Megatrends and How to Survive Them #11 The Next Technology Revolution

Megatrends and How to Survive Them is the title of our book that is published by Cambridge Scholars Publishing. This is one of a series of blogs based on the work we have done for the book.  This blog is about The Next Technology Revolution.  This revolution covers advances in robotics, Artificial Intelligence (A.I.) and machine learning, advanced materials, biotechnology and genomics.  Biotechnology and genomics are covered in the next blog in this series.  We chose to focus on A.I. below because of the wide impact it will have across all organisations within our timeframe.

A.I. is embedded in many systems to solve business problems, from robotics and autonomous vehicles to 3D/4D printing and machine learning.  It links into Big Data (the analysis of Big Data uses A.I.).

This trend has strong links with Connected World, of course, and it impacts Social Structure and Economic Activity as one of the drivers of change in society and the economy.  Shifts in population – ages and densities – will have impacts on what kinds of A.I. need to be developed. Migration and Urbanisation will lead to smart cities with needs for different kinds of A.I. as well.  Both of these will impact what is developed and likely, in what order.

 Through the development of A.I. what was once science fiction is fast becoming reality.  The Qualcomm sponsored Tricorder XPRIZE was won last year (see the link below).  A.I. will transform all aspects of our lives, from wars, crime and justice to our jobs, society and social structures.  It will transform what it means to be human.  A.I. is seen as “the new oil” because of its potential contribution to the world economy.

The evidence today is that the centre of gravity for A.I. research is shifting away from North America to China.  At a recent annual meeting of the Association for the Advancement of A.I., which has been setting the standard since 1980, China submitted more papers than the USA and only three less were accepted.  The figure tracks the patents in A.I. across major patent agencies, as shown in the Figure below.

AI patents

The use of A.I. in decision making – whether in embedded systems or in explicit decision-making tools for managers or front-line workers – can raise concerns in the global North about potential biases and assumptions which are built in, intentionally or not.  Machine learning is very exposed to algorithmic bias, where the data used can reflect the implicit values (and unconscious biases) of the humans involved in the data collection, selection or use.  It has been seen to have an impact on search engine results, social media platforms, privacy and racial profiling (see link on ethics below).

As A.I. becomes smarter than we are and becomes autonomous, it may not make the same decisions that we would, and we may not be able to figure out why it made the decision it did.    AlphaGo made a move no one could explain while beating the world champion.  What might the implications be for this?

There are many areas of A.I. that will touch us by 2032.  Some examples are:

  • Many jobs will use A.I. assistance in some form. Already it is being used in surgery and in law.
  • Pharmacies (and warehouses) can use robots to pick and pack medicines or stock.
  • Cleaning and personal care is likely to be widely undertaken by robots and there is already a British Standard covering their use. As populations in some countries fall, there is likely to be an unfulfilled need for care which robots can take over.  This is already beginning in Japan.

Just as in any product or services, those that incorporate A.I. will go wrong on occasion, requiring specialist diagnostic tools and staff trained to do the diagnosis.

The impact on consumers and providers is likely to be high.  As purchasing decisions are delegated to A.I. (e.g. food ordering from smart refrigerators, algorithms predicting which brands you will want to buy etc.), the way that companies reach their customers and engage with them will be transformed.  Brands will be compelled to compete against each other electronically, but even within this space, these systems could reflect developers’ biases or completely block out brands that actually meet the consumer’s criteria.  It will make it very difficult for companies to engage directly with their customers.  Smart assistants and connected devices could even be influenced by sponsors who fund the applications, either openly (for the consumer) or not.

These are just some of the issues that may arise, and, in this blog we haven’t looked at the ethics and decisions that will need to be made before we get this far; you will find more about that in the book.

Some questions that might be useful for you to explore:

  • How might A.I. disrupt your business model?
  • How will A.I. affect the skills of the people you will need?
  • How will your customers relate to you if all services are automated?
  • How will you deal with product or service failure due to A.I.?
  • How might products and services supplied on a subscription model present new quality and safety challenges, as costs of failure will fall more on the supplier?

Some interesting articles in this area:

Building a real-life tricorder, a la Star Trek:

https://www.zdnet.com/article/building-the-tricorder-the-race-to-create-a-real-life-star-trek-medical-scanner/

1/3 of Americans would prefer a robot to a human boss:

https://singularityhub.com/2017/01/09/one-third-of-americans-prefer-a-software-robot-over-a-human-boss/

How ethics needs to come before the design and development of A.I.

https://sloanreview.mit.edu/article/ethics-should-proceed-action-in-machine-intelligence/

With thanks to David Smith for his thoughts on a number of these aspects of A.I. – we live in interesting times!

