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.”

In 1995, at the height of Microsoft’s power over the economy and the zeitgeist (before Google came into its own, before Apple renewed, etc.) Bill Gates wrote “The Road Ahead,” which was, as one would expect, a broadly techno-optimistic look at the future. Did it see 9/11? No. Iraq War 2? No. The Credit Crunch? No. For a start it only really thinks about digital technology, and that’s going to be a very partial guide to the road ahead, at best.

But, in a recent The Atlantic article, “Bill Gates: More Profit than Prophet,” Tom McNichol evaluates Gates’s foresight on its own terms. As reproduced below, he finds it more “miss” than “hit.”

In general, Gates makes the mistakes outlined in Future Savvy, particularly in predicting the future based on its technological possibility rather than economic or social practicality. He’s short on systemic/feedback thinking and therefore misses side effects and unintended consequences. He also falls into the wishful-thinking bias: mixing up what he and (and Microsoft business) would like the future to be with what it really will be.

This last factor is less a mistake than a classic tool of future advocacy, and Gates would no doubt admit to a bit of this. It is illuminating (and sobering for future predictors) to see how much of the digital future Microsoft had within in its area of control in 1995, which it ceded to others. That lowered Microsoft’s ability to influence the road ahead and therefore weakened Gates’ predictions.

The McNichol analysis (shortened in places):

E-Mail
Prediction: Gates wrote, “Electronic mail and shared screens will eliminate the need for many meetings. … when face-to-face meetings do take place, they will be more efficient because participants will have already exchanged background information by e-mail. … information overload is not unique to the (information) highway, and it needn’t be a problem.”
Verdict: Miss. Gates’s view of e-mail now seems naively Utopian, failing to account for unintended consequences. If anything, e-mail has made workplace meetings more frequent and less efficient. “Didn’t you get that e-mail?” is probably the single most common question posed at meetings, a query that often leads to … another meeting.

The Wallet PC
Prediction: “You’ll be able to carry the wallet PC in your pocket or purse. It will display messages and schedules and also let you read or send electronic mail and faxes, monitor weather and stock reports, play both simple and sophisticated games, browse information if you’re bored, or choose from among thousands of easy-to-call up photos of your kids.”
Verdict: Hit. Gates’s wallet PC is more or less today’s mobile smartphone with voice capability added.

Wireless Networks
Prediction: “The wireless networks of the future will be faster, but unless there is a major breakthrough, wired networks will have a far greater bandwidth. Mobile devices will be able to send and receive messages, but it will be expensive and unusual to use them to receive an individual video stream.”
Verdict: Miss. Today, receiving a wireless video stream is neither expensive nor unusual; in fact, it’s so commonplace that most people don’t give it a second thought. Gates failed to anticipate that wireless would become cheaper and faster, but his chief mistake was a common but flawed assumption among techno-futurists: that new technology is adopted chiefly on the basis of technological superiority rather than social factors.

Social Networking
Prediction: “The (information) highway will not only make it easier to keep up with distant friends, it will also enable us to find new companions. Friendships formed across the network will lead naturally to getting together in person.”
Verdict: Hit and Miss. One of the killer apps of the information highway has turned out to be social networking… But friendships formed online don’t regularly lead to face-to-face meetings. Far more common is the user with 250 Facebook friends, most of whom he rarely, if ever, sees in person.

Online Shopping
Prediction: “Because the information highway will carry video, you’ll often be able to see exactly what you’ve ordered. … you won’t have to wonder whether the flowers you ordered for your mother by telephone were really as stunning as you’d hoped. You’ll be able to watch the florist arrange the bouquet, change your mind if you want, and replace wilting roses with fresh anemones.”
Verdict: Miss. Gates was right that the information highway would carry video, but he completely misread the social and economic factors that would shape its use in online commerce. How on earth would a harried florist find the time to hold a videoconference with every customer who orders flowers for Mother’s Day? What company would absorb the colossal expense of having orders changed at the last second according to customers’ shifting whims? Gates’s vision of online shopping has turned out to be a lot like past predictions about personal jet packs and moving sidewalks: a future that’s technologically possible but socially and economically impractical.

Videoconferencing
Prediction: “Small video devices using cameras attached to personal computers or television sets will allow us to meet readily across the information highway with much higher quality pictures and sound for lower prices.”
Verdict: Hit. What came to be called webcams are standard issue on PCs, or can be purchased from Bill Gates’s favorite company for under $30.

The Internet and the Web
Prediction: Gates’s 286-page book mentions the World Wide Web on only four of its pages, and portrays the Internet as a subset of a much a larger “Information Superhighway.” … Verdict: Miss. Gates’s notion that the Internet would play a supporting role in the information highway of the future, rather than being the highway itself, was out-of-date the day The Road Ahead was published… and he made major revisions to a second edition of The Road Ahead, adding material that highlighted the significance of the Internet. In many ways, Gates’s cloudy crystal ball regarding the Internet amounted to wishful thinking. Gates built Microsoft into a global powerhouse by selling proprietary software that users loaded onto their PCs. He wasn’t likely to warm to the idea that the same functions could be delivered cheaper and faster through a decentralized network that he couldn’t control.

