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The Future Is Where You Find It - Late 2011 Sessions

At the end of another year – my 25th as a futurist – it’s interesting to look back at recent projects for some perspective and observations. My work takes me to a wide range of locations and there’s always an interesting twist to the proceedings.

Parked in between the strategy sessions that form an increasing share of my practice were some intriguing groups and industry situations.

I worked extensively for the Institute for Management Studies this year. IMS is one of my most loyal clients and I’ve been on their faculty for over 17 years. I teach a full day seminar on anticipatory habits, foresight practices, strategic thinking, and informed decision-making. Typically there are executives from a stimulating mix of companies that come together for an interactive day of observations, discussions, debate, and what I think are some excellent case studies. Boston was my final region of the year and my host Bill Brottmiller had attracted top notch people from everything from shoe manufacturing (New Balance) to insurance (Amica and others) to sound equipment (Bose) as well as healthcare, government, and banking.

This group applied the section I teach on “Seeing Around Corners” in some intriguing ways to identify early signals of consumer behavior, an innovation-resurgent America, and some of the next major risks in the insurance field. It was a superb day. That night I sat next to a venture capital guy in the energy field who regaled me with things I’d never known about how to store wind and solar power for use in high-demand periods.

I spent December working largely with agriculture. Funny how that happens a lot when the land is fallow and snow blankets the Breadbasket. I’d never worked with the aerial application side of ag before but I keynoted a conference where I looked, among a range of developments, at the substantial penetration of automation into the field. I’ve long held that jobs that are “dirty, dangerous, or dull” have the highest payoff from robots and automation. The barnstorming background of crop dusters is long gone and is now being replaced in odd corners of the world by small flying robots that could be the safer, more efficient future of that industry.

Earlier in the year I was with a roomful of Washington state mayors. I worked on a long term consulting assignment with the National League of Cities and their Advisory Council which is charged with identifying the emerging trends that will affect America’s towns and cities. This leads to a fair amount of work in the municipal space.

I had an interesting side conversation with Seattle’s Mayor Mike McGinn. When I asked one of my typical futurist questions, “What’s surprised you this past year?” He had a quick comeback. “Food trucks and medical marijuana!” Of course they weren’t connected. Municipalities walk a tightrope in uncertain funding times if they allow any form of “semi-legal” drug use that’s not permitted under Federal law. I won’t say more. But the food trucks comment related to something very interesting: the movement of some of America’s most talented and adventurous chefs out of the restaurant establishment and onto the streets.

Now the cognoscenti among foodies are passing around social media hints, tips, and raves on where to get the best mobile food in America. Many chefs are experimenting, reinventing, and testing recipes from a few burners or an oven inside of a moving kitchen. “Meet-ups” and tweet-enabled magnets of inexpensive, gourmet-quality eats are popping up all over America and McGinn said his city is trying to stay ahead of the massive burgeoning of the trend in Seattle. The future is where you find it.

The Middle East and Us

Almost 3 months into the wave of unrest in the Middle East and we’re staring at events like a deer in headlights. It might be a good time to take stock of how events might play out.

The best case scenario for an American economic recovery, avoidance of inflation, and $6 gasoline?
Moderation. Ghadifi quietly leaves Libya. A compromise between the separatists and the former cabinet and military. Eqypt remains somewhat quiet and their military fulfills promises of Mubarak crony removals and elections.

But those two possibilities are far less than certain. I’d give them less than 40% probability right now. Libya’s important production of light sweet crude oil will come offline for some time. Today I passed my first sign for $5.00 gasoline in San Diego, CA.

The more troubling events could occur in Saudi Arabia. The mere fact that government troops are firing rubber bullets at crowds is chilling. Despite the royal family throwing billions at the less advantaged citizens the groundswell from the educated population could destabilize the largest exporter of oil in the world. Crux facts: there is a huge concentration of the Shia minority around the Saudi’s oil production and shipping locations. Just like Benghazi in Libya, it’s strategic.

So what?

Think
1979.

Oil prices spike to $200 or perhaps beyond.

Oh yeah, you might not have been born then or you are too young to remember. Lines around blocks at gas stations (and there were almost 3 times as many as we have today with a population half the size). Declaration of a national crisis. Rationing. Price controls. Gas cans in auto trunks. Third world stuff.