Authors: Patricia Lustig, MD LASA Insight and Gill Ringland, SAMI Emeritus Fellow and Director, Ethical Reading.

 

Posted in Emerging Trends, Foresight, thought pieces | Tagged , , , , , | Comments Off on Megatrends and How to Survive Them #11 The Next Technology Revolution

Megatrends and How to Survive Them #10 Connected World

Megatrends and How to Survive Them is the title of our book published by Cambridge Scholars Publishing and available on Amazon.

This is one of a series of blogs based on the work we have done for the book. We chose Connected World as a topic for discussion because over the next decade the Internet of Things (IoT) will  become ubiquitous, and many industries will be re-shaped. International platforms will offer economies of scale, be everywhere and underpin globalisation of the private sector. Big Data, whether relating to individuals, money or IoT, will be the subject of three-way power struggles over ownership of data. We discuss all of these in the book, and in this blog we raise the question of systems design for the connected world.

A recent conference on the Connected World had streams on a number of applications – Connected Homes, Smart Cities, Internet of Things, Smart Buildings, Utilities, Smart Cars. It had streams on technologies – 5G, Blockchain, Artificial/Augmented intelligence, Virtual and Augmented Reality. It had a stream on insurance and another on cyber security.

Taking these in turn, what could prevent the applications delivering on their promise? Three challenges that we can see, are not widely discussed. The first is the design and verification of embedded devices. These need to have fail-safe characteristics so that if, for instance, power is lost, they are able to close down safely. These disciplines have been applied in process control systems but may be lost in the transition to consumer applications. The second is the overall system design – a nightmare as smart cities evolve, with diverse networks added over time. Is there a school of computing tackling this? Third is “user error”. As populations age and their visual acuity reduces and response times increase, systems designed and tested by young men may have many users who do not understand the implicit rules and use the system in ways not anticipated by the designers. And as migration continues, increasing number of users will be unfamiliar with the systems and the language in which they are asked to navigate them.

The discussions around autonomous cars highlight another concern – the switch from people control to system control and back. As autonomous cars become more prevalent, how do we transition from person in control with assistance, to total computer control? The intermediate stage, with the computer in control until it asks for help from the human, does not sound wise.

All of the technologies are likely to continue to be developed, led by consumer markets in Asia. This will raise concerns in the West about potential hidden spy features.

The last two, insurance and cyber security, raise in a more pointed form the issues which lurk beneath the success of the technologies and the applications to fulfil their potential: viz, the use of big data and the resilience and stability of these connected systems.

The use of big data as a tool for calculating insurance risk starts to raise the question of what is insurance for? If it is for sharing risk, how is this compatible with using big data to set premiums by post code – with big data on weather and crime; age and lifestyle – with big data on health outcomes; on personal genetics – with big data on genetic markers?

Cloud computing arrangements are becoming increasingly popular as organisations are attracted to the potential cost savings and enhanced flexibility that cloud computing services can offer. One of the most critical concerns of cloud computing is data security. Large scale scandals over breaches of security of cloud computing services could slow but not halt the use of ICT platforms.

Cyber-crime has a wider reach than just finance, as recent hacks into online services, health services and national security agencies have shown. However, most headlines are on crime relating to money, and here a recent survey by Kroll of 540 senior executives found that the majority of perpetrators of cyber-crimes were random criminals, ex-employees, competitors and employees. Less frequent were attacks by political activists, nation states or terrorists. However, these less frequent perpetrators may be the main threat for the IoT and for fraud relating to data. For instance, a hacker shutting a city down could lead to demands from citizens to go “off grid”.

Tackling cyber-crime when it crosses national boundaries is made more difficult in a Multi-polar World. Differing regulatory structures may lead to “Panama Papers” – databases outside any recognised regime and exposing individuals’ data to the world.

Questions for leaders:

  • What impact will a fully monitored environment have?
  • Cyber-attacks must be anticipated – what are your main sources of threat? What are your business continuity plans?
  • What is the role of personal data in your organisation?
  • How are you planning to scope out new types of competition?
  • The Connected Worldallows for remote control – what effect might this have?

We live in exciting times!

https://connectedworldsummit.net/

https://www.techopedia.com/definition/29059/data-ownership

http://www.datagovernance.com/assigning-data-ownership/

Authors: Patricia Lustig, MD LASA Insight and Gill Ringland, SAMI Emeritus Fellow and Director, Ethical Reading.

