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Looking one year ahead

January 11, 2019

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The turn of the year means that one’s inbox inevitably gets overwhelmed with “The world in the new year” pieces. Some are so general to be almost cut-and-paste from each other; some sector-specific ones are full of grinding detail; some (and I think this is relatively new) are so politically tilted that they are almost unreadable. And, if one is engaged in futures and strategy, they all have to be read, and thought through, and analysed.

The short time horizon of “the next twelve months” is not one in which SAMI generally operates. We prefer to drive strategy from the point of view of the future, not forgetting the important lessons from history. Too many assumptions are built into the present, and it is part of the freshness of the future-driven approach that those assumptions can be challenged in a way which is positively useful, as opposed to simply building out from the world as it is.

So one particular piece, circulated at the beginning of December 2018 by Saxo Capital Markets https://www.home.saxo/en-gb/insights/news-and-research/thought-leadership/outrageous-predictions really caught our eye. Even the headline is promising “Outrageous Predictions 2019”, which at least implies a awareness often missing in many short term projections. As the authors say, “Riding roughshod over the consensus, they look at some highly unlikely events that could have a tremendous market impact – if they come to fruition”. The caution here is important – those of us who look at the future from a professional standpoint tend to disdain the wilder reaches of futurology, because evidence and clear-thinking is important; but heavily caveated thinking such as this can be useful in developing weak signals, fostering creative thought, and crashing other people’s thoughts up against one’s own in a way which may generate useful results.

Whilst the predictions are focussed on the capital markets, there is a lot of food for thought. Let’s look at a few of them, and draw out the long term futures lessons.

EU announces a debt jubilee

As a response to the unsustainable levels of public debt (Italy will have to refinance EUR300 billion in 2019, for instance), and in response to the gilets jaunes protests and the populist tide, this would be a politically attractive move for the ECB. It is probably politically unacceptable in Germany, but were it a way of stopping the Eurozone fragmenting or the Euro collapsing, then it enters the realms of the feasible. Long term, this points up one of the central embedded risks within the EU which will, at some stage, have to be resolved – debt, both public and private, is at an unsustainable level. The world is not yet out of the effects of the great recession of 2007-9, and the two factors – debt and the tail of the recession – taken together will require some real action in the next 5-10 years.

Global transportation tax enacted as climate panic spreads

SAMI’s global drivers have included climate change since their inception. Towards the end of last year, we moved climate change from its role as one amongst many to a higher level of importance, where it is included force majeure in every scenario, since we believe that the evidence now shows it as an ongoing and increasing event. A global taxation response seems to be beyond the ability of the world to organise at present; but Saxo’s prediction is a valid one: climate change will require policy responses which both dissuade fossil fuel use and which raise funds for climate change mitigation. We are already seeing global responses, but we see a response such as this as being unlikely in the near term – the lesson of climate change is that governments respond late, inadequately, and only under pressure. However, we do see local taxation being an option in the short-medium term.

X-class solar flare creates chaos and inflicts $2tn of damage

There is a new Solar Cycle coming round in 2019. In 2012, the earth just missed an X-class flare. We may not be so lucky in 2019. We certainly will get one at some stage in the future. This is one of those science-fiction sounding outside risks which, on closer examination, are actually very real; but like the risk of the eruption of the Yellowstone supervolcano, one which it is possible to anticipate, though perhaps not to plan for.

Prime Minister Corbyn sends GBPUSD to parity

Our work on “Britain in 2030: Four post-Brexit scenarios” encompasses four future scenarios for the UK and the world. This prediction is one which plays well into our scenario set, though we anticipate that any fall-out from it would have resolved into one of our scenarios in ten years time. However, those in the City who we have spoken to occasionally raise the “triple whammy” of a hard Brexit, followed by an election in which Labour wins, followed by the imposition of exchange controls, and we could certainly see that that would cause Sterling and the Dollar to reach parity (alongside the Euro, probably). This would make UK exports significantly cheaper, but push up the cost of imports and hence the cost of living in the UK. UK businesses would become even more attractive for takeover byoverseas companies. And, no matter what happens with the ability of Brits to travel following Brexit, we would have to rediscover the joys of Britain’s wonderful holiday destinations, as going abroad would become impractically expensive. Labour may not get the chance to run for office until 2022, thanks to the Fixed Term Parliaments Act, so we can put this one into the “medium term” – though the very real risks of Brexit may well cause serious movement on exchange rates even absent a Labour victory.

