Here we are. It’s 2010. In 1968, Stanley Kubrick brought us “2001: A Space Odyssey“. In 1984 (yes, Orwell would have been proud), Arthur C Clarke’s “2010” made it to the cinemas. Throughout the 1980s and 90s, “near future” movies tended to be set sometime in 2001 or 2010. Well, here we are. And there are no flying cars. No apocalypse. Sure, we have the Wii, the iPhone, HD TV, surround sound and McDonalds sells salads. Oh, and there’s Dubai.
But trains, planes and cars all go roughly the same speed as 30 years ago (and let’s face it, the biggest advance in that industry in that time has been the hybrid, and the Prius is just plain ugly). Our energy still comes from the same sources, and we don’t wear silver cat suits.
I recently reread the 1970 Toffler classic, “Future Shock“. It’s still the best book of predictions I have read. Not because he predicted the future (he didn’t anticipate the Internet or mobile phones, or even home computers). But rather because his basic thesis was superbly accurate – and defining of our age. He said that the defining feature of the decade after 2000 would be constant change. How right he was.
But all this got me thinking… How do you predict the future? How do you go about predicting the trends that will shape the world in the next decade? This is an important question, because it’s what I do for a living.
In a turbulent world, it is more necessary than ever to have some means of anticipating what the future will be. Anticipating – and responding to – future customer demand, industry competition, legislative constraints, resource availability, labour supply, and all manner of other changes, is an absolutely critical task for every organisation everywhere.
Disruptive change is now more common than ever – this is change that changes the rules of the game, and can threaten your very existence. The task of attempting to describe – and possibly even define – the future, is no longer a luxury. It’s a necessity.
I count myself fortunate to spend most of my time thinking about the future. It’s my job – clients pay me to help them figure out what is likely to happen in their industries and in society in the near future. There are many words for what I do: futurist, scenario planner, strategist, forecaster, futureneer. Whatever you call it, that’s what I do professionally.
More than just doing it, though, I believe it’s important to help people do it for themselves – it’s a critical skill for everyone to have these days. Even as a parent, when your children ask, “What must I do when I grow up?” you’re being asked to forecast the future.
It’s not good enough to rely on one or two individuals to do this in your company – however sentient they may think they are. In the turbulent world in which we live, the more people involved in this process in your organisation, the better the outcomes of the process will be.
So, with the goal of helping everyone become something of a “futureneer”, here is part one in a series of brief insights into how I, and my colleagues at TomorrowToday, go about predicting the future.
How I get my ideas
We do not have a crystal ball, and claim no special wisdom. We don’t hear voices, either. Our method is a reasonable mixture of science and art, and has served us quite well, even if it is imperfect. There are two key steps.
The first is to understand the past and how it has shaped the present. This is the basis of trend analysis and often features highly in scenario planning, too.
Underneath the disorder of history, the task is to see the order. In doing so, your worldview always guides what you look for, and the assumptions you make. I’ll talk about this more in my next post.
My personal assumptions are that people desire freedom and fulfillment, and that the world is growing (or evolving) towards greater complexity, increased connections and more autonomy (I am a student of both spiral dynamics and systems theory, and believe we’re living at a time of history where we’re about to take a cultural leap forward).
Since companies try and respond to the desires of their customers, and politicians attempt to stay aligned to the demands of their constituents, in most parts of the world, what individuals are striving for will ultimately emerge, one way or another. Our first task is to identify how this has been happening, and how the flow of history has brought us to where we are today. This will give us a sense of direction and momentum.
A common tool used in the business world to achieve this first step is a PESTLE analysis (grouping the defining forces as: Political, Economic, Social, Technological, Legal and Environmental). I believe you need to go a step further than a typical PESTLE analysis, which simply lists the factors shaping current reality. You also need to ask WHY. Why did these trends emerge, and why did they have such an influence?
So, for example, from as early as mid 2007, I was predicting that Barack Obama would win the US presidential election. This was not the most controversial of predictions, of course – he had a fairly good chance, if only he could beat Hillary Clinton for the Democratic nomination.
The key here was to look at direction and momentum. In almost every country that had recently had elections, the incumbent government had been handed a resounding defeat – the democratic world wanted change. Why? Technology was helping people around the world to feel connected with other elections, and momentum for change was building; socially, people were tired of conservative governments and wanted a change; and people were disillusioned by the American led global “war on terror”. So, it was likely the Republicans would not just lose, but would lose convincingly (I am sure that McCain was not their best candidate, but was rather a sacrificial lamb – no Republican stood a chance).
But why Obama over Clinton? Well, Clinton could only win if she projected an image of change – a break with the past. I wasn’t certain she could do that with Bill in the background. And her ticket was then to say she had more Washington experience – she misread America’s mood. Obama got it right: “Change: Yes we can.”
Was America more ready for a black or a female? Tough call, but I guessed they’d prefer a (half) black man, to a (fairly scary) woman. Misunderstanding this, the Republican fate was sealed when it selected Palin as vice presidential candidate, assuming that a “hockey mom” ditzy woman was the type of woman people wanted. (One of the key trends we’re currently tracking is how hard it is for women to find the right public positioning – not too hard and not too soft).
Another key indicator was Obama’s ability to communicate and through soaring rhetoric to connect and inspire. The momentum of history is always with inspirational leaders, and current direction is with leaders who connect.
