Futurewise

‘A momentous achievement.’

Professor Zuhayr Mikdashi, School of Business Studies, University of Lausanne

‘Change is the pervasive reality of the modern day. Identifying those changes and explaining their often complex dynamics at work is what Futurewise does with great clarity. It has become the indispensable guide book for those seeking to understand the strategic implications of change for their organisation.’

Sir Peter Vardy, former Chief Executive, Reg Vardy

‘Of all the guides to what is ahead, none is so sensitive, comprehensive and realistic as Patrick Dixon’s book.’

Professor Prabhu Guptara, Executive Director, Organisational Development, Wolfsberg, UBS

‘Making real, significant change in organisations can take many years, so we need to be thinking deeply now about the future. That’s why visioning and futuring capabilities sit at the centre of managerial competencies. This book provides an excellent and thought-provoking view of what the future may hold for organisations. Invaluable for any manager plotting organisational progress.’

Lynda Gratton, Professor of Management Practice in Organisational Behaviour, London Business School

‘Like the author, I am convinced by the potential of science, medicine and technology and the capacity of human beings to build a better world. If you are in business, you should read this book.’

Brian Souter, Chief Executive, Stagecoach

‘If you want to intelligently invent your own future, this is the guidebook. Dixon presents the best analysis of future trends.’

James Johnson, President and CEO, Eikon Strategies

Comments on the first edition of Futurewise:

‘I was eager to see how your predictions compared with reality. Therefore I read once more [the first edition] of Futurewise. Result: continuous astonishment at how much of what you predicted has become true – in many cases at an even more accelerated pace than originally assumed. This result merits a huge bravo and encouragement.’

Werner Augstburger, former Senior Vice-President, UBS

Comments after Futurewise presentations:

‘Superb. One of the most interesting and entertaining presentations I’ve ever heard.’ ‘A real out there thinker.’ ‘He challenged many of our business beliefs.’ ‘Top performance.’ ‘Energetic, interesting.’ ‘Very entertaining.’

Evaluation forms of partners, Accenture

‘Please express our deepest gratitude for participating in the Microsoft Global Accounts Summit last week in the Hague. Your session was very well received. Every person in that room was glued to what you had to say.’

Stephanie Rowland, Global Accounts, Microsoft

‘Your presentation was one of the most striking events I ever experienced.’

W. Mul, Director, Corporate Human Resources, Anthos

Comments on ‘Building a Better Business’:

‘A really helpful guide to success.’

Brent Hoberman, Co-founder and former CEO of lastminute.com

‘A perfect summary of all important factors that contribute to success in business and private life.’

Robert Salzl, CEO, Arabella Hotel Holding International

‘Excellent management books should spur you into action. This one does!’

Lord Leitch, Chairman of the Employment Panel, formerly CEO of Zurich Financial Services in UK and AsiaSEN, Aria Foods

DR PATRICK DIXON advises senior teams of many of the world’s largest corporations on a wide variety of global trends and their impact on risk exposure, customer behaviour, product innovation, competitor activity, marketing, management processes, motivation, leadership and public policy. He has been ranked as one of the 20 most influential thinkers alive today,* is author of 12 books, chairman of Global Change Ltd and Fellow, Centre for Management Development, London Business School.

His multimedia presentations on the future are experienced by up to 2,000 people a time in up to four countries a week. His clients include HSBC, BP, Siemens, GSK, Google, Microsoft, UBS, Credit Suisse, ABN AMRO, Aviva, Allianz, MunichRe, Infosys, Shell, 3i, BBC, Fedex, PricewaterhouseCoopers and the World Bank. He has also presented at the World Economic Forum.

He is often described in the media as Europe’s leading futurist, and has appeared on hundreds of TV and radio broadcasts for CNN, CNBC, Sky News, BBC and ITV. He has written for many publications including the Financial Times and Time magazine. His own WebTV site has had over 10 million unique visitors.

He is also heavily involved in humanitarian projects in the poorest nations. In 1988 he founded the international AIDS agency ACET, now a rapidly growing federation of community-based prevention and care programmes in 22 countries, which he continues to lead. Dr Dixon trained as a physician at Kings College Cambridge and Charing Cross Hospital, London. In 1979 he began his own IT start-up in artificial intelligence and medical computing, before going on to specialise in the care of those dying of cancer. He was born in 1957 and is married with four children.

