology into local universities.

About 200-500 IBM employees and executives are in the program at any one time. Teams are composed to represent all major skills in the company: information technology, marketing, consulting, finance. They spend about 2½ months in prep time, and the same afterwards in various forms of debriefing and handover to a new team.

Having this many people on a 6-month ‘sabbatical’ while delivering free consulting expertise and project implementation worth an average $250-400,000 per project, means IBM is footing a big upfront bill. But, aside from the venerable calling of doing good things with technology in the developing world, Litow maintains the costs are handsomely offset by benefits to IBM.

Cost-Benefit

First, the company builds relationships and goodwill on the ground, and so gains a foothold in growth markets, which becomes a platform for follow-on work. Around 30% of IBM revenue is international, a percentage expected to grow rapidly.

Second, program staffers – future IBM leaders – get skills enhanced and perspectives built, in globally sourced teams, via practical immersion, which all closely duplicates the demands of expected future paid assignments. Since inception, 1,400 executives and staff have been through the program; a reservoir of talent that has “been there.”

Third, the program attracts and rewards aspiring talent. IBM gets 8-10,000 internal applications for the few hundred spots on offer, evidence that CSC is popular and relevant in-company. According to Litow, CSC opportunities help retain executive staff and attract new talent to the company.

The positive cost-benefit of the program for IBM is perhaps most proved in requests from a half-dozen other companies – including FedEx, Deere, Dow Corning, Novartis, PepsiCo, and Best Buy – for help in putting together similar programs, or to piggy back on IBM’s program.

In mid-2011, IBM announced a partnership with USAID’s Center of Excellence for International Corporate Volunteerism to provide resources for companies that are interested in pursuing strategies based on IBM’s model.

Jeff Bezos

When I was at INSEAD for my MBA, I noticed it was fashionable for young men on the move in their careers to wear genuinely expensive watches. We’re talking $5,000 a pop and more (and no doubt they would upgrade in time.)

Me, I’d rather invest in my wine cellar: each to his own. The point is, it’s nothing new for rich men to spend handsomely on their timepiece. And nothing new for even richer men to lavish a fortune on signature and-or vanity projects.

So it’s all to type that Amazon founder and CEO billionare,Jeff Bezos, is spending $42m on his timepiece. The clock the size of a building, which will still take a number of years to complete, is being constructed deep in the Sierra Diablo Mountain Range, Texas. It is designed to run for 10,000 years.

On the clock’s web site Bezos says: “It’s a special clock, designed to be a symbol, an icon for long-term thinking… As I see it, humans are now technologically advanced enough that we can create not only extraordinary wonders but also civilization-scale problems. We’re likely to need more long-term thinking.”

This is partly the standard, “world-going-to-hell-in-a-handcart unless we wake up and change our lifestyle” plea for a long-term, sustainable, perspective.

But, in fact, the general thrust of communications around the 10K Clock is refreshingly low on planetary doom. Long Now Foundation founder member Steward Brand says of the clock: “Ideally it would do for thinking about time what the photographs of Earth from space have done for thinking about the environment.”

Builders in clock tunnel. Image: http://www.10000yearclock.net/

So the clock is in fact about exactly what it says on the tin: just a symbol of long-term thinking, a monument to the value of a long-term perspective.

And while 10,000 years is no business horizon, it’s possible to interpret the clock as symbol not just socially, but also in terms of dollars and cents. In a short-term world, where most businesses are rated by the quarterly numbers, it is a living monument to making scaled-up and lasting investments, and not pulling the plug too soon.

Who better than Bezos to put up this monument? In his first report to Amazon.com shareholders in 1997 he said: “because of our emphasis on the long term, we may make decisions and weigh trade-offs differently than some companies.”

The company was founded in 1994, listed in 1997, and but didn’t post profit until 2001. But by the time it did, it was far bigger and more influential than imagined. It was on the road to becoming what it is today: the world’s biggest online retailer, period. Reflecting a final coming of age after 15 years, the share price (AMZN) has doubled and doubled again in the last two years.

Arguably Bezos’ true leadership genius at Amazon in the early days was not just seeing the long-term and scalable possibility (beyond book retailing) but also being able tactically to hold the short-termers at bay for long enough to do the building required.

As a business culture, we’re locked into annual reports and rapid product life cycles. We’re quick to say “fail-fast” and pull the plug on a fledgling project that’s in the red. Or we make a return, so good, let’s cash it in and do something else.

But Bezos was able to see and to say that a critical component of business leadership success is looking beyond your own or your competitors’ time horizons and scale horizons.

The leadership message in the clock is “Don’t think small. Forget short-term wins. Look beyond your time horizon. Give weight to the long-term possibilities. Build for tomorrow and allow the full potential of a project to evolve.”

The World Bank on May 18 released a report “Multipolarity: The New Global Economy” with outlook for the geo-financial system to 2025.

“Multipolarity” catches the World Bank up with what has been clear for a long time: an actually, genuinely different global economic order is unfolding as growth moves to emerging economies, with countries such as China, India, South Korea, Russia, and Brazil accounting for the majority of economic growth in the next decade and beyond. And, on the back of this, the dollar will lose its pre-eminence as global reserve currency.

The report is nevertheless important at a meta-level. When the World Bank puts out a perspective, that means the perspective becomes more-or-less institutionalized wisdom. Global financial revolution, effectively, is no longer a theory out there. It is the “official future,” and financial and political institutions are more likely to act in line with it. Therein a reinforcing feedback loop.

Renminbi

A couple of things stand out. Report author Mansoor Dailami says the euro and renminbi will establish themselves on an equal footing to the dollar. This seems plausible, but one is left wondering – given the pace of innovation in finance, and in computing, and in communications and networking, and the 14 years to 2025 – will we still be looking at a system where national or regional currencies are  “dominant?” Could the world financial system not evolve differently, for example away from a global reserve requirement altogether, or towards more multi-currency baskets? (The report does entertain the adoption of the IMF’s Special Drawing Rights system.)