Posted in Emerging Trends, Foresight, thought pieces | Tagged , , , , , , , , , , | Comments Off on Megatrends and How to Survive Them #10 Connected World

Megatrends and How to Survive Them #9 Transforming Energy

Megatrends and How to Survive Them is the title of our book that is published by Cambridge Scholars Publishing. This is one of a series of blogs based on the work we have done for the book.  This blog is about Transforming Energy, which focuses on both the way it is used (and how much) and where the energy comes from.  None of the trends that we discuss operate on their own – they are all part of a larger system.  This trend, in particular, impacts (and is impacted by) several megatrends:  Mobility and Economic Activity (as well as Population) impact the demand for electricity, Global Limits and Multi-polar Worldview are impacted by the shifts in where energy comes from.

There are major transformations underway in the global energy sector.  Where we get our energy from is changing, becoming diversified, with renewable energy becoming a much larger part of the mix.  This pushes decentralisation which in turn will force the business models in the sector to transform.

The use of renewable energy will increase as the costs for its production come down.  This leads to the cost of electricity, rather than the price of oil, becoming the key measure of energy costs.

As increasing numbers of people become middle class (using Hans Rosling’s four levels, levels 3 and 4, numbering roughly 3 billion people), the demand for energy rises.  Not just in order to produce and transport the goods that people aspire to buy, but also to allow them to exercise their choice to travel. This means that the demand for transport (of goods and people) rises from where we are today.

Changes in the pattern of where energy is sourced (and what energy is sourced) will undoubtedly affect global politics and Multi-polar Worldview.

Diversification of energy mix

The mix of fuels used to supply electricity is becoming decarbonised as it diversifies.  Coal powered electricity plants are being taken off line in the OECD and China is slowing growth of coal powered plants.  Nuclear power is in decline in most countries due to costs of production and safety issues, as well as aging plants nearing the end of their life.

Electricity production from natural gas is projected (in the figure below) to reduce very slightly out to 2040.  Coal powered plants are being replaced by wind and solar energy: these sources are not always available and currently the ability to store electricity is limited.

Demand for energy

Demand keeps rising as we find more ways to use energy.  While the requirement of liquid fuel for use in each internal combustion engine is decreasing (as engines become more efficient and there is a shift to other types of engine), the number of devices is increasing. The number of vehicles will increase as more and more people wish to travel and as more goods are required by increasing numbers of middle class. This will keep the demand for liquid fuel at about the same level as it is now.

There will also be increased demand from the Internet of Things (Connected World) and The Next Technology Revolution.   Overall this means that the demand for energy will increase, perhaps substantially.

energy

If we continue to diversify our energy sources, a new model will emerge to utilise these diverse sources and it is likely to contribute to a re-distribution of the current economic/political power among countries.  As we said in the blog on Multi-polar Worldview, power follows the money.  It may cause an economic downturn in areas that export oil.  It may cause variations in pricing due to the intermittent nature of renewables.  It paves the way for disruptive technology and new business models

Some questions that might be useful for you to explore:

  • How will your business model need to change if the energy distribution model or pricing changes?
  • Will you produce your own energy and/or buy it in?
  • How will your products need to change to take advantage of the transformation of energy?
  • What opportunities might the distributed energy production model offer you in community engagement?

Some interesting articles in this area:

Energy mix in Europe to 2040 (source of figure above):

https://sg-mktg.com/MTU0MzIwODU0NXxKMktyZmo4ZDZyM096TTBRcDlRVzBzV3JGOUtKMGExSFVWOUI5WTdnYmEtNGFKM0hwZ0JhdkFwNW1tUnA2eFREeS04YXBjMFk2VEtzajNERXFjYkNodWhQY3U3WHlkVlowVWhTTXZLVi11YTRSc3YyM3NuOFNrQXFaS1NucTVYMWlhREFQbGdtZGpGQnl6di1icktvWkVfd3JVbDlxZTlBTVRhUUQ0ZXRKWTRGXy11RjFic0NqMUtiOEdaYTkxbDhnMXlGUzVSMjl3NDdNZjNRajhKcEFSdWVIRkNxNkc1OWJPaklEV1lTWTJmQ0V2OExFTHcyV20wdHpLdjBTNDlaUGRzVXluUm5IaTBhUm5yMXhzYmozcUI4WVE9PXxf6GdqQ29W-v2ahqmmtzPdyJWUq4YsoDVonaHal1XFRw==

New way to store energy:

https://www.sciencealert.com/scientists-develop-liquid-that-sucks-up-sun-s-energy

Outlook for self-generation of electricity:

http://futurepresent.economist.com/infographic-the-outlook-for-self-generation/

Nuclear energy statistics around the world:

https://www.statista.com/statistics/268154/number-of-planned-nuclear-reactors-in-various-countries/

We live in interesting times!