[email protected]

+44 7768 511 390

www.globalchange.com

(articles, presentations, videos, free books)

*Thinkers 50 global executive survey (2005).

ALSO BY PATRICK DIXON

Building a Better Business

The Genetic Revolution

The Truth about Drugs

The Truth about Westminster

The Truth about AIDS

AIDS and You

The Island of Bolay

Cyberchurch

Out of the Ghetto

Signs of Revival

The Rising Price of Love

FUTUREWISE

To Sheila, my best friend, closest adviser and source of endless encouragement for over 30 years.

FUTUREWISE

Six Faces of Global change

A personal and corporate guide

to survival and success

in the third millennium

PATRICK DIXON

This fourth edition published in Great Britain in 2007 by

Profile Books Ltd

3A Exmouth House

Pine Street

Exmouth Market

London EC1R 0JH

www.profilebooks.com

Copyright © Patrick Dixon, 1998, 2002, 2003, 2004, 2007

1 3 5 7 9 10 8 6 4 2

Typeset in New Baskerville by MacGuru Ltd

[email protected]

Printed and bound in Great Britain by

Bookmarque Ltd, Croydon, Surrey

The moral right of the author has been asserted.

All rights reserved. Without limiting the rights under copyright reserved above, no part of this publication may be reproduced, stored or introduced into a retrieval system, or transmitted, in any form or by any means (electronic, mechanical, photocopying, recording or otherwise), without the prior written permission of both the copyright owner and the publisher of this book.

A CIP catalogue record for this book is available from the British Library.

ISBN 978 1 86197 814 1

Contents

Introduction

1 Fast

2 Urban

3 Tribal

4 Universal

5 Radical

6 Ethical

Afterword: turning the cube

Appendix: measuring your future

Acknowledgements

Index

Introduction

Life in the third millennium

You cannot fight against the future. Time is on our side.

W. E. Gladstone 1809–98

Either we take hold of the future or the future will take hold of us. Your company may have a reputation for brilliant leadership, outstanding innovation, clever branding and effective change management, but the business could fail if the world changes and you are unprepared. The larger the corporation, the greater the risk that you are flying blind, misled by old data.

Such institutional blindness is common, which is one reason why so many organisations use futurists and scenario planners to analyse future trends. Trends can pose threats as well as opportunities. We urgently need the big picture, to plot the longer-term sweep of future history, or lose focus and direction.

We need to be futurewise. That means planning to change tomorrow, future-thinking at every level, taking a broad view to out-plot the opposition. Being futurewise is about shaping the future, making history, having contingencies, staying one step ahead.

This millennium will witness the greatest challenges to human survival that we have ever seen, and many of them will face us in the early years of its first century. It will also provide us with science and technology beyond our greatest imaginings, and the greatest shift in values for over 50 years.

The future is about emotion. As history shows us, and more recently in reactions to terror attacks, SARS, the threat of bird flu and in food health scares, reactions to events are usually far more significant than the events themselves. Therefore we need to give close attention to how fast the emotional climate is changing and why. This can be unfamiliar territory for those analysts who prefer historic numbers, graphs and tables as their basis for future strategy. As we will see, small activist groups, many influenced by religion, will learn how to wield vast influence, driven by a passion for a better world.

This fourth edition of Futurewise has been altered very little from the twenty-year vision first set out in 1998 but has been stretched a decade further into the future. Many of the things that I expected are already history, such as: rapid growth of tribe and state-sponsored terrorism, loss of civil liberties as a result, new viral threats, growing protests against globalisation, Internet replacing phones, the rapid rise of China, growth of London, rise of single issue activism, demand for stronger corporate ethics, recycling as a way of life, growth of Islam as a political force, the online retail revolution, economic and commodity price instability, growth of ‘reality’ TV shows, chips fused with brain tissue, advances in human cloning, designer babies, global agreement on carbon trading as a response to growing anxiety about climate change, rioting in France over pensions and strains in Europe following the euro, prior to enlargement.