Privacy
Predication: “A decade from now, you may shake your head that there was ever a time when any stranger or wrong number could interrupt you at home with a phone call. … by explicitly indicating allowable interruptions, you will be able to establish your home — or anywhere you choose — as your sanctuary.”
Verdict: Little Hit, Big Miss. It’s true that technology lets you explicitly indicate allowable interruptions — you can use caller ID to dodge unwanted calls or sign up at the National Do Not Call Registry to nix telemarketers. But the notion that technology would pave the way to greater privacy has turned out to be anything but true.

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

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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.

The podcast is up at the Abenteuer Leben site, playable via the buttons on the right hand side.

Alternatively it can be accessed directly at

http://media1.roadkast.com/abenteuerzukunft/DAZ71_120410_6tt6.mp3

(If you don’t speak German, you need to fast forward through the first 3 minutes.)

Samuel, L., Future: A Recent History, University of Texas Press, 2009

I recently received a copy of Future: A Recent History to review. True confession: what hit me first on picking up the book was (a) “wow, the title Future is not already taken!? And (b) what a fabulous job the University of Texas Press has done producing this book. It is beautifully designed, with an understated Art Deco motif, and carefully laid out with enough text on the page, on delightfully solid paper stock.
It may seem odd to go on about text on the page, but it’s much easier to read like an adult, in paragraphs. So many books, particularly business books, these days appear produced at 14-point, double spacing, like pre-school readers. Makes you wonder…

Anyway, author Larry Samuel’s project is to investigate the history of views of the future from 1920 to the present. (The book has an acknowledged US-centric focus, partially defended by the notion that future-mindedness is “a principle strand in America’s DNA.”) He organizes the book chronologically into six periods between then and now, and shows, with interesting examples, how each period had its own views of the future, and how the views shifted from period to period.

In tracing the history of “tommorowism,” in this way, Future is on a similar track to the classic book in this field: I.F. Clarke’s The Pattern of Expectation 1644-2001 (Jonathan Cape, 1979). It ultimately makes similar points, although Samuel’s argument is obviously drawn from more recent examples. As Samuel puts it: “A look back on how people looked forward reveals that while it possesses certain common themes … the future is not a fixed idea but a highly variable on that reflects the values of those who are imagining it.”

Happily I can say this chimes exactly with the argument of Future Savvy, particularly Chapter 4 “Zeitgeist & Perception,” where I argued how heavily the nature of the present and its topical issues frames how the future is seen (what is forecast, what is aspired to or feared, what counts as a valid method for thinking ahead, and so on). Which means the framing conditions of the present  should be carefully analyzed in assessing the validity of any future view.

Historiography

Historiography – investigating the meta-conditions surrounding what is recorded and how it is interpreted by historians – what counts as “history” and for whom –  is a well-understood part of doing good history. Unfortunately, there is no equivalent standard “futuriography” in the foresight field, despite it being absolutely fundamental to understanding the value of our own predictions as, similarly, highly determined by the epistemic configurations of their production. It is here that Samuel very competently fills a much needed gap.

The practical implication of this, which Future does not get into – it’s not that kind of book – is that to make better predictions (or make valid assessments of others’ predictions) we need to ask stiff questions as to how much of what we foresee is determined by the perspectives of today, and expect the answer to be “very much.” Understanding the limitations and biases of our own perspective is the sine-qua-non of a robust view of what tomorrow will actually bring.

]]> http://futuresavvy.net/2009/07/a-look-back-on-how-people-look-forward-and-the-need-for-futuriography/feed/ 0 http://futuresavvy.net/2009/05/the-age-of-stupid-viewed-from-2055-dystopic-futuring-meets-activist-journalism/ http://futuresavvy.net/2009/05/the-age-of-stupid-viewed-from-2055-dystopic-futuring-meets-activist-journalism/#comments Fri, 15 May 2009 13:52:41 +0000 Adam Gordon http://www.futuresavvy.net/?p=598 Apocalyptic predictions are designed to be wrong. The point of doing them, as with “1984,” “Brave New World,” “When the Wind Blows,” etc., is to raise consciousness to negative outcomes and engender action so that the prediction, by succeeding in purpose makes itself incorrect in fact. “The Age of Stupid” is this all over. See the trailer here:

There is also a documentary about how the movie was funded and made.

Set in 2055, post the environmental global climate change collapse, it features last-man-on-earth (Pete Postlethwaite) as an archivist in a tower refuge somewhere in the Arctic north of Norway sifting through records of human life before it was wiped out, trying to find out why people did nothing to stop the eco-catastrophe that was imminent. The plot device allows filmmaker Franny Armstrong, (director of McLibel, 2005, about environmentalists who successfully challenged McDonalds) to showcase a selection of real reportage and news clips from today to withering effect. Like any good scenario it gives granularity: dates, names, actions, timelines. It points fingers and mentally readies the reader-watcher to act.

By all accounts this is a punchier movie than Al Gore-fronted “An Inconvenient Truth (2006),” and punchy is what is required to effect the goals of a future-influencing forecasting, that is, an assault on the powers that be and/or on public complacency.

By the way, if you want to see the best activist consciousness-raising movie (ever!) see Pete Postlethwaite in the anti-Thatcherite “Brassed Off.”

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.

Amazon the new Wal-Mart? pic:Huffington Post

According to yesterday’s LA Times Amazon says the whole thing was a cataloging error. But when author Mark Probst had previously contacted Amazon for an explanation, he got this: “In consideration of our entire customer base, we exclude “adult” material from appearing in some searches and best seller lists.”

Aside: Everyone is trying to figure out what Twitter is good for, or how it will be used, and it has become clear that one application is to quickly aggregate mass protest, evidenced in the anti-Amazon outrage, see Twitter “Amazonfail.”

