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The Challenge Network www.chforum.org |
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This Chapter discusses the implications of the scenarios to a number of focused topics. The assumption that we have made in writing these elements is that the reader will be an expert in the topic in question, and that what we can most usefully provide to them is a context within which to think about their area of responsibility. The style is, therefore, chiefly tabular, contrasting the impact of the two scenarios with respect to key variables. Some of the contributions reference lengthy papers, and more of these may be added as 2001 develops.
These vignettes have been developed from a purely industrial world perspective. We may extend this to the rest of the world during 2001. Additionally, the impact of change is described from the perspective of 2020, once again for clarity. Most, when considering practical problems, will have a shorter horizon in mind. Notice, however, that this requires you to take account of both sets of drivers, as (a) which if either scenario will eventuate is not clear and (b) the factors which lead to either of them are, for the most part, hard at work today. There is much more on offer in respect of methodology elsewhere on this web site, including Chapter 4, which is dedicated to he subject.
The following vignettes have been developed. Please click on any one:
Public life entails formal representative politics, the background executive operations of the state, and the informal patterns of representation that manifest themselves as NGOs, media campaigns and issue-focused political movements.
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Formal representation declines in relative significance, but remains very important, both when it is done well and when it is done badly. It will be less and less 'party' focused, however, and more and more concerned with process and issues, insight and mechanisms for effecting change. Election may be a less a 'grand slam' affair than gradual turnover of people, with individual elections occurring at many levels, and for many representative seats, all of the time. The role of the executive arms of the state becomes as much concerned with interpretation and strategy as it is with delivery, which is often conducted through private sector third parties. The key issue is to find a way through the maze of interest, knowledge, pinned pawns and partnerships to arrive at a consider set of options to pass up the hierarchy for decision. Once general direction has been set and criteria for performance have been established, the independence of these agencies will be considerable, but subject to massive scrutiny by interests. Interest groups rise from the dissatisfaction of the 2010 period. Their impact on expert governance at all levels in the public sector is very great. Such interests are increasingly transnational, but also highly local. Their individual influence is directly proportional to their long-run contribution to the debate (their weight with their peers) and media management. Whilst interaction with the media is still politically important, becomes less and less easy to achieve clear, branded message. There are two reasons for this. Audience sophistication has increased. Additionally, media channels have, been replaced by browsable databases. All manner of viewpoints compete for viewer attention, rather than for editorial approval. |
Formal representation gains considerable strength in those nations where the 'future is coming too fast'. It acquires a new party polarity, however: age and claimancy versus modernism, youth and independence. Elsewhere in the world, representative politicians are both marginalised by events and faced with an impossible task. Their role is increasingly subject to recreation after 2010. The executive arms of the state are handled in very different ways in the various attitude blocks which develop. In none of them is the effort made to achieve 'joined up' approaches to analysis and the use of expert knowledge. Individual units are often driven to time frames and goals which affect their performance adversely or impact in a negative way on their peers. However, agencies are given much greater autonomy, and the imperatives which they must meet are generally all too clear. This has two affects. First, those organisations tasked with cross-cutting tasks - such as health maintenance - will tend to benchmark with, loin up in purchasing ventures with and increasingly share staff and knowledge resources with their international peers. They will begin to march to transnational, issue-focused themes. Second, agencies which have a geographically-focused remit will tend to seek competitive differentiation for their neighbours and their peers. They will play to their strengths and mitigate their weaknesses. The outcome, by 2020, is a mosaic of specialisation, in some cases of a very extreme nature. Cities differ sharply from their host nation, regions set out to be different from their peers. Interest groups grow sharply in number and scope, but their influence is mitigated by the sustained existence of traditional party politics, and the continued centralisation of power. |
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No world driven by competition can be truly transparent. Scrutineers see the general outline of affairs, and the sharp edges of things that have gone wrong. The environment is 'translucent'. Nowhere is this more true than in partnership amongst potential competitors, whether nations, firms or the proponents of ideas. In prospect, we shall be able to see more, but what we need to see will also become more complex. By analogy, the brightness of the lights may increase, but the opacity of the veils will not diminish.
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Partnership in the public sector, and action within innovative milieux and value chains is the essence participative success in the world of 2020. The chief source of opacity is the sheer complexity of what is being done. Knowing the terrain - having a map and knowing how to use it - is a key set of skills. All maps have limited lives, however, before they become outdated, and all have limited ranges, beyond which they are blind or for which their resolution is inadequate. The use of knowledge tools, software assistance and other mechanisms to cope with complexity is universal. A significant component of the service economy deals in navigation, as in their various ways did the media, education, legal help and medical support at the turn of the C20th. Perhaps three quarters of all business output consists of patterns of knowledge, and half of al traded output consists of guidance, analysis, clarification and assistance. Clarity is not truth, any more than being enthusiastic is equivalent to being right. Clear messages - brand, propaganda, marketing - abound, whilst 'true', useful insight may be obscure. Mining for second, third opinions and analysis is a general necessity. Such a commonplace makes - for example - vacuous brands or political bundling hard to sustain. |
Value chains exist as building block, lit with a hard light in which all is visible, and all is specified. These may be connected up into a value chain, rather as the user of a child's engineering set can temporarily bolt together this or that part, so as to make a vehicle or a windmill. Driving the action of this 'tool kit' are the innovators, who have ideas, and the integrators, who have the blueprints and the knowledge to keep a step ahead of their peers in doing the same things. The actions which these both take are far more shrouded, with privileged disclosure made only to those with reciprocal favours to bestow. Traded intangibles - of insight, understanding, access, legal right - dominates this world. Often, because of the difficult of giving an objective value to these transactions, the matter rests on informal obligations, trust and long-term mutual advantage. At its most extreme, this world resembles an open savannah, where all is clear and bathed with tropical sun; but dotted with patches of forest and shade, where only the experienced can tread safely, and where key transactions are undertaken. Hints and shades of meaning matter in this environment, but an utterly different culture prevails out on the 'plains'. |
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The powerful lobby is a universal force wherever there are choices to be made that matter to powerful interests. There was an enormous expansion in the professionalism, ambition and number of such groups in the last two decades of the C20th. This trend will not reverse. How are public choices to be made in the face of professional lobbies?