Very few of the many expectations listed in earlier editions have been removed, unless they have now become history, although some timings have been adjusted forwards. We may debate about dates but the trends on which Futurewise is based are clearer than ever. So what is coming next? While no one can predict the future, there are fundamental processes at work which have many consequences. From these we can plot out reasonable expectations – things that could happen which need to be considered and prepared for. That is the futurewise challenge.

SIX FACES OF THE FUTURE

The future has six faces, each of which will have a dramatic effect on all of us in the third millennium. Each is important but not equally so, depending on who you are and where you are positioned on this globe and on the social scale. It is impossible to keep them all in view at once: some are related, others are opposites. Together they form the faces of a cube which is constantly turning. The faces spell the word ‘FUTURE’.

Fast and Urban sit together on one side, Radical and Ethical on the other. On top is Universal, and beneath at the opposite extreme is Tribal. Most executives spend their lives looking at the cube from above, at a world which is fast, urban and universal. However, one twist through 180 degrees presents us with a very different view: a world which is tribal, radical and ethical. Understanding the tension between these two dominant views is essential to understanding life in the third millennium. As we have seen, a tiny minority who are strongly radical, ethical and tribal can affect the rest of us profoundly.

Expectations, predictions and challenges to management

Out of these six faces cascade over 500 key expectations, specific issues and opportunities as logical workings-out of these important global trends. These range from inevitability to high to low probability – but still significant enough to require strategic planning and personal preparation. There are more than 200 challenges to management – key questions which demand answers. There are more than 100 futurewise issues for individuals. However, there is one single overriding factor which is central to understanding tomorrow: the Millennium Factor.

THE M FACTOR

Few people have woken up so far to the impact of the millennium. My children are the M generation. Their entire adult existence is being lived in the third millennium. Children born today will have little understanding of the second millennium. The M Factor will not be instant but profound, far-reaching and very long lasting. Expect to see the M Factor affect every aspect of life on earth over the next 150 years.

We are seeing it already in many countries, as a radical rethink about values. Indeed, whenever I talk to people about the future, they talk to me of their concerns for themselves, their families, their communities and the whole world.

Making sense of our history

The human brain makes sense of the past by dividing it into intervals: the day marked by the sun, month originally by the moon, year by season. Then there are decades and centuries. So the nineteenth century becomes the Victorian era, and is seen as a single defining period with its own distinct culture and traditions. But unlike the sun or moon cycles, these time-stones are entirely artificial, set in concrete only by the diary of humankind. They are entirely the product of a human need to pigeonhole events into neat time-frames. And four time-events were to hit us in the same instant: new year, decade, century and millennium.

Every decade has a character

Every decade has its character. Only a millisecond of eternity separated the 1960s from the 1970s yet we all recognise instantly the music, style and architecture of the 1960s. The same could be said for every decade in the past 100 years. It is totally irrational to think that whole periods of human existence can be neatly framed by decades, centuries or even millennia dated from the hypothetical birth date of Jesus Christ, but they are. We all know what we mean when we say that a building is nineteenth-century. By the year 1904 people recognised that the old century was dead.

Get into the third millennium

In the latter half of the twentieth century if you wanted to insult your boss you would have said that he or she was still stuck in the 1970s or 1980s – or perhaps even the nineteenth century. However, the insult has changed: ‘You’re still stuck in a late twentieth-century time warp. Get real, this is the third millennium!’ or ‘That’s so last century’.

No architect wants to design a late twentieth-century building. At Greenwich in London, a huge millennium dome, designed by Richard Rogers, was built to celebrate 2000. Imagine a group of Japanese tourists being shown round in 2050. What will the guide say?

There is only one accolade that is likely to satisfy architects of the large number of great buildings opened in 2000–20 that is: ‘Ladies and gentlemen, here is an outstanding example of early third millennium architecture, expressing as it does the hopes, aspirations, dreams, anxieties and fears of the new millennium.’

Expect to see hundreds of millennium structures around the world, all curiosities by 2015, many decaying and an embarrassment by 2025, all competing to be the defining image of a truly third millennial building. Expect more Eiffel Towers: big white elephants criticised at the time that people grow to love and then fight to save.

