The new global landscape - a long view

To understand the future one has to have a thorough grasp of the past... here's quite a very valuable summary of recent economic history from Time editor Fareed Zakaria at IBM's THINK leadership forum.

In a way he makes the case for behavioral economics, by showing that the unknown factors of government and consumer behavior makes things rather unpredictable, or at least make outcomes of events (like the recent financial crisis) sometimes surprising.

But some trends are ineluctable. It is clear for instance that job recovery after an economic crisis is taking much longer than in the past (some 60 months predicted for the latest crisis). Innovation is key to respond to this challenge -innovation in a broad sense, as Fareed explains.

Fascinating speech:

How leadership skills need to adapt to megatrends

I must admit I never asked myself the question so far: how do business leaders need to adapt to the megatrends that are influencing their businesses?

 So I was quite interested in the report that HR consultants Hay Group dedicated to the subject. The report distinguishes 6 megatrends and investigates how they affect business leaders.

Hereby some of my highlights –to find out more you can always check the full online report here.

Globalization 2.0

• Asian management models increasingly important (fdm: too bad the report doesn’t explain what they mean with this); 
• Local decision making => leadership needs increased cultural awareness, agility, cross-functional collaboration, lose control

Climate change and environmental impacts 

• More sustainable business practices benefit the bottom line, although increases cost Leaders need to balance sustainability efforts with business success 

Demographic change

• Lead with diversity: cross-gender, cross-generation, cross-culture (fdm: this topic would certainly have merited a deeper thought… what about the new environments to foster this? In my opinion the business conditions GenY wants is ultimately the same as what is required for elderly people to work longer: flexibility, remote work, crowdsourcing, …) 

Individualization and value pluralism 

• Leaders need to mutate from bosses to mediators and coaches, business needs to offer ‘tailor made’ business environment to their employees 

Digital lifestyle and work 

• Leaders need to find balance between virtual and face-to-face management 

Technology convergence

• NBIC technologies (Nano, Bio, Info & cognitive) will open corporate structures, leaders’ collaboration and influencing skills need to be excel (fdm: this is rather opaque, not sure I fully grasp this) 

Interesting report though hopefully just a start for further exploration (are these skills required across all industries, for instance?).

Interesting infographic from the report on how digital natives and changing workplaces are influencing leadership skills:

The future of growth... new sustainability champions

Interesting report by the World Economic Forum (and performed by BCG), including 16 case-studies about new and existing businesses changing their business model into a more sustainable one: Redefining the Future of Growth: The New Sustainability Champions

The overall initiative (of which this report is part) is 'set out to seek unconventional, practical solutions to the current challenges of growth, aiming to identify and support key business practices, and to relay them to the global community.'

This is well worth the effort, although it does not necessarily provide a clear answer to what exactly growth should be measured on. The initiatives of these companies -and their transformed business model- are of course changes that produce effects one can track. From a sustainability perspective you'd track them through the number of people they helped, or the amount of water that is being returned unharmed, for instance.

But from a business perspective? They will still be measured on turnover and profits I'm afraid, even if the short-term financial (profitability) expectations might have decreased a little.

All in all there must be a better way to seize even the economic growth -or else leave it out of the equation altogether? This needs a complete new business model for the way the world operates ;-)

While the cases form a very interesting read, I was most struck by the 'metrics' by which the companies were selected:

With the debt crisis in mind, surely these metrics would be more interesting parameters to base a debt redemption on, rather than tough saving plans and sellout of public properties, like the world demands from Greece now...

60 megatrends on my watchlist

(this is an update of my previous post about 49 megatrends on my watchlist)

Why an increasing number of companies are adopting 'cause marketing'

This is quite an exciting report from JWTIntelligence, looking at the fundamental changes in ‘social good’ behavior of companies, their reasons and the expectations of customers with regards of the social behavior of their providers. The report distinguishes 4 main trends:

• "The End of Goodwashing: Cynical and savvy, today’s consumers expect greater accountability from nonprofits as well as brands involved in cause marketing—e.g., exactly where the money is going and what impact it’s having. More transparency will mean more focus on effecting real change and less “goodwashing.”
• The Rise of Shared Value: Rather than simply doling out checks to good causes, some corporations are starting to shift their business models, integrating social issues into their core strategies. The aim is to create shared value, a concept that reflects the growing belief that generating a profit and achieving social progress are not mutually exclusive goals. By reconsidering products and target demographics, forging partnerships with local groups and improving productivity in the value chain, companies can become a force for positive change while enhancing their long-term competitiveness.
• Creative Urban Renewal: Human environments will become increasingly important as the global population becomes more urbanized over the next few decades and cities boom. Brands will become key partners in enabling creative strategies for urban renewal—improving local environments, adding beauty or helping to bring communities together.
• Ripping a Page From the For-Profit Playbook: Nonprofit organizations are increasingly adopting for-profit tactics, fusing social consciousness with business acumen and focusing on achieving visible change. The shift from blanket or black-hole benevolence to targeted giving and venture philanthropy places more emphasis on cause and effect, measurable results and return on investment."