As noted in the section immediately above this one, clear statements and enthusiastic voices are not necessarily the best ones to follow. That a brand looks good does not mean that it is accurate or that it acts in our favour. It wishes to persuade us, and good brands persuade us to things which we find ultimately rewarding. Not all brands - messages, propaganda - is of this nature. Many of the worst political movements in the C20th made copious use of popular enthusiasm and brand. Equally, not all good ideas - or even most of them - come from the established centre.
Lobbies and dissenting voices, new thoughts and surprising options are, however, essential contributions to progress, adaptability, diversity; to the capacity to cope with complexity and thereby find options and new ways to be. Civilisation needs the lobby and the enthusiast, but it also needs how to manage their often lop-sided views.
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Ant colonies create harmony and purpose not through orders or algorithms, but by the exchange of information. They do this piecemeal, building up a collective map of their world and its states. Strong and lasting signals become amplified and laid down as physical structures, learned patterns of action and the like. The queen ant modulates patterns of ambiguous information and generates what amounts to a decision, but does so without (much of a) mind. Much of the natural world operates in a similar manner. Human swarms have the benefit of declarative thought and objective expression, records and means of debate. Nevertheless, the way in which we make up our collective mind is far from the linear, logical model that we may once have liked to believe was true. The 2020 of Renewed Foundations is intensely expert, vastly complex and highly distributed. Individual agents - firms, state agencies, individuals, pressure groups - play their roles in several domains, but not are effective in all of them. To cope with such a world is to acquire very active filters, and the capacity to be 'intensional', to read into the agent with whom one is dealing its goals and ambitions. Each 'ant' receives a vast number of signals - the average Briton is the target of some 17,000 marketing messages in a week of urban life. In the order of 5-15 of these are noted and acted upon. We are already very smart ants. The issue for lobby groups is how to be effective in such an environment. Clearly, the persuasion has to be valid, when tested against the wide range of second opinions that are available. The brand of the lobbyist needs to be trustworthy. Trust, in this world, consists of three factors: Credibility - the 'ant' accepts this stance as valid, pro tem, based on reputation, resonance with other information, fit with its own ambitions and the like. Containment - that the lobbyist does not represent too great a risk; or that the 'ant' can call down retribution if the trust proves to be misplaced. |
Much of what is said opposite remains true in Pushing the Edge. However, there is one central dynamic to the world of 2020 and whilst views are welcomed, most actions are largely predefined by the imperatives of 'keeping up'. Lobbies are useful, or they are ignored. They have a very small window in which to prove their usefulness. Not all nations subscribe to the revealed truths that govern the lives of the cutting edge group of nations, firms and cities. Many specialised regions and smaller cities have their own versions of it. Many have opted out, offering a haven to the independent and the elderly. This said, each element of the industrial world of the times has a clear view of who they are and what they are about. This has the consequences that were discussed above. The pluralism of even this stripped-for-action world is still vast when compared to the turn of the millennium. There are many voices, using the extraordinary infrastructure of the time. However, sophistication has also grown. Time budgets are constrained. The habit of selecting for oneself a tiny subsection from the whole of what life has to offer has become intense, and is greatly assisted by active agents of many kinds. The filters that can be deployed on behalf of users of the new communications media have become formidable. A lobby has, therefore, many criteria to which it has to answer if it is to succeed. Professionalism has increased, but so too have the defences: an evolutionary arms race, of market predator and consumer prey.
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The industrial segmentation of the economy will change. There will be three meaningful 'cuts' in the world of 2020, in almost any environment. One of these defines where a firm sits in respect of the flow from latent possibility to completely specified routine delivery. The second cut revolves around the position in the supply chain, as to whether the firm faces consumers or other commercial organisations as its customers. The third cut is defined by access to scarce resource, which is, by 2020, almost always comprised of knowledge and understanding. Into which frameworks of regulatory permissions, legal understanding, technology and partnership is the organisation 'plugged'?
The upshot of this is that a small firm, providing innovative seismic services to the oil industry, may be as different from an oil major as it is from a pharmaceutical company. It may, however, be far more like a small software house writing computer games for professional branded distribution by global entertainment companies. In this instance, 'like' means similar in its ambitions, limitations, means of handling its staff and ways of taking choices. Both may sell themselves to capital markets in ways which are highly similar, but quite distinct from the approaches of the slower moving, established majors.
Very similar things may be true of the constituent parts of the majors, however, and efforts to provide a 'gestalt', where the whole is more that the sum of the parts, already dominates the concerns of such organisations. Their distinctive competencies are chiefly concerned with 'being big', in the sense of managing subsidiary processes which small firms carry out for them, and which they could not handle for themselves. A major part of this consists of managing risk - volatility - so that the cost of capital of the large organisation permits investment in the future. In particular, low discount rates permit large companies to value costly, long-term things which small organisations cannot contemplate, such as blue(-ish) sky R&D, knowledge pooling and human resource development. If they can tell a convincing story about this, large companies become the custodians of long term adaptability, whilst small companies become the vehicle both of operations and of medium-to-short term development.
The risky, scattershot entrepreneurial approach to innovation will continue to thrive. Innovation comes from organic development and from sudden insight. However, many such start-ups are a more or less temporary offshoot of larger organisations, and many of the more successful are staffed by people who learned their trade in large firms before starting up on their own. The survival rate of naïve entrepreneurs is actuarially discouraging, but the number of candidates mean that some always survive: about one percent, in 2000. Overall, about 3% of all US and UK start-ups exist as independent companies after five years.