Expect third millennial fashion, clothes, radio, television, culture, music, art and social codes. The real winners will be those who tap into this huge shift – and help define it. What television producer wants to produce second millennial TV? What clothes designer dare risk his or her annual collection being labelled as a rehash of tired late twentieth-century fashions? Every creative talent will be focused on trying to interpret what the third millennium means. Expect to see radical shifts by 2020 in every aspect of art and culture with eccentricity pushed to the limits of every extreme, before settling down into a third millennial rhythm of life.

Changes can be dramatic – look at the shifts in social customs and dress from the eighteenth to nineteenth to twentieth centuries. Do we really believe the globalised dark suit and tie will still be standard male uniform in 2050? Expect not only major shifts in fashion but also revolutionary new fabrics.

So what does third millennial life look like? Faster, more technology-dominated, data-obsessed but more intuitive, sensitive, spiritual and environmentally aware.

If you are a pre-millennialist …

Pre-millennialists tend to see 2000 to 2020 as just another couple of decades. The trends of the 1980s and 1990s continue, just more of the same. Post-millennialists are very different. They are products of the third millennium. They live in it. They are twenty-first century people, a new age. Expect to see one of the greatest generation gaps in recent history between pre- and post-millennialists. The trouble with trends is that we always look forward. We look back to find the line of the curve but our perspective is blocked by the patterns of the past. Looking ahead is progress.

However, the lesson of history is that the pendulum always swings. It is never still except for a millisecond at the outer limit of each swing. It is true that at extremes the pendulum moves relatively slowly and it is far harder to tell the current direction. It never swings true, but always twists somewhere new.

Trends and countertrends

To every trend there is a countertrend, which is why media pundits are able at once to describe, for example, trends to greater liberalism and greater conservatism. Both are true – of different tribes in the same society. So gay rights movements continue to make advances at the same time as America is becoming gripped by cultural conservatism, with ideas such as marriage, religion and civil society seen as the answer for the future.

Drug use soars, with growing calls for decriminalisation, at the same time as a neo-prohibitionist movement seeks to make it all but impossible to smoke a cigarette in a public place. Expect to see millennial culture clashes between opposing trends, a world increasingly of extremes with tendencies to intolerance as groups fight to dominate the future. But not driven merely by culture clashes, the greatest forces will be unleashed by clashes of conscience influenced by strong religious conviction, or lack of it.

Which trends will be dominant?

The big question is this: if trend and countertrend coexist, which will be dominant in the new millennium? The truth is that in a pluralistic, multitrack society there are a number of pendulums operating and each creates new business opportunities. Dominance is less important with the emergence of micro-communities, micro-markets where all that matters is being able to target every trend with a package of products and services.

Expect to see whole industries built around micro-marketing techniques, micro-advertising, micro-distribution networks, micro-affinity groups.

Trend ‘wild cards’ – managing risk

Expect trend ‘wild cards’ over the next 20 years and plan for them with rapid-reaction capability and streamlined decision-making. Most business time is spent managing high probability, low impact events, which are usually extensions of existing business activity. But the really interesting areas to watch are the small blips on the outer edge of the radar screen, some of which are moving rapidly. These low probability, high impact events or ‘wild cards’ can strike rapidly and transform your world. It’s easy to dismiss them as improbable and therefore insignificant. However, there are a great number of them. A large business may be able to list several hundred potential wild cards, each with a probability of happening of 1 per cent or less in any year. However, on closer inspection, such lists usually turn out to contain risks which are more likely to happen than first thought. Therefore the risk of such a business being hit by such a low probability, high impact wild card is far higher than boards usually realise. And in every risk there is also opportunity for fast-moving companies to respond in innovative ways. Wild cards can be clustered into types of event to plan common responses. At the outer edge, wild cards include catastrophic events such as viral pandemics, dirty bombs, nuclear accidents, vast volcanic eruptions and climatic disasters.

