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Blockchain used in world trade

August 1, 2018

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I have not had a chance until now to blog about the Long Finance report on the impact of distributed ledgers on trade, published in April. It was launched at the House of Lords, and looks at Smart Ledgers (blockchain) as potential facilitators of global trade flows. It is particularly relevant given recent developments in Brexit discussions.

The impact of Smart Ledgers will be to reduce cost frictions associated with processes such as paperwork and identity checking. This could facilitate the creation of new business opportunities, and reduce the volatility associated with international trade.   For this reason, the report was sponsored by, among others, the Worshipful Company pf World Traders.

The key findings of this report into the potential economic impact of Smart Ledgers on world trade are the following:

  • Smart Ledger technology could boost world trade in goods by at least $35 billion dollars per annum. The cost of importing a single container could, therefore, be reduced by around $46, by simplifying procedures. These potential benefits are driven by a 2.5% cost clawback assumption, supported by case studies on previous technological advancements in trade.
  • If reduced uncertainty is also taken into account, the potential gains become even larger, with a potential monthly net cost saving of $172 million (or, approximately, $2 billion per annum). This would boost world GDP by $10 to $20 billion and could, potentially, add between 450,000 and 900,000 to the worldwide demand for labour, boosting wages and living standards worldwide.

Boosting world trade would be of particular benefit to the United Kingdom (UK), for two reasons. First, as a small island economy, it is relatively more dependent on world trade than most countries, and second, because Smart Ledgers offer particular advantages in solving some of the problems that might emerge from Brexit. The likely gains to UK GDP might be given an estimated boost of £0.4 to £0.8 billion, without taking into account the effects of Brexit.

Written by Gill Ringland, SAMI Fellow Emeritus.

The views expressed are those of the author and not necessarily of SAMI Consulting.

SAMI Consulting was founded in 1989 by Shell and St Andrews University. They have undertaken scenario planning projects for a wide range of UK and international organisations. Their core skill is providing the link between futures research and strategy.

If you enjoyed this blog from SAMI Consulting, the home of scenario planning, please sign up for our monthly newsletter at newreader@samiconsulting.co.uk and/or browse our website at http://www.samiconsulting.co.uk

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The Future of International Institutions

July 25, 2018

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The World Academy of Arts & Sciences organised a Colloquium with organisations including the World University Consortium, and a number of academic institutions, in Paris in early May. The topic was “The Role and Impact of International Institutions on Economic Theory and Policy”. I kicked it off with a talk on “The near future to 2030 and its potential impact on the role and impact of International Institutions on Economic Theory and Policy”. The message of this was that many international organisations are outcomes of post World War II thinking and spin out of the UN in some way. The UN is likely to become less effective over the next decade as the US pulls back financial and moral support. Other sorts of international institutions – connected to specific topics such as security, access to Arctic resources, etc – will become more effective.

The link to the web site is http://worldacademy.org/newsletter/july-2018#n2.

Some personal reflections:

  • A number of presentations focused on the shortcomings of UN agencies and organisations, with boundaries or terms of reference less relevant than when they were set up. One example was the Food and Agriculture Organization, a specialized agency of the United Nations that leads international efforts to defeat hunger. The current status is that obesity rather than food shortages are the key concern in the future; and that while the world can provide enough food for the growth in population, there will continue to be losses and inefficiencies in distribution.
  • The need for a new economic theory was a major discussion theme – this is an ongoing open project for WAAS – http://neweconomictheory.org/– and starts from the position that the world confronts a paradox: Unparalleled global production capacity exists side by side with high and rising levels of unemployment, inequality, financial instability, social unrest and ecological degradation. Efforts to reform current economic policy and institutions are invariably opposed by both an intellectual orthodoxy and vested economic interests, drawing on the conventional wisdom of prevailing economic theory to support prevailing policies. The multidimensional challenges confronting humanity today are human-made and can be changed by a change in thought and action. Theoretical limitations and misconceptions are a primary root cause of persistent poverty, rapid and rising levels of unemployment, inequality, and calamitous environmental threats. A fundamental change in thinking is needed to support a radical change in policies.
  • One question which also recurred is the “best” way to organize for the benefit of society. While capitalism has many clear and manifest problems, a presentation from two Russian academics had a cutting analysis of characteristics of decision making and implementation by bureaucrats, raising the question in my mind – should we be talking about trying to improve systems without approaching the topic of the people involved and human motivation.