In Obama’s case, he also had the best online strategy of any presidential candidate in history.
The clincher for me, though, was age. The Baby Boomers (born after World War II and into the 1960s) do not want an old person leading them. They want someone from their own generation. Obama is actually a touch young, and I predict will be the youngest president for many years to come; but for 2008, he was the only guy ever going to be elected as president. And so it turned out.
Step one then is to track the trends that have shaped the present, and understand the direction and momentum these trends indicate.
The second key step is to understand the critical levers that are emerging in the present and will influence the future. The future will almost certainly NOT be a simple extension of the past. To counter this problem, many forecasters use the technique of scenario planning.
Ten years ago last week, a famous Business Week article highlighted the role of scenario planning (of course, South Africa’s Clem Sunter has been one of the world’s great exponents of this since the 1980s): “Forecasters who extrapolate from today inevitably get tomorrow wrong… [but] by pitting multiple scenarios of the future against one another and leaving many different doors open, you can prepare yourself for a future that is inherently unpredictable. Brainstorming pays off. And the more possibilities you can entertain, the less likely you are to be blindsided.” Peter Coy and Neil Gross, Business Week, 30 August 1999.
This may be true, but it is also often entirely unhelpful. You might create numerous future scenarios, but how do you prepare for each of them?
I think it’s possible to refine our list of likely possible futures by identifying a few factors that are most likely to be the shapers of the future. What we’re looking for is a few key factors that we can track. While these may be different in different industries, I’d like to suggest four general categories of factors that have the most influence today: technology, changing demographics, institutional upheaval and shifting societal values. I will speak more of these in the next blog post.
For now, it’s enough to say that you need to sit down and work out what factors, if they were to change, would change everything in your industry. For banks, right now, for example, it’s the legislative environment in which they work. No-one can predict what banking legislation will emerge over the next few years, but we know for certain that new laws will emerge. Banks therefore need to create scenarios to help them start preparing for what might happen.
Stan Davis, a famed futurist and author, wrote: “Focus on discovery and eschew invention… The thing discovered already exists; you simply see it before most others do… So, find a direction things are moving in and spell out the ultimate logic or conclusion. If you are right there will be early examples of the thing already around.” Lessons from the Future, 2001.
That’s what we’re looking for – early examples of the things that are about to change the world – or our part of it – forever. These may have been some of the trends we’ve been tracking historically, but equally, they may be the turning points – tipping points – of new, disruptive change.
Later, I’ll provide more details – and point out some of the most common pitfalls when forecasting the future. The goal is not to predict specific events, but rather to transmit a sense of the future. Maybe it’s best to say that we’re not trying to forecast, but rather attempting to foresee. The distinction is important. I, or anyone else, am unlikely to get the details of the future right.
Predicting what the gold price will be this time next year, or who will be the next President of France, would be impossible and a guess at best. But predicting the general trend of resource prices over the next year is far more scientific a process. And judging the mood of the French electorate is probably fairly easy right now – we know they’re becoming more nationalistic, more conservative and more demanding of an economic recovery and job creation. The party that taps into this mood now will win the next election. We can foresee the trends, and build scenarios for the specific probable events.
So, does it work?
Of course, the real problem with doing all this is that there are so many factors impacting one’s ability to get it spot on – and most clients expect you to get it perfect. That’s impossible, of course. Even if you can predict what will happen, you will be very lucky to be right about the timing on a regular basis.
For example, in 2000, I wrote a book, Mind Over Money, in which I looked at how different generations of people were managing their personal finances (and helped them to do it better). In that book, I wrote that the Baby Boomers, who were heading towards retirement, were creating a real problem for themselves and for all other generations by being addicted to debt.
I predicted that it would all end in tears for them and for everyone else. Was this a prediction of the credit crunch that hit a year ago? In one sense, yes (and I am happy to claim it). But, could I have told you that it would happen in September 2008? Unlikely (although I did sell all of the shares I held in late 2007, anticipating that the bubble could not last too much longer).
If you step back now, you’ll see it was fairly easy to predict the credit crunch. In fact, Trevor Manuel and Tito Mboweni, South Africa’s Minister of Finance and Central Banker respectively, did. As early as 2001, they began imposing tough financial controls on the economy, and on the banking industry specifically. In so doing, they have largely protected South Africa from the worst of the global downturn.
As is typical with futurists, they have not received the credit they deserve for taking the tough actions their predictions suggested they should. It should have been easy, yet so few people did it. This is because they lost sight of history (step 1) and were blinded by their worldview (step 2). They failed to recognise the natural rhythm of the business cycle, and they did not see that changes in banking regulations in the early 21st century had fundamentally changed the risk factors associated with credit and investment banking.
But most importantly, even when the first signs of a crisis emerged (in the UK, there was a run on Northern Rock in late 2007!), they failed to do anything about it.
And this, ultimately, is the point of predictions. We need to act on them. For years, for example, many predictions have been made about what talented employees will demand from their employers, yet very few companies have implemented true flexibility, work-from-home options, and some companies actively discourage any use of social technologies that could assist with this process.
It’s not enough to have an intellectual exercise in foreseeing the future. One also has to have the guts to react to what you find when you see tomorrow’s world today.