Sustainability – major driver of change

The key to understanding the post-millennialist is one word: sustainability. The reason is simple: current trends are unsustainable, or seem to be. We have never before had the means to view an entire century and the effect is extraordinary. One hundred years of film – still and moving – has charted almost every detail of our lives. We began with horses and carts and ended with people living in space. We began with books of paper and card and ended up with cyber-reality. Can we survive another hundred years of increasingly rapid change? What about another thousand years? Could this be the last millennium?

Economic growth is at the centre of every government strategy, yet in the third millennium expect that rapid economic growth as a universal goal will be increasingly questioned by activist groups in the wealthiest nations. Growth means more things, greater wealth, but does it mean greater happiness? If quality of life means being happy and fulfilled, what is the secret of it all? Since the very wealthy show little or no sign of being any happier than lesser mortals on modest incomes, this is a fundamental question.

Economic growth is clearly vital to the poorest nations, to provide food, clean water, education, better health care and other things. However, the real human need for relentless growth in material wealth of those in the most affluent nations will be increasingly debated, especially in terms of costs to future generations from overconsumption and environmental damage.

We can divide every nation into hundreds of social groups. Each is a market sector. Each has its own set of pendulums. Each will react to the events described in this book in different ways.

You may be an optimist or a pessimist. The future is uncertain and many possibilities are alarming, but I am an optimist, convinced by the potential of science, medicine and technology, and the capacity of human beings to build a better kind of world. But the way ahead will not be easy, being beset with moral challenges, economic and geopolitical instability, resource limitations and consequences of climate change.

Radar screen and road map

So here is a radar screen and a road map. The radar screen is a grid you can place over any organisation, a structure for thinking about the future. It will help you scan your own world for emerging trends.

The road map? You will find in this book not only a way to make sense of new blips on the radar screen but also a guide to how they may behave in the general frame of the future.

CHAPTER 1

Fast

Speed will be everything

HISTORY IS ACCELERATING

The first face of the future is FAST: speed will be everything. Never before has the future so rapidly become the past for so many people. History is changing faster than you can calculate a risk or exploit an opportunity, whether you look at trends in the economy, global events, industry, social factors, politics, or share prices.

Who wants to wait?

The developed world is cash-rich, time-poor and intensely impatient. Up to 30 per cent of web sales can be lost if a page takes more than 30 seconds to load. Expect even less tolerance tomorrow in an increasingly instant age. The impact on the way we buy, sell and live will be huge. Holidays will get shorter, more focused and more frequent, often interrupted by messaging from around the world. Expect rapid growth of stress-busting weekends, indulgent experiences, and exotic activity bursts.

No time for Do-It-Yourself (DIY) and materials

Expect falls in sales of DIY tools in all developed countries over the next decade, as time-poor, stressed-out people opt to hire in expert help, rather than risk their health, time, property and money. Losses will be offset by dramatic growth of DIY sales in emerging nations such as Poland, Slovakia, Slovenia, Belarus, Russia, India, Brazil, Indonesia, Thailand and China.

Expect outbreaks of irrational behaviour caused by minor delays – as we see when busy executives gather around a hotel lift, repeatedly punching the call button in a foolish attempt to make it arrive faster.

Political whirlwinds affect whole continents

Look at the speed with which the Soviet Union collapsed in 1990.

When the Iron Curtain fell, people thought the reunification of Germany would take five years. It took five months – although with huge longer-term problems. Expect further rapid realignments, with North Korea top of the list as the last outpost of Stalinism, a country bankrupted and starving after three decades of mismanaged central planning and its intense suspicion of all neighbouring countries. North Korea could crash at any moment, spilling thousands of starving refugees into China, South Korea and Japan. Expect, too, increasing signs of regional pressure for change in China.

Look too at the rapid creation of the global alliance against terrorism, formed in less than a month in 2001, with unheard of co-operation and international consensus. Russia and the US stood shoulder to shoulder in warm solidarity – until the Iraq war, disagreements about how to respond to Iran’s nuclear programme and further Israeli-Palestinian conflict.