Then, in the years that followed, runaway inflation coupled with a recession and double-digit interest rates. I was running a business in a market with real resistance to price increases when my operating line of credit went to 22%. It’s one reason I never, ever again want to make payroll for more than 40 people.

Worse, the US government can’t absorb a huge spike in what it pays to service the debt. The dollar will be wiped away as the world’s reserve currency, capital will leave the country, and the 1930’s will repeat and potentially be even more catastrophic.

I’m not saying the scenario is likely. I think it is still less than 30% probable but that probability increases daily to the point where we want to think through implications and actions.

In a recent Twitter post I pointed out a NY Times article on a fellow who’s gone “off the grid” in Texas by living in the desert on solar and wind power and capturing rainfall for water. Funny thing is that it’s both one of the most read and most e-mailed articles on the publication at this writing.

More in the days and weeks ahead. Hope for moderation in the Middle East and some leadership in our country. This could become a perfect catalyst for us to take steps to begin resolving our financial, energy, and world dominance issues.

The Race for Sustainability

It was obvious 5 years ago that the term replacing “green,” environmentalism, or “save the planet” would be sustainability.

The signs were obvious. In manufacturing, energy, and agriculture the shift had been underway for some time. But the “s-word” was popping up in unanticipated fields like financial services, municipal government, hospitality, and healthcare.

The driver: consumer attitude. When people are asked whether they want a product that’s “green” or “organic” they hesitate. Experience tells them it’s going to be somehow a sacrifice of quality and higher priced to boot. Not a great choice unless you’re in the minority of the market that wants to save the planet at any cost.

But the term “sustainable” refers to the concept of renewable or the ability to be perpetual. A UN commission in 1987 established a definition that holds today,
“meet the needs of the present without compromising the ability of future generations to meet their own needs.” Consumers sign on to that thinking readily. So readily, in fact, that the future is going to be full of battles over the ability to use the term.

A conflict in an active segment of my practice is a good example. Organic food producers would like to claim the sustainable term as their own. An organization called the Leopold Academy applied to the American National Standards Institute a few years ago to establish a standard, a definition, of “sustainable agriculture.” When forming the group that would put forward the criteria they pointedly omitted the largest food producers in the US – production agriculture. You know, the farmers that use chemicals and genetics to be the most productive on the planet and which account for well over 80% of the food production in our country.

The US Department of Agriculture intervened and the Leopold Academy agreed to put 11 production ag representatives on the committee where they were outnumbered 3-1 by organic producers and environmental group representatives. The new participants tried to turn the standards to what’s known as the “triple bottom line” – defining sustainable as not only environmental but based on
economic and human capital issues as well. The short version is people – planet – profit. The discussions continued for some months but last fall the production agriculture reps pulled out of the talks.

Today it may be impossible to establish a standard until two sides of the debate can sit down in more equitable numbers to reach consensus on the definition. It’s a huge issue that could lead to more than standards and labeling. With a political overlay the standards would eventually translate to regulations.

Look for many more debates, discussions, and organizations positioning themselves as “sustainable” in the years ahead. Look for them to use the triple bottom line as the standard. In your own industry or field, no matter the level of environmental sensitivity, look for
sustainability to be a major issue in the future.

The Oil Forecast

For the last three years, ever since it became obvious that the world was slipping into a recession and commodity prices would come down, I’ve forecasted an inevitable return to rising oil prices.

My logic: the recession reduces demand but only temporarily. Recovery from recessions is uneven globally. Some regions recover months, perhaps even years before others. A robust economy in Asia and to a lesser extent in Latin America will create demand that will drive prices up despite a slight fall in use in the U.S. and the EU.

Speculation or unexpected geopolitical events – “triggers” – will create volatility. Speculators will enter the market on supply shortages. No regulating body can keep them away from the opportunity to make money.

My forecast from mid-2008 forward: 75 to 85% confidence that an oil price spike and permanent plateau above $100/barrel will come sometime in the 2011-2014 time frame.

It’s been of interest to clients in, well, almost every field. Because as one CEO said to me on being asked what energy prices affect, “Everything!”