The foresight principle: In looking at the future it’s tempting to see new agents dominating current structures, but often the structures themselves change.

The other point that pops out is an expectation that cross-border M&A deals originating in emerging markets will be an increasing feature of the new corporate landscape.

This is as solid a prediction as one will find. But it surely will not be one way. While cash-flush emerging-market companies will look to diversify into European and American companies, or take them over entirely – particularly ones that have Asian brand recognition and prestige (remember the Japanese corporate shopping trips of 1980s) – developed-world companies will be returning the favor, buying their way into emerging market companies to get a piece of their growth.

And we’re not talking passive investment here. The action will be immersive developed-meets-emerging market M&A (and surely also corporate raiding, hostile takeovers, etc.)

M&A is “speed” for corporate leaders. A big high, often followed by acrash. But if history is any guide, the lure of buying someone else’s growth, not to mention instantly enhancing a company’s industry size-power footprint, is more intoxicating than the sirens of Odysseus, so one can confidently predict it going forward.

Which is to say the spreadsheet-anticipated wins in economies of scale, scope, market synergies, or vertical integration of M&A will be up against the problems of marrying company cultures, systems, products, brand values and business models — a vexing problem that routinely defeats even the best business leaders.

But add to this, here, very significant cross-cultural management and staff issues, problems of distance, and regulatory systems that are often purposed to different ends, and you have a leadership challenge indeed for firms that venture down this path. But venture they must, because companies in low-growth markets can only buy back their shares for so long (aka “we’ve got no ideas about what to do with investor money, so we’re giving it back to you”) — witness GE’s $12bn share buy-back announcement this week.

Kate Middleton's new coat of arms

Tomorrow’s wedding of Prince William and Catherine Middleton dominates the airwaves around the world, and even Harvard Business School professor Rosabeth Moss Kantor has an HBR blog post offering business insights thereto, including that it is an example of the coming of the “experience economy,” where people pay for the chance to participate at particular times, and expenditures on goods and services come in bundles tied to particular events. She councils how the “soft stuff” and “joy factor” can offer big audiences and revenues; romance and ritual matter…“sentiment sells.”

Fair enough. To this, permit me to add a thought or two about how the fact of the royal wedding can improve out judgment of future business environments and opportunities.

First, in the race to the future, leaders should never underestimate the power of traditionalism and continuity –particularly in changing times. Business leaders may be tempted to view the latest gizmo or the new lifestyle choice as the future. But this would be thinking poorly about tomorrow. Yes, new things get adopted all the time, and real and rapid change happens, but at the same time the broad market also has a vast, seemingly unquenchable, appetite for tradition.

The point is, the two are closely correlated. The faster society and technology moves the more people cling to apparent past certainties and traditions.

If you’d looked at the future of the British monarchy anytime through the turbulent, democratizing 20th century you might have be tempted to say it must soon be phased out, given the estimated $65m-a-year cost to the taxpayer (not including the spiraling cost of security.) You would think that the public would tire of upper-class toffs prancing around from polo matches to garden parties, wearing Chloe and drinking Krug at their expense.

Popular

But, in fact, no. The British monarchy is as popular as ever. There is some truth in the view that royalty is good for UK tourism. But mostly the monarchy survives because the public wants vestiges of the past as it peers at the changing future and the steady erosion of tradition and other fixed points from middle class lives.

A handsome military prince, a girl in white, a horse-drawn carriage, a bishop, a cathedral … is a psychological balm for most of us, even if we are, or more exactly because we are, viewing it all streamed on an iPad.

In industry foresight, we call this a “counter-trend.”

Another counter trend at work here is marriage itself. The figures are clear that people are marrying later, if at all, and staying married for a shorter time. William and Kate represent a minority: the number of weddings that are a first-time marriage for both parties is down to 150,000 a year, 35% what it was in 1940. That’s the trend. So the royal couple and their public ritual affirms publicly what most ordinary people are denying or denied privately.

The point not to be missed is the middle-class compromises most people are making drives counter-trend nostalgia for what once was, and marketing campaigns or business units, if not entire companies, can be built thereon – not only on traditionalist revivalism specifically, but on any strong counter-trend.

American Dream

Finally, the wedding of Prince William to “commoner” Catherine Middleton shows us how, despite all its apparent protestations, the UK is yet still Americanizing faster than one might think, and not just in splurging on cheap Chinese imports or putting university education on a pay-to-play basis.

Kate is very much an “American” princess, in the sense of being from a self-made family. Her mother was a flight attendant, her father too, before becoming a flight dispatcher for BA. (Rumor, hotly denied, is that Prince William’s friends used to snigger “doors-to-manual” among themselves on Kate’s arrival, in reference to her parents’ profession.)

But then “the American dream” could and did happen: The Middletons hit it rich with an online party supplies company (Party Pieces), were able to send Catherine to the right schools, and the rest is history.

The new axis in world diplomacy and global leadership flexes its muscles next week on Hainan Island – the southernmost tip of China – with the BRICS summit on April 14 in Sanya, and the Boao Forum the following day.

BRICS (Brazil, Russia, India, China, and South Africa) is already something of a “G5” of non-Western nations. Next week its leaders (China’s Hu Jintao, Brazil’s Dilma Rousseff, Russia’s Dmitry Medvedev, India’s Manmohan Singh, and South Africa’s Jacob Zuma) will set themselves to discuss their joint concerns in international affairs, economics, development, trade, security, etc.

More than anything, the event signals growing intention to coordinate views and act in closer alignment, and press towards future empowerment and responsibility of non-Western world leaders. Political clout has always gone with economic clout, and in this respect the future can be depended on to “rhyme” with the past.

BRICS countries already account for 40% of global population and 20% of global GDP – and they are the nations expected to grow most rapidly in GDP terms in the next decade and beyond, and to provide primary succor to neighbors in their regions.