Authors: Patricia Lustig, MD LASA Insight and Gill Ringland, SAMI Emeritus Fellow and Director, Ethical Reading.

 

Posted in Emerging Trends, Foresight, thought pieces | Tagged , , , , , | Comments Off on Megatrends and How to Survive Them #9 Transforming Energy

Megatrends and How to Survive Them #8 Mobility

Megatrends and How to Survive Them is the title of our book published by Cambridge Scholars Publishing and available on Amazon.

This is one of a series of blogs based on the work we have done for the book. We chose Mobility as a topic for discussion because people have always travelled over land and sea, later through the air and into space. Mobility of people and freight looks likely to continue to increase though the next decades, with major growth in air travel and passenger vehicles in Asia. Freight and goods transport may increase less due to localised manufacturing and changes in supply chains and trade wars.

The focus of this blog is automated (driverless) vehicles.

On land, freight traffic and trains will adopt autonomous vehicles before their wide use in passenger cars, and there are already many systems in operation. Some examples are:

  • In Singapore, there is a shortage of truck drivers and an ongoing requirement to transport containers between ports. This is being tackled with “platoons” of four trucks with a single shared driver, on public roads, in a three-year pilot from 2017. The approach is designed to build up public trust.
  • From Perth, engineers manage autonomous trucks and trains connected with robotic drilling systems across Western Australia under the Rio Tinto Mine of the Future programme.
  • The first fully automated driverless mass-transit rail network is the Port Island Line in Kobe, Japan. The second in the world (and the first such driverless system in Europe) is the Lille Metro in northern France. The Barcelona Metro line 9 and Copenhagen Metro use trains capable of operating automatically at all times, including door closing, obstacle detection and emergency situations.

Air traffic globally is expected to increase at a rate which will depend on regulations and trade protectionism. The increase will be mostly in Asia, with internal traffic in China due to quadruple and in India to increase five-fold.

Not counted in the air traffic data is traffic from drones which are currently in use for instance in:

  • Agriculture and land management, to look for signs of disease, examine crops or apply chemicals.
  • Law and order – monitoring, and search and rescue after incidents.
  • Smuggling drugs across borders.
  • Atmospheric monitoring to improve weather forecasts.
  • Tracking wildlife and combating poachers.
  • Taking wedding photos from the air!
  • Delivery of parcels by Amazonand others.

So, for leaders, the questions to ask themselves and their organisations could include:

  • How will autonomous vehicles affect your supply chain? If the delivery of supplies to your premises is by autonomous vehicles, how will your goods inward people handle problems?
  • How can you keep contact and build the relationship with your customers if delivery to them is via automated vehicles?

We live in exciting times!

https://indvstrvs.com/singapore-autonomous-vehicle/

http://www.riotinto.com/australia/pilbara/mine-of-the-future-9603.aspx

http://blog.novel.engineering/driverless-trains

Authors: Patricia Lustig,  MD LASA Insight and Gill Ringland, Director, Ethical Reading.

Posted in thought pieces | Comments Off on Megatrends and How to Survive Them #8 Mobility

Megatrends and How to Survive Them #7 Global Limits

Megatrends and How to Survive Them is the title of our book that is published by Cambridge Scholars Publishing. This is one of a series of blogs based on the work we have done for the book.

As increasing numbers of people become middle class (using Hans Rosling’s four levels, levels 3 and 4 the number is roughly 3 billion people), their wants and desires require ever more resources.  They have seen what others have (in mature economies in the global North) and they want some of it too.

The current world population and the life styles of most of us are stressing the global natural systems with unknown results.  There are three main areas where our impact on the global environment is causing problems: climate change, environmental degradation and resource shortages.

Climate change is leading to more and more extreme weather events.  It leads to higher sea levels as glaciers and polar ice melt.  Droughts and heatwaves create water shortages.  Desalination of the Atlantic as the polar ice melts will have unpredictable effects on the Gulf Stream that warms northern Europe.

Environmental degradation has – in some areas – passed the point of no return.  Johan Rockstrom suggests that we have gone beyond restorable limits on biodiversity, chemical pollutants (e.g. on crop land) and deforestation.

Finally, some resources that we have up until this point in time taken for granted that they are available in sufficient quantities, are becoming scarce.  You only have to remember the issues experienced by Cape Town in April of this year where an ongoing drought made the headlines and water was rationed.   Some minerals are also becoming scarce and we have known for some time of the scarcity of the rare earth elements some of which are needed for the manufacture of our ubiquitous smart phones and high-tech gadgets.