The report provides a multitude of examples of how companies are dealing with this. On top of that, the surveys done for this study show some interesting –though expected- differences between generations on a number of topics:

(source: JWTIntelligence trend report, September)

The report is available for free (after registration) on the JWTIntelligence website (look for 'social good' in the right column)

I couldn’t help to compare this to the ‘megatrend influences on Shared Value’ graphic I built some months ago. Apparently there are plenty of similarities and common viewpoints, so I’m delighted to see my gutfeel past the test of the more scientific research of JWT!

The impact of crowdsourcing on the economy (a sequel)

To my surprise my blog post on ‘the impact of crowdsourcing on the economy’ ranks third in terms of number of visits to this blog. After all, this was merely a simplistic thought experiment, aching for some further thought. Furthermore, it focused a bit too much on the negative aspects. If you think it through, even Cloud Computing would have the same effect on the overall economy as what I described for crowdsourcing. Time to give it some further thought.

For sure, ever increasing automation are a threat to ‘human work’ (see Marcel Warmerdam’s latest article), and the digitization of our world will exacerbate the polarization of work (see the latest blog post of Ross Dawson), but surely there must be a middle way to these dawn scenario’s. To me, crowdsourcing would be right in the centre of a brighter outcome.

Let me propose a rather radical scenario to make my point. Let’s say that –because of automation and outsourcing to remote countries- all companies would leave a given country. Instead of working for these companies, people will now make a living with what they are good at: creative input in crowdsourcing projects, or researching for open innovation projects. Of course, they would not earn as much as when they worked for companies, but let’s say they would earn enough to live decently.

The overall economy, as shown from the example beneath and measured by GDP, would decline with about 70%, but would this really be dramatic? After all, there would be full employment, and people will likely lead happier and more fulfilling lives earning money with their real skills or passions, choosing from projects they are most interested in, getting rewarded when they truly deliver added value, and enabling a work-life balance of their own liking.

Of course, there are some problems with this. Will government income be sufficient to fulfill its core functions (health care, education, infrastructure, …) and, with no corporate profits to invest, will the economy still be able to innovate and, well, grow?

Hm, the hidden point of the scenario here above is probably this: should an economy grow at all, and should we still be measuring ‘growth’ by an approximate indicator such as GDP?

Why the West will loose relevance, learnings from historic patterns...

Quite a coincidence to have this interview as I was just putting this book on my short list to buy...
Why the West Rules--for Now: The Patterns of History, and What They Reveal About the Future

In his book, Ian Morris looks into the history of civilization in order to uncover patterns that might predict how the geopolitical balance might change in the future. A bit disappointing, perhaps, his major conclusion seems to be that the West will loose a lot of its relevance in the next century (this is stating the bleeding obvious), but along the way he makes some very interesting observations. A couple of them I retrieved from the interview:

• Debt crisis might speed up the decline of the West;
• Wealth in itself will not decline in the West (though it might stagnate), but its weight in global wealth will undoubtedly decline;
• Humanity might reach a 'hard ceiling' of development for the second time in its history -this time due to the limitations of the use of fossil fuel;
• Big climatologic changes have lead to mass migration in the past, but the real paradigm change is that humanity has nuclear bombs nowadays (need to think through this one);

The book climbed a couple of places on my 'to read' list...

How the mighty fall... is Yahoo! a case in point?

Lucien Moons passed this interesting article to me “The failure of Yahoo’s Board” written by Maxwell Wessel at the HBS. In this article, Maxwell argues that the choice of the ousted CEO Bratz was wrong in the first place. Bratz was chosen based on her past successes as CEO of software firm Autodesk but, as Maxwell argues, this success was achieved in a completely different environment, and is hence no indication of whether she could have turned Yahoo! successful again.

Fair enough, I’d say. But on the other hand, it’s not a proof that they’d automatically do badly neither. And if ‘success’ is environment-specific , so should failure be as well?