Author Maya Reynolds has been connecting the dots in the future of publishing, watching Amazon move via acquisitions such as Abe Books, Audible, BookFinder, BookSurge, Brilliance Audio, FillZ, GoJaba, Library Thing, Mobipocket and Shelfari.

She is among various industry watchers who claim, with fair evidence, that Amazon is following a “Wal-Mart” strategy – the well-documented essence of which is to gain enough retailer power to be able to pressure suppliers (telling them what to make or what to charge, or exacting special discounts) to achieve better retail prices and get more retailer power, in a reinforcing spiral which, inter alia, squeezes all the healthy mom-’n-pop-shop diversity and other balances of power out of the industry.

In a post of July 08 she paints the full dystopia scenario:
“1. First, the smaller presses, POD presses and e-publishers will disappear as Amazon’s margins squeeze them out of business. Amazon will help the process along by offering better terms to authors if they will use BookSurge’s POD press and Kindle’s e-book to publish. Even if authors don’t embrace Amazon initially, as their publishers go out of business, they will be forced to do so.
“2. Brick-and-mortar stores have two constraints which Amazon does not: (1) limited shelf space and (2) a limited geographic range. Bookstores carry books “on spec,” filling their shelves with stock they hope readers will seek. Amazon, on the other hand, has unlimited virtual shelf space and unlimited geographic reach. Amazon does not have to warehouse stock. They can wait until a book is actually ordered and the money is in hand before using a digital file and BookSurge to print the book. Because they cannot match the deep discounts Amazon offers, bricks-and-mortar bookstores–already under siege–will be squeezed out of existence.
“3. Like Wal-Mart, Amazon will continue to apply pressure on publishers to give more favorable terms. Wal-Mart’s suppliers used cheaper materials and out-sourced to cheaper overseas labor. As the publishing houses’ profit margins are squeezed, their cost-cutting efforts will take three directions: (1) Focus even more attention on signing best-selling authors whose work is guaranteed to sell; (2) Begin to pressure their mid-list authors to accept lower advances and lower royalty percentages; and (3) Sign fewer and fewer new authors because of the uncertainty and the expense of growing a new writer.

Where will they go?

“4. Mid-list authors and new authors, unable to either find a publisher or unwilling to accept the low royalties, will seek to self-publish. Where will they go? Since, by that time, most of the self-publishing houses will have gone out of business, they will go to Amazon’s BookSurge or to Amazon’s e-book division, Kindle. Amazon will welcome them.
“5. The next death on the food chain will be the publishers and agents themselves. First the mid-level publishers will die. Well-known agents and the larger houses will be protected for a period of time by their best-selling authors who are loyal to them. However, as those cash cows die off, so will the agents and larger houses. A new paradigm will emerge: Amazon as both publisher and retailer.
“6. Eventually Amazon will have so much power, they will be able to decide WHAT is worthy of being published. Welcome to the future of publishing.”

Is this the future of publishing? The logic of unregulated industry power suggests it is. But Future Savvy says response – regulation – is also likely. As with Microsoft and many before them, when Amazon gets too powerful, anti-trust regulators should be in business. But only if their hand is pushed. Articulate and persuasive dystopias such as Reynolds’ are the single most powerful mechanism by which the word is spread (spread it! forward it, tweet it!) so that enough consumers get to see and believe threatening future outcomes early enough, and pressure regulators to act.

Guinness' view of the pub of 2259. Image credit: Chris Bainbridge

The Guinness Pub-of-the-Future is a St. Patrick’s day (March 17) promotion. Nothing wrong with a little bit of fantasy foresight. But what they come up is so “20th-century-futurism” it’s hilarious. Among various reports on the project – for example in the Telegraph – the following features are foreseen:

- robotic doorman, greets you by name
- cash obsolete; orders via RFID; payments deducted automatically
- your product tailored to you on the spot
- touch-sensitive tables, send your order straight to the bar
- socializing via virtual / hologram technology
- a running tally of the number of units consumed.

Yawn. Even on it’s own terms (minimal constraints of realism) this is a totally derivative piece of foresight. These “innovations” are the staples of an infotech view of the future, and they have all been thought and spoken of countless times. Also many of the elements and services cited are already here, or not more than a decade away. What we have is the current pub assumptions + digital steriods, while the year 2259 will be, truly, another world.

The limits to growth
But all this leads us to more interesting industry foresight problem. Will there be pubs in even a generation, never mind 250 years? What the Telegraph dryly observes at the bottom of its report is that 39 pubs are closing every week Why? A number of driving forces are coming together:

First is strict drink-driving limits, which makes “the local” literally local or nothing. Second, pubs in the UK have traditionally been a refuge from housing that was poor and/or underheated. Unprecedented waves of affluence (credit-crunch notwithstanding) have led to widespread housing “do-ups.” It’s now a valid option for most people to spend their leisure time at home and entertain at home.

Then there’s the where’s-my-friend trend. You’re likely to go down the pub if your friends are there, but not if they are where most people’s friends are: on Facebook.

The social-legislative clock
Fourth, no matter how you dress it up, pubs are retail outlets. So, like all retail they are under the cosh in a Wal-mart / Tesco world. The price gap between store and pub has become too great for most consumers to cross with good conscience.

Which brings us to the current price-floor legislation bid. Alcohol is a huge social cost in terms of health care and violence. Drink costs the NHS £3bn a year, and the total price of alcohol to the taxpayer is estimated at five times that. Eventually these costs will become unjustifiable so, like smoking before it, the social-legislative clock is ticking for booze. As the 2-martini lunch has become the 2-seltzer lunch, the trend to social stigmatization is clear, and legislators will follow (not with Prohibition, but with a much more subtle community-endorsed squeeze).

Like the good politician he is, Gordon Brown won’t let his party get ahead of the trend. But the trend is clear and it bodes ill for pubs.

My question, as the Dow Jones Industrial Average (DJIA), and the FTSE100, the DAX, the Hang Seng and so on have hit a decade lows is, what is this predicting, if anything? What is the long-term value of this prediction, and could it be used to make better decisions in the real world?
We know that the value of a common stock – a share in a company – is based ultimately on the returns (dividends) it will bring. Buyers and sellers therefore derive a daily market price based on their views of the share’s expected, that is, predicted future payback. The greater the expectation, the greater the price. A high price vis a vis earnings (P/E ratio) suggests confidence in future earnings, and vice versa.
Therefore the current steep fall in share prices is an expectation of (crowd prediction of) lower future payouts. Of course the complexity in human-prediction situations is that this basic level is also overlayed with a meta-level: people are not only trying to figure out what will happen, they are trying to figure out what others think will happen. So falling PE ratios are an expectation of what others will do (predicting they will continue to sell.)

Madness or not?
One of the perplexing things about the markets is they very often seem to react opposite to what is expected; to what would be common sense. They often fall on good news, rise on bad news, close unchanged on big news, and so on. Although there is – famously much irrational behavior and herd instinct in the market – you don’t get hundreds of thousands of decision-makers wagering significant money not using common sense.
What is going on, of course, is that the market has often already risen or fallen in prediction of the news. When a new condition – an interest rate move, for example – is imminent, the market will move to “price in” the expectation. If market participants as a whole have called the future correctly the market will not move much on announcement.

Pricing-in the future
Because of this predictive component to group decision-making in market situations, the stock market as a whole is a classic leading indicator of the real economy. When prices move they may be taken as the crowd “pricing-in” a future prediction. So markets will fall ahead of real economic problems (they may continue to fall, as now, during steep economic declines.) But they will also turn up well before any real, measurable upturn.

By the way, there is little doubt it will overshoot in this time, as it always does. This is because, as in prediction markets, the wisdom of crowds can predict the trend but not the turn. Trend extrapolation will never show you the key shifts, and this is why predicting the bottom or top of a market is so hard.

The point, for market speculators, is that long before the real gloom is over the markets will be zooming upwards. The point for the rest of us is that recession times will be with us even after the markets move up. In the long term the market will go up. Like death and taxes, it’s the surest thing there is.

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 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.

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]

In many ways, focusing on whether “this” or “that” is predicted, or not predicted, is to put the cart before the horse. The horse is the adequacy of our approach to anticipating outcomes and the quality of our foresight as a whole. When this is good, the cart – not missing important changes – will follow.

Credit: http://www.lewrockwell.com/blog

In this, it’s important to realize that many did predict the financial crisis (as many predicted 9/11 in various ways). Sticking with the financial crunch for now: it has generally been portrayed it as a “why-didn’t-anyone-see-it-coming” event. It wasn’t. Hats off to The Times for their October 12 piece: “10 People Who Predicted the Financial Meltdown.”(Summary here). Allowing for a fairly loose definition of “predicted,” the article shows that among those who foresaw the crunch were: Vince Cable, deputy leader of the Liberal Democrats (2003); US congressman Ron Paul (2003); Stephen Roach, senior executive at Morgan Stanley (2004); Christopher Wood – chief strategist of a broking firm in the Asia-Pacific Market (2005); and Nouriel Roubini, economics professor at NYU (2006)… and there were many others.

A different problem

So this reframes the problem entirely. It’s not that the predictions were not there. It was that not enough people believed them and, particularly, important decision-makers didn’t believe them or didn’t have the institutional capacity to respond. So there are two halves to the problem: the ability to see the full spectrum of what may happen, including unexpected outcomes; and the ability to act on what we see. Quality in foresight work – the raison d’etre of Future Savvy – makes it possible to see more outcomes more clearly, and to act with more confidence in choosing what to prepare for. (In the real world we can’t prepare for every outcome.)

There was a good letter published in the FT from eminent futurist Peter Schwartz on December 2, which describes this very well. It shows predictions for what they are (one-horse scenarios), and how decision-makers are typically bound into inaction or wrong action not only by working on the basis of a wrong prediction, but by the predictive mindset itself. This mindset – the habit or culture of picking “one right answer” in the face of a complex situation with many competing outcomes, prematurely closes alternatives and leaves us open to surprise. As Schwartz says, as scenario planners have always said (and he was one of the people who defined the field in the first place), a compelling set of alternative future scenarios encourages decision-makers to recognize unlikely and unpopular outcomes, along with expected outcomes, and therefore to be able to respond earlier and more effectively whatever happens.

Scenarios also contribute to the “act” side of the problem. In a well-done set for the banking industry, a financial-meltdown scenario would at least have been in play, institutionalizing the consideration of less unlikely, less popular outcomes in company and government forums, forcing serious consideration of necessary strategies and contingencies, and therein creating the ability to act early and effectively without having predicted the crisis.

The letter is well worth quoting in full:

Sir, The real question regarding the financial crisis is not, as the Queen asked: “Why did nobody see this coming?” In fact, any number of thoughtful people in academia, politics and business had been compiling the data and sounding warnings for several years.
The question we should be asking is: “Why didn’t decision-makers believe that a global financial meltdown was increasingly likely and then act on that belief?” Or, to put it another way: “What would it take to make decision-makers both believe and act?”

The problem is that decision-makers believe that they are forced to pick one right answer: the most likely scenario. Their approach to decision-making does not afford them the opportunity to consider apparently low probability but highly consequential scenarios. The answer, therefore, to the “believe” half of the question is a decision-making process that considers several scenarios: compelling stories about alternative futures that incorporate the analysis of “outliers” and describe three or four plausible paths forward.
Good scenarios force decision-makers to challenge their own assumptions and reconsider what is possible. As a result, they can take seriously those scenarios that seemed less likely at first, but whose plausibility increases over time.

The second part of the question – “What would it take to act?” – is much harder to address. Suppose that Ben Bernanke or Hank Paulson had come to believe a year or two ago that the house of cards was about to collapse and trigger cascading, global failures. What would they have done, given the realities of the complex interconnected systems at the heart of the problem? Perhaps if they had good scenarios with appropriate indicators to start with, they could have rehearsed different strategies and contingencies. Importantly, these decision-makers could have used these scenarios to persuade others on all sides of the issue also to recognise the complexity of the impending crisis in a more timely way. It’s never easy to convince everyone around you that the game they have been playing to their great benefit is about to change. But with a shared recognition of the magnitude of the risks and the ways they might unfold, they could have acted far earlier to prevent some of the dire consequences that have occurred, let alone what is to come.

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.

This is the item:

There’s nothing new about this of course – the product has been around for a while, and ways to take vinyl and digitize it have been offered since the CD became the music industry standard in the mid-1980s. What’s interesting is that it is still being offered in 2008, more than 20 years after the technology transition. And still being bought, despite a sticker price of gpb 299 (nearly $600. In fact, this is the special newspaper-tie-in deal price.) The producers and marketers have, no doubt, done their homework: there are still enough people out there with vinyl records to justify a product and a campaign, including big newspaper spots that don’t come cheap.

What does this tell us about the future, and about predictions? It illustrates a key principle in thinking circumspectly and more accurately about the future. Legacy investments and legacy situations are a reality. They often represent a significant slice of daily practice or market share, well beyond the time when things have, officially, moved on. For all practical purposes, in any future the past continues to exist for a long time.

A slow and measured exit
This is common sense. But often missed by breathless techo-forecasters whose eyes are fixed on the next new thing. The implication of many forecasts is, when a new technology emerges into the market (which often takes longer than expected) that is also when previous solutions fall away. Not so. Yes, sometimes a new product is clearly advantageous, and adoption is rapid and pervasive. But when there are real investments in prior systems and technologies, these typically work their way out of people’s lives slowly, often over generations. The transition takes longer than we think it will.

While they are still part of the picture, legacy systems work against change (“This is working fine for me, why should I shift?” or “I’ve invested heavily in this, I can’t afford to shift”). On the other hand, as evidenced by the LP2CD in 2008, opportunities in the legacy system, or in facilitating a transition to the new system, may exist and be significatn long after everyone’s attention has moved on.

There are legacies in all kinds of products and services. A case that is currently pertinent, as discussed in Future Savvy, is the existence of deep legacies in the automobile industry and gasoline-petroleum supply chain. Both petroleum supply constraints and carbon emissions worries are driving hybrid engines, new fuels, and renewable forms of energy (technology is not the obstacle here) but the reality is that we are all deeply invested in a legacy petroleum-automobile system, from the well to the refinery to the factory to the forecourt. Even when new / alternative energies are proven, reliable, and equal in price and performance, the legacy will continue to exist, and it will erode gradually, as companies or consumers slowly renew their investment over time. Of course regulatory or social pressure can accelerate the incremental process, but nothing can make it vanish.

This means, in this example, there’s no possibility of a sudden change in individual land-based transport solutions. Whatever comes along will have to emerge into and live side-by-side with past systems and infrastructure for a very long time.

Legacy as luxury
Here’s another principle of legacy systems surviving into the future. There are many examples where a surpassed technology remains in existence, but moves into a niche or luxury market. The car replaced the bicycle and the horse, but both continue to enjoy massive popularity. In the developed world, more bicycles are sold than ever in history, but these are primarily for exercise or leisure. Horses, once widely distributed through society as instruments of work, are still part of a very active industry, but this industry is about leisure and/or gambling. Similarly, electricity replaced candles as our primary means of illumination, but candles are everywhere – associated with mood and romance rather than functionality. Ball-point pens squeezed the fountain pen off the table, but that merely freed the fountain pen to become an icon of status and refinement.

The forecast is the recently published academic research paper: Chinn & Frankel (2008), “The Euro May Over the Next 15 Years Surpass the Dollar as Leading International Currency,” Faculty Research Working Paper RWP08-016 (Cambridge, MA: Harvard University, John F. Kennedy School of Government) available here. Frankel is a Professor of Economics at the Kennedy School.

The critique, “Forecasting the Euro’s Future,” by Benjamin Cohen, is here

The argument of the Chinn & Frankel paper, which is also summarized here is that the euro may surpass the dollar as the leading international reserve currency as early as 2025. The authors use econometrically-estimated determinants of the shares of major currencies in the reserve holdings of the world’s central banks. Significant factors include: size of the home country, rate of return, and liquidity in the relevant home financial center (as measured by the turnover in its foreign exchange market). The analysis predicts a narrowing in the gap between the dollar and euro over the period 1999-2007, and forecasts this trend to continue.

Cohen has technical issues with the forecasts, saying, “the analysis addresses just one specific function of the two rival monies – their use in central bank reserves – ignoring all the many other roles that international currencies play. But the essence of his critique is deeper. He says, “By concentrating purely on economic factors, (the forecast) ignores the politics involved, which in practice could prove to be far more decisive… key considerations include both the quality of governance in a currency’s home economy and the nature of relationships between countries. Is the issuer of a currency capable of assuring effective political stability at home? Can it project power abroad? Does it enjoy strong inter-governmental ties – perhaps a traditional patron-client linkage or a formal military alliance? Though it is by no means easy to operationalise many of these factors for purposes of empirical analysis, it is hard to deny their importance (for an accurate forecast.)”

Cohen’s agenda is not merely to tackle possible shortcomings of Chinn & Frankel’s study, but to critique economic forecasters far-and-wide that analyze the technical data, while ignoring political (or social) factors that are hugely influential on outcomes, yet harder or impossible to quantify, and which are therefore conveniently ignored.

Coming to grips with politics
Says Cohen: “Chinn and Frankel are not alone in this shortcoming, of course. Many economists, perhaps even most, have a hard time coming to grips with the intricacies of politics, which can seem so messy and indeterminate when compared with the pristine parsimony of formal economics. When it comes to the analysis of public policy, few even bother to try to address political factors systematically.

“The result, though, is sadly predictable. By ignoring the role of politics, economists often get it wrong. How many trade specialists were prepared for the recent breakdown of the Doha trade talks, despite the obvious gains to be had on all sides from a new round of liberalisation? How many can explain the unprecedented accumulation of reserves in China or other East Asian countries, the widespread distrust of multinational corporations or the failure of the international community to do a better job at combating global warming? Politics is clearly critical to all these questions, and more… (Yet) conveniently, Chinn and Frankel set all these considerations aside in order to build a parsimonious model that they can use for forecasting purposes. Only three independent variables are highlighted in their regressions: country size (relative income), foreign-exchange turnover (representing the depth of competing financial markets), and trend exchange-rate changes (representing the rate of return on currency balances).”

Cohen offers potential political and ideological blockers to the particular forecast: “Japan, for instance, has long relied on a formal security umbrella provided by the United States to protect it against external threats; and the same, less formally, is true for Saudi Arabia and other Gulf states as well. Can we really imagine any of these nations, all very large dollar holders, casually jeopardising their ties to Washington for the sake of a few basis points of return on their reserves?”

To be fair to Frankel, the nature of his analysis is consistently political – see his blog at http://content.ksg.harvard.edu/blog/jeff_frankels_weblog/
One can’t imagine that Frankel or Chinn would dispute that politics will strongly influence the accuracy of their forecast. (What they clearly imply in their data-centered model is that the economic data is backed up by political shifts towards Europe, or at least there is nothing in the political realm that would counter their technical analysis.)

Yet the problem remains that these contextual factors are not built into the model. The technical stuff is quantifiable and gets forecasted quantitatively. The rest is a kind of political/social/ideology soup that we flounder in, and the best we can apparently say is “it’s going in the same direction” or “ceteris paribus”.

International Political Economy
Going with Cohen, one may well ask: what is the value of the forecast that ignores the context, or separates it in this way? Surely very little. As impressive as the economics or the modeling is, the results are are circumscribed by the larger questions that are not in the model, and that affect everything.

As an alternative, Cohen offers International Political Economy (IPE), which explicitly combines political analysis with economic theory, saying, “part of what IPE offers is a critique policy choices as ‘rational calculus by unitary actors responding to well-defined structural constraints and incentives – in effect, an approach akin to the analysis of atomistic firms in a setting of perfect competition.’” IPE suggests three levels of political analysis: the systemic level (macro-international politics); the domestic level, revealing competition of domestic interest groups and institutions; and the cognitive level, ideas that legitimate governmental policy making. If one is not thinking at all three levels of politics, any prediction will surely fail.

Whether IPE succeeds in mitigating the shortcomings of technical analysis or not, one can only say amen to the principle – and that, additionally, there’s surely even more to factor in. Beyond politics, there are issues of technology change, changes in culture, values, ideologies and perceptions that shape the future. Truth is, we don’t know how to quantify all this – and it’s certainly not tractable to quantitative measures for anything but the short term. Using the technical analysis to predict the euro’s status vs. the dollar in 2025 must return a result which (while even possibly correct) is one we cannot rely on.

Being graduate students, they’ve learned to prevaricate, and they do. It’s either No, with a bit of yes; or Yes with a bit of no.  Both are correct or course. Clearly nobody can see the future perfectly, but there do seem to be times and/or situation where some see it much more clearly than others. (And therefore make better forecasts. How one can recognize this is a core topic of “Future Savvy.”)

Anyway, I’m reminded of this because I stumbled on two Web links, one after the other, that are salvos in this debate. The first is at:           
http://picasso.rediffiland.com/blogs/2008/09/08/Predicting-the-Future-We-veall-hear.html
This is very much the standard, smirking, “look-see-bigCheese-got-egg-on-his-face” testimonial, of which there are many. Bloggers are, in many ways, journalists, and all journos like to see a big-shot egg-faced.

The other link is a fun 3-min video, posted on the Disney blog, see

which is at
http://thedisneyblog.com/2008/09/08/how-good-was-disney-at-predicting-the-future/

The clip argues, possibly slightly tongue in cheek, that the Disney forecasts as portrayed “Horizons,” EPCOT in 1983 – 25 years ago – were, in fact, not bad predictions. (Context is Disney’s tomorrow visions have, generally, been discredited.)

Back to the smirk site, above, which bears further thinking about. This one is hardly original (why do they all have the same 20 quotes? They also normally start with the Yogi Berra-ism “Predicting is hard, especially about the future.” Yawn) but at least they all correctly put us on our guard as to the poor future thinking of industry experts. In fact, the record of future prediction is littered with the most astounding mistakes. From underwater cities never built to rocket mail that never flew to Y2K disasters that never materialized – the list of laughable errors is a mile long. Experts aside, all of us are liable to confidently anticipate things that wont happen while missing what is brewing right under their noses.

Prediction-skepticism
Fair enough. But, the predictive nihilism behind these smirk sites is is dangerous in a number of ways.

First it promotes the skepticism that “we cant know anything” about the future. If the experts were so wrong – let’s all just give up. And therein we get the problem of many people, including highly-paid managers, justifying ignoring or under-funding future thinking. Sometimes managers, not wanting to look unprepared, suggest resources and expertise be channeled into “fast response” so that when the future becomes clear they can move rapidly to profit. This view is soundly rubbished in Hamel & Prahalad’s classic HBR 1994 article “Competing For The Future,” and I don’t think more needs to be said. 

Second, there’s obviously no science behind the smirk. They pointedly do not show the number or extent of incorrect forecasts *in context of the total forecasts made*. We don’t know, in other words, how many people got it right or at least right enough to have profited or avoided losses. Wherever you have significant success, it is likely that there is a good-enough forecast behind it.

Finally the failed-forecast smirk lists also miss the fact that many forecasts are not meant to be an accurate anticipation of events. Many are trying to influence the future, that is, talk a particular outcome into being or shape it, or stop it from happening. People make predictions to sway an audience, or get a response from authorities or opposing forces. When Gates said: “640K should be enough for anyone,” who was he talking to, and what was he trying to achieve …? A real prediction of the future? I think not. Microsoft did not stop at 640, and nor did anyone think it would. And nor did Gates think anyone else would. Forecasts are often salvos in the games of power and influence, flagrantly used to marshal situations or promote self-interests, in situations where accuracy is not the point.

1. First, what do you use scenario planning for?
Initially stated everyone did scenario planning, every time you find yourself doing something unusual it implies you’ve done something wrong with scenario planning. We think about the future all the time, constantly making scenarios in head, if move to London think about what need to earn, where live, family, critical uncertainties. We run forward, think about various challenges, we rehearse the future.

CL wondered about ill thought through scenarios?

AG felt it was inevitable that people will disagree. End of day scenarios boil down to politics. Visionary scenario planning gets everyone talking – firstly need to find common threads (if not grounds), that most buy into – even if it is a low common denominator, thus creating a shared vision, then dystopias, but remember the end point is never total agreement.

RS Acknowledgment of importance of politics? Is that your experience of foresight?
AG believes he is a political animal, but no longer involved in protest. Belief is power is absolutely important when thinking about the future. He then amends it to power and money – as often groups without power have public opinions so they can shape the future. There is a danger that they only talk about market forces and technology and that’s it.
RS Is it a struggle working with other foresight groups – is that view not shared?
AG says they can give a shared opinion, but politics mostly overlooked by the groups

RS describes that we all have a political agenda (social inclusion, voices excluded) within this project – it makes it interesting to deal with those who have an economic/gov background, it’s difficult to pretend futures neutral.

2. Could you talk me through a brief overview of your scenario planning method? (How long does each stage take? What preparation is required for each stage? How many people are involved in each step?)

There is an underlying method – but each stage has some degree of flexibility and can use a variety of methods.

A. Handshaking stage
Firstly deciding what you’re doing, basic project stuff – who’s involved, what resources, what deliverables – key is choosing method and who’s involved, may have varying degree of democracy – heads or grass roots, be inter disciplinary or not, have a broad or narrow focus, and what type of input is required. Believes it needs to have mixed agenda. Note that relying totally on academics is bad.
Then you need to decide the dates your final scenarios will relate to – further in the future the more radical but less relevant to other people and harder to action. Most future scenarios are around 10 years ahead – as a rule not less than 5 or more than 20.

To decide the focus you must:
1) Drive management team towards understanding how much influence they have over the future, can they drive future or does external events influence them? Percentage, never exact but idea.
2) Based on the amount of control can decide if creating a visionary scenario or anticipatory (not good word) scenario building. Visionary trying to develop an idea, multiple stakeholders get shared ideal, easier if pressure group, one organisation, as they can develop enrich and jump on to focusing on how we would put this into practice. They create a vision and dystopia. Influence future (money, opinion etc).
In anticipatory, or “Businessy type scenario”, participants don’t mind how things turn out, what they want is to be successful in the world however it turns out. Within organisation goal is to anticipate broad set of possible worlds, particularly critical uncertainties. So they do have research scenarios and different takes on how things emerge, BUT no preferred future. Look at resource and competence so they may have preferences but can adapt. To same extent they look at legacy competencies but this is not a determining factor. Scope alternatives and plan.
The Handshaking stage takes a few meetings to do, small with key meeting, then larger with various stakeholders – perhaps half a day.
In terms of materials one could send out stimulating piece to encourage thought so not stone cold but which doesn’t colour the agenda. Could also have to read a synopsis of what the process is about and the sort of things to think about and expect.

