Friday, March 13, 2020

Practicing for an emerging future

I'm writing this in the stages of the corona virus outbreak in the United States where we've finally decided to take the virus and its impact seriously.  While the virus may not be as deadly as some other viruses, it is clearly contagious.  I think after weeks of ignoring it or wishing it away, or waiting for a miracle cure, we've finally decided to do what must be done - that is, more social distance to reduce the spread.  That's good news, because we've finally decided, after weeks or months of dithering, to take action.

I'm not a virologist or a doctor, more a person who is interested in the unfolding future and the opportunities and challenges that will be created as the future emerges.  New futures create new opportunities, new customer segments, new needs and wants, and also eventually introduce new business models and new entrants or substitutes.  If that sounds a bit like Porter's five forces in action, you are right.  Thinking about the future and how it will unfold is critical to the success of any business, large or small, but also any government, country, community or individual.

With the importance of thinking more carefully about the future and its implications in mind, there are a couple of points I'd like to make in this post:
  1. There are no straight lines to the future
  2. Shifts are caused by far more than technology
  3. Demographics is destiny
  4. There is a heavy hand
  5. Expect the unexpected

No straight lines

We know this, but we choose to ignore it.  The future will be different in some degree than the present.  I'll address this more shortly, but as the pace of change increases, as we have more interaction and more trade, as there is more and more widely dispersed technology, the future will be different than today.  There are no straight lines, yet in most cases (businesses, governments, societies) we act and live as if the future will be a carbon copy of today.  In other words, there will always be horse drawn carriages, regardless of the advent of the car.  There will always be home delivery of milk and a newspaper.  The majority of families will consist of a traditional nuclear family, owing a home and two cars.  As we consider what certainly seemed like "givens" in the recent past, we can see how much change has happened in a relatively short period of time, to people who were fairly surprised when these changes occurred.

The sooner we decide, as governments, companies, societies, organizations and so forth that the future will be different, and that difference has consequences, the more likely we may be to attempt to understand the potential future and take action. 

Shifts are caused by more than technology

When we do look at the future, we imagine that technologies change and everything else remains the same.  When we watch movies or read books about the future, new and amazing technologies are presented, but the societal, religious, political, familial and other structures remain virtually the same as today.  Many, many shifts happen because of extraneous forces, and many of those aren't the introduction of new knowledge or technologies.  Consider how the Black Plague changed Europe, basically ending the feudal system.  As there were fewer people to work, a person's labor became valuable, and gave laborer's more control over their earning potential. 

Political shifts can have dramatic impact on the future.  What if the Wobblies had won in the US in the early 20th century?  What if Ronald Reagan had not won the presidency? Would the US look like it does today with just a few changes in political leadership?  President Obama significantly changed a significant portion of the economy with new healthcare rules.  Does anyone think that the US won't be different based on a Sanders versus Biden presidency?

Political, economic, social and environmental movements and factors have tremendous impact on the future. Often more impact than we recognize, except in hindsight.  Consider, for example, the Dust Bowl that drove many mid-westerners to the west coast.  An environmental change that largely emptied several midwestern states but fully populated and changed California.

Demographics is destiny

Most countries in the world today have a birth rate below replacement rate.  What this means is that live births are less than deaths, meaning the population will shrink unless replaced by immigration.  Many countries are rapidly aging.  Countries like Russia and Japan, where birth rates have been declining, the population aging and where immigration is discouraged will age rapidly, creating new challenges and opportunities.

The thing about demographics is that it is observable and it is closely tied to the destiny of any organization.  The Shakers, a religious movement in the 1800s, encouraged celibacy, making it difficult to sustain an organization that did not attract a lot of converts.  Their religious movement has all but died out.  Younger people will dictate the future of an organization or country to a great extent, so understanding what younger generations think, want, hope for and will act on is exceptionally important in the medium and long term.

The heavy hand

The governing factor over demographics is the power and investment of the older generations, and the amount of investment or debt left behind.  If much of the wealth and power of any organization, government or country is tied up with the elderly, then the rate and impact of many societal and demographic trends will be somewhat stymied by the lack of access to money or the inheritance of debt which limits where change may occur. 

But this isn't just a screed about old people or national debt, it's a warning that old models and old perspectives often have to be updated or even rejected when looking at future needs and opportunities.  It's critical to understand when past experience, perspectives and knowledge are helpful in determining what to do, and when they create roadblocks or barriers about how to understand the future.  Consider that Thomas Watson, the CEO of IBM thought the total market for computers in the world was about 5 machines.  Was he an idiot?  Of course not.  He just had locked into a specific way of thinking that governed how he looked at the future.

The unexpected shifts

Finally, there are unexpected shifts or impacts, not necessarily brought on by emerging technologies or demographics, or political movements.  Corona virus is an excellent example of an unexpected but powerful shift in the way we work, think and govern.  While corona virus by itself is not a trend, it is a disrupter, and could be a harbinger of other widespread illnesses or pandemics, or simply a significant one-off event.  What our thinking about the future often fails to anticipate, because the probability is so rare, is a major, unexpected outcome like corona virus.  We fail to anticipate and prepare because the impact is unpredictable and the costs to adequately prepare for something like corona virus is exceptionally high.

But globalization, trade, interconnected airlines, access to education and travel means that what were once local outbreaks, easily controlled and perhaps quarantined, now spread exceptionally quickly.  It will be interesting once the corona virus is over to look back to the Spanish Flu and the Black Plague and understand how similar or different these outbreaks were.  Given that medicine and public health have advanced tremendously over time, we are still using the same approach to slow the corona virus as we used in the Black Plague - isolation.

Prediction, Assessment, Preparation

If we are doing our jobs - in governments, companies and society - we should be more alert to the accelerating rate of change, the higher degree of impact that any trend or unexpected shift is likely to have, and be constantly thinking about the future and how it will unfold. 

We know, for example, that a major flu will emerge each year and regularly have people inoculated against the flu.  But increasingly, due to more trade and interconnectedness, we are seeing more viruses or other diseases introduced and spread.  We should predict that this is the case and predict what may happen, and try to assess what may happen and how to prevent or slow changes and do a better job preparing.  This is true of viruses or illnesses, which create future challenges, and is also true of trends that create new opportunities or new segments with new needs.

An investment in your future

It is simply unacceptable that any government, company or even individuals fails to do a good job of watching trends, making assumptions about what is going to happen in the future and failing to prepare or anticipate future change.  We have much of the data we need to make basic assumptions, and have enough experience to understand the increasing and somewhat chaotic nature of change.

Anticipating and thinking about the future, even when considering scenarios that don't pan out, give decision makers far more information about the future and potential outcomes and decisions.  We simply need to get better practicing for emerging futures.  The governments, companies and people that can constantly practice for the future will be better informed, and better able to withstand the changes that will unfold.

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posted by Jeffrey Phillips at 5:31 AM


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