Increasing numbers of people in China and elsewhere are starting to eat more like the average American – that is, they want to eat more meat and to have a more varied diet.  China is scouring the planet in an attempt to fulfil its people’s desires.

We think it very likely that by 2032 many major cities around the world will experience more flooding which will have a knock-on effect to our increasingly urbanised world.  It won’t just be river flooding, but also rising sea levels and sea surges due to increasingly volatile weather for many coastal cities around the world.  Social systems may become stressed as urban populations swell and as the size and frequency of emergencies and disasters increases.

Unless air pollution is quickly tackled – as China realises – many more deaths will occur.  As it is, even today, living in urban areas with air pollution contributes to decreases in longevity.  It is much harder to tackle sea pollution, both visible and invisible, which requires international coordination and regulation which may well be hindered by the multi-polar world order we are approaching.  We don’t even (yet) know all the consequences of this.

It is likely that much more thought will be given to our use of resources.  As more people are able to afford more – and more varied – food, it is likely that countries and regions will take a more active planning stance in order to attempt to meet demand.

The drive to design for re-use and recycling is getting stronger and as resources become scarcer, this will be imperative.  We are likely to see innovation not just in design and recycling but also in waste management as the need for it becomes undeniable.

This may lead to devolving responsibility to people and organisations so that they manage their resource usage and waste locally.

Some questions that might be useful for you to explore:

  • How resilient are your supply chains to resource scarcity and unstable weather conditions?
  • How might flooding put your organisation at risk?
  • How might you need to innovate to better design for re-use and waste management?

Some interesting articles in this area:

Johan Rockstrom: https://www.ted.com/talks/johan_rockstrom_let_the_environment_guide_our_development

https://www.bloomberg.com/news/articles/2018-01-11/china-is-winning-its-war-on-air-pollution-at-least-in-beijing.

http://thealt.com/2017/03/20/bee-pocalypse-drastic-declines-bee-diversity-threaten-food-supplies-locally-globally/

http://news.trust.org/item/20180131175029-qezh7/

We live in interesting times!

 

By Patricia Lustig,  MD LASA Insight and Gill Ringland, SAMI Emeritus Fellow and Director, Ethical Reading.

Posted in thought pieces | Comments Off on Megatrends and How to Survive Them #7 Global Limits

Megatrends and How to Survive them #6 Multi-polar Worldview

Megatrends and How to Survive Them is the title of our book that is due to be published on November 1st by Cambridge Scholars Publishing.

This is one of a series of blogs based on the work we have done for the book.  In it, the seventh Megatrend we explore is Multi-Polar Worldview.  We chose this trend because the centre of gravity of global power and influence, both political and economic, is shifting from the North and West to countries in the East and South (often referred to as the Global South).

We are seeing the end of the post 1945 global consensus, moving from a USA-led world to a multi-polar worldview.  It is not yet clear which nations, if any, will emerge as the primary influencer(s) in this multi-polar world.  Of course, different worldviews will change not only the way that decisions are made, but potentially the range of decisions themselves.  And a breadth of different worldviews will contribute to creativity and innovation.

multi-polar worldview

Politics follows economics.  Follow the money to find the power.  This graph shows the amazing change in global share of GDP from 2004 (the aqua bars) to 2014 (the dark blue bars).  The shift is from Japan, North American and the EU28 (the bottom three) to the rest of the world, the other G20 and China as the top three.  Together with this shift in share of global GDP we are seeing increasing political strength of the world outside of Japan, North America and Europe, leading to a world no longer dominated by them, but now – and increasingly so – a multi-polar world.

China has replaced the USA as the driver of global change.  On purchasing-power-parity (PPP) its economy became the world’s largest in 2013; its GDP per person at PPP has risen tenfold since 1990, much faster than any other developing economy.  Two thirds of the world’s decline in poverty since 1990 has taken place.  At the same time, China is also responsible for half of the total increase in patent applications since 1990.

We think it is very likely that by 2032 the world order will be a dynamic and complex form of multi-polarity with no one country or region dominant.  It could be that three or four of the world’s five largest economies are in Asia: China, India and Japan with the potential that Indonesia occupies the fifth place.

Different nations have different visions of what a common world should look like.  Different nations have different views of what is ethical behaviour and what not.  The coming years are likely to force diverse visions of political order to be intermixed and exist together.  We only have to think about how differently different countries view ‘free and fair trade’ to get an idea of what this could look like.