Hainan 2011 is the third summit of the BRIC countries. The acronym BRIC was coined by Goldman Sachs (NYSE: GS) in 2001 in a chicken-and-egg prophesy: causing Russia, China, Brazil and India to see their interests as potentially aligned, and politically worth aligning. South Africa was accepted into the group in February.

Without stopping for breath, the diplomatic caravan moves 125 miles overnight up the coast of Hainan Island to Boao, where President Hu will give the keynote address the next day at the annual Boao Forum for Asia (BFA).

Boao is an undisguised knock-off of the World Economic Forum in Davos (with skiing replaced by snorkeling perhaps): a high-level gathering for policy and business influencers, with a similar nudge-and-influence mandate, here with an Asian focus. In attendence, in addition the the BRICS representatives, will be by Korea’s Kim Hwang-Sik, Spain’s Jose Luis Rodriguez Zapatero, Ukrainian’s Mikola Azarov, and New Zealand’s Bill English.

Fukushima plant, Japan. Picture: digitalglobe.com

At the time of writing, Japan is battling a nuclear meltdown and radiation emergency, and Fukushima could become a word suddenly the whole world knows, like Chernobyl.

Bloomberg News has called the whole tsunami crisis Naoto Kan’s “Katrina moment,” and one can only hope and pray for all concerned that the Japanese prime minister is a more competent leader than Bush was at this moment of human catastrophe.

As to the nuclear meltdown: If ever we have been warned about anything in the future, we have been warned about nuclear plant catastrophes. Not only have there been, as it were, verbal warnings going all the way back to the 1950s, but real-world events such as Three-Mile-Island and Chernobyl have fully fleshed out the scenario of nuclear reactor failure or near failure in populated areas.

If nuclear-generated electricity makes sense anywhere, it makes sense in Japan, which famously has no coal or gas reserves. But these are nuclear plants … built right on the Pacific Ring of Fire? Japan is a small island with 125 million people densely packed into urban areas. As we face the possibility of this many people put at risk, however the next few days play out it’s clear the risk and reward of nuclear energy here is out of alignment.

This is hardly news. The question is, why are the plants are there? And the answer is not a simple one of collusion or corruption of government, or shenanigans of power companies, although there may be some of that. It comes down to a misapprehension of probability and risk among leaders and decision-makers such that it appears that risk and reward are in balance, when in fact they are not.

Year 869AD

To think about this, consider yesterday’s BBC Story: Japan tsunami ‘could be 1,000-year event,” saying last week’s tidal wave was equivalent to a giant wave that hit the Sendai coast in 869AD. The report says: ”It is not unusual for undersea earthquakes to generate tsunamis in this part of Japan. Offshore quakes in the 19th and 20th centuries also caused large walls of water to hit this area of coastline. But previous research by a Japanese team shows that (only) in the 869 ‘Jogan’ disaster, tsunami waters moved some 4km inland, causing widespread flooding.”

The point is, tsunamis are common, but “the big one” is a one-in-thousand year event — an extremely low probability outcome.

Here I’m strongly reminded of the days following the depth of the Credit Crunch, Bear Stearns’ collapse, and general world financial system meltdown of 2008. If bankers said one thing sensible through the whole period it was: “this was a one-in-ten-(hundred, etc.)-thousand probability outcome, and extreme ‘outlier’ event!”

A low-probability event means we can relax, right? Wrong. The problem is probability says zilch about impact. “Wild Cards,” or now more famously in Nassim Taleb’s terms, “Black Swan” events are low probability but of game-changing impact.

Taleb’s point, made repeatedly across his various books and articles, is that standard probability theory and Gaussian statistics lull analysts into thinking that because an event is low probability – an outlier in a normal bell-curve distribution – it is of low or lower consequence.

Ignoring the tail of the Bell Curve is okay if events are genuinely assessed as low impact. If they are high-impact aka “fat-tailed” events, they are the most important events we face in the future, in building or maintaining any system or organization.

A probabilistic framework misleads decision-makers because it degrades their attention to crucial events (by tagging them low-probability,) which means next thing they are betting banks on mortgage-backed securities, or building nuclear plants on earthquake fault lines.

In the pivotal moment of the movie “Remains of the Day,” US Congressman Trent Lewis (Christopher Reeve) in England in 1936 declares to the “gentleman-amateurs” around him who are blunderingly cosy-ing up to the Nazis: “leave politics to the professionals.”

It’s an expression of the 20th century zeitgeist shift to professionalization of not only politics, but all significant decision-making and management. Business certainly led the way through the century with the rapid rise of managers as a distinct class of professional, expecting the commensurate erosion of family-run firms of any real size and clout.

The problem with family firms are legion: under-qualified if not downright incompetent heirs thrust into positions they can’t cope with or don’t want, family wrangles, inheritance disputes, relative non-accountability of management leading to quixotic decision-making, secrecy mitigating against access to capital and therefore growth, and so on.

So the wisdom became that the family-firm management was appropriate in start-up mode, and then as companies scaled up and moved to external funding and responsibility to multiple stakeholders, professional management should take over for the good of everyone.

Generations

Or so we thought. There is a long-running counter-argument that family firms do many things better, even at scale. Key decisions are made with the fearless straight-talk that is often required, and without bureaucracy up and down the chain. Families may have their politics, but they don’t have the chronic office politics nor resume-polishing that besets so much of corporate life, wasting countless person-hours.

Furthermore, industry and business wisdom that is built up over generations stays in the firm rather than getting washed down the river every time the executive door revolves. The bottom line: family firms remain a more-than-viable model very much alive and kicking all across the world.

These are background issues to Randel Carlock (INSEAD) and John Ward’s (Kellogg) new book “When Family Businesses are Best,” (Palgrave, 2010) which is broadly about navigating a family firm in the changing, globalizing world.

What got my attention particularly is the authors’ contention that family firms are better at developing, retaining, and working to a long-term management perspective. That is, the family is an inherently long-term institution, and well-run family enterprises are run in such a way as to endure for the future for the family – and this is an advantage in navigating and surviving a changing world.