And Paris in the spring is magical!

Written by Gill Ringland, SAMI Fellow Emeritus.

The views expressed are those of the author and not necessarily of SAMI Consulting.

SAMI Consulting was founded in 1989 by Shell and St Andrews University. They have undertaken scenario planning projects for a wide range of UK and international organisations. Their core skill is providing the link between futures research and strategy.

If you enjoyed this blog from SAMI Consulting, the home of scenario planning, please sign up for our monthly newsletter at newreader@samiconsulting.co.uk and/or browse our website at http://www.samiconsulting.co.uk

Artificial Intelligence And The Legal Profession

July 18, 2018

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The Law Society has published a report on AI and the Legal Profession with input from SAMI Consulting.  The Law Society’s research team used the Horizon Scanning tool Futurescaper to store their scanning hits, and SAMI used its analytical capabilities to help structure the report.

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After an introduction which reviewed the nature of AI systems generally and assessed their current state of development, the report covers areas of application in the legal profession identified by the horizon scanning. These included:

  • Document analysis: drawing key conclusions, especially for due diligence
  • Contract intelligence: using machine learning to scan documents and produce a risk visualisation
  • Document delivery: a chatbot that provides consumers with privacy law information and generates a compliance policy
  • Legal Adviser support: based on IBM Watson, a system reviews the relevant laws, draws inferences and provides candidate answers to various questions
  • Clinical negligence analysis: a decision support system that reviews similar previous cases and their outcomes
  • Case outcome prediction: predicted outcomes of European Court of Human Rights cases with 79% accuracy
  • Public legal education: helping the general public understand the law better, notably in divorce cases.

The report then addresses the potentially far-reaching implications of the application of AI in the area of law.

Firstly it looked at the impact on the number of legal jobs. In their book The Future of the Professions”, Susskind and Susskind predicted that a wide range of legal jobs could be replaced by AI systems. Not all commentators agree, but the suggestion that the impact on entry-level solicitors could be large is quite common. But if that is the case, where do the senior solicitors of the future come from?

This leads on to an impact on the types of legal jobs and the skills required. The need to relate to clients and assess the real nature of a problem becomes more important than knowledge of the law itself.  Also clients will increasingly use AI systems themselves to reduce complexity and ambiguity – two reasons for consulting lawyers in the first place.  Conversely, new roles will emerge in operating and understanding AI systems, and in addressing issues of liability their application might raise. Consequently the whole area of skills and legal education training will need substantial revision, as other drivers such as changing generational attitudes will impact as well.

There is then the impact on organisational structure and strategic planning. Recruitment and succession planning need to change, and a new role of Head of AI may be needed. Machine learning could also identify new opportunities and growth areas in the market itself.

But for many, the key impact is lower costs and changing fee structures. Entry-level solicitors could be replaced entirely, and more highly skilled solicitors can be freed from routine tasks to spend more time negotiating agreements. Lower costs in turn could open up the market to those who could not previously afford legal advice, increasing the value of the whole market.

The final section of the report looks at how AI systems could themselves raise legal concerns. Areas covered include:

  • Transparency: AI systems learn from data, so are self-organising and their conclusions not easily explained; yet transparency is a basic principle of justice.
  • Ethics: the Law Society addressed this area in a recent conference, which we reported on in two blogposts here and here.
  • Liability:as AI systems interact with many sources of data from the Internet of Things assigning liability becomes difficult.
  • Electronic personhood: the EU has already begun to consider whether sufficiently advanced systems should be given personhood, with rights and responsibilities analogous to corporate personhood.
  • Public acceptance: just like GM crops, vaccines, and nuclear power in previous generations, there could be increasing public disquiet about the application of AI to sensitive social situations.