While this may be difficult and even a source of trepidation for many people, we think there are great possibilities for organisations and businesses because greater diversity unleashes greater creativity and innovation.  It gives us the opportunity (if we recognise it) to create new relationships, businesses, markets and models of interaction across the world.  Not to mention to learn more about others and how they think differently

Some relevant articles:

https://www.economist.com/graphic-detail/2018/10/27/the-chinese-century-is-well-under-way

https://www.economist.com/leaders/2018/03/01/how-the-west-got-china-wrong

https://www.axios.com/chinas-takeover-as-the-world-top-exporter-180c8514-b38d-4388-b126-b40912720fca.html

https://www.theguardian.com/world/2017/jul/14/globalisation-the-rise-and-fall-of-an-idea-that-swept-the-world

Some questions you might consider:

  • How does someone from a meritocracy deal with authoritarian, hierarchical rule?
  • How do you adapt your business model to work across different cultures efficiently and effectively?
  • How do you relate to the people you work with respectfully and effectively across diverse cultures?
  • Do your networks reflect the cultural diversity of the multi-polar world?

We live in interesting times!

By Patricia Lustig, LASA Insight and Gill Ringland, Director, Ethical Reading and SAMI Emeritus Fellow
.

Posted in strategy, thought leadership, thought pieces | Tagged , , , , , , | Comments Off on Megatrends and How to Survive them #6 Multi-polar Worldview

New Blog Post on Long Finance Blog “Pamphleteers”

We’ve just had a blog published by Long Finance.  It is about why economic models no longer work (if they ever did) and how choice affects this: https://www.longfinance.net/news/pamphleteers/power-choice-and-economic-models/ #economicmodels #economicchoice

Posted in thought pieces | Comments Off on New Blog Post on Long Finance Blog “Pamphleteers”

Megatrends and How to Survive Them: #5 Economic Activity

Authors: Patricia Lustig, MD LASA Insight, and Gill Ringland, SAMI Emeritus Fellow and Director, Ethical Reading.

Megatrends and How to Survive Them is the title of our book published by Cambridge Scholars Publishing and available on Amazon.

This is one of a series of blogs based on the work we have done for the book. We chose Economic Activity as a topic for discussion because the structure of much economic thinking is being challenged by the megatrends.

The economic megatrends are that economic growth will continue and the average GDPs of countries and regions will tend to converge. Growing returns to capital at the expense of labour means that multi-nationals will increasingly impact local economies, and that there will be growing inequality within countries.

The impact on economic thinking comes from (at least) three directions.

First, economist and social scientist Kenneth Boulding made the point that “The classical economic taxonomy of the factors of production into land, labour and capital is too heterogeneous to be useful; know-how, energy and materials are a much more useful taxonomy in understanding productive processes.”

Over the past decades, each of these has seen a substitution: of non-human for human sources of energy, automated control systems for humans as a source of process control, and the embodiment of knowledge and know-how in process plant, and equipment for knowledge and know-how embodied in production labour.

There has been a persistent trend to use mechanical energy from non-human sources in place of mechanical energy from human and animal sources. This substitution is approaching completion.

Second, almost every production process requires process control. Increasingly automated control systems are displacing humans as a source of process control, for example driverless vehicles. This substitution will continue to play out over the next few decades.

Over the next decade, almost every production process is informed by knowledge and know-how. Originally, the humans who did the work and provided process control, also provided the knowledge and know-how needed for production. Increasingly, the knowledge and know-how are embodied in the plant and equipment. The generation of knowledge and know-how is highly specialised and is easily replicated. This is the domain of the Connected World megatrend.

Together these substitutions, as they work out, have profound implications for human societies. As humans play a smaller and smaller role in production, payments for labour will not be adequate to be the main means for accessing the goods and services that can be produced. And, most of the value created in production will accrue to the owners of the process. They are then able to buy more, that, in turn, generates even more income. The result is that we are witnessing increasing concentrations of wealth globally. While the expansion of the middle classes in Asia is a dominant force for change in our timescale, the underlying structural factors mean that inequality of wealth and the nature and role of work represents an ongoing challenge for society and economic policy.

Doughnut graphic

Third, in Doughnut Economics, Kate Raworth reminds us that economic growth was not at first, intended to signify wellbeing. Simon Kuznets, who standardised the measurement of growth, warned: “The welfare of a nation can scarcely be inferred from a measure of national income.” While economics in the 20th century took as its dominant model “rational economic man”, she argues that the aim of economic activity should be economies that “make us thrive…”

The central image in mainstream economics is the circular flow diagram. It depicts a closed flow of income cycling between households, businesses, banks, government and trade, operating in a social and ecological vacuum. Energy, materials, the natural world, human society, power, and the wealth we hold in common … all are missing from the current economic model. Unpaid work is ignored, though no economy could function without it. Like “rational economic man”, this representation of economic activity bears little relationship to reality.

