Will we ever see a return to Business as Usual? – Unlocking Foresight Blog from May 2016

In our book “Beyond Crisis”, (Ringland, Sparrow, Lustig, 2010) we suggested that the economic conditions in the period leading up to 2008 were unlikely to return, and drew a figure suggesting how the global economy might evolve after the crash. This picture has been largely accurate since 2008.

Screen Shot 2016-05-26 at 11.06.15

But now there is concern over slow growth globally. China’s growth rate is shrinking and as a recent article in Foreign Affairs points out (https://www.foreignaffairs.com/articles/world/2016-02-15/demographics-stagnation) in every single region of the world, economic growth has failed to return to the rate it averaged before the Great Recession. Economists have come up with a variety of theories for why this recovery has been the weakest in postwar history, including high indebtedness, growing income inequality, and excess caution induced by the original debt crisis. Although each explanation has some merit, experts have largely overlooked what may be the most important factor: the global slowdown in the growth of the labor force.

One way to calculate the world’s potential growth rate is to add the rate at which the labor force is expanding to the rate at which productivity is rising. Since 1960, gains in both factors have contributed equally to potential economic growth. And in the last decade, the gains in both appear to have leveled off. The difference between these two drivers, however, is that there is a debate about whether the decline in productivity growth is real. Productivity measurements have arguably failed to capture savings in money and time generated by new technologies, from super fast Internet connections to artificial intelligence. But it is hard to deny that the growth in the size of the labor force – which is driven mainly by increases in the number of working-age people, those between the ages of 15-64 – has slowed across the world.

In a world with fewer young people, economic growth will be harder to come by. The exception – with large populations of young people – could well be Muslim countries and regions, and Africa. Here, family sizes have remained larger and the working age population continues to increase. This will produce a very different population mix over the next decades, as well as resulting differential growth rates between these regions and those with declining work forces – for instant, East Asia, Europe.

Gill Ringland, Unlocking Foresight Non Executive Director

May 2016

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How trends merge to create disruption

It is important to research emerging trends in order to think through how they might change going into the future.  But if you are looking at how trends might become disruptive, you need to also look at how trends merge.  Here is a short example: Birth of telecommunications

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New Huffington Post Great Work Cultures Blog

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Great Work Cultures Blog: Our World in 2026



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The Implications of Water for the Future…

Water, water, everywhere, and not a drop to drink, or should it be “not a drop to fill the coffers of business?” That is the question looming menacingly over the business horizon.

“Dwindling water supplies are a greater risk to businesses than oil running out, a report for investors has warned” (https://www.theguardian.com/environment/2009/feb/26/water-drought).  So what does this mean for you?

No one foresees the day when this situation will happen, but the way things are, it is a distinct possibility. Water is one of our most critical resources, and Slovenia has deemed it a basic, constitutional need. The impact of water-scarcity is being considered not only in terms of biological needs, but as a harbinger of negative impact on businesses and industry. As of today, we already witness decreases in water allocations and more and more stringent regulations and expenses for water-usage, both of which impact a company’s bottom line.

There are no substitutes for water, and in its greed, the human race has just been squandering away nature’s largesse. We should all now be aware of the stresses imposed by water shortage and their causes: population explosion, climate changes, environmental disregard and hazards, and the unchecked usage of this critical commodity. Businesses that had hitherto been riding waves of success could very well be staring doom in the face if they don’t adapt to the situation.

“The International Food Policy Research Institute (IFPRI) found that 4.8 billion people – more than half the world’s population – and approximately half of global grain production will be at risk due to water stress by 2050 if status quo, business-as-usual behaviour is followed” (http://growingblue.com/water-in-2050/).

Industry and businesses will find it impossible to keep their footing in a scenario of fast-dwindling water resources, which is ironically, a situation partly of their own creating. Among those most at risk are high-tech companies, especially those using huge quantities of water to manufacture silicon chips; electricity suppliers who use vast amounts of water for cooling; and agriculture, which uses 70% of global freshwater, says a study commissioned by the powerful CERES group, whose members have $7tn under management. Other high-risk sectors are beverages, clothing, biotechnology and pharmaceuticals, forest products, and metals and mining. In short, there is no business that doesn’t have a dependency on water and can justly claim immunity from the water-strained future. Neither can any facet of life, for that matter; business, industry, agriculture, development, humanity, are all interlinked hoops, and the entire cycle – our entire world – is water dependent.