The report concludes: “Over the next few years there can be little doubt that AI will begin to have a noticeable impact on the legal profession. Law firms and in-house legal departments have opportunities to explore and challenges to address, but it is clear there will be change”.

For those interested further, the report has a very extensive list of references, the output of the research team’s very thorough horizon scanning.

Written by Huw Williams, SAMI Prinicipal.

The views expressed are those of the author and not necessarily of SAMI Consulting.

SAMI Consulting was founded in 1989 by Shell and St Andrews University. They have undertaken scenario planning projects for a wide range of UK and international organisations. Their core skill is providing the link between futures research and strategy.

If you enjoyed this blog from SAMI Consulting, the home of scenario planning, please sign up for our monthly newsletter here and/or browse our website

 

Mortgage cover excluded from new means testing rules

July 12, 2018

SAMI Consulting were pleased to see the press release from the Building Resilient Households Group about the exclusion of mortgage cover from new means testing rules. The work by the group, co-chaired by SAMI Consulting’s Richard Walsh and Alan Woods, brings much needed good news for householders.

The Building Resilient Households Group gives regular updates on its progress to the IPTF and the CII. The Building Resilient Households Group sought clarification from DWP about how pay outs from protection policies will be treated under the new system

Changes to State help with mortgage payments

From 6 April 2018 people who suffer a loss of income from sickness or other causes can no longer get state benefits to cover their mortgage payments. Instead some people may be offered and qualify for a loan, called a Support for Mortgage Interest Loan (SMIL) in which case DWP will, where possible, put a charge on their property. This means that all mortgage holders now need to consider protection if they want to avoid eating into the equity in their home in the event of a prolonged sickness absence (an occurrence that affects two million people each year.)

Clarification of how insurance pay-outs will be treated

In the light of these changes the Building Resilient Households Group, has sought clarification from DWP about how pay-outs from protection policies will be treated under the new system. The key point from the clarification we have now received is any income received from an insurance policy which is specifically intended and used to cover mortgage payments will be totally disregarded when entitlement to means-tested benefits is assessed.This applies to both legacy benefits and Universal Credit

Two provisos should be noted:

  • If insurance pay-outs are restricted to the payment of a mortgage (e.g. by being paid direct to the lender) they will be fully disregarded. But if the claimant has choice over how to spend the payments then only any portion which DWP judge to be intended and used for mortgage cover will be disregarded.
  • If a claimant applies for a Support for Mortgage Interest Loan their insurance payout will be taken into account when their offer of a loan is considered. However, this scenario is unlikely to be a common one as people would have no need for a loan while receiving insurance payouts which fully cover their mortgage.

Implications for mortgage-holders, advisers and insurers

Richard Walsh, Joint Chair of the Building Resilient Households Group, said: “This clarification means that:

  • people who choose to protect their mortgage payments with an appropriate insurance policy can do so without fear that their pay-outswill lead to their benefits being cut
  • advisors should alert clients to the risk that loss of income through sickness or other causes may lead to mortgage holders into spiralling debt – and advise on appropriate protection
  • insurers may see opportunities to design new protection policies with a portion specifically designated to cover mortgages”

Written by the IPTF and BRHG.

The views expressed are those of the author(s) and not necessarily of SAMI Consulting.

SAMI Consulting was founded in 1989 by Shell and St Andrews University. They have undertaken scenario planning projects for a wide range of UK and international organisations. Their core skill is providing the link between futures research and strategy.

If you enjoyed this blog from SAMI Consulting, the home of scenario planning, please sign up for our monthly newsletter here and/or browse our website

 

Disruptive technologies?