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Many of the forces that act so clearly in Pushing the Edge exist as primary imperatives in Renewed Foundations. The key segmentation is, however, that which faces knowledge, on the one hand, and stakeholders on the others. The key stakeholders are those who grant regulatory permission, and those who make and break reputations, including the internal and external communicators, employees and interest groups. The key asset is a reputation that can be trusted, a brand that seems to offer protection from the worst that the world of change can offer, and the ability to defend these. The successful brand is rooted in continuity, common-sense accessibility and, above all, a reaching for stability and the capacity to manage events. This may manifest itself by varying appeals to generic icons: the organic, the traditional, the socially cohesive, the environmental. These are, however, less the drivers of the brand than the colours with which the sign is painted, not what it says. Common-sense utility and accessibility is an important feature of the young as well as the elderly. It is youth which is bearing the strains of change the most, and it is youth which seeks the ability to harness and ride upon its back. Such brands will work only if the offer delivers on its promise. Particularly before the watershed of 2010, however, firms match themselves more to the prevailing national ethos, particularly in those of the industrial nations which are having the greatest difficult in coming to terms with change. Technological change, in particular, creates strains which some regions cannot bear. The location where this knowledge is developed, and the presentation of the products of it, are both carefully handled. Both before and - very strongly, after - the watershed, knowledge milieux shift to the places most happy to host them. These are chiefly large cities within the cutting edge group. What is being done is not widely disseminated, particularly to the public, raising issues of funding when offers must be made to the market. |
The segmentation that we have described above is fully in place in the cutting edge countries by 2015. Markets have learned to value the intangible issues and management talent of the innovative firms far better, and has understood the value of network connections. The differentiated, fast changing environments to which all organisations are exposed have considerable effects on their prospects and there is increased attention on micro-regions such as major cities, industrial centres and regions with high income consumers. Firms have learned to speak to stakeholders clearly, but in the managed translucency discussed in a section above. The 'mittlestand' of mid-sized and new companies are seen in individual terms, as a result of the information systems available and the nature of communications from these firms. Market interest focuses here - as it did on so called 'junk bonds' in the 1980s - because whilst the capital volumes are relatively small, the margins achieved from insight are huge as compared to the majors. Large firms make up about half of the capitalisation of most markets in 2020, considerably down in proportion from 2000. They are, however, fully transparent and 'studied to death'. They are held as solid components of a portfolio and their marginal trends used to create financial instruments. Hotter trading focuses elsewhere. Small and medium-sized firms are recognised to work to complex and differentiated constraints, and their information is far less transparent. Here, analysis and information make for margins. The market puts far more emphasis in these minutiae. |
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The last decade of the C20th saw great emphasis on pragmatic solutions and systems optimisation. Firms tuned themselves to capital market and consumer imperatives. Government organisations were sold to the public sector or, more commonly, given quasi-autonomous status. In either instance, tight criteria and hard scrutiny were brought to bear.
There can be no suggestion that the decades before were particularly long-sighted. However, the consequence of this tightening of the sinews was a focus on immediacies. CEOs were driven by the quarterly results. Politicians watched their words least a minority were affronted, and remembered their affront to the next election. But politicians also ceased to discuss - or ceased to discuss in useful, analytical terms - those issues which had time spans well beyond one administration. It is not entirely unfair to assert that academics no longer pursued truth, but rather grants.
All of this occurred at a time when our understanding of systems grew at an unprecedented pace. We know very well that the progress of the future is rooted in what we do now, and that realising that potential will take considerable time, co-ordination and fine definition in order to get our actions 'right'. Our time horizons have grown, just as our time spans have shrunk.
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Rejection of risk, fear of discontinuity, general uncertainty and economic pressures all serve to curtail time horizons up to the watershed of 2010. As knowledge networks develop, however, so systems views enforce the need for multiple time horizons. The public sector, in particular, becomes more long-sighted, and the political blinkers that constrained such debate are progressively buckled back. The tasks and the criteria which the public sector imposes drive in the order of a quarter of all activity in most nations, so this alone has a major impact on how tasks are considered, specified and carried out. The private sector is, as noted in a section above, critically dependent on its fit with the local ethos for its survival. It cannot often extricate itself from the network of analysis and lobby that has developed. It must take account of these issues, and whilst these do no (in some cases emphatically do not) push it towards R&D spending, these do encourage human resource development, knowledge pooling, and long term customer relations. Capital markets follow the consequences of this trend, rather than set it. However, what works in this environment shows up as profit, and markets quickly link - and are encouraged to link - performance with approach. |
These issues are not solved by 2020, but have - in the public sector, in particular - become more acute. The cutting edge nations see the problem for what it is, whilst the laggards and rejectionists are still 'wishing for two impossible things before breakfast'. Commerce has, however, arrived at its own solutions. These are, essentially, twofold. First, the structure which places innovation, integration, co-ordination and operations into separate managerial frameworks and under separate ownership decouple time horizons and allow organisations to focus on the right horizon. (The phrase 'right horizoning' has evolved from 'right-sizing'.) Second, the communication of issues - including the "right" criteria against which performance should be judged - is an active matter, central to milieux, regulatory authorities and firms. The fundamental equation - that innovation is a risky business, and so best conducted in tranquil conditions where discount rates are low - remains in force. Large aggregates have the lowest general volatility, as do well managed and welcoming economies and regulatory regimes. It is to these that knowledge milieux migrate, and within these that these groups make it clear what is needed for their survival. |
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We discussed the nature of human assets in the knowledge economy in Chapter One. Our conclusion was that individuals were important, and their knowledge, skills and motivation critical, but that it was how they interacted that set the true value. "We all know more than we each do" is more than a slogan. At issue is how this is to be made operational.
There are two basic issues. First, there are the issues of individual skill development and motivation. Second, there are the issues of team fusion.