Keeping this bleak outlook in mind and the latest buzzword being “blue”, glad tidings are in the offing. The Corporate world is investing in innovative technology that initiates processes for conserving, recycling, and even extracting fresh water from salt water. However, the flip side presents a grim picture. “Water-use efficiency improvements may slow down the growth in water demand but, particularly in irrigated agriculture, such improvements will most likely be offset by increased production, and subsequently more strain on water-resources. Similarly, water storage and transfer infrastructure improve availability, but allow further growth in demand as well. Climate change will probably increase the magnitude and frequency of droughts and floods. The expected increase in climate variability will compound the problem of water scarcity in dry seasons by reducing water availability and increasing demand, the latter owing to higher temperatures and the need to make up for lost precipitation” (http://www.nature.com/nclimate/journal/v4/n5/full/nclimate2214.html).

Water scarcity and the alarming growth of water pollutants will pose a physical risk to business by affecting their operations. Increasing regulation is highly likely to slow down net profitability, and force businesses to either resort to shortcuts or cut down on their water usage. Media also plays havoc, bearing down on companies that collude in water wastage.  Even companies in water-rich areas will be affected because their global networks, social media and the speed of global communication. Almost 22% of water consumption and pollution the world over is linked to the production of export commodities. So how can we truthfully insist that one country is affected while another is not?

Looking at the near future, many companies should be developing response mechanisms, but is it too late? Again, all these efforts might just be in vain if governments don’t back up efficient and clean water usage with effective policy.

If the global future of business is to remain a positive, productive and profitable, it’s time for a rude awakening, for if we don’t do something about water now; there will be no water.  With no water, businesses can’t run. Taking a leaf out of Dow Water and Process Solutions, we need to make every drop count, and commit to putting each drop to the greatest potential use (https://www.greenbiz.com/blog/2014/08/04/10-companies-innovating-water-making-waves-water-innovation). No industry can be an island (excuse the pun), but in the very near future they could be part of a very large wasteland.

This blog was first published on http://www.unlockingforesight.org/blog.


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Podcast on Strategic Foresight

Our CEO, Patricia Lustig, was recently interviewed about developing strategy by Dawna Jones, author of Decision-making for Dummies.

In it they cover:

  • How to develop your foresight muscles,
  • How to scan emerging futures on a regular basis,
  • What happens when you combine emerging trends together,
  • What went wrong with the emergency response plan at the nuclear power plant Fukushima Daiichi and what other companies with emergency response plans can learn,
  • How to work with the unthinkable,
  • Why using foresight strategically gives you the side benefit of seeing patterns so critical for workplace health and decision making accuracy.

Read more at http://insighttoaction.libsyn.com/how-to-avoid-distorting-your-business-strategy-with-patricia-lustig#cbzf0dw00t6FTa62.99

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New blog by our CEO on Huffington Post Great Places to Work Blog

Please see: http://www.huffingtonpost.com/great-work-cultures/five-steps-to-develop-you_b_12732662.html

for our latest article from our CEO Patricia Lustig.

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Guest blog – Board must embrace long-term value creation

Board must embrace long-term value creation

(This article was first published in the ‘Dutch Financial Times’ (Het Financiële Dagblad)

A major shift in the Dutch corporate governance system is on its way. The term ‘long-term value creation’ will play a key role. I expect that this still relatively unfamiliar term will be part of corporate governance vocabulary in a few years time.

I am supported in this assumption by the Dutch Corporate Governance Code Monitoring Committee, which ensures a responsible corporate governance. This spring, the committee has proposed to explicitly include the terms long-term value creation and culture in the code.

The committee wants the new code to apply from 1 January next year. This impetus will help to create a broader view of governance. This is a reaction to the Anglo-Saxon inspired focus on shareholder value, which critics say has strongly contributed to short-term thinking and a culture of greed. In that broader view of governance, subjects such as corporate social responsibility and sustainability should not be treated as some sort of hobby, but should form an integral part of business management. Today I still see many businesses focusing on quarterly results as part of their daily routine. In addition, they help to improve the world by allowing their sustainability departments to study the reduction of CO2 emissions. Those corporate goals will become more and more intertwined with the social goals. The inner world and the outer world will no longer be separated, but will feed each other.

Executive boards and supervisory boards will have to form an opinion about the new code and act accordingly. In this area I identify three distinct categories of directors: the enthusiasts who take it seriously, those who do the minimum required and then return to business as usual, and those who do nothing.