As the economic recovery has forged ahead strongly almost everywhere except the North Atlantic the price of a barrel of oil has risen back through the $50, $70, then $90 levels. Now the unprecedented events in the Middle East have taken Brent futures over $111. West Texas will follow.

Will it stay there? Of course it depends on a complex array of factors. Economic effects, how high the price spikes, volatility, whether the Saudi’s can really make up most of the shortfalls, refining bottlenecks, and more. In the weeks ahead I’ll place more information here on the implications of this important trend.

In the meantime I’m getting a lot of queries from clients who quickly remember my forecasts and are running through their Plan B strategies to react to the development or are confident because they planned for the high probability of this years ago.

The Consumer Christmas 2010

I spent time at the epicenter of American spending over the past few days. The Christmas shopping at Macy’s flagship store in Manhattan was, in a word, tepid.

Don’t get me wrong. The store was busy but large areas were deserted. A store that stays open 24 hours a day is a phenomenon in itself but those wandering the aisles were being attracted to sale racks and less-spendy areas of the store.

It was interesting that many of the fur-bedecked matriarchs leading families very slowly and deliberately through the store’s luxury departments were speaking other languages. A lot of Russian and many Asian languages filled the air as we steered around them.

It’s not surprising. Almost all surveys of consumer behavior in the U.S. show a concentration on reducing debt that is unprecedented. Spenders are coming to grips with the fact that jobs are not multiplying, they’ve got to make do with what they have, and the smartest thing they can do is get out from under credit card and other debt as quickly as possible.

Where was shopping intense in Manhattan? Jack’s Dollar Store located just a few blocks from our hotel. Wall to wall shoppers all the way up to the closing hour.

The most likely scenario for the economy, in my opinion, is a long slow recovery. What I observed falls in line with that. I think a GDP growth near 3% in 2011 will enable the unemployment rate to drop below 9%. Spending will return cautiously. It won’t be for big-ticket items but will begin to bolster support for more indulgent food, some travel, culture, entertainment, and family involvement.

We attended sold-out Broadway shows but there were half-priced tickets available up to curtain time at almost all shows. Movies that you would have to buy tickets for days in advance at prime viewing times were walk-up purchases. Top-rated restaurants were busy but not overwhelmed. On the eve of the Christmas rush I’ve been getting discount and free-shipping (even of the rapid variety) offers on a regular basis.

We’ve moved into an era of moderation and introspection. May we emerge more sober and wiser.

The E-Reader Killer

The other day I spent about an hour with an iPad.

Those of you who know me or follow this site know I’m a Mac convert. I switched from what the Apple cognoscenti refer to as the “dark side” seven years ago. It’s been a very good experience. Frankly, the Windows world has improved much since I left. But there’s a bigger issue here.

I believe I held the device that will kill the e-readers. Convergence is coming.

When I sit next to a Kindle or Sony user on airplanes I hear rave reviews. Convenience, long charge life, portability are the things they mention. But they also acknowledge it’s another gadget in the bag along with the laptop, smartphone, and various accoutrements of the business traveler today.

With the iPad – and what will be a shrinking horde of imitators over the next few years – you get much more than the reader. It’s really a true lap companion that does much more than just show you a replicated black and white page. It’s a full color, multi-tasking, e-mail and word processing handler – at the minimum. Some power users make them much more.

And the price is just a little more than double the e-reader. Why not spend the little more and get something that does way more than twice the lower priced gadget?

Key indicator – the dropping cost of e-readers. http://nyti.ms/afXw0u A price war has already begun. Developers see an adoption disruption early. Amazon bumps up its advertising.