The term the authors’ use is for this kind of management is “stewardship.”

The root problem of most professionally managed businesses is they are run without stewardship  – without concern for long-term well-being of the firm or its stakeholders. If we needed reminding, the banking crisis was the product of management that couldn’t be further from stewardship – taking absurd risks with other people’s money for short-term personal wins.

Banks have become the poster child for the follies of short-termism, but the reality is short-termism remains endemic across professional management, both in business and politics. Long after “après moi le déluge” CEOs have taken their packages and are on the golf course, others – employees, taxpayers, the environment, etc. – are paying the price.

What’s measured

At least, post-crunch, it is now incontrovertible that short-termism is an extremely poor strategy for managing a complex and uncertain future. “What gets measured gets managed,” and when what is measured is only the next quarter’s profit figures, bigger failure looms.

The family-run businesses offers a model of long-term management. It is a conservative non- “bet-the farm” model to be sure, but perhaps the path a real steward of value genuinely operating in the best interest of valued stakeholders would follow.

So how might one, without the real flesh-and-blood bond of family ties, get senior executives to think through the effect of their behavior on employees or stakeholders 10- or 20 years in the future, as the head of a family would? Surely only by creating incentive structures that mimic family stewardship – incentives that mean that leaders can’t walk away smiling until the organization (or the value it represents) has been safely passed on to the next generation.

A photo exhibition, Facing the Impossible, opened at the end of last year in New York. (425 Broadway, 5th floor, NY 10013; to 28 February 2011.)

Just another photography exhibition in NYC? Well, not quite. It’s an industry foresight story too – the survival and revival of Polaroid analog instant photography in a digital world.

Polaroid, for those too young to have heard of it, is a camera system that produces a picture in a few minutes out the back of the camera, no darkroom required.

Polaroid US brought out its first camera in 1948. The company filed for bankruptcy in 2008, closing down its last production plant in Enschede, Netherlands, making 180 employees redundant. But a group of entrepreneurs and ex-employees calling themselves The Impossible Project acquired the plant and have set about making (and improving) Polaroid film. The company reports that 500,000 packs of film, retailing from $15 to over $100 per pack for Polaroid cameras was sold this year. Revenue for 2010 was more than $10m and the number of ex-employees on staff has grown from 10 to 30.

Now a $10m turnover and 30 employees is hardly a business number of consequence for the world. The point is, conventional wisdom says it should not exist at all. Even Kodak stopped making Kodachrome this year, after 70 years. How can anyone be growing sales of analog film in 2010?

The Message in Red Ink

One might say Polaroid US head office could be forgiven for assuming digital media completely trumped its product and exiting the market. But should shareholders be forgiving? Yes the company filed for Chapter 11 bankruptcy amid various complex management issues, but at its heart, red ink is always the product of inability to see and adapt to the future in time (or poor execution, or both.)

What The Impossible Project saw, that Polaroid itself could not see, was that niche, expert, aficionado secondary markets often remain extant and lucrative well after the mass market has moved on. Of course digital photography is the mass product-and-service market of the future. But in the rush to the future, lucrative pockets of specialization remain and this is one of them.

This principle can be seen in the media industry as a whole. Records and record players have not gone away in a CD and iPod world, they have moved to aficionado markets. Printed books and magazines are going this way too. They won’t disappear but they will be a format for niche uses. This is true across other industries and across history too: transportation, for example, has seen eras when horses and bicycles were primary modes of working transport. Their primary function changed, but this opened up lucrative secondary, leisure, and niche industries.

In adapting to the future, opportunities exist in taking retiring mass-market solutions into new industries, or upmarket into niche areas of the same industry.

Creative Adaptation

The irony in this story is that the Polaroid camera and film was always a niche product. It fought giants Kodak and Fuji for a piece of the mass market in analog photography but never became a mass-market solution. (Its competitive advantage was instant-ness; its disadvantage was price and relative quality.) So it didn’t require any great “shift in DNA” by the company leadership to make the moves that Impossible has. But it did require a leadership willingness towards industry foresight and creative adaptation.

Impossible is doing the basics of providing (and improving) film to Polaroid’s installed base of users. It estimates that 300 million working Polaroid cameras still exist. This is the legacy factor. The future doesn’t move as fast as we think.

But more importantly, Impossible is also actively building a future for itself in its new niche — broader artistic and creative industries. In addition to its project space in New York, it has one in Tokyo (and had an exhibition during the Arles Photography Festival.) It is using these spaces as hub for soliciting alliances across visual creative media, promoting analog instant photography in its relationship with other creative industries, including growing beyond Polaroid’s static image legacy.

Promotional projects during the year included the creation of a special film edition with HUGE magazine (Japan), participation at Photokina 2010 Germany with the first 20×24 camera, and cooperation with the band The Decemberists — all growing the future of the product, reaching out to new users and a whole new generation of users.

The leaks created predictable dismay at the State Department and beyond, along with gritted-teeth promises to bring perpetrators to justice, and there is enough outrage and embarrassment in high places that this kind of action will no doubt go forward.

But, from a foresight perspective, it’s just “noise.” It is not the future. There can be no muzzling in the digital world. Just like we nod and smile when China tries to keep a finger in the Internet dyke, we should nod and smile at these diplomatic machinations to hold back the electronic tide.

A long time coming

This kind of upset has been a long time coming for the diplomatic community. Over the last 20 years, most industries and organizations have been forced to adapt to a world where instant copying and distribution of digital content means that electronic information is soon, if not instantly, freely available in the public domain. That is, an electronic document is effectively a public document no matter what anyone says or does.

Some have learned the hard way. Media companies slow to imbibe this new reality, from Encyclopedia Brittanica to Blockbuster, have gone to the wall. The music industry has fought a long fight against unsanctioned electronic redistribution, a fight it must ultimately lose. Police departments have found out that any time “policing” is going on, someone with a cell-phone is videoing it (digitizing it), and next thing that’s in the public domain too.