July 4, 2018

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VC company Tällt Ventures brought together a panel of judges from Microsoft, Google, Uber, Sainsbury’s and others under the banner of “Disrupt 100” to select the start-up businesses “with the most potential to influence, change, or create new global markets”.  Innovations that had a social benefit were particularly highlighted. They tackled this challenging task, grouping contenders together in themes:

  • Social impact enterprises
  • AI
  • Biotech
  • Space tech spin-offs

Many investors are now looking at the social impact of businesses as a KPI.  Examples on the list include:

  • Jupiter Intelligence which provides a tool for urban planners to assess flood risk using real-time satellite data and machine learning to assess the effects of climate change, rising sea-levels and erosion
  • Callisto is a platform for college students to report unwanted sexual harassment; now being extended into workplace versions
  • Flow Neuroscience, a personal medical device that treats depression by stimulating and suppressing parts of the brain using very weak electrical currents.

 We’ve seen many developments in AI in recent years and the judges saw these having a real impact very soon.  They selected:

  • Sophia Genetics, providing enhanced genomic diagnostics, specifically for cancers
  • CallSign uses AI to build a picture of the user and trigger an alert if it detects unusual behaviour.
  • Textio is an “augmented writing” platform helps recruiters improve the content of their postings and changes the way businesses use language. Small tweaks can change the appeal of an advert and targeted to specific groups: in one case the female response rate increased from 10% to 57%.

Biotech has long been one of our megatrends. In this category the judges were looking at those developments that would support sustainable consumption.

  • Memphis Meat, which produces lab-cultured meat thereby reducing water use, and includes amongst its backers Bill Gates and Richard Branson
  • Algiknit is developing a sustainable “BioYarn” that can quickly biodegrade after its use-life is over using alginate, a biopolymer derived from kelp
  • Envigreen Biotech produces starch-based substitutes for plastic bags that are 100% organic and recyclable; some of the inputs are vegetable waste bought from farmers in southern India, thereby also providing a boost to the local economy.
  • Douxmatok is looking to change the way we taste sugar, making it more potent so people consume less of it – ideally, around 30% less. A “drug carrier” transports the sugar molecules directly to the body’s sugar receptors enhancing its impact.

The fourth category was rather anomalous: “unfathomable science”, mainly space technology spin-offs. The highlights were:

  • General Fusion are developing fusion energy called Magnetized Target Fusion (hydrogen atoms fused together by heating to high temperatures); fusion energy could be relatively cheap, and of course doesn’t produce greenhouse gases.
  • Zero Mass Water have developed hydro panels to produce water using only sunlight and air from the natural humidity – a huge benefit in water-starved areas and refugee camps.
  • EnergyNova design and manufacture longer-lasting hydrogen-fuel batteries which overcome the limitations of lithium batteries.
  • Axelspace uses 50 satellites to take pictures of the world every day, and is building a space data API for anyone to use; applications are boundless.

The range of innovations on the list is startling – from nano-technology satellites to portaloos that use no water and convert waste into energy; from automated quantum chemistry to “increasing pregnancy possibilities via smartphones”!

But what I found interesting was that so many innovations targeted at social benefit are seen by a VC firm to be serious investment opportunities. Maybe this signals a change in corporate priorities.

Written by Huw Williams, SAMI Prinicipal.

NB: none of the above represents an investment recommendation by either Huw Williams or SAMI Consulting.

The views expressed are those of the author and not necessarily of SAMI Consulting.

SAMI Consulting was founded in 1989 by Shell and St Andrews University. They have undertaken scenario planning projects for a wide range of UK and international organisations. Their core skill is providing the link between futures research and strategy.

If you enjoyed this blog from SAMI Consulting, the home of scenario planning, please sign up for our monthly newsletter here and/or browse our website

Taking the bias out of decisions

June 27, 2018

This blog piece is a highly edited version of “Debiasing political decision-making through “Value-Free” scenario models”, a paper presented by SAMI Fellow Jonathan Blanchard Smith at the European Union’s 6th International Conference on Future-Oriented Technology Analysis (FTA) – Future in the Making, held in Brussels, 4-5 June 2018.