Saxo’s outrageous predictions are indeed outrageous. But they’re good for provoking thought for the medium term, if not all for 2019. Have a look – there are ten in total – and let us know your views!

Written by Jonathan Blanchard Smith, SAMI Fellow and Director

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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Anticipating threats

December 21, 2018

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The disruptive use of drones at Gatwick Airport is certainly unprecedented, unique and concerning. That a major element of the country’s infrastructure and the lives of 120,000 people can be thrown into so much disarray by simple and no doubt readily available pieces of equipment is worrying. But was it unforeseeable, was it a “black swan”? Work we did back in 2014 suggests to me it was not.

SAMI had been commissioned by a transport sector client to monitor technology developments. Drones were then beginning to be used in an increasing number of applications and it was clear from our horizon scanning that they would soon fall in price and become much more widespread, and turn into the common retail product we see today.

We could also see some early signs that this would cause problems.  Some drones were crashing, there were some near misses with aircraft, a drone was even present at a terrorist attack in Sydney. That year there was the first conviction (in France) for the dangerous use of a drone.

At the time drones fell under regulations designed for model aircraft.  We noted that there were calls for a “drone law”, and indeed over the years there have been increasingly strict regulations put in place to control their use and create “no-fly” zones.

But moving on from technology to the way it is operated, we realised that the rapid growth in sales would lead to their use by people ignorant of the regulations or even wilfully disobeying them.  Increasing the penalties for misuse might cause some to think twice, and give the satisfaction of punishment, but it didn’t actually prevent dangerous activities. The issue would become one of enforcement. Back in 2014 we used the analogy that policing drones would be like trying to stop kids from riding motorbikes on the common, not like licensing helicopter pilots.

We were also concerned about deliberate malicious use of drones.  The Gatwick incident, although hugely disruptive, is in many ways more benign than it might have been. The potential use of drones by terrorists or others wishing to cause serious harm was clear back in 2014. The drone operators at Gatwick could have deliberately flown the drone into a plane as it was landing, causing untold havoc. Drones could be armed with explosives and targeted at nuclear installations.  Drone defence systems would be necessary.

Clearly these were not in place at Gatwick – and presumably not at other UK airports either. Why was such a plausible scenario not acted upon?

It calls into question the way in which decisions are taken about the impact of unprecedented and possibly unlikely events. Again in an airport context, spending on snow-clearing equipment in the UK is seen as unnecessary because we have so little snow it is better to bear the cost of a little disruption – in Jamaica it would be stupid, in Norway essential.

Are there lessons for other technologies?  The FBI some years ago considered the possibility of autonomous vehicles being used as “suicide” bombs, though presumably their use to cause traffic chaos would easier to stop than the Gatwick drone attack.   The risks of cyber-attacks on the Internet of Things has been noted, but has it been acted upon?

When money is tight (and isn’t it always) spending on contingency plans coping with theoretical problems can be seen as wasteful. That such significant sums are being spent on a “no-deal” Brexit tells us something!  Structured scenario planning can help decision-makers evaluate the effects of plausible but uncertain futures, identifying those high risk, low probability events that need serious attention.

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 at newreader@samiconsulting.co.uk and/or browse our website at http://www.samiconsulting.co.uk

 

2018 and all that……..

December 20, 2018

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“The seeds of the future,” they say, “lie in the present.” So for our final blog of 2018, we thought we would look at SAMI’s present – at the changes we have seen in 2018, and where we think they may take us into the future.

The global situation has grown, if possible, even more uncertain than when we started the year. Old certainties are coming up against new politics; disruptive new technologies are vying for their place alongside established ones; and splits once papered over seem to be widening by the day. Our role as futurists and strategists demands that under such circumstances, we step up and play our part, both in thinking and in action.