So now its US (and global) diplomacy’s turn to learn the digital lesson: if it’s digital, it’s in the public domain — already, or soon.

There are of course good arguments for secrecy. The sensitive baby-steps of international agreements need privacy protection. Leaking information may embarrass partners, scupper deals, put lives at risk, or compromise counter-terrorism. This is all true.

But to wag fingers over this is like EMI saying: “creator incentive is compromised by copyright violation.” True, but there go mp3s, zooming around the Internet.

Far from the public gaze

As already evident, first response of the authorities will be to try to shore up the system. The Secret internet Protocol distribution (SIPDIS) electronic archive will disappear or be ushered behind much higher security, access clearances will be hiked, and tougher followup and penalties for official secrets violations will be enacted —to make it safe for diplomats to go back in the water. That is, back to the 19th Century gentlemanly art of a quiet word here, a confidential nudge there, far from the public gaze.

But electronic information cannot be contained, and to think that it can is to live stupid. We inhabit a world where the electronic machinations of diplomacy and national interest can be sent anonymously to a drop box at any time. If the forces of national interest close down the current actors and Web sites, others will open (broadly supported by the quality news media.) Digital capabilities cannot be withdrawn and the thought of an anonymous electronic drop box cannot be unthought.

The writing is on the wall, and it says: “This Writing is On Everyone’s Wall.”

So we should anticipate that the public going forward will have a much greater visibility into the diplomatic process no matter what diplomats want or think is best.

The issue for senior government leaders is to choose their response path. Do they, as expected, act furiously to preserve the past; or do they embrace the future of their sector and perhaps even exploit the possibilities in it? Not everything should be made public, that’s what “top secret” is for. But for the rest, bringing the public into a high-quality, two-way sense of what is being done in its name could bear fruit of real political grounding for diplomatic initiatives, therein greater legitimacy.

Leadership is most commonly associated with motivating staff and streamlining organizational effectiveness. While this is core, leadership implies far more. It implies foresight and vision. Leaders are not just those who are responsible for an organization’s “best manifestation today.” Whether they like it or not, they also carry the burden of responsibility for their organization’s best manifestation tomorrow.

And tomorrow, as we know, will be different in important and sometimes surprising ways.

So any leader of note is soon asked to go beyond “effective managing,” to look out at the uncertain road ahead and steer to the desired destination on behalf of followers and stakeholders. Leaders take their institutions to the future.

Therefore, as enterprises are forced to transform in response to rapid social, technological and market change, so anticipating and competitively interpreting new opportunities and setting appropriate direction under conditions of complexity and uncertainty has become a key competitive skill — perhaps the key skill — leaders bring to their position.

There are, these days, more high-quality non-predictive approaches to strategic foresight and future-management than most managers are aware of. So this is what I get to go over with an impressive array of real-world Scottish managers in workshop mode in Edinburgh over the weekend.

But will leadership itself change?

In leading the future, there is also a meta-question: will leadership itself change? Does this skill have “a future?” Will leading mean the same thing in the next generation as it has meant in the past? Or are there new skills leaders will need to acquire for the new era of business and society?

In a recent Forrester hub blog piece “Thoughts on Leadership in the Social Era,” authors Josh Bernoff and Ted Schadler bring insight from their book Empowered, and Charlene Li’s book Open Leadership in asserting what it means to lead “in a social world.” They offer this 5-point checklist:

1. Share strategy continuously, especially changes in strategy
2. Embrace half-baked ideas
3. Use councils to coordinate
4. Celebrate failure
5. Celebrate success (Full text here.)

Would he require a skills upgrade? Image via Wikipedia

To be honest, this looks a lot like the flattening and opening-up “leadership revolution” of the dot-com boom and the post-recession 90s, which leads me to think, is leadership (including the foresight injunction) perhaps a constant rather than a changing skillset? Would any leader in history, from Jefferson to Jesus, not be able to lead in today’s environment? Would George Washington, Abraham Lincoln, Sir Earnest Shackleton, Mahatma Ghandi, Golda Meir, Nelson Mandela, et al would be able to lead in the 2nd decade of the 21st Century, or would they they require some kind of “skills upgrade” to be fit for the world of social media, empowered consumers, and so on?

I’m very tempted to say they would do fine. Hyper-information and social networking is just another set of challenges drawing on an age-hold leadership skill set, which includes knowing how to effectively communicate and persuade and inspire, no matter what the media conditions.

But I’m indebted to my friend and foresight-sounding-board-extraordinaire, Andrew Curry, for offering this perspective:

“I think there must be *some* changes in the demands on leadership as a result of:

- rapid feminization of the workforce
- secular shift in attitudes to authority/ trust
- emergence of ideas about complexity.”

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:

1. Beware of sector experts, they are deeply entrenched in the present.
2. The consumer and choice is the determinant, not technology.
3. Change is about overestimating followed by underestimating.
4. Trends are patterns in the data, behind the trend are enablers and drivers, but frictional forces exist and in front of the trend are turners and blockers.
5. Trend extrapolation is limited, don’t fall foul of the turkey syndrome.
6. There is well behaved and badly behaved change. Both can be predictable and unpredictable. The potential of sudden shifts always lurks.
7. Scenario planning wraps up the key uncertainties over which we have no control.

.
“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):

1. Often we know what causes the problem (poverty, crime, HIV) but we don’t know what to do about it.
2. Often the logic that gives rise to the problem is not the logic that will solve the problem.
3. Mostly the problem does not contain the makings of the solution.
4. Solutions in one area can exacerbate problems in another.
5. The current situation has momentum, change to the system should happen concurrently not suddenly.

.
“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.”

Front page 'Competing for the Future' Hamel & Prahalad, HBR 1994

.
As many have commented, Prahalad made great strides in getting business to see the potential in emerging markets and ‘poor’ consumers, in The Fortune at the Bottom of the Pyramid and allied work.