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Our recent work on Brexit, and in particular the creation and use of the SAMI futures model in client work and presentations, has thrown up an unexpected outcome. Client feedback has shown that one of the benefits of using the model is in being able to consider a politically contentious matter such as Brexit in what we are calling a ‘value-free’ state: in other words, that the model enables people to think about a complex, highly emotionally charged problem rationally.

Alongside our existing work on decision bias, and how it complicates making “robust decisions in uncertain times”, we have been developing this thinking, and recently presented it at the main European foresight conference to gain feedback and further advance our thinking. This remains very much a work in progress, but it is one which seems to have real benefits.

Brexit as an example of contested thinking

It is a feature of Brexit that people find it very difficult to engage with without having a preference for one or other side of the argument. We have seen in for instance the largely unsupported claims of the Leave side (Aaron Banks’ recent statement to the House of Commons Culture Media and Sports Committee: “Banks and Wigmore happily admitted lying to journalists during the EU referendum to gain publicity for their cause” (The Guardian, 12 June 2018)) or the much derided “Project Fear” from the Remain side that both sides exaggerated and exaggerate their positions for effect.

The binary nature of the choice inevitably intensifies the split between the two sides. The marginal nature of the referendum result gave neither side an argument that the electorate was with them.

Populism

The rise in populism raises a number of issues including:

  • Youth vs age. Whilst the people behind populist movements are of all ages, those who vote for them are predominantly older.
  • Distrust of experts. The reaction against expertise complicates decision making by introducing what is essentially an unanswerable opposition (“I don’t believe you”) to fact. There is no easy resolution of this issue.
  • Emotional investment. The oppositionalist, binary nature of many of the issues results in people gaining entrenched positions where it is emotionally easier to pick a side and defend it than it is to see that the other side has valid opinions or, even more difficult, may in fact be right.

The combination of these two last points has been compounded in what is generally known as the “backfire effect”.

The Backfire effect

Essentially, the backfire effect holds that “A man with a conviction is a hard man to change. Tell him you disagree and he turns away. Show him facts or figures and he questions your sources. Appeal to logic and he fails to see your point.”

The issue: and its solution

The essential problem our clients found was that their thinking was clouded not only by the normal issues which affect one’s thinking about the future – lack of precise information, compromised or conflicting reasons for doing the work, unconscious or conscious desire for a particular outcome and so on – but by the fact that they were too embedded in a view about the decision that formed the start point of the scenarios in the first place. This emotional investment in one side or other prevented them from thinking clearly about the future.

By developing a futures model which does not include the problem but includes the consequences of the problem, in such a context that it is the potential future outcomes that matter, the model seems to allow a freedom of thought which is genuinely productive.

We have described the model in detail in past blog posts. Our paper described the results we gained from the model.

Feedback from clients has been overwhelmingly positive. They appreciated

  • “the space to think about this without worrying about Brexit”
  • “the clear air it gives us to think about the future”
  • “the fact that I can think about the opportunities not just how bad it’s going to be”

This implies that the ability to communicate is by itself improved by the removal of potential biases, by providing a “safe space” for clients to think about complex and divisive issues without actually having to explicitly engage with the issue itself.

We draw a number of other conclusions, specifically designed for scenario creators, around the requirement for conscious debiasing at the outset, the need for independent checking and a real sense of integrity throughout the model development process.

The backfire effect is only one of many potential biases that can influence both scenario set creation and use. However, it is also one of the most evident. Whilst scenarios are generally understood as providing a space within which one can think about the future and its implications, the underlying assumptions and methodologies are poorly recognised in the client base, and there is a question about how far one can engage clients with the engineering as opposed to the result.

Conclusions

Conscious debiasing at the outset of the scenario construction process is a multi-step process, and is dependent not only on the quality of the scenario set but upon the determination of the development team.

We believe that this model provides a potential route to thinking about the implications of contentious political topics in a way that provides clarity for clients, whether they be in politics directly or in the impact of those politics through their involvement in business or the third sector. Communication, comprehension, and results all seem to be improved through this model.

Copies of the paper are available directly from the author at jbs@samiconsulting.co.uk

Written by Jonathan Blanchard Smith, SAMI Fellow.