We started the year buoyed up by independent research which quantified the value of “future preparedness”. In a robust 7-year longitudinal study, René Rohrbeck showed that the right Strategic Foresight practices boost profitability by 33% and market capitalization growth by 200%. Whilst the news that some 60% of UK companies have done no preparedness for the UK’s departure from the EU at the end of March 2019 seems bad news, the fact that 40% have is perhaps an indication, using Prof Rohrbeck’s figures, of where one should look for the successes of the future.

It is, incidentally, not too late to get our advice. We have been working with thinktanks and industry, as well as at conferences at the EU, the Institute for Risk Management, and the Chartered Quality Institute with our “Britain in 2030: four post-Brexit scenarios” project, as we play our part in ensuring that organisations and companies think hard and effectively about this key concern in Britain’s future.

SAMI is at the forefront of thinking about strategy and the future, reflected in numerous publications this year: Emeritus Fellow Gill Ringland and Associate Patricia Lustig’s book. Megatrends and How to Survive Them : preparing for 2032, was published by Cambridge Scholars Publishing. SAMI associate Professor Paul Moxey’s book “Certificate in Corporate Governance” has just been published by the ICSA. Former SAMI Fellow Peter McKiernan’s latest book “Scenario Thinking”is available to download free for a limited time. We had articles in on the new UK Corporate Governance Code in Transparency Times; Dr Wendy Schultz and Jonathan Blanchard Smith both presented papers at the EU’s Future-Oriented Technology Analysis (FTA) conference on June 4th and 5th, published as part of the Proceedings, and Ringland, Lustig and Blanchard Smith will shortly be publishing based on Gill Ringland’s paper on “The near future to 2030 and its potential impact on the role and impact of International Institutions on Economic Policy” at the XV International Colloquium of the World Academy of Arts & Sciences in Brussels. Nicola Stacey of the Health & Safety Executive presented a paper on the work they and SAMI did for EU-OSHA at the Safety of Industrial Automated Systems conference in Nancy. The paper is available in the volume of Proceedings.

And there were awards! SAMI won Best Enterprise Training Consultancy in SME News’ 2018 Greater London Enterprise Awards. Patricia Lustig was has just won an award from the Association of Professional Futurists for 2018 Most Significant Futures Work for works that advance the methodology and practice of foresight and future studies with “Strategic Foresight: learning from the Future”, Triarchy Press , 2017. And at the Chartered Insurance Institute President’s Dinner, SAMI’s work on “Building Resilient Households” was singled out for a special mention in the “Building Public Trust” award category.

We published our blogs throughout the year, ranging from series on megatrends and the future of Africa, to Brexit and the effects of AI on the legal profession.

And, of course, we launched our training portfolio – a range of courses designed to help businesses understand the future, and develop their governance, to prepare them for whatever lies ahead.

So that’s been us. We thank all our clients with whom we have had the pleasure of working throughout the year – whilst we have helped them understand their future(s), they have also brought new ideas, new concerns, and sometimes taken us in ways which we could not have imagined. It has, without exception, been a pleasure.

So if that’s the present, what does the future bring? Our new website will be launched early in the new year. We shall be working with European institutions and with European clients as well as those in the UK, as we help them make – as our tagline says – “robust decisions in uncertain times”. We will be helping companies deal not only with Brexit as an event, but with the risks and opportunities that flow from it. We do not make forecasts – we look hard at the world and its possibilities to think about alternative future worlds for our clients – and whilst some of them are challenging, in all of them there are opportunities. As ever, get in touch if you’d like to know more. We wish you all a happy, relaxing and refreshing holiday season. You may well need it.

Written by Jonathan Blanchard Smith, SAMI Fellow and Director

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

Will the 21st Century Be African? Part 3 – Uses of Technology

December 12, 2018

 

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This is the third in a series of blogs on the factors that might make Africa the most important continent by the end of this century. In this blog we look at the ways in which technology could help Africa to match its population growth with economic and social progress.