More recently, the nature of tasks has changed. Jobs have become both more multi-dimensional and more outward-looking, engaging far more with partner organisations. Relatively junior staff have at least to be able to spot opportunities when they see them, and have to take decisions about complicated issues. Senior staff have to engage in considerably less 'line' issues and spend far more time on communications, integration, balancing claims and settling disputes. Skills have to be learned in parallel, therefore, and retained and kept to date for far longer. This has to happen in a world of faster change in best practice and greater individual challenge from the day-to-day. The consequence has to be a major shift in how management development is to be considered. The 'butterfly' model - and the spotting of butterflies-to-be - is really not good enough. The parallel model of human resource needs suggests what this alternative should be. How such multi-dimensional development should be measured and fostered is, perhaps, implicit in the 'balanced score card' approach to assessment and remuneration.
All of this complex recipe can be seen, usually in isolated parts, in contemporary commerce and in some parts of some public sectors. Virtually nowhere is the entire texture set in place.
Team work around knowledge will obviously benefit from better access to knowledge. There are knowledge tools in development which may greatly assist team work and to allow team members to 'out-source' expertise on line. They will not replace human processes, however, but rather augment them.
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Organisations need to fit themselves to the needs of very many stakeholders, and they need to be at least as plural internally as the people with whom they deal. Such pluralism makes direction setting both arduous and important, as it is in the rest of the society. Staff members are seldom only members of staff; and they have conduits to outside organisations with the aims of which they may sympathise at least as much as with the aims of the firm. They leak; and they blow whistles. Standards of governance must be above reproach, therefore, and the steps leading to mutual trust, team work and team reward must receive continual attention. People joining firms do so for many motive. However a dominant theme is that for many, individuality brings with it exposure to a frightening world. They are keen to sink themselves in a collective structure with a sense of purpose and unity. They expect to play a social role, and to be rewarded for doing this well. They are personally damaged if the reputation of the firm is hurt. |
Innovation - finding new things to do amidst the ocean of knowledge and capabilities - is the key source of competence and economic rent in 2020. Different ways of doing this are frozen into different ways of segmenting the value chain, as discussed in a section above. These is no particular way of handling people and teams, other than generics of renewed training, groupware capabilities and senior management creation of trust, clarity and enabling frameworks. Instead, the purveyors of very new things operate in one way, and the managers of ends games in another. Each has a distinctive prescriptions which creates an equally distinctive culture. Such organisations are far from plural, and people join them as much for personal 'fit' as for other reasons. (A person living in 2000, who was considering whether to join the armed force, or a profession such as science or accountancy, might well go through such an assessment of personal 'fit'.) This said, loyalties are weak and mobility between firms (and between commerce and the public sector) is high. |
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The media are undergoing radical change, which will accelerate. Gather material (or commissioning it) and promulgating it are increasingly becoming two distinct activities. Dissemination is acquiring a new layer, of intermediation. What is in prospect is, perhaps, the following.
A production layer gathers news, makes entertainment, education and diversion. This is stored in the equivalent of vast databases, accessible on demand on a pay-for-view base. A dissemination layer uses an endlessly ramifying and expanding network of communications to bring this to the consumer, on demand.
A layer of intermediation - similar to contemporary channels, but involving all manner of 'infomediary', including consumers' software and human agents - will help the user to stream this material to suit their needs, or to anticipate these. Many modes will become mixed: news and simulation games, entertainment and role playing, on line coaching and education.
Devices in near-production in 2000 can put nearly a teraflop of computation into the home, and a gigabyte of information streams in and out of it. Any home so equipped could - once the software has been written! - have simulated socialisation, could support a story engine that could instantiate fantasies and flesh out the stories which children tell themselves, could be a guide in times of uncertainty, could, perhaps, learn the family 'personality' and so help to solve or defuse crises.
The near-magical technology of 2020 will bear a freight of interchange which the customer selects, or which is selected and modified to meet their exact demand. If the current media are afraid to bore, then the media of the times will be afraid to evoke even the potential for boredom.
What can be said without losing the audience depends on three things: on the intensity of their interest in to the topic, on the 'hooks' that exist in their minds from which the narrative can grow, and the degree to which the presentation comes with 'eye candy', such that viewing or auditing it is of itself pleasurable. Where there is no initial interest, where the subject is esoteric to most and where the presentation is bland, then fingers move flick the page or change the channel. In 2020, such material will never reach the viewer. An infomediary will edit it out.
Most of this is known and fully exploited. Focused media can deal with populations of differing interests and abilities. This is nowhere more evident in the magazine sector, where an explosion of speciality publications has arisen. The 'database' model of media production and sale amount to the same thing, endlessly multiplied for a global audience. It will be possible for two neighbours to 'see' two quite different worlds. An important synchronising feature - the evening news, the blockbuster program - will be lost.
In all of this, however, it is reasonable to ask where is 'journalism' to be found? There has always been an audience for interpretation. There will be an increasing audience for it as the issues become more complex. Journalists may express themselves at the 'database' stage, putting raw material up for consumption. More probably, however, it is the role of the infomediary - the editor, perhaps the impresario commissioning material - which will be the dominant model. The analogy with the free-lancer and the newspaper editor is tempting, but this is a world of a million or ten million 'newspapers' and more would-be editors freelancers still.
What, then, of informed comment? We discussed the issue of what could be said without boring the audience. A central feature of the modern world is the pace with which reality is expanding ahead of what most see as common sense. Our hooks are out of date, and we refer to certainties which are no longer certain. The effort needed to create new hooks - such that we can debate new and awkward issues before they become the subject of crisis - is a major task for the renewed politician, in conjunction with the media. How this is to be achieved is problematic and it may well not occur. In such instance, new things will always appear in the guise of 'miracle cures', examples of villainy or the cause of crisis. Celebrities may endorse or revile them, but they will be portmanteau phrases ("the endangered planet", "social justice") which carry only vague meaning and no capacity to support meaningful debate.
In prospect whatever the scenario, the commercial imperatives that have driven media production continue to play: what makes money is what attracts a large audience, and this entails high production values, effective actors and a good script. That the rendering of a high production value product is done remotely does not detract from the care that goes into writing it. That the actors are simulations is neither here nor there: good simulations are very costly. That the script is interactive, multi-leveled and multi-valued simply adds to its cost.