The views expressed are those of the author and not necessarily of SAMI Consulting.

SAMI Consulting was founded in 1989 by Shell and St Andrews University. They have undertaken scenario planning projects for a wide range of UK and international organisations. Their core skill is providing the link between futures research and strategy.

If you enjoyed this blog from SAMI Consulting, the home of scenario planning, please sign up for our monthly newsletter here and/or browse our website

 

“The Future Starts Here” at the V&A

June 20, 2018
V&A Exhibition

© Victoria and Albert Museum, London

The V&A have put together a very interesting exhibition “The Future Starts Here”with some 100 objects selected to illustrate current trends and future possibilities. The exhibition, on until 4thNovember, is organised in five sections: Self, Public, Planet, Afterlife and “The Future is….”.

The Self section explored what it means to be human and how connectedness does not necessarily mean an end to loneliness. This first looked at the application of AI in the home – a robot laundry, called BRETT (Berkeley Robot for the Elimination of Tedious Tasks) – and moved on to cover Roman wearable technology (a ring with a door-key attached).  The extent to which biotech can actually change the human form – and has already begun to do so – blurs what is human and what is technological.  Other difficult issues around criminal profiling (remember phrenology anyone?) and staff monitoring were also raised.

In Public, issues around democracy, cities and the use of data were explored. Is direct democracy the next stage – as evidenced by an Estonian e-citizen card and flashmob demonstrations? If refugees can compete under a neutral flag at the Rio Olympics, what does that mean for nation states? Inevitably, there was a driverless car (the whole event is sponsored by VW), and zero-carbon, zero-waste cities (Masdar, Abu Dhabi).  An example of crowd-funded infrastructure (a footbridge) asks the question of whether this a better way to pay for services than taxation. We were also invited to consider what it would be like to work for an algorithm – as UberEats drivers do.

The third section, Planet, dealt with how we manage ours and whether we reach out to others, specifically Mars. After noting that we were now in the Anthropocene, a geological era shaped by mankind, there was a proposal to green the deserts with deep-rooted grasses – have we not seen the unintended consequences of eco-engineering before, in Australia for example?  3D printing in space as a way of managing inter-planetary missions seemed a more reasonable proposition.  If Mars is the answer, what was the question?

Afterlife dealt with the prospect of living forever – who would want to do that? Cryonics potentially creates the potential for freezing bodies – or just brains – until health technology can cure their illnesses.  Will we upload our experiences and knowledge to the web, and become virtual beings?  The Svalbard Global Seed Vault providing the capability to recover plant life is one thing as is, similarly, the Millennium Seed Bank at Kew , which SAMI Fellow John Reynolds helped set up. But the Long Now library, which aims to compile all the books needed to re-boot humanity in the event of a cataclysm, is surely  something of a Desert Island Discs exercise, as everyone would have their own selection – Terry Pratchett anyone?.

Finally, visitors were invited to complete the sentence, “The Future is…”.   Suggestions included “The future is vegan”, “the future is female”, “the future is slavery to AI”.

Overall, the exhibition was perhaps overly technologically optimistic: new inventions will together make our lives wonderful. There was little consideration of the fact that technology is largely value-neutral. It can be used for good or ill – human nature includes greed and the lust for power as much as goodwill and the desire for a better society.

How would you complete “The Future is….”??

The V&A is also hosting a day-long event, “Toolkit for the Future”, on 29thJune.  “Thinkers and makers question dominant futures and imagine alternative worlds, sharing perspectives on technology, politics, and speculative design”.

Written by Huw Williams, SAMI Principal

The views expressed are those of the author and not necessarily of SAMI Consulting.

SAMI Consulting was founded in 1989 by Shell and St Andrews University. They have undertaken scenario planning projects for a wide range of UK and international organisations. Their core skill is providing the link between futures research and strategy.

If you enjoyed this blog from SAMI Consulting, the home of scenario planning, please sign up for our monthly newsletter here and/or browse our website

 

 

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