It is, of course, an option to limit yourself to doing the minimum required or even to doing absolutely nothing in the hope of getting away with it. However, I believe that companies who choose to do the latter, will ultimately shoot themselves in the foot. It would be more fruitful to invest and anchor these subjects in a structured way and at the highest level in the organisation. One reason that immediately comes to mind in taking the code seriously, is the increasing pressure from private and institutional investors, clients and ‘society’. There is increasing concern about the short time horizons of companies, about business cultures in which decency and good manners are secondary to making a quick profit, and about paying lip service but not practising corporate social responsibility. Those who take a reactive approach to this in an attempt to prevent activists from disrupting shareholders’ meetings and prevent clients from expressing their concerns on social media, run the repeated risk of having new activists and clients emerging and launching attacks on new points time and again. This does not offer a structured solution. There is a much more positive reason for taking the code seriously. Those who do not occupy themselves with long-term value creation will harm their own competitive position. One only has to look at the devastating effects that too strong a focus on the short-term results has had on Volkswagen and on the companies that appeared in the Panama Papers. I am convinced that bearing social importance in mind will also ultimately serve one’s self-interest.

Too strong a focus on the sort-term had a devastating effect on Volkswagen and the companies who appeared in the Panama Papers

Understanding can also emerge – and I see this happening more often – gradually and collectively. A precondition, however, is that the topic is discussed in a structured way. An essential aid is to look at long-term value creation structurally from the outside inwards. Not only will this create sympathy for the surroundings of the organisation, it will also widen the strategic horizon of the board.

Finally, the tone at the top largely determines the culture and the behaviour within the organisation. It is up to the board to bring the themes of the revised corporate governance code to life. They are the ones who determine whether the concept of long-term value creation will thrive or not.

The code does not, rightly, prescribe the values and standards a board should promote, and gives little substantive direction to the long-term value creation theme. Organisations will have to give their own appropriate interpretation, preferably in the form of an integrated vision. There is no ‘one size fits all’ solution. It is encouraging that the starting point of the journey to long- term value creation is close by, namely in the form of the executive board and the supervisory board of the company itself.

Currently, it is not necessary for them to have the answers to all the questions that arise in this area, or for them to have a crystallised vision: their willingness is sufficient. All ‘best practices’ in this area were born from the understanding (and the will) at the top that things needed to be done differently. It really does not have to just come from a charismatic leader who makes radical changes.
This article was first published in the ‘Dutch Financial Times’ (Het Financiële Dagblad)
Ron Soonieus is Managing Partner at Camunico and Executive Fellow at Insead.

Ron can be reached at: Camunico, Amsterdam +31202010140

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Patricia Lustig on The Future of Work

40 Futurists: Your Child’s Success in Tomorrow’s World of Work (1)

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Sowing the Seeds of Hope

Today, we are clearly in a place of great uncertainty. Although this is often the case, since Brexit, it is suddenly very apparent to everyone that no one knows what is going to happen next. There are, however, things that you, as a leader, can do to manage the uncertainty and to help identify what you can and can’t control going forward. There is one thing that is clear to me, hope – and a vision of a positive future – is needed. And this is the responsibility of everyone in a leadership role (even if you are leading only yourself).

Managing uncertainty is something that we all do, although most of the time, we are unaware of it.  For instance, you take a train and will usually consider what to do if there are delays – you create a plan B.  In business, you consider all angles of what is facing you, by constructing a set of potential futures based upon trends that you see emerging.  You explore how things might play out, and then you make plans (A, B, and C) for the different possible futures which may unfold. You then implement those plans; foresight won’t help you without action.

From that range of potential, plausible futures that you identify, find a preferred future, the one you like best and where you see the biggest advantages. You figure out what you can influence to make that future unfold (as opposed to any other).  Sharing this preferred future and what needs doing to get there is what leaders do when sharing a vision.

From reading the press and social media streams, there hasn’t been much of a positive future vision shared (if any) regarding Brexit, both before and after the referendum. Perhaps now is the time to start exploring different potential futures going forward – even if only in the short term – and choosing (and sharing widely) one that gives you and your team the most hope.

Strategic foresight is not about prediction; it is about exploring a range of different futures so that you are prepared when any one of them unfolds. By doing the preparation work and strengthening your foresight muscles, you are prepared to act quickly and proactively when you notice a different future emerging, to the one that you have already considered unfolding. You can meet the future with an existing, well thought through plan; a positive vision and hope.

Although this may well sound like a big investment which has you envisioning a full blown scenario planning exercise, it can be much easier and quicker than you think. While it will take reflection time, there are many tools to help you get started that needn’t take as much time and will enable you to identify a preferred future and start building hope. We have many tools that can help you, from those that explore the impact of a particular trend to some that enable you to look across several timelines (short, medium and long term) from today and extrapolate what could happen.

Let’s together work towards a positive future and allow us to help you sow and grow some hope.


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Article in BL Magazine about Strategic Foresight & Patricia Lustig


Dr. Liz Alexander has written an article in BL Magazine about Strategic Foresight which mentions our CEO and her recent book.   See: BLMagazine_strategicforesight or see the journal online – article is on page 42.  https://issuu.com/businesslife.co/docs/bl43_final



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