In our rush for the new and latest, early work often gets buried. So I would like, as my take on the passing of Prahalad, to go back to his fundamental testimony to the role of and need for foresight in management, which is to be found in his co-authored piece (with Gary Hamel) ‘Competing for the Future,’ Harvard Business Review, 1994, which became a very famous book of the same name. Sixteen years on and now in the wake of the credit crunch, this piece remains as relevant as it ever was:

“Ask yourself: Do senior managers in my company have a clear and shared understanding of how the industry may be different ten years from now? Is my company’ point of view about the future unique among competitors?

“On average managers devote less than 3% of their time building a corporate perspective on the future.

“The painful upheavals in so many companies in recent years reflect the failure of one-time industry leaders to keep up with the accelerating pace of industry change… Those companies were run by managers, not leaders, by maintenance engineers, not architects.

“If the future is not occupying senior managers, what is? Restructuring and reegineering. While both are legitimate and important tasks, they have more to do with shoring up today’s business than with building tomorrow’s industries. Any company that is a bystander on the road to the future will watch its structure, values, and skills become progressively less attuned to industry realities.

(therefore) “Most layoffs at large US companies have been the fault of managers who fell asleep at the wheel and missed the turnoff for the future.

“If senior executives don’t have reasonably detailed answers to the ‘future’ questions, and if the answers they have are not significantly different of the ‘today’ answers, there is little chance that their companies will remain market leaders.

“The Quest for Foresight: Why do we talk of foresight rather than vision? Vision connotes a dream or an apparition, and there is more to industry foresight than a blinding flash of insight. Industry foresight is based on deep insights into trends in technology, demographics, regulations, and lifestyles, which can be harnessed to rewrite industry rules and create new competitive space.”

Footnote: this from the FT: The last time CK spoke to the FT he was buzzing with intellectual energy. “Really, in all my career I have been interested in ‘next practices’, and not merely ‘best practices’,” he said.

They have a bit of the fashionable “SunTzu Art of War” feel to them, and some of the quotes may be apocryphal. But no matter. What’s really interesting in this very savvy list is how customer-focused the lessons are. As said in Future Savvy, and one can’t say it too many times, what customers (users, the public) want and the cost-benefit tradeoffs they will make is a MUCH more reliable guide to the future than any techno-fantasy.

The wisdoms also reflect a foresight industry insider truism and paradox: you seldom get to the future by asking the customer directly (e.g. in a focus group) what they would like to have. You have to leap for the customer (and use focus groups only to refine new offerings.)

The list:

“1. St Augustine said that it is a blessing from God that we can’t predict the future. If we predict prosperity, we will become complacent. If we predict evil, we will lose the ability to discriminate.

2 Sharp President Haruo Tsuji: ‘You cannot find out what the consumer wants only by doing market research. You need to pull the ideas out of your brain. Manufacturers of the future should not simply respond to market demands, they must create market demands.’

3. Konosuke Matsushita said: ‘Don’t try to fit your business to a forecast. Fit it to the needs of your customers.’

4. Toshiba President Sugiichio Watari: ‘Money doesn’t come falling into the headquarters of Toshiba. If you want money you need to go to the customers.’

5. President Yoshio Tateishi of Omron: ‘Learn from your customers. If you learn from internal resources you will become self-satisfied. If you learn from your competitors you will fall far behind.’

6. Professor Yoshiya Teramoto of Meiji Gakuin University: ‘When companies start a big market research project, it is one sign of the ‘big company’ disease.’

7. Tsuyoshi Kawanishi: ‘The way to predict the weather is to look at the sky. And, every once in a while, you can make your prediction by simply thinking.’

8. President Haruo Tsuji of Sharp says: ‘Don’t be a spider, be a honey bee.’

9. Takeshi Kaneda, a management critic, says: ‘After elaborate research to find out what the consumer wants, Ford produced the Edsel. It was a complete failure. Ford mistook what the customer wanted for what they would really buy. They ignored their insight and relied on consensus. Japanese tend to emphasize harmony and consensus. But insight and decisiveness can be more important.’

10. Someone says: ‘Figures do not lie. But liars often use figures.’”

Book reviews by SAMI fellows and associates
“Future Savvy” by Adam Gordon (American Management Association, 2009)

“Forecasts and predictions are ubiquitous. We are bombarded with views of the future on a plethora of subjects from myriad sources, with a diverse set of motivations and self-interests. Adam Gordon seeks to provide a practical users guide to the assessment and interpretation of all things about the future, with special emphasis on the cautions and ‘health warnings’ that need to be applied, so as not to be misled by forecasts. However, the author is careful not to veer towards over-cynical dismissal of all future projections; rather, he seeks to provide guidance to the reader on how to apply the necessary caveats, and in the author’s words “profit from change”.

The book covers a very broad field, from the basic issues of the misuse of data and statistics, covering the quality and validity of data as well as their misinterpretation, through technology forecasting, trend and horizon scanning to quantitative modelling and scenarios. The one theme common to all these activities is the need to be alert to bias, whether it be a deliberate motive to influence behaviour through a dire prediction; or a bias inherent in futurologists needing to see rapid and pervasive change in all areas of society – if it exists or not – and evangelising it.

The track record of much futurology is mixed. Well-known examples are quoted: television did not lead to the end of the cinema industry. Nor has space exploration led to people taking foreign holidays on other planets – yet! Bias may also lie in the beholder. The ‘Zeitgeist’ tendency, whereby we are all influenced by contemporary perceptions, affects not only how “experts” and professionals see the world, but also how the audience receives the views of the future – often with unprepared minds. The internal “official future” of an organisation can pose a real blind spot to its progress.

The weaknesses of much quantitative modelling are highlighted, with such forecasts only being as good as the assumptions on which they are based, but which are often not overtly stated. In contrast to the conceptual and practical errors inherent in much futures output, the role and advantages of scenario planning are emphasised as a tool for challenging assumptions and developing alternative futures: “It’s better to be vaguely right than precisely wrong”.