Trends are becoming more unpredictable

Take Mexico’s financial crisis in 1995, dubbed the first financial crisis of the twenty-first century. It hit with ferocious speed, as global investors fled. Then came Thailand’s devaluation of more than 23 per cent in 1997, following huge exchange rate fluctuations. Thai authorities wasted more than $30 million propping up failing financial institutions exposed to bad loans, before shutting down 42 companies. The Bank of Thailand lent 10 per cent of the country’s entire gross national product to 91 finance companies. Then came the sudden collapse in the currencies of the Philippines (70 per cent fall), South Korea and Malaysia, Indonesia and Turkey. Expect further runs on currency in emerging economies and a rush into protective alliances which will also be overpowered by market forces, driving both inflation and deflation in different sectors.

Expect contagious forces: events in one area will impact globally as we saw in the dioxin panic in Belgium when contamination of animal feed led to a ban on entire food lines from Europe.

Expect growing uncertainty about what the Chinese government will do with its foreign currency reserves – more than 1 trillion in dollars alone by early 2007, most of which was still in US government bonds. Expect these reserves to be used more creatively in future, to buy entire corporations, invest in real estate and to buy other strategic assets such as energy supplies. Just 10 per cent of China’s dollar reserves could be leveraged to make a $600 billion investment fund.

Tigers turn to lion cubs

The so-called ‘tiger economies’ of South East Asia grew fast on the back of cheap labour and cheap exports but now have the whole of China to compete with, while the expectations of their own labour forces have risen.

New contingencies, IMF and inter-bank co-operation, better investor information and better government communication, are not going to be enough to prevent more speculative attacks on one currency after another. Global money flows are just too big to control, as the Bank of England found when it was forced out of the Exchange Rate Mechanism. Expect the UK to remain out of the euro until at least 2012, observing the agonies that some other nations experience in managing their economies with zero control over domestic interest rates, their own exchange rates or rates of inflation. In the meantime the ongoing US budget deficit and trade deficits will raise growing numbers of questions about US long-term economic stability.

Expect increasing North–South tension as emerging economies come to realise that abolishing all trade and currency restrictions in a rush for growth also places their countries at the mercy of rumours, hunches and market opinion. Expect an even greater backlash against globalisation, with some nations reduced to ‘economic slavery’ by massive, destabilising currency flows. Expect large institutions to continue to make (and lose) huge fortunes trying to outguess volatile markets in these countries. Expect countries to rally round to help stabilise each other’s currencies, as seen in Thailand where China, Japan, Australia, Singapore and Malaysia were among those contributing emergency loans. Expect far more countries to see rioting in the streets as workers, students, wealthy intellectuals and the retired all unite to vent their various angers and frustrations at leaders, global institutions, wealthy, ‘arrogant’ nations and ethnic minorities.

World markets will be seen more in the future for what they are already: a great global gambling den, using hunch, intuition, guesses about how other investors will feel, detailed analysis, inside knowledge, a host of other factors – and a dose of good fortune.

Instability of basic commodities

Basic commodity prices will also continue to fluctuate wildly at times. Take zinc, for example, whose price fell 18 per cent in an hour on 29 July 1997, catching on the hop Chinese producers who had pre-sold what they did not own, or the meteoric rise of copper prices which had a similar impact in 2005. Expect increasingly complex investment instruments to be developed, so that a commodity sometimes rises or falls dramatically as a large market intervention is made, linked to a completely different and apparently unrelated event. Expect growing worries about these poorly understood derivatives and about the activities of ever more powerful but lightly regulated hedge funds.

These rapidly growing so-called funds will eventually be seen for what they are: insurers against future price movements, organisations that place large bets that the value of a share or commodity will rise or fall by a particular date, rather than managers of real assets. Expect many more hedge fund scandals, some with losses of many billions of dollars, and consolidation of more than 9,000 funds, with greater emphasis on transparency, risk management, integrity and control.

Inflation and deflation

While hyper-inflation will continue to threaten failed economies such as Zimbabwe, in most developed economies, inflationary problems are already beyond the memory of most under 30-yearolds. The majority of young adults have no experience of inflation above 5–10 per cent. Their world for the past decade and a half has been one of deflation in retail prices of almost all manufactured goods and many services – with the major exceptions of health and education.

Despite popular opinion, even oil prices were still below their mid-1970s peak