Designing the Future

The Uncertainty Series - This is our 4th instalment of the Uncertainty Series, where we bring you an excerpt from our interviews with top experts for their views on managing in uncertain times. Keep a watch for the full audio and transcript of this and the other original interviews in the series which will be launched soon.

Di Worrall interviews the “futures architect” Mike McAllum of Global Foresight Network.

Author of several books, including his latest “Designing Better Futures”, Mike McAllum has grown an international reputation for helping business understand some of the large trends which are coming from the future towards us and how that affects the landscape of their business, their region or their city; and then how they should position in that future. It really is in a sense designing the future. As we look back on the global turmoil of the past year and to our future hopes for 2010 and beyond, this is a timely interview where Mike shares with us his innovative approach to preparing for the future, and his top 3 pics for the trends that are likely to have the most impact on business success.

Di: When a business thinks about preparing for the future, one of the techniques we were taught to draw on in Business School is forecasting and the good old 3-5 year business plan. You advise clients that this approach can be problematic though, why is that?

Mike: I will talk about why it is problematic in a second but I think that I am not saying you shouldn’t forecast and I am not saying that you shouldn’t have a 3-5 year business plan but I don’t think that is the start point, so I think that is the second order activity. The reason why I argue that it is a second order activity is that in fact there are a range of, I think, significant shifts, economic shifts, energy shifts, environmental shifts which are eroding many of the old value propositions that up until a year or so ago made us all very successful. Therefore, the danger is you forecast what you know into the future but the future is a different place where the rules have changed, so for me, that’s not a good place to start. The second point I think about the 3-5 year business plan is that the way our brain works is that we automatically assume that the rate of change in the next 3-5 years will be the same as the last 3-5 years but the evidence shows that that is not the case and in fact what we are doing is going up an exponential change curve so we are likely, for example, to experience in the next 10-15 years a rate of change that is equivalent to the last 100. So, to put that into perspective that is a bit like somebody who owns one by plain in 1910 trying to forecast a world of jumbo jets but it is simply the wrong model. I think this issue of speed and the shear quantum of change is a real challenge for organisations as we have understood it, the way they are organised, the way that they are managed is simply is not nimble enough for this avalanche of change coming towards us.

Di: It is really questioning so many of the techniques that we have been taught, not just business planning as I mentioned, but so many of the techniques used to run business over the last few years, that is a phenomenal statistic you’ve quoted, that the rate of change would be so much faster, I mean we have been talking about that for a few years but perhaps it is only just about to hit us.

Mike: Well, look, I think that that’s the case and the way that I try and explain it to people, so that they can get a sense of that, is I ask them, depending on how old they are, to go back in their own head, back in their own memory of rates of change and you could argue for example that the rate of change during the 1990s was roughly equivalent to the rate of change during the 1970s and 1980s. I would argue really strongly, and almost in every sphere by the way, that the rate of change from 2000 to 2005 was probably equivalent to the rate of change of the whole of the 1990s and so you start to see that half life of change taking place. I have only got to say remember Dougal, it was really an idea in somebody’s garage in 1999 and you get the point.

Di: How could you have predicted? I mean really the techniques that we were using back then how could you have predicted that would have happened, nobody did really.

Mike: That’s right and I think that is the point, that forecasting is about trying to achieve some sort of prediction whereas the technique that I use which is foresight where you try and stand in the future is really about anticipation and that anticipation, if you like, sensitises you I think in a much more holistic way to the weak signals of the future which are already here. There is evidence of all the changes, it is all here now, it is just sometimes our brains get in the way and we don’t see it and unfortunately what forecasting does is it reinforces the patterns of the past, it does not create disruptive thinking perse. Now that’s not entirely true but certainly that is where it starts.

Di: Okay. Well, Mike we have crossed paths a few times over the last 5-6 years now and it always seems to be at conferences, seminars and events that have something to do with change, the future or global trends and you have made quite a name for yourself as someone who can really unpack what global trends really mean to the world of business. I am going to put you on the spot now and I am going to ask you to distil what you think of the top three trends that are most likely to have the greatest impact on business success now as we prepare for the future.