The Wild Card Weeks

Wild Cards are lower probability, high impact events. We’ve not seen a few weeks like the last three for some time. I’m not a believer in the adage of “threes” when it comes to these events but there are lessons and implications for the three we’ve just seen.
A volcano erupts and ash plus extreme caution by air travel regulators paralyzes a system we take for granted. Millions are stranded. Millions, by any currency measure, are lost. Alternative transportation comes into short-term vogue and overloads. Normalcy returns and we forget. But that volcano is still smoking and just because it’s not page 1 news we relax.
An oil platform explodes and lives are lost. Initial concerns about leaks are downplayed by company executives. Days pass and a slick surfaces. There’s action but no results. Now we’re staring into one of the great environmental disasters of our generation.
Initial reports of an over-reliance on a “blowout preventer” will be examined in hearings and investigations for the next 3-4 years. Recriminations from environmentalists take on stronger weight. A decision to open more offshore drilling could not have been worse timed. We realize that we’re totally unprepared for the scale of the problem, contingencies for stopping the gusher of oil on the bottom, and we’re unenlightened or purposefully ignorant about the risks of the technology.
A car bomb fails to detonate in New York’s Times Square. If it had a fireball would have killed dozens, perhaps more. Vehicles nearby would have burned and exploded. The ensuing panic would have injured hundreds. Midtown Manhattan would have emptied as reports of the notifying phone call leaked out. The caller said it was only a diversion for a larger device. Transportation would have slammed to a standstill. Offices remained empty for Monday morning. Absenteeism spiked. Broadway theaters cancelled performances. And the world’s biggest financial center would have stopped for days. The economic after-effect would have climbed into the hundreds of millions for a devices that cost only a few hundred dollars.
When the alleged bomber is arrested within 53 hours we relax. Investigations of the origin, connection to terrorist groups, evaluation of police response will come. There will be criticism of no-fly lists, airport security, even Craigslist. But when the crisis is over our thinking returns to the mundane.
Therein lies the problem. Extraordinary events like these should prompt contingency thinking and action. They should trigger better preparation, encouragement of public involvement, and planning for the next inevitable event. Too often we don’t look at the next event, only the last event.
I’m hoping the wild-cards of the past few weeks result in serious contemplation and preparation for:
  • Disruptions of air travel for substantial periods of time on the part of industry and government.
  • Development of even better alternatives to face-to-face communication to back up or reduce long distance travel.
  • Better technology and layered backup systems for the next generation of deepwater drilling like that necessary for tapping the even deeper oilfields off the coast of Brazil.
  • An acceleration of alternative energy sources and, most importantly, conservation.
  • A renewed recognition that many man-made systems have Faustian consequences that should be contemplated before adoption, not after.
  • Higher levels of vigilance among all peoples in all places for those that would indiscriminately destroy life.
  • Smooth transitions to pre-thought Plans B, C, D, and Z when the worst happens.

Your Major is What?

A while back I observed that the most e-mailed story from the New York Times online edition was about the popularity of philosophy as a major at Rutgers and other universities. Philosophy majors and graduates doubled over the past five years. It’s a trend that is evident at other colleges and universities according to Winnie Hu, an education writer for the Times.
There are more colleges than ever before offering philosophy majors. In schools with well-known programs like UMass, Notre Dame, Pittsburgh, and Texas A&M the number of majors has doubled just like Rutgers.
The attraction? Surprisingly pragmatic. Students say the major is equips them with tools for success.
David Schrader, executive director of the American Philosophical Association says, “It’s a major that helps them become quick learners and gives them strong skills in writing, analysis and critical thinking.”
That gets my attention as a futurist and it’s a parallel with the courses I teach in executive education sessions that target leaders at large companies. It identifies two of the most common shortcomings I see in those executives:
1. The lack of perspective for the big picture. Myopic expertise and a lack of awareness of how major forces are affecting their own functions, teams, and organization is too often present.
2. An obsession with quick and often reckless problem solutions and especially fast action when confronted with a challenge. An emphasis on speed over contemplation is a bad practice. But I see it again and again in corporate America and, too often recently, in our political decision-making.
We can all use a better grounding in the principles from philosophy.
Philosophy programs have changed over last couple of decades. Today the major is less about old texts and more about cutting edge, interdisciplinary fields like cognitive science. It’s often followed as a double major by students planning on careers in the law, medicine, finance, and even investments.
Students say philosophy has a couple of other attractions. It helps them make sense of the big questions that face society like globalization, the environment, war, and technological adoption. Even more pragmatically, it is a field that helps them with a set of skills that can be applied in the range of uncertainty that faces many graduates.
Want to be more valuable to your organization, your colleagues, your family, yourself? Build skills that help you make excellent decisions in uncertainty.