The penultimate chapter takes examples of relatively recent forecasts from a range of organisations, whose subjects range from US agricultural production to UK dementia sufferers. These are subjected to a form of ‘retro wind-tunnelling’ to illustrate the deficiencies in their construction and how they would have benefited from the application of methodologies described earlier in the book. The final chapter provides a summary checklist, or framework, to apply in evaluating forecasts and future predictions.

Adam Gordon has written a shrewd and perceptive book that deserves a wide readership, especially among managers in both the private and public sectors, as well as the familiar ‘general reader’. Those wishing a more detailed technical guide to the various forecasting and futurist methodologies will need to consult other standard works. Professionals in the fields of management and strategy consulting and scenario practitioners might well be familiar with many of the points made in the book. However, those with some savvy might do well to recommend the book to their clients.

Michael Owen, 20 April 2009

Says Hamel, “The experience of growing up online will profoundly shape the workplace expectations of “Generation F” – the Facebook Generation. At a minimum, they’ll expect the social environment of work to reflect the social context of the Web, rather than as is currently the case, a mid-20th-century Weberian bureaucracy.

“If your company hopes to attract the most creative and energetic members of Gen F, it will need to understand these Internet-derived expectations, and then reinvent its management practices accordingly.”

He cites 12 work-relevant “the post-bureaucratic realities” that tomorrow’s employees will use as yardsticks in determining whether your company is “with it” or “past it.” These are:

1. All ideas compete on an equal footing.
2. Contribution counts for more than credentials.
3. Hierarchies are natural, not prescribed.
4. Leaders serve rather than preside.
5. Tasks are chosen, not assigned.
6. Groups are self-defining and -organizing.
7. Resources get attracted, not allocated.
8. Power comes from sharing information, not hoarding it.
9. Opinions compound and decisions are peer-reviewed.
10. Users can veto most policy decisions.
11. Intrinsic rewards matter most.
12. Hackers are heroes.

One hesitates to question Hamel, whose edifice of work, bookended by Competing for the Future (1994) and The Future of Management (2007) is as eloquent and substantiated a guide for innovation and future-thinking in management as you will find.

But, what is startling, for those of us around long enough to remember the Web-excited 1990s, which includes Hamel of course, is that these 12 principles are really old stuff, the mantras of the Internet 1.0 … the needs of Gen F are apparently not different to the needs of Gen Y.

But, now it’s a dozen years later, and this future is still the future. Hmm.

New management, but not in old bottles

Actually, surely Hamel’s beef is with the Fortune 500 set particularly, because what has happened is that most small and niche companies have already embraced a big chunk of these new-management attributes. It’s specifically the Fortune 500 that lags: but then, running organizations with stakeholders and budgets resembling mid-sized countries seems to fly in the face of Gen F value set.

Looking abroad, it appears that a Chinese factory or an Indian call center are not about to convert to Gen-F values either. Command and control, and uncreative hyper-attention attention to margins — effected by the Weberian bureaucracy — is the route to profit for them. The old paradigm will rule, and rule well.

From the Future Savvy vantage point, the real future will have, broadly speaking, two types of firm, the Weberian and the Gen-F. Firms running 19th century-type businesses will run them in 19C ways. Funky firms exploiting new ideas have already changed management style significantly and will continue to do so.

Christian Blanckaert, Executive Vice President at Hermès International was quoted as saying: “We have absolutely no visibility into 2009!”

On the one hand, fair enough. This economic downturn is steeper than previous down cycles, and the basic viability of the financial sector has been tested. Access to credit is normally easier in a recession, but in this one it is not. All of which makes luxury spending harder to predict.

No doubt the most unlikely prediction of all would have been that Hermès, Burberry, LVMH, Moët Hennessy, Louis Vuitton, and PPR (Gucci , Yves Saint Laurent) have all recently reported better-than-expected results.

Nevertheless luxury industry leaders have declined to provide investors and analysts with any official outlook. What’s curious, from an industry foresight point of view, is how executives such as Blanckaert thought they really had more “visibility” into any previous year, or that they will somehow gain it again when the financial crisis is over. They will not. The world will continue to surprise them and us. What they will gain, certainly, is a greater likelihood that the standard business-as-usual future assumptions they make will not be upset by reality.

Meanwhile, judging by the conference, the luxury goods industry has a very decent grip on current social and moral trends, and clear insight into the bigger picture of change in its industry over the next five to ten years. As they know from before, what happens in a recession is that luxury goes out of fashion. Conspicuous consumption wanes, or retreats further behind secluded walls. This is a basic pendulum swing that tracks the economy (witness how the early 1990s recession stimulated a return to “values” era after the “me, me, me” 1980s.)

Sustainable luxury

So we are again in a swing to modesty. But we also know that each swing of the pendulum also carries with it the specific issues of its time. Current key issues for consumers in this segment are sustainability, global warming, business ethics, and globalization (or fear thereof).

Therefore the luxury brands will be looking for ways of making, transporting, and displaying goods in an energy-efficient and socially conscious way, including a renewed emphasis on local artisans and traditional craftsmanship that speaks sustainability in both natural and human resources. This will be the basis of the “sustainable luxury,” positioning that the famous houses will define and compete in. Fabulous and renewable  – now there’s something you can charge top dollar for.

The IFTF’s full map is available for download here.  Quick aside: these maps, putting complex forces into visuals, have defined IFTF’s public (and client, one presumes) communications for over five years, and have raised the bar of excellence in the foresight communications. The company has produced many such outstanding maps, some publicly available.

The new map and Sir Fred-gate are unrelated of course. But here was the connection for me: The IFTF map lists six “Key Driving Forces” (2007-2017) in the area of sustainability, and the first is:
“An Imperative for Looking Long: The 21st century will test our ability to grasp the future impacts of present choices, but even as we struggle to incorporate future knowledge into our day-to-day decisions, we’re tuning up our bodies and minds and even our cultural frameworks for a much longer view.”