Mike: I think that is interesting. Firstly, thank you very much for such a flattering question. Look, for me I think there are three and each of them in a way is a bundled, I don’t whether they are trends rather than shifts because I think they are discontinuities. A discontinuity is when something does not continue. I think the first one I am going to call economic and energy structural shifts, I think that is the first discontinuity.

Mike: Yep, and I will come back and explain what I mean by that in a moment. The second one I think there is, it is both a trend and a discontinuity, and that is our disconnect and therefore our need to reconnect with the environment. The third one is called the NBIC convergence which is the emergence and deployment of some startlingly different technologies. Nanotechnology over robotics or cognitive technologies, biotech and what we are now calling Web2, Web3 and that kind of thing. NBIC and this particular convergence, in my view, will make the so called digital revolution look like childs play. Many of the technologies that are fundamentally new platforms of science and discovery will fundamentally replace what we do, whereas you could argue that a lot of digital technologies are better ways of what we have already been doing. So it’s quite, and if you think that it is already crazy, there are at least 30-40 nano products in your supermarket right now then you can walk into a supermarket, a robotic supermarket in Japan and you can buy a robot that will serve a glass of wine.

Di: Economic and energy structural shifts.

Di: Why don’t we come back up to the first one, we can explore them each in turn. The first one that you mentioned was the economic and energy structural shifts. Can you explain a little bit more about what you mean there?

Mike: These shifts are what I call near term futures. These are things that I think will happen between now and 2020. Let me take the economic one first. My assessment is in fact that partly driven by the current chaos, but also partly driven by a whole lot of other factors, we are likely to go into a post-consumption society. What that means is that we simply can’t continue to build economies which are based on ever increasing growth of goods and services, it is not mathematically possible, two different statistics to round that out. According to the world bank if the cities of the world double in size by 2030, that’s using 2001 as a base point and we are on track to do so, then they will need the resources of four planets every year to sustain them. Now that’s just not going to happen because we don’t have four planets. The second thing is if China continues to grow in the way that it does and you do the mathematics then their demand for raw materials, and I am talking growth at 6.5% not double digit growth, they will need more oil, cement, steel and other resources just for themselves than the world has ever produced. So, you start to see the fact that there is a mathematical nonsense in our current growth paradigm and I think people are beginning to understand that. It is simply not possible for every organisation, every city to grow so that last years growth is the new bottom line and continue to grow, that’s all kind of us all racing up Everest at the same time and when we get to the top then what happens. So I think that this is a time for large structural shift because it is very easy for me to say this but the economic, the social and human consequences of a society that has to accept a lower level of resource based growth, please note that I am putting the word resource in here every time, I think is very significant. It is a profound transformation. That’s the first part.

The second part that actually links to that and will accelerate this particular shift is that basically we have used up half of the worlds oil but demand is continuing to grow so the gap between supply and demand will continue to accelerate and particularly after 2015 it becomes very acute. Even the Internation Energy Agency last year said that the gap was 6.7%. What that means is that we are going to have to shift from a world that was designed and fundamentally has enjoyed cheap energy particularly for the last 120 odd years and now we move into a world of more expensive energy and that will re-design our cities, it will re-design our organisations because energy is fundamental to the way that we convert resources to do the things that we do.

This is a time I think of profound structural shift and it challenges simple things, how we think about design and make windows for our buildings, how often we change things that we use, whether we can continue to have things which are very highly consumable or whether we need to shift to things that are more durable, there are a lot of challenges in that shift. For me, and I think people are starting to feel that. Smart organisations, I think, are starting to see their current value proposition eroding, they are starting to see it doesn’t quite work and they are starting to say well how do I now re-design and re-think what I do in a way that is more interesting.

Another example, there is a large construction company in Australia that put up a building in Melbourne and it has got every recycled technology that you can think of so it is near to zero carbon footprint, but they put it up with the same capital cost as an ordinary building.

Di: How did they do that?

Mike: Well, they sat down and said we want to put all these technologies in it, we want to bring it in the same capital cost, now how do we design it. Their engineers had to sit down and think about how do you build a building that has all these extra features but actually is now more expensive than the old way of doing things?

Di: The only difference is they are asking different questions.

Mike: That’s right. If we just use that as an example the new value proposition is a building that is nearly zero carbon footprint. The old value proposition was just put the building up as cheaply as you can and comply with standards. That’s the difference.

D.Worrall © 2009