B. Horizon scanning
There are 100s of ways of doing this. Basically need to go into world and do research on what’s going on in key dimensions, technology, markets – broad scan of world relevant to issue area, bring in people outside of own industry. Best tool in this area is “learning journey” – jazzy word for anthropology of own society, structured agenda for talking to people about concerns, what they know, what they’d like, focusing on future – so need to be carefully done to avoid reiteration of now or what they think you want to hear.
Note that you can commission this – but it is not market research.
No answer to how long, dependent on time and resources, but should budget third of total time.

C. Pulling it together
Mulch through the data gathered – preferably in funky creative meetings, collate, output into things like forces, drivers of change, trends, blockers of change, critical uncertainties. What comes out is a picture of world that’s relevant to us.
This activity could be whole group or just the scenario developing team – it’s to pull out what’s important.
The format could be something like workshop, sleep/gap, then another half day or so.

D. Separating critical from predetermined
This could require a Mini Delphi, talk to experts to find out what are the sorts of things in forces of change list that are predetermined – so things we know will happen in 2020, perhaps the number of students, or trends to sustainability.
The various issues will have lifecycles in being a key focus, they’ll always be there but the amount of interest will vary, eg sustainability. In the future sustainability will be less of a concern, but not less important, it will just be integrated into our expectations we won’t focus on it. An example relating to education is how we’ve shifted views on punishment; it was a stick, then detentions, then exclusion…
[Divergent conversation about the failure to correctly predict overpopulation – they just extrapolated – AG argues it was not a failed forecast, just bad forecasting - a failed forecast is interlocked bad assumptions. There was a discussion whether carbon credits will have the same results.]

E. Question all assumptions/Test lists
Note: This stage might highlight the need for more research or stakeholder engagement.
The goal is to end up with two lists that rank for importance. One is about predetermined things – things that we are sure about for our purposes – note that we may, or may not, need to talk about them. Then there are uncertainties (anything we can’t clarify with further research). They are sometimes called “strategic uncertainties”.

F. Create scenarios
These lists form basis of scenarios, they allow us to try out alternate resolutions of the unknowns. AG hates the 2 by 2 matrix approach (from Boston management), but it is sometimes a useful tool. Shell use a fork in the road approach, or possibly a roundabout, where there are clear alternatives. For example, they know sustainability will happen but they have various scenarios predicting the demand for resources. [RS comments that Shell also have a trilemma approach, so deal with three worries.]
More generally scenarios are structured round uncertainties. The van der Heijden approach is to list things and tell stories – NEEDS creative facilitators. He has a pack of cards which people develop stories around. Each group is given part of the puzzle to resolve. Basically you need judgement to choose how.
The groups then write stories and the facilitator ensures the scenarios cover the cone of plausible uncertainties. Note there must be multiple scenarios, a single story is not helpful.
The creation of scenarios will take a minimum of 2 days to talk through, write, draw or tell.

Note: Jump scenarios are conversations over a day. There is no learning journey and it’s hard work for the facilitator. The result is paragraphs rather than stories. These are good for management to emphasis the alternatives and broaden thinking

G. Check and test scenarios
Vital outside people criticise. What could and would work? This stakeholder analysis is meant to be a practical exercise.

H. Put them out
Visioning scenarios (including preferred outcome) get published, they need to get folks on board. Business ones tend to be more internal.
Then test existing strategic agenda within scenarios. They’re a test bed for strategy and choices. How would things work?
Or backcast using the scenarios – so how to reach or avoid scenarios.
AG keen to promote that there needs to be standards, just like testing a pram, you need to exhaust all the things that could happen before it gets its kite mark.
[There was a conversational aside over the time spent on this. AG worried not enough time spent using them and that politics will block change – “if broke don’t fix it”. People need to be desperate to be receptive.]

3. Do you use any tools for scenario planning? If so, can you briefly describe them?

Classic management tools – so getting people to communicate, being experienced based.

4. Are any of those tools online?

Nothing practical is online but there are resources and case studies (see his website). Although then amended that can do Delphi online. Note that learning journey is not market research, not supposed to be investigating people’s mental models – “good foresight is not predictive”.

5. What scenario planning tools would you ideally like to have available?

Something that follows stages explaining steps, timelines, who’s involved, explaining predetermined and uncertainties when listing – basically scaffolding.

6. If time was restricted for a scenario planning exercise, which parts would you keep because they’re the most important?

Would go through all stages (tick all boxes) but go lightly on some. However the less knowledge bought in the more focus on facilitation. The key is to get people to develop interesting motivating diverse stories appropriate to their needs.

7. What tools or approach would you recommend if a non-expert wanted to do scenario planning?

When asked AG said that don’t need a facilitator but would do better if had one. They focus the time and can support the whole process – not just when in workshops. Those involved aren’t experts and have a stake in the present so they’re going to struggle to change their minds.

When asked if it could be done alone AG said yes, BUT that it would be better if one could do at least step G, testing scenarios, with others.