Raworth embeds the economy in the Earth’s systems and in society, including the flow of materials and energy. She also includes people as more than just workers, consumers and owners of capital. The resulting doughnut model consists of two rings. The inner ring of the doughnut represents a sufficiency of the resources we need to lead a good life: food, clean water, housing, sanitation, energy, education, healthcare, good government. Anyone living in the hole in the middle of the doughnut is in a state of deprivation. A billion people live in the hole in the middle (Level 1 on Hans Rosling’s categorisation in his book Factfulness).

The nature of the outer boundary is more fluid. We have breached the outer boundary in several places by using up resources faster than they can be replenished by the ecosystem. There is evidence to suggest that prosperous societies become more environmentally aware and better at protecting it, and that technology is finding ways to avoid the zero-sum game, e.g. renewable energy, biotech, and nanotech as an aid to recycling etc. As the population continues to increase and push up against resource limits, the world may need this type of integrative framework within which to set conventional growth measures and to add new economic measures.

For instance, some models start to build in the factor that many people now have choices and may not be driven by economic/financial factors in making decisions. This is a major challenge to many existing economic models. As people become wealthier, they may choose to spend their time in different ways, on no cost experiences, rather than driving for more wealth or accumulating more goods.

So, for leaders, the questions to ask themselves and their organisations could be:

  • How does growing inequality of wealth affect your organisation, supply chain and customers?
  • Do you assume that rational economic man is the dominant model? Have you tested this with people in your organisation and outside?

We are very grateful to Dr Robert Hoffman and Willem Londeman for their significant inputs to this blog.

We live in exciting times!

 

Posted in Emerging Trends, Foresight, Leadership, strategy, thought leadership, thought pieces | Tagged , , , , , , , , | Comments Off on Megatrends and How to Survive Them: #5 Economic Activity

Megatrends and How to Survive Them: #4 Social Structures

 Megatrends and How to Survive Them is the title of our book published by Cambridge Scholars Publishing this month.

This is one of a series of blogs based on the work we have done for the book.

We chose Social Structures as a megatrend as we believe the changes in society are deep and long lasting – a new paradigm will emerge:

  • Until relatively recently family structures were typically wide and extended, with a number of children and few surviving grandparents and perhaps aunts and uncles. Now, globally, as marriage becomes less the norm, as women have fewer children, as people live longer, family units may well consist of one child, one parent, grandparents, and several great grandparents.
  • As migration and urbanisation become the norm, new social structures replace those that have been in place for centuries – family members may be geographically remote, employment and work may be more transient, as may neighbours and community.

In addition to the trends of reduction in the number of children per woman, and the decrease in marriage, the increase in longevity is starting to cause stresses in society. This could cause shifts in attitudes to work in later life and the definition of social contribution to society.

Some implications of the new family structures are:

  • Single parent families will need more flexible working arrangements such as job shares and allowance for absence due to lack of backup.
  • More work for those “of pensionable age”.
  • As is found in China, one child families can result in people who find it difficult to be part of a group.
  • Flexible working arrangements, and adapting to new family structures, may cause re-assignment of work and work locations.
  • More allowance will need to be made for absence and presenteeism (present physically, but not mentally) due to illnesses both physical and mental.

The effect of these and other changes is reflected in the GINI index. The GINI index for a society is 100 if one person has all the wealth and the rest none, and it is 0 if everyone has equal wealth, so it is a measure of the gap between the rich and the poor.

GINI slide

What this shows is that since 1820, which was roughly the start of the industrial revolution, inequality between countries has shot up.  This is because the industrialised countries got rich and other countries didn’t.  This gap has started to reduce as more countries industrialise.

Historically within many countries there was high inequality. Industrialisation reduced this, with the post World War II period being one of relative equality in most countries. But inequality within countries is increasing again. All the trends that we can see suggest that the directions of travel of both these graphs will continue: inequality between countries is reducing, and within countries increasing.

Inequality within countries – both real and perceived – is likely to continue and lead to civic unrest and increasing regional conflicts. This sense of inequality is fed by a number of factors:

  • Increasing technological change (A.I., robots, etc.) alongside continued globalisation,
  • Decline in labour market protection,
  • Tax policies that benefit the wealthy.