Surely, there must be other forces at play. By coincidence, I just finished reading How The Mighty Fall: And Why Some Companies Never Give Inby Jim Collins (the author of Good to Great: and Built to Last: Successful Habits of Visionary Companies). Through Jim’s research on once-successful companies, he distills 5 stages in the failure of big companies:

In a much summarized version, the 5 stages sound like this:

• Think success is due to them (it rarely is)
• Hunger for (ever) more and bigger
• Discard negative news (denial)
• Gasp for ‘saviors’
• Fall into oblivion

No doubt Yahoo! was already in stage 4 when hiring Bratz, so the road to oblivion was already well paved –its acquisitions throughout 2002-2005 and its pathetic attempts to counter Gmail’s success, its successive rounds of layoffs would fit well in stage 2, for instance). Firing at all directions is seldom a good choice for companies in that falling path, according to Collins.

Nevertheless, there are ways out –as Xerox and (well, yes) Churchill have shown us: get back to the basics, focus on management discipline, etc. ‘Get your act together’, in short. Simple enough, but why is it so rare to see troubled companies act on it? It’s a wise enough lesson for today’s giants (Google, Apple, Facebook) to track early warnings of decline…

Well worth the read:

A biodegradable car? The future of... compost

Interesting videoreport from ZDNet on newest trend with biodegradable packaging, and a huge leap forward into the concept of 'cradle-to-cradle' for some products that I didn't thought would be close to such a concept anytime soon.

Nevertheless, the video comes short in explaining the indirect effects of these new technologies. Just like with biofuels, the concept of foam based on soy (used by Ford in car-seats) might put an additional strain on farming land if it becomes widely adopted. The disadvantages don't weigh up to the tremendous advantages, for sure, but that doesn't mean we should be blind for these disadvantages...

Can game theory help us predict the (near) future?

"You must be joking?', I hear you say. Well, think again -or rather, watch the video beneath. Apparently game theory did predict the recent events in North Africa, to give just one example...

The concept is both simple and (hence) appealing. Take a limited set of metrics on which a particular -potential- event would depend. Rate them, map them, scale them, superpose them, ... in order to provide them a statistical weight, and there you have it: the likeliness that a given event would take place at a given time in a given location...

I wonder if you can download that software somewhere for free ;-)
But, all joking aside, it's something worth trying out...

Will 'producing things' in the future not require human intervention at all ?

Reading through an interesting article of Marcel Warmerdam at Metisfiles: "The future of work: the rise of the machines". Of course, automation and the very role of robots in our production economy has been increasing steadily for the past hundred years. But Marcel's point is that it is likely to accelerate and will soon make all human production work redundant. The reason for this? Even in the manufacturing powerhouses like China the wages get to such a level where it becomes more profitable to make machines do the work.

Taking this one step further, I would argue that humans would still be needed to design and build the machines that create physical things, and others to maintain and repair them. It is likely that the first group will be highly regarded -and rewarded, while the second group will be 'worth' less than the machines they maintain. The gap between rich and poor is likely to widen unless we rethink the concept of work itself -and unless our educational system adapt in order to enable people to conceive of work differently.

But wait a minute... is it really be necessary to have people involved even in designing and maintaining machines that build things? Perhaps I'm even over-optimistic on that front. Watching this TED lecture of Skylar Tibbits, about self evolving (and repairing) things, I'd have to conclude that somewhere in the future producing things would not require any human involvement at all:

How the declining power of the Western world would prelude a more balanced world

It's almost a given notion that the global influence and weight of 'The West' is declining in favor of emerging economies. It's as simple as anything can be: as long as the emerging economies are growing more strongly than the Western ones, their influence and weight naturally increases.

However, what lies beneath are more complex streams of inter-dependencies and behavioral shifts. China is now the major trading partner of Brazil and Africa, for instance. But, rather then limiting their influence to the provision of aid, like Europe has done for so long with Africa, China is contributing in more structural ways to the future growth of African countries.

What this entails is a 'new world' where indeed the developed world will have less influence and will loose it's place as the center of all international transaction, but perhaps this is not so much a bad thing and at the least it is perhaps a prelude to a more balanced (but not yet fairer) world... interesting debate:

The future of science, technology and well-being, 2020 map

Intriguing view of the future of health and medical science, built by Ben Hamamoto of the Institute for the Future. The text is too small here and there, but Ben promises to discuss each piece of the graph on his Blog -well worth following if you're interested in Health Care.Can't wait for his discussion on 'crowdsourced research', 'measuring the subjective' and 'Augmented environments'...

The future role of education in the developed world

Education in itself is prone to the influences of the megatrends I discuss on this Blog, but it is also at the center of resolving some of the major challenges that come along with these trends. The presentation hereunder was meant to sort my thoughts out about the subject, perhaps it can be useful to some of you:

The future of education

View more presentations from Frederic De Meyer.