By the end of the 21st Century, Africa’s population is projected to be over 4.1 billion (today it is 1.2 billion).  It will be the most populous continent on earth.  By 2050, the African population will be 2.4 billion, and, more strikingly, one third of the world’s youth population will be African, according to a report prepared for the EU Institute for Security Studies (ISS). This growth will be greatest in West, Central and East Africa.

The Fourth Industrial Revolution is a global phenomenon involving the rapid evolution and (importantly) the interaction between new technologies including: big data, artificial intelligence (AI), computing, connectivity, robotics, genetics, biotech, nanotech, and sustainable energy generation and storage.

In this blog, rather than simply rehash what has been written many times before about the huge potential of these technologies, we identify how some of them might work in a specifically African context, help to address some specifically African problems, and help to bring about an African transformation in this century.

Smart megacities

In the previous blog we described how the population surge would mean that Africa was projected to have 13 of the world’s biggest 20 megacities by the end of the century, including the three biggest: Lagos, Kinshasa and Dar-es-Salaam.  It is likely that those cities will grow in a chaotic, sprawling and largely unplanned way, as was the case with many of the megacities of the 20th century.  Technology will be critical in determining how well these cities can function, and their effectiveness in fostering African economic growth and competitiveness.  Key challenges will be:

  • Reliable energy supplies – probably based on renewable, locally generated and stored power
  • Reliable connectivity – a 5G infrastructure will be critical to Africa’s success
  • Reliable transportation and distribution networks – using clean vehicles, a sharing infrastructure and extensive use of drones to mitigate the inevitable road congestion
  • Access to education and health care – using mobile technology and AI to make these services more accessible and more economical
  • Improving public health and hygiene – using advances in biotech to help with the task of purifying water and genetech to combat insects and other pests that spread disease
  • A thriving business environment – based on property law, with verifiable and enforceable rights
  • Resilience – the capacity to guard against, and mitigate natural and other shocks

Below are some specific examples, but before looking at these, it is important to recognise that Africa’s success or failure: whether Africa emerges as a global leader over the century, or remains subject to the greater economic power of others, will depend crucially on the extent to which it is able to harness the technologies of the 4th Industrial Revolution both to tackle existing economic, social and environmental challenges, and to build strength, resilience and self-sufficiency for the future.

Energy

But turning to the positives, in Rwanda only a just over a third of households has access to mains electricity.  Although Rwanda has useful natural resources – it derives 56% of its electricity from hydro – it would have major physical and geographical problems in building a traditional national grid, given the mountainous and often sparsely populated nature of the country.  Instead, Rwanda aims to deliver off-grid electricity to a further 22% of households using thermal, methane, peat and solar energy.  And as the price of generation and storage falls, it will progress further.  Energy without a grid will be more resilient, easier to repair and maintain, and better suited to Rwanda’s geography.  It will also be cleaner and more sustainable.

Health

Just as Rwanda has the potential to “jump the shark” by building an electricity infrastructure that does not depend on a national grid, so the opportunity exists to take health care and education to people without the need for an expensive physical health infrastructure.  80% of sight loss is avoidable.  Andrew Bastawrous, CEO and co-founder of Peek Vision, has established in Kenya, where he lives, a system that allows state of the art eye screening to be available to a poor and widely dispersed rural population via smartphones, carried by health care workers on bicycles and recharged by the use of solar rucksacks. Test results can be sent to central collection and analysis points and results communicated back to people and their families.  This could apply equally well in Africa’s teeming megacities of the future.  In addition, the ability to pinpoint those who need help, and link to local leaders is a vital tool with potentially wider adaptation for both health and education.

 

Genetics & Biotech

Turning to the application of genetics, throughout Africa, sleeping sickness, which is spread by the tsetse fly, has in the last century killed hundreds of thousands of people, and 70 million people are at risk of the illness.  The genome of the tsetse fly was successfully mapped by a coalition of Western Universities in 2014, and now scientists are using that genetic information to reduce or eliminate the spread of the disease. The aim is to eliminate sleeping sickness as a problem in parts of Africa as early as 2020, and transfer knowledge and establish research programmes in Africa itself to allow Africa to lead the fight.  In the same way, companies are now bringing to market new biological treatments to purify water more effectively and more cheaply than ever before.