Popular attention is likely to focus on unfair practices such as tax evasion and corruption.

Since health and social problems are worse in more unequal countries, the self-interest of organisations in improving low pay and working conditions would seem obvious. Not only would this benefit those less well-off but also those with more wealth.

Some questions you might like to consider, looking forward:

  • Thinking about the new social structures, how might your strategy and business model need to change in order to continue to be successful?
  • Who do you think you will be selling to, and what are networks and social structures?
  • How might your product/service offering need to change?

We live in interesting times!

Authors: Patricia Lustig, MD LASA Insight and Gill Ringland, SAMI Emeritus Fellow and Director, Ethical Reading.

 

Posted in Emerging Trends, Leadership, strategy, thought leadership, thought pieces | Tagged , , , , , , , , , | Comments Off on Megatrends and How to Survive Them: #4 Social Structures

Megatrends and How to Survive Them: #3 Migration and Urbanisation

Authors: Patricia Lustig, MD LASA Insight and SAMI Associate and Gill Ringland, SAMI Emeritus Fellow and Director, Ethical Reading.

Megatrends and How to Survive Them is the title of our book that is due to be published on November 1st, by Cambridge Scholars Publishing.

This is one of a series of blogs based on the work we have done for the book.  In it, the third Megatrend we explore is Migration and Urbanisation.  We chose this because we now have more people living in urban areas than live in rural areas for the first time in history.

People migrate either because they are fleeing bad situations (the minority of migrants) or because they are aware there is a better life somewhere else and they choose to move to find it.  About one percent of the world’s population is “an asylum seeker, internally displaced or a refugee”. However, as more people become middle class (see our blog on the first Megatrend, Population), they have the ability to make a choice about where they live.  Most of you reading this are probably migrants: if you no longer live near where you were born, you, too, are a migrant.  More than one in ten of us is a migrant, many from rural to urban areas within a country, or to another country.

In the 1950s the world population was around 2 billion and more than two thirds of people lived in rural areas.  Today it is more than three times that and more people (roughly 4 billion of 7.6 billion) live in urban areas than rural.

Migration & urbanisation

As the figure shows, the trends are for Asia and Africa to become as urbanised as Europe and North America.  Urbanisation is expected to continue while rural populations shrink.  Many of the fastest growing urban areas are relatively small cities in Africa and Asia.

As jobs migrate to cities, their economies are also moving from being mainly manufacturing based to delivering services.  Migration to cities leads to opportunity: the growing diversity can feed creativity and innovation; it can also help countries with falling population levels care for the young, the ill and the elderly.

Today’s growing cities face many challenges.  Not just the obvious ones such as developing infrastructure to support the growth, but considering health, education, waste management, logistics of food supply and environmental change.  Often little or no long-term planning is done: what planning is done is frequently for today and not considering what will be needed in the future.  Many cities were designed for the times of our grandparents, not for today.  To meet the future, cities will need to become Smart Cities: urban areas that use electronic data collection sensors to supply information to help them manage their resources and infrastructure more effectively and efficiently.  This could improve the quality of life for their residents across buildings, mobility, infrastructure, public space, social and community programmes and civic governance.

Living in urban areas can have problems.  With high accommodation costs, migrants and those with no employment or low wages congregate in poorer areas – which, in many cities means informal settlements, slums, shanty towns and run-down areas.  These areas are usually not part of the urban planning if it exists, so they grow in a haphazard way lacking infrastructure, transport, safety, water and public services.  High youth unemployment (where young males outnumber young females in informal settlements) is correlated to rising levels of crime and violence.  When many people live together in small spaces, mental and physical health can be affected.

And of course, two thirds of the cities in the world today are on coasts, vulnerable to flooding and sea level rise.

Some relevant articles:

https://www.raconteur.net/technology/the-city-in-2030 with some views of how a smart city will look.

http://www.theafricareport.com/North-Africa/africas-15-richest-cities-in-2030.html  which these are likely to be.

And for handling risks that can arise: https://www.ted.com/talks/robert_muggah_how_to_protect_fast_growing_cities_from_failing.

Some questions you might consider:

  • How does urbanisation affect your market, products and services? How might you need to adapt them?
  • How could urbanisation affect the people you work with? Will it make the skills you need easier to find?
  • Where will you locate your business and where will the people you work with live and work?
  • What opportunities might there be for developing new forms of social frameworks and support in both urban and rural areas?

We live in interesting times!

 

Posted in Emerging Trends, thought leadership | Tagged , , , , | Comments Off on Megatrends and How to Survive Them: #3 Migration and Urbanisation