The impact of the rest of the world on this domain will be stronger than in almost any other. Media are relatively accessible and easy to transmit, and so large amounts of foreign material will be accessed as automatic translation and dubbing software becomes available. Interactive games will span continents.
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The period to and around 2010 is, for many, characterised by the search for identity, meaning, and solidarity in the face of economic malfunction, weak government and an alarming technology base. The infomediary response is to offer precisely such frameworks, to the exclusion of the unsettling. The rise of populist politics, selling easy solutions and hostility, play to such offers. The hooks on which debate is hung are retrospective, and stereotyped. The period after 2010 sees a gradual marginalisation of this material in favour of something much closer to the starting position of Pushing the Edge. Very many offers will be accessible, but with strongly focused infomediaries serving the many communities of interest which arise. As more agents, pressure groups, areas of focus and entertainment crystallise, so these will attract commissioned work and yet more infomediaries. |
Everything that can be done with the technology and with the creative talents of the world is done. Censorship around political domains exists, but only for what those societies regard as extreme. The extreme nature of those views would frequently shock the citizens of the same nations in 2000. Self-censorship, either by locking to an infomediary, or by modifying search agents, if far more common, and indeed and entire industry. That is what they do: exclude things, and emphasise others. In the period after 2010, the appetites of the cutting edge nations and rejectionist nations diverge. The former begin to interact strongly with world media sources and communities, whilst the latter fall closer to the model of Renewed Foundations. |
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The innate level of risk will usually depend on where you are and what you are doing, rather than in which of these two scenarios do you find yourself. How risk is handled is, however, distinct.
Finance, insurance and real estate rose from 25.5% to 28.6% of the GDP of the average OECD economy in the ten years to 1997. This is by far the largest sector in the service economy, and the fastest growing one. However finance has operated on the basis that capital is the scarce good in the economy, and that the allocation of capital is the key to what happens next. Few would deny its importance. However, it is knowledge, the capacity to organise and select between options which are the truly scare features of both scenarios. The resolution of this varies, and market valuations on assets where conventional accounting has failed amount to guesses as to which of the many models on display will succeed. Above, we discussed how firms will explain themselves and how markets will go about valuing them.
Finance in the non-industrial world has seen some painful shocks. At least a trillion dollars has been lost to banking crises and debt default (or discount) in the poor nations. Virtually all foreign direct investment went to only a few nations, and international loans to sovereign debtors has been similarly focused. Those who get the money and other assets are those which make it clear from track record, transparency and internal practice that they understand how the game is played. They are economically and politically stable, relatively free of corruption and have invested in human and physical resources in useful ways. These criteria are unlikely to change. However, one of the scenarios acts, at least after 2010, to reinforce modernisation, whilst the other does little to encourage it and much to slow it down.
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An anxious public drives states to minimise risk in all of its manifestation before 2010. This leads both to unrealistic expectations and uneconomic or irrational behaviour. After the watershed, however, the tendency is to find rational risk equations which take account of the entire operational and socio-economic system in which the assessment is taking place. An evidence-based, actuarial mechanism works closely with concerned stakeholders in making such choices. Intangible assets are not easily valued, but are clearly valuable. Many come to see these as near-public goods, particularly when embedded in milieux or in public structures, such as the networks of strategic debate and regulation that are such a feature of this scenario after 2010. Efforts to improve international institutions, and to 'raise the game' in the poorer nations, both bear the fruit of greater stability. Considerable sums flow to the poor nations, which begin to grow rapidly. |
Risk is relentlessly pursued, with different risk-managing schema in the various levels and stages of commerce. There is always great emphasis on macroeconomic and fiscal stability, but this becomes stronger after 2010. Finance bends much ingenuity to the valuation of potential and of intangibles, such as the effectiveness of teamwork of the adequacy of knowledge bases. The act of measuring greatly increases the effectiveness of delivery of these. However, the element of guesswork cannot be eliminated and there are bubbles and crashes in a number of markets. Investment in the poor nations occurs on an ad hoc basis, and is focused on those which have demonstrated their stability and effectiveness. A closely-coupled financial system, fast change and considerable savings seeking a home all create instabilities which propagate from poorly managed economies. |
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The biological revolution will be maturing by 2020 and its fruits (and fleurs du mal) will be widely apparent. The potential will, however, create funding issues, regulatory concerns and major public distress at some of the more contentious possibilities. Coping with this will require a re-think of the health industry, which the paper debates.
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Social concerns place great regulatory hurdles in the face of biotechnological exploitation. Public uncertainty weakens the uptake of all but the most clinical and supervised of applications. Low economic performance, at least to 2010, limits what can be done. These tendencies focus in the nations which have the greatest problems of unfunded demographic change, some of which - such as Germany - have major tradition of green activism. The resolution of some, if not all of these issues develop with the renewal of consultative and regulatory processes that develop after 2010, as well as the economic upturn. Scepticism of technology continues, however. Health care expands rapidly in the developing world, as a result of institutional improvements. |
In brief: Very rapid technological expansion, often with limited safeguards where this is exploited in middle income or poor nations. Whatever can be done will be done, however, and there will be eager customers for even the most extreme products. Managing unsafe practices becomes of great concern. Coping with the consequences of 'health tourism' - and of psychoactive materials active in nanogram quantities - is a major issue of policing. Rapid economic growth and a buoyant capital market empower the elderly to spend heavily, and governments to bow to spending pressures. The health industry expands very rapidly. Transnational affiliation creates merged interests and capabilities. |
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Four processes drive towards the realisation of the immense potential of biology as the basis for a business idea. The first is the expansion of knowledge, turning what was a descriptive science into something mostly concerned with the management of knowledge about complex structures and complex systems.
The second is also technological. This is the capacity to envision and manage vast amounts of information about the unseen and the complex and make this tractable, coupled to the equipment - such as nanotechnology - that is needed in order to act upon this information. A wide range of other disciplines - materials science, process control, knowledge fusion techniques and statistical mathematics - all contribute to a flowering of the discipline. Great leaps seem to occur when mature knowledge bases fuse. Here, very large bases are about to come together.
The third issue is a business-related one: the experience of venture capital and markets with technology-related activities is now much more mature than it was a decade ago. Whilst it is too much to hope for rationality from markets, we may nonetheless see the benefits of the understanding that has been wrung from the 'e'-wave and its aftermath.
The fourth factor is, perhaps, the most profound. It is that biology presents the key barriers to what we want from our lives: we get sick, we under-perform, we age, we die. If this were to be turned to a positive thing - that we are always well, that we gain new capabilities, that we can manage or defeat the ageing process, that we can add useful decades to life - then the economic demand will be insatiable. Health care and its ancillaries amount to 10-15% of GNP in most industrial nations. A doubling of this proportion in the doubled economies of 2020 would not be impossible. Other areas - in agriculture, in public health, in process control, in energy - all offer themselves. Biology is ideally suited to build the very small, and whilst its processes are slow, they are also precise. We have discussed the issues of cognition and of the consequences of our understanding what is entailed elsewhere in this section.
Standing against the realisation of this potential is, essentially, the effectiveness with which public opinion is mobilised in its favour, or against its use. Accidents, but also social trends against modernism, both act against this.
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See "health care", above |
See "health care", above. |
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Chapter One reviewed the ground of economic success and competitiveness. One natural tendency is to play to strength and to mitigate sources of weakness. This prescription - of focus and competitive bench marking - has had major successes in companies. Where companies have been allowed to dictate the terms of local engagement - or where local government has chosen to accentuate some feature, such as tourism, and to protect this from dilution or harm, then the result has been geographical specialisation.
Towns are innately specialised as compared to the nation as a whole, but it is a different kind of specialisation from the results of being, for example, a 'company' town. Complex towns are plural, but they are also machines that sustain themselves for complex tasks. They are their 'for' their citizens, not for a single company that caused them to be built. Power structures are different, and debate is more wide-ranging.
A specialised town or region has made some choices about what it wants to be and how its citizens want to live. Where interests clash, the decision is weighted towards this overall thrust. If a region wants to support knowledge-intensive industries, academia and a high quality of life, for example, it may allow an influx of the wealthy retired, but not the introduction of heavy industry, or the cruder end of tourism. Complex regions have a freight of history to carry, of course, and sectors and social groups rise and fall as a proportion of the overall 'portfolio'. Nevertheless, shapeless regions, in which no one concept dominates and in which no organising principle guides major choices seem unlikely to thrive in the decades ahead.
The reasons for this are inherent in knowledge milieus. It is clear that geographical concentrations of like activities and their support services create a gestalt that leads to renewal, innovation and further growth. It is also clear that regions which compromise the attractions of their sources of advantage by diluting these with inappropriate development lose way. The way in which this will evolve is, of course, scenario- and nation-specific.
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Most regions - and virtually all cities - have identified their courses of comparative advantage, and have identified the systems and resources which they cannot afford to compromise. They have done this in an expert and consultative manner, such that their populations have collectively worked out what they want to be. They have often come to decisions which lead to segmentation at a micro-level. The complexity of law, tax, regulation and identity that this creates is a major (and welcome) feature of the times. However, the 'systems' perspective that informs much of what is done also sets limits to such fragmentation. Basic functions such as health, communications and the like are harmonised across such boundaries, although perhaps locally interpreted. It is a mistake to see this world as comprised of micro-states. It is far more many-layered than this. Overlapping domains of decision and choice create a dappled effect, rather than neat boundaries. All of this is satisfactory when it works, but very hard work to manage and to understand. |
The unceasing thrust from commerce to change, to meet receding frontiers, to attract mobile capital generates many kinds of response. In the cutting edge nations, these are primarily of an enabling nature. It is essential to keep up; the obscurantists are falling behind; we must go with the drift of the times. There is no alternative. It is, however, impossible to cover all of the options, and so the unavoidable consequence is specialisation of the 'company town' nature. The views of those who do not fit in with this are given decreasing attention, and in line with the great physical mobility of the times, many move to quieter, or anyway different, pastures. The consequence, around 2015, is evident as increasing fragmentation. Successful areas grudge the subsidies asked of them by their hinterland. Today's mono-dimensional success can be tomorrow's very absolute failure. However, the jigsaw of specialised domains remain glued into national structures, and these arbitrate where difficulties emerge. The weakness of these institutions has already been noted. |
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Energy consumption is a function of four factors: efficiency in transformation, efficiency in use, the nature of the portfolio of value-adding activities and the scale at which these operate and expand. The three most powerful modulating forces are the relative prices of the primary fuels that are being used, the rate at which capital goods are being replaced and the technology which is being employed.
The consequence of this is that energy forecasting and energy policy are extremely complex, technical and uncertain matters. There are, unfortunately, four fundamental concerns that such policies must address.
First, energy is absolutely crucial to the modern economy and supply security is paramount. This impacts on issues such as the insecurity of particular primary energy sources, the richness of the energy supply portfolio and the use of indigenous resources. It has relevance to how peaks in demand are to be treated, how uncertainties innate to transmission infrastructure are to be handled, to protection from security threats and to a host of other issues.
Second, energy supplies must be economical to use. Energy inputs may amount to half of the cost of many finished products, and high prices mean uncompetitive goods and services. Additionally, energy is a significant fraction of the budget of poor households, and high prices affect then in proportion.
Third, energy creates pollution, either as heat - which is unavoidable - or as chemical pollutants, which can be abated or avoided. Often, however, abating one kind of pollution - sulphur emissions, focused urban discharges - results in problems elsewhere. Regulation which is aimed to shift from one more to another - form coal to nuclear or solar electricity generation - offers one powerful supply-oriented solution to this, which efficiency of use has potential which has yet to be fully exploited on the demand side. Efficiency is chiefly driven by investment at best practice, something dependent on regulation. Price-driven savings are important where alternatives exist - in fuel switching, for example - and much less effective when it is overall activity levels which are being deterred. (Environmental issues have been discussed in Chapter One.)
Fourth, the use of energy may create situations which are problematic, but for which the solution does not lie in the strict domain of energy policy. Urban congestion is one example, and an earlier effect on cites - that of suburban sprawl - can be traced to the introduction of the train, tram and other mass transit. One can make a very clean and effective car, but this will not solve urban traffic problems. One can sort out urban transport, but still be left with carbon dioxide emissions from the power stations which power the public transport so used. Many such solutions are, however, more effective per passenger mile, but do not meet with the needs of the public, who want to drop children at school, go shopping and then visit a garden centre.
These linked factors make solutions contentious, technical, costly. The scenarios present different approaches to their resolution.
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The scope of technological progress is hinted at in the commentary on Pushing the Edge. However, a less technophile, less adventurous world takes fewer steps in this direction. The international scene is more stable, and slower growth creates less supply pressure. Environmental concerns are, however, marked. Pressure groups develop their coherence of approach to the issues, separating out the many features to which the introduction referred and offering solutions to these. There is less heard about 'saving the planet' and much more about specific things that can be done in respect of specific issues. One very distinct feature is the developing trade in energy efficient good to the poor and industrialising nations, not least to comply with supply chain requirements and the strictures under which the industrial nations agree to conduct their trade. The period around 2020 sees the regeneration of the industrial world cities into sustainable engines for growth. As much of the economy is by then captured within these entities, solving these issues solves many more. Issues such as long distance travel are still seen as exceptional issues. However, the failure of the industrialising nations to follow rationalist paths in their development is a major cause for concern. The industrialisation of China and India on coal is having a major impact on carbon dioxide accumulation. Climate change is proven to be occurring, but the observed change remains relatively small. What is less proven - but everywhere evident - is that extreme events are becoming more frequent, and that the climate is becoming erratic. The institutions, the will and the means are available to do something to modulate this, if not to reverse it. Life in the poor nations is very difficult when prices of energy are high. New renewable sources - solar photovoltaics, biomass power generation - are affordable only when the local populations pay market rates, and the owner of the capital is able to remit dividends. The apparent unfairness of this is, for the most part, not allowed to mask its essential truth. |
Technologies prove easily able to deliver light, almost pollution free vehicles which are exciting to drive and safe to own. Urban access is managed rather in the manner of air traffic, with 'slots' being sold to bidders for access to the city and to parking. Energy supplies are increasingly under threat in an unstable world, and effort goes into creating indigenous supplies. Biotechnology has freed up farm land, and biomass power is widely used. Solar power-generating roof tiles, and high performance rotors to store day-time energy, are widely used. Ocean thermal plant - often creating high-energy products such as metallic Magnesium, Aluminium, various Hydrogen-rich clatherates and compounds - are in wide service. Natural gas from the oceanic hydrate beds and from geological reserves is converted to portable liquids - such as formaldehyde - on site. This one catalytic technology sinks the oil and petrochemical industries, due to the extraordinary scale of these reserves. Both of these approaches cause a revival in interest in the 'law of the sea'. Once triggered by deep sea mining. Access to non-sovereign resources, particularly near the equator, creates words but few actions. A major security issue is, however, created for the future. Containment-oriented fusion power proves a difficult resource, but particle beam systems (using the scarce Helium 3 isotope) become practical as small-scale plant by 2020. These have zero emissions, and evince no possibility of catastrophic risk. The are widely regarded as the lasting solution, ever provided the Helium supply can be maintained or the Boron hurdle surmounted. (Readers will find more about third generation fusion on the web.) The supply side measures are supported by regulation that mandate effective standards for new investment. Such standards are not much harmonised between nations, but represent a balance between technological advance and the maintenance of individual competitiveness. However, such measures are also compounded of the desire to close marketplaces to the non-compliant. |
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Chapter One has reviewed the issues that drive security concerns, international relation and the management of crime in the domestic and international arena. The scenarios present some alternative prospects.
The reasons for fighting traditional wars of conquest are now much weakened. One cannot capture the knowledge economy. Most wars will not be of this nature, therefore, being low intensity, predominantly urban and aimed to destabilise political dominance rather than to win military targets. Wars between medium-weight industrialising powers (Iran-Iraq, brought up to date) may offer the only reprise of the traditional set battle. The collateral of such confrontations would be such, however, that no industrial power could afford to stand by whilst preparations for it were being developed.
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From the perspective of 2020, the tendencies of the industrial world are clearly those of an analytical, intrusive and managerial nature. Its nations and citizens do not see themselves as custodians or a global police force. However, they do see themselves as coaches, mentors and firm guides where issues have plainly gone off the rails. There is much at stake. Laboratories that are out of control could kill many people. Indeed, an accident could kill far more people than the deliberate use of the weapons of mass destruction of the C20th. The natural world is being damaged, in some cases beyond easy repair. Instabilities in natural systems and in man-made ones, such as financial structures, propagate the consequences of poor management around the globe. The habits of assessment, analysis, well thought-through action are deeply ingrained in the educated populations of the world. The new information technology brings concurrency and interpretation to every portable display and every tenement wall-screen. The projection of power is a multi-phased matter, acting over long time scales, using all means to get the target group to do what is wanted. It is built on solid grounds of consensus legitimacy (in the industrial world) and calls down extraordinary capabilities in assessment, oversight and economic inducement, as well as - where necessary in extremis, strike power. The key issue is not one of blowing things up, however, as constructing the intangible so as to attain the objective of intelligent stability. International policing follows international crime, and requires international jurisdiction. Issues of intellectual property are likely to be fundamental, followed by the containment of dangerous technologies. All such agreement constrain the liberties of the signatory parties, and agreement will be hard-won. |
The convergence of opinion amongst the thoughtful, elderly populations of Renewed Foundations does not occur. Events move too quickly, and regions cannot agree on ways forward or on the fundamental values which they wish to advance. International institutions are not developed and the framework is weak. Security issues do not, however, 'go away'. The extraordinary efflorescence of technology and its global dissemination by out-sourcing makes many of the issues much more acute. Economic exploitation of knowledge creates accidents, steals intellectual property and generates fearsome weapons that are accessible to many governments revolutionary movements and special interests. In the absence of a framework for action and a consensus legitimacy, the industrial powers tend to work in groups, perhaps informing their peers but often in covert situations, to deal with micro-issues. Intelligence gathering grows considerably in all cases to 2020, but the human intelligence features of this scenario - and the rival nature of the intelligence gathering between the block of industrial nations - are quite distinct. Further, client nations and interest settle on different industrial nations, blocks of them or - increasingly - political pressure groups within them. The technical explosion in this scenario makes war-waging a remarkable business, in which a formal confrontation between major powers would create a battlefield uninhabitable to the unprotected foot soldier. Remove vehicles with considerable agility and autonomy are developed, and these are managed to good effect from remote locations. The 'video game' nature of modern conflict clashes with the need to create exit solutions, whereby the political and social aims of intervention are delivered. This is a hard task for robots. |
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Guesses at the leisure time available to people in the past suggest that Europeans that in the order of a tenth of life is open to fun and leisure under subsistence conditions, rising to a fifth as integrated economies emerged. The industrial revolution allowed this to rise to about a quarter, and contemporary estimates suggest that in 2000, around 40% of our lives are given over to leisure. (Such estimates count childhood and retirement as 'leisure'.) It is likely that over a half of our lives wil be spent on discretionary activities by 2020.
People worked 70 or more hours a week in the C16th. Their equivalents work an average of 41 hours in the OECD, and down to 30 hours per week in some nations. Holiday entitlements have risen from, essentially, nil to up to 37 days a year, in Finland. The working lifetime, once curtailed by early mortality or disability but not by right, is everywhere contracting.
This trend confronts three others.
First, the expansion of options inherent in wealth, education and access to complex facilities.
Second, the quick-fire packaging in which we increasingly wrap our experiences: the international weekend, the cartoon, the fast meal.
Third, the embedding of categories of delivery and offer: amusing retailing delivered by electronic means, educational software that sells travel; and so forth. The particular forces of commercial aggregation - creating malls, retail complexes, packaged travel - and of electronic search-and-delivery will both continue to develop in sophistication.
The consequence of this is a very rapid expansion of the formal leisure sector, and a blurring of the boundaries between - for example - health, self-improvement and fun. We wear clothes and drive cars which do much more than protect us from the elements and transport us about. These and many other products afford pleasure, announce who we would like ourselves to be to others, display status and the like.
Brand is a crucial concept. There are four discernible stages of brand, from basic recognition ("you can clean yourself with this") to differentiation ("this one is better at doing it.") The next two stages are not strictly about the product, but about the customer. The third stage is, therefore, is about segmentation: "you are gracious and feminine, and this is for you." The fourth and final stage is about relations between the user and the group: "people who use this product are of the following kind, and react to the world in the following manner." As we move up this brand hierarchy, so the intangibles - status, solidarity, self-guidance - become more important than the innate product. Whilst far from an issue of leisure, acquisition of this apparent clarity is pleasurable and for some, addictive. It governs much of our surplus resource, and will expand greatly as we acquire more.
In addition, it is worth noting that we out-source many things which we once did for ourselves: gardening, cooking, maintenance. We do this in order to find time for things which were, frequently, once regarded as a chore: gardening, cooking, looking after domestic animals, travel, maintenance. The expansion in do-it-yourself, home decoration, cooking as a hobby, gardening and travel is very apparent. In the order of a third of all British prime-time television now addresses these topics. Travel and tourism has become the third largest retail sector in the US. (It should be recalled that quarter of a million foreigners visited Switzerland in 1890, so the trend is hardly a new one.)
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The increasingly multivalent nature of a successful life is reflected in complex choices. People are plural, and plurality will always want a range of goods. Nevertheless, it is seen that being balanced is more important than being extreme in any one form of excellence: 'nothing too much'. Lives may be lived in phases which vary quite starkly in aspirations and affluence, or they may try to balance many factors in a happy medium. In the midst of all of these options, however, the issue of finding one's way through choice is important. What might be termed 'fourth stage brands with integrity' are significant. That is, they let you say who you are and they suggest your behaviour, but they do without asserting dominance, exclusivity or pretension. Leisure activities make unobtrusive use of technology, but this is deprecated. For example, a high powered vehicle in a country lane is seen almost universally as coarse and destructive. By contrast, some will see it as thrilling in Pushing the Edge. Social deprecation of such issues grows rather as the dislike of smoking, or driving whilst drunk, became near-universal in the industrial late C20th. Investment in activism, either of money or personal time and talent is, however, the growth sector in leisure. This calls down a wide range of skills, from personal learning to design, information technology use and media management. Self-development whilst simultaneously having an impact is a very characteristic pattern of self-expression in 2020. |
Technology frees more time, and offer more opportunities to exploit this. The consumer in an increasingly complex bundle of contradictions, and many types of people want different things under different circumstances. There is a market for a far wider range of leisure-related products. Many of these are extreme, in the terms of 2000. They are far more 'hybrid' than were their prototypes, not least as communications are built into almost anything of ant significance and virtually any object of any complexity has a complex repertoire of interactivity on offer. Many industries that were once primarily concerned with things - vehicles, shows - now find themselves selling intangibles. Sports clothes is an example where this transformation was already well underway by 2000. Tie-ins that add to the intangibles associated with an offer will increase in importance. The importance of the genre and the continuity within a life-styled theme is strong, to the extent that the references embedded in the product are meaningless to the outsider, once again a feature of youth culture in 2000, but increasingly mainstream to the extent that braided, parallel rivulets can be said to have one. Technophilia will have passed its peak, in that new technologies saturate activity in 2020. It is style tweaks that proclaim affiliation, the 'in' signals of social groups and parallel elites which serve as the cutting edge. |
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