My question is, “really?” Is the long view really a driver – something that will drive change and shape the future? Or do we hope it is. Are we trying to talk it into being?

No question that the long-term view is crucial. Solving just about any social, technological, or environmental problem requires sustained long-term action. And everyone who works in foresight keeps evangelizing long-termism. But, in fact, what we have in industry and government is rampant short-termism and there is no indication this will change, despite the crisis and many heartfelt calls.

Linking big to long

The problem with Sir Goodwin’s package (in career and in retirement) is that the reward numbers were based on short-term company returns. “Hey, we made lots of money this year, so you get a big bonus, and you get a big bonus,” etc. But a few years down the line  – in the long term – it turns out that no bonuses were valid (if a bonus is, truly, a reward for success).

Put it another way: in finance, as in other aspects of society, technology, and the environment, we don’t know if we’ve succeeded or failed until the long-term numbers are in. Few would have a problem with handsome rewards for a valuable job well done, but those rewards must surely be delayed, and delayed, until we are in command of the long view of the performance.

Easy in theory, hard in practice. Perhaps impossible in practice when most politicians and legislators are themselves on a short 3-7 year cycle, like CEOs. I have some inkling from the IFTF map that the thinking is that life-extending technologies will improve to the point where people will really see themselves in for the long haul, and so adopt a longer perspective on benefits and rewards.

Time on the clock

Perhaps. But, life-technologies aside, plenty of decision-makers – Goodwin included – still have a lot of time left on the clock and that doesn’t appear to stop them chasing and cashing in short-term incentives at the expense of the future. Or legislators (and the public who votes them in) structuring performance rating on our immediate perception of their performance.

What we have, and what we have increasingly had (the trend) over the past few decades, is systemic short-termism. Winning in the next annual report or the next election is what what leaders’ rewards are based on. Incentives for politicians or business leaders or even scientists or engineers to make a better world for 2025 or 2050 are negligable.

Until there is reason to anticipate that this fundamental underlying short-term incentive structure and mentality changes (that is – convince me – who will change it and how?) the future savvy perspective must say that the “long-term imperative” remains a nice sound-bite, but not a material driver of anything.

The mood is justly sombre at the World Economic Forum’s Davos meeting this year, as grim-faced world leaders mull over the dismal state of the global economy and how to fix it. This is in marked contrast to recent years, when the top executives were warmly congratulating themselves on the general state of things.

In one sense this is perfectly understandable. The crisis is upon us and leaders should be directly and practically involved in tackling it. On another level it’s profoundly disturbing, because world leaders and senior managers should be doing more than merely responding to situations. When crises occur, crisis management becomes part of a leader’s job, but their real job is thinking ahead effectively to avoid crises and, on the positive side, develop opportunities.

Put another way: the heads of a companies or countries – Davos-level people – are tasked far beyond effective daily management. They are tasked, fundamentally, with negotiating the VUCA (volatile, uncertain, complex, ambiguous) world on behalf of the rest of us. If not them, then who?

This requires foresight and vision. In this sense, many who are at Davos this week are responsible for the current crisis. They failed to foresee it, in fact they generally endorsed the growth of complex financial instruments, the shadow banking system, and private equity growth –- much of which bypassed SEC or equivalent regulation, and which is now seen to be the root cause of the meltdown.

In fact much of the “new finance” system was thought to spread and therefore actually lower risk. Turns out that was a poor view of the future. In fact the present situation as a whole is the result of key decision-makers operating on a poor view of future. As a group, their mental model was not open to bad outcomes, or even just alternative outcomes to what was commonly expected.

Could we have thunk it?

Their response might be: “nobody can predict the future!” “Easy to say after the event!” This is true. But it’s common knowledge that there were those who foresaw the mess — The Times identified at least 10. As Davos attendees might now be forced to agree, some forecasts are clearly better than others.

This is where executive leaders can learn from the foresight field and particularly the history of failed predictions. Everyone relies on predictions for their guide to the future – nobody can be an expert in every field. And there’s never a shortage of them – they are frequently published in the media, offered by consultancies and think tanks, and are a key part of Davos.

While getting a prediction is easy, the key leadership skill is to be able to tell a good one from a bad one: that’s what turns a forecast into a strategic resource. That is what leads to better decisions, better plans, and better actions.

Can one do that? Can one critically assess a particular or consensus-held view of the future, to identify its strengths and weaknesses? Absolutely yes. Among the tests one can run on a prediction are:

•    assessing motivation – who is speaking and what their agenda might be, particularly if they have an interest in maintaining a current system or shaping the emergence of a new one
•    determining whether the tools used are appropriate to the level and type of uncertainty faced. High-uncertainty situations and long-term views require different approaches to standard modeling
•    questioning consensus mental-models and forcing consideration of alternative outcomes. All foresight is swayed by “zeitgeist” – spirit of the times – and good forecasts swim against this tide.

These are just a few among the many forecast tests one can run, as detailed in Future Savvy.  But even if Davos attendees had been applying just these three in previous years, their foresight would have been greatly improved. It won’t help with this crisis, but it might forestall the next.

* This article, authored by Adam Gordon, was first edited and published by Bnet.co.uk

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]

This was a fairly typical example of the Intro Workshop in Scenarios program that I run, so I’ve decided to post it on SlideShare, see link below. Let me know what you think.

What is different about this course at this venue, particularly, is that the attendees come from a wide spectrum of industries and sectors (from Nestle strategist to the Canadian military planners, to Mauri sustainability experts, and beyond), and have a very wide background/preparation in futures tools and methods. There were relative experts in the room, and some absolute novices. … nothing like a challenge for the facilitator!

Slides from the day are at http://www.slideshare.net/adgo/how-to-build-and-use-scenarios-day-workshop

some pix: