Monthly Briefings

May 2012: Innovation.  Everyone’s talking about it – just take a look at the contents of any leading business journal in the last few months.  Everyone wants to be at the forefront of it. But it’s tough.  It’s not just about having a good idea; it’s about translating creativity into action in the market or environment in which you are operating.  As Thomas Edison put it: "Innovation is 1% inspiration and 99% perspiration."

So why all this interest in innovation?  Because the world is changing faster than ever before; uncertainty and volatility are the norm.  Global trends are driving new markets, new customer and consumer needs, new technologies, new business models for value creation and new ways of working, living and behaving. In this environment, even world-leading companies, with dominant and proven business models, ultimately discover limits to growth. They are always in search of the next high-growth market, the next source of value – and if they don’t innovate to realize these opportunities someone else will, often someone that may not even have been considered as a potential player.  Think about which company now dominates the music market – a “computer” company, Apple.  Think about how leading food companies are reinventing themselves in the health and wellness market space.

In these shifts there is an emerging pattern: Innovation is becoming more and more distributed.  Industry-level innovation is no longer the province of the traditional players – the notions of value and industry are being shaken up more often than not by players from outside the industry or small start-ups with radical ideas and/or technologies, who even more radically focus on needs and customers/consumers than industry boundaries.  How value is created is becoming even more distributed as new models for sourcing and executing on ideas expand, from crowdsourcing to crowdfunding to word of mouth and peer recommendations.  Everyone is – or can be – an innovator, thanks to rapid advances in communications and information technology that is shifting knowledge around the world faster than ever across multiple, self-configuring networks.

April 2012: The weather seems to be going crazy across the globe, with man-made climate change seen by many as an important contributing factor.  Preliminary findings from the World Meteorological Organization (WMO) confirmed that 2011 was the warmest year on record. Globally-averaged temperatures in 2011 were estimated to be 0.40°C above the 1961-1990 annual average of 14°C (Source: WMO). In many parts of the world people have had to deal with unusual extreme weather events from devastating flooding to extreme drought and freezing temperatures. Such climatic shifts have a significant impact on energy, water and food security in a world where demand for all these critical elements is rising due to both population increases and rising per capita consumption. Vulnerability is increasing.  As a result, energy, water and food security are top priorities for the world’s leaders along with all those directly and indirectly impacted, i.e. everyone on the planet. As resource pressures increase, the challenges will be to do more with less, to eliminate waste and, ultimately, to develop self-sustaining systems that will allow us to find the balance where resources are no longer depleted but reused effectively. 

To achieve the security we need, new technologies will be critical from urban farming to seaweed or algae-based biofuels. However, more important – and more difficult – will be rethinking our entire relationship with energy, water and food as this is the key to future resource security.  It means potentially using less of each resource – or using it better, for example through distributed production which eliminates the waste of transmission or transportation.  It also means being open to novel sources of the resources we need, for example of new, healthier foods in our diets from currently unused vegetables to artificial meat to insects.

How the future of energy, water and food security will evolve is yet to become clear, but what is already certain is that if we do not act now, the potential for resource conflicts between countries, organizations and people will rise as a recent US Intelligence report highlights (see Water below).  Even in the next two decades our resource consumption patterns are likely to be radically different and diverse – and these developments might even be exciting and interesting!   What is your organization doing to tackle the challenges?

March 2012: Technological advances are moving at exponential rates.  Ponder this for a moment:  your parents have lived through the development of the computing era from the earliest electromechanical devices in the 1940s to IBM’s supercomputer Watson that outperformed the best human brains.  Today, many five year olds have no concept of a world without technology – it is quite simply part of their lives.  This month, we’d decided to look ahead – a long way ahead in some cases – at radical and innovative technologies that will potentially reshape our world in the decades to come.  In today’s world, it’s easy to get swamped by short-term thinking and firefighting but we don’t like to encourage it…

Technology advances will not only impact how we work and live, but also humans as a species. From developments that allow us to overcome the resource challenges presented by population growth to advances that will reshape the production of goods and services, our environment and our humanity, technology will challenge us to rethink every aspect of what we do and how we do it.  While some of the breakthroughs will be exciting and easy to embrace, others will challenge vested interests and the status quo.  The definition of value will be challenged and change.  Our comfort zones will be disrupted and pressures could easily spill over into social, political and business tensions or conflicts.  But, like it or not, these changes will come – sooner than we think in some cases.  What is your organization doing to get ready?  Who do you need to partner with to do so?  What will be the impact on your customers and consumers more broadly? What are YOU doing?

February 2012:  With more consumers globally with more affluence, choice and desire to get involved in co-creation through the business system, the race is on to own the consumer. Businesses are leveraging their extended networks along with technology and the exploding number of channels available to connect with the consumer to build reputations, trust, loyalty, returns, market position and ultimately the license to compete. The competitive advantage of companies on the frontline of consumer interactions is being challenged by those one or more steps removed, as they seek to leapfrog retail channels, e.g. through direct online sales, or to build reputations that mean consumers demand their product or service as part of the solution, e.g. Intel Inside. As consumers increasingly demand experiences and solutions and become more socially aware, the notion of value is shifting, potentially demanding new forms of cooperation between firms and consumers.

In this briefing, we look at how this fight to own the consumer is playing out in practice, through the eyes of the consumer and the networks to which they are increasingly connected. On the other side of the equation we look at how businesses are becoming more networked and social – mirroring in many ways their target markets. 

January 2012: Typing Trends for 2011 into Google on January 1^st 2011 gave us around 46 million results but typing Trends for 2012 on January 1^st 2012 gave us around 808 million! Clearly there are a growing number of diverse opinions on what’s in store – particularly in a year where we face increasing uncertainty over everything from the geopolitical world order (with changes due in many leading nations) to the economy (recession or not? global or not?) to consumer behavior (to buy or not to buy?).  The problem is there are so many forecasts and opinions out there that it is tough to sort the noise from the merely interesting to the extremely important. 

So, as last year, we thought we would give you a brief overview of where you can find some of the more interesting and important trend forecasts and ideas for 2012. As always, bear in mind that in a world as uncertain as ours such forecasts are not meant to be accurate. Treat them as directional and informed opinions on potential opportunities and challenges that can offer new perspectives to supplement your own thinking on what might be possible, feasible and desirable. And look at both sides of the arguments – as uncertainty grows, so does the diversity of opinion! Don’t forget to look at top trends outside your own industry or market space – these may well cross over sooner than you think! We will pick up on many of these trends in our next GT briefings along with examples of how they are being – or could be – translated into action.

December 2011: Information and communications technologies are reshaping all aspects of our work and lives.  The implications for providers of commercial goods and services are enormous, from how they manage their increasingly tech-literate workforce to how they interact with consumers and customers.  With the data deluge increasing organizations are competing not only within their industry but across all industries and forms of information to gain – and keep – the attention of their consumers and customers.  It can’t be done alone.  Organizations need to manage a growing array of channels and intermediaries through which their information is filtered, aggregated and relayed to target audiences, including search engines, social networks, news sources, mobile communications providers and purchasing portals such as apps stores.  

The big question is who controls the interfaces between these organizations and their target markets or constituencies – and what does this mean for those organizations that own, use and depend on these interfaces, as well as the consumers that rely upon them.  There is an increasing battle between a diverse range of intermediaries for control of these key interfaces, from the “Gang of Four” (a term from Eric Schmidt of Google), which includes Facebook, Google, Apple and Amazon, to others from Twitter to Cisco, Microsoft, Yandex and RenRen. Control of the interface is power – and potentially profit.

As we work on our forthcoming report exploring how the intermediaries controlling the interfaces are creating a revolution for consumers and businesses, in this briefing we highlight the three key drivers of change in the interface landscape: The unavoidable mobile web, the shift in consumer demand to “made by me” and the rise of social business.   Local, social, photo and mobile or LoSoPhMo is driving much of the conversation about online opportunities and behavior. A world of ever increasing choices leaves consumers with more power than ever to get what they want, when they want it. Mass consumption belongs to the past and uniqueness is the new must. In a world of austerity and green awareness, consumption patterns are changing, leaving businesses no choice than to follow this new behavior or, even better, get ahead and shape new behaviors. Traditional business patterns are being disrupted by the digital interface as businesses increasingly feel the pressure to be where their customers are.

How the interface will change will depend on many things, particularly technologies and behaviors whose shape is only emerging.  But don’t wait too long to start thinking about how things may change – the playing fields are being redefined and if you don’t help reshape your world, someone else will!  Look out for our report in the New Year!

November 2011:  As the end of what has been a remarkable year approaches, we looked back in the October GT Briefing at some of the profound changes that took place in 2011, changes with long-term implications for our collective economic, social and geopolitical futures.  Japan is rebuilding after the earthquake and tsunami in March, the Eurozone is wavering on bail-out plans, Libya has celebrated its liberation, Tunisia has just held its first free and democratic elections, floods are impacting many cities and livelihoods in Asia, and the “Occupy” movement against greed and poverty is growing globally. These events reflect trends whose impact will play out over many years to come, with the path and outcomes still far from clear.

So, as we said last year when we introduced “10 Key Trends to Watch in the Next Year” – trends are just that, trends.  They don’t start and stop according to the calendar and they certainly don’t deliver neat “answers” or outcomes.  Some evolve over long periods, others move faster than anyone can anticipate. 

The critical challenge for each of us is to not just sit back and watch them evolve – action is needed now, even if the ultimate impact of the trends is not yet clear. If you don’t act, you can bet someone else will – and it can be easy to get left behind.  So your role is to ask questions like “what if …”, “how could … impact us in the future,” “how could we anticipate and respond to …” – and then to translate resulting insights into options, choices and actions you and your organization could take to succeed in this uncertain and complicated world.  We offer some suggestions on this in our article Bringing Global Trends Alive in Your Organization Today, Part 1.

Now let’s take a look at ten areas where we expect to see trends making a major impact in 2012!

1. BRIC & beyond rising: Markets, competitors, mindsets and systems
2. Financial and economic uncertainty explodes:  New roles for power brokers?
3. Geopolitical tensions: Politics as a barrier to economic and social stability, versus an enabler
4. Food, water and energy security: Growing challenges
5. Cybercontrols & cyberwars: The new frontlines of authority and crime
6. Technology breakthroughs: Are we serious and will we pay the price?
7. Beyond the Gang of 4:  The fight for controlling the interface
8. The democratization of everything: Facing the tensions of globalization and fragmentation
9. Redefining playing fields:  Fighting to own the new consumer
10. Generations Y and Z moving to the forefront:  Preparing for the digital natives

October 2011:  2011 is one of those noteworthy years where events have unfolded which will have far-reaching consequences in the years and decades ahead; events of such a profound nature that any one of these events would have been more than enough for the world to cope with alone, from the devastating tsunami and nuclear disaster in Japan to the popular revolutions of the Arab Spring to the deepening Eurozone sovereign debt crisis. Together they have stretched our resources and ability to respond, individually and collectively.

On a brighter note, technology has again ushered in massive changes, as tablet “computers” and smartphones proliferate, along with social media – with even the poorest countries joining the technology revolution.  New technologies in many areas from clean tech to communications to healthcare are providing new tools and ways to address the challenges we face. 

Amidst this year of profound changes, one striking element from our perspective is the change in the human condition. We have more choice, more tools at our disposal, more communities to connect with than ever before.  Societies and businesses alike are recognizing the magnitude of the global opportunities and challenges ahead: Social activism is rising; businesses are actively seeking to be sustainable in both purpose and action. The power and resilience of the human spirit is clear.  Yet we are also seeing associated shifts in values and morals; connections—and tensions—are growing.

Despite the challenges of 2011, let us not forget that we have as many, if not more, opportunities ahead of us. We have many choices.  Perhaps the biggest test we face is in developing the capacity to look beyond short-term pressures to make sense of change – and to take action today.  Looking ahead, it will not be business as usual or society as usual. In this brief we highlight some of the profound changes which have happened over the last year (and more) – which will impact our collective futures.     

September 2011: Economic power is shifting to BRIC plus a next tier of rapidly developing economies, due to a combination of increasing financial power, resources, knowledge base, population, and consumer affluence – leading to a multipolar market landscape. Markets are also moving beyond national borders or clear demographic groups – urbanization and the rise of megacities are leading to new forms of “city-states” which can be considered markets in their own right. And “pure” demographic segmentation is giving way to segmentation by communities of choice, which are fluid and often driven by social media. Values and beliefs as well as behaviours are also becoming more diverse – and mobile across borders.

Mutipolarity is asserting itself in more than markets – the world has a huge range of economic systems from centrally driven economies to free markets with many shades in between. Political and geopolitical systems are becoming more diverse, reflecting global economic and power shifts, for example the move from the G8 to the G20 forum. And don’t forget competition. Those companies which are among the largest economic entities in the world will shape this multipolar landscape, but may require a broader portfolio of products, services, business models, knowledge and organizations to succeed. They will also be facing new, formidable competitors – new global challengers are emerging, often building on domestic strength in rapidly developing economies.

The bottom line: The world is becoming more diverse and less predictable. To operate in this shifting environment, in multiple systems at the same time, organizations are going to need to be more flexible and agile, managing several business models at the same time. In this briefing we look at some of the dynamics of multipolarity in terms of markets, competition, and economic/political systems. The question is how you and your organization can navigate this world successfully.

July/August 2011:  Twenty-five years since the Chernobyl nuclear disaster, radiation continues to leak at Fukushima and the world continues to look for cleaner answers to future energy needs. But it’s not just energy in focus – climate change and resource scarcity, including food and water, mean we need cleaner and better ways of using (and reusing) the resources the planet can provide.  Clean technologies are no longer “alternative” – they have significant impacts on the future viability and sustainability of businesses globally and applications are growing, driving new markets, new business models and new solutions to customer and consumer needs.  We have come a long way – many clean technologies are now available and affordable. A recent IPCC (Intergovernmental Panel on Climate Change) report on the Potential of Renewable Energy emphasizes this point – the scenarios run by the panel suggest that close to 80% of the world‘s energy supply could be met by renewables by 2050 if backed by the right enabling public policies.  Yes, that is not a typo: 80%.  But the lower-case scenario, without the enabling policies, is that only 15% of the world’s energy use in 2050 would be provided by renewables.  That’s a huge difference which clearly highlights the choices we have as societies, industries and individuals. 

The question is: Are we serious about implementing them?  Yes, there are upfront costs and benefits will be recouped over time – are we willing to invest now for the long-term, whether governments businesses or individuals, or are we using the economic crisis as an excuse to pass the burden on to the next generations?