Blockchain

In a later blog we will look at the economic drivers of change in Africa.  In the context of this one, it is important to recognise the potential value of blockchain technology in helping to establish effective and enforceable property rights, and facilitating online access to finance and commercial activities – such as retail and peer-to-peer lending.  The big Corporations are already starting to investigate the opportunities.  The Blockchain Africa Conference is now an annual event.  But African actors as well as international corporations are entering the lists.  As Africa moves into the future in technology, blockchain represents a decentralized and largely incorruptible ‘truth engine’, and has the potential both to facilitate easier payments, promote SME business, and mitigate a number of identity management and transactional problems that have bedevilled Africa.

Risks

These examples all provide grounds for optimism that Africa can overcome the challenges, and seize the opportunities of the continent’s rapid growth in this century.  But, inevitably, there are risks inherent in technology that could move things onto an altogether less happy trajectory:

  • Technology may exclude and/or exploit those who need it the most – the poor, women and girls, people migrating to the megacities in search of a future
  • Technology opens up greater opportunities for crime, in particular cyber fraud and theft – hence the importance of blockchain as a defence against this
  • It may also become more an instrument of war and insurgency – intensifying internecine conflict, and exploited by powerful elites to bolster their dominance
  • Genetic and biotech experiments may go wrong – for example attempts to use genetics to “modify” the malarial anopheles mosquito might backfire, and lead to more dangerous and resilient strains of the insect
  • Megacities could become choked by unplanned developments and traffic, and choked by toxic air and water, as well as sinks of crime and human exploitation.The putative cities of 70- and 80-million are an unprecedented experiment in human society

And of course, the effects of global warming, and other environmental catastrophes, such as regional water and food shortages, could throw Africa’s development off course, and towards the negatives listed above.  In our next blog we will look at the environmental drivers of change, and the massive challenges Africa will wrestle with, as it grows.

Written by David Lye, SAMI Fellow and Director and Jonathan Blanchard Smith, SAMI Fellow and Director

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

What’s Eating Europe?

December 5, 2018

This blog summarises the big issues that dominated #ESPAS18, the Conference of the European Strategy & Policy Analysis System, held in Brussels on 28/29 November.

The Rise of Populism

The rise of populist parties and politics within Europe and beyond is worrying the EU and its institutions.  Within Europe, the Governments of several Central European member states, Italy, and the rise of populist opposition in other states – not to mention the vote for Brexit in the UK and the gilets jaunes demonstrations in France – marks a challenging departure from the centrist liberal democratic values that underpin the EU.  The 2019 European Parliament Elections will be interesting. What if the populists win (unlikely but not impossible) or hold a large chunk of seats in the new Parliament (entirely possible)?

Beyond Europe’s borders, the election of President Trump, as well as other populists in Turkey, Brazil, the Philippines and elsewhere strengthens the feeling that existing multilateral institutions are under threat.

ESPAS heard evidence from Daniel Drezner, Prof of International Politics, Fletcher School of Law & Diplomacy, that populism in the US may be nearing its limits, and that it may be spawning a counter-reaction.  This was a welcome message to many at the Conference.  On the other hand, other speakers warned that things would get much more challenging.

Will Populism produce its own antibodies, or will the 4thIR fuel the continuing move away from multilateralism and the liberal consensus?

The 4thIndustrial Revolution and the Rise of the Global Corporations

Frans Timmermans, First Vice-President of the European Commission observed that the 4thIndustrial Revolution means different things to different blocs:

  • For China it’s about extending state control
  • For the US it’s about the growth and exercise of big US corporate power in the world
  • For Europe it’s about morality and democracy: if democracy can’t control the 4thIR, people will look elsewhere for answers

It seems likely that whatever meaning we place on it, the 4thIndustrial Revolution will usher in more disruptive change to people’s employment and standard of living, and the prospects of young people, who already suffer high rates of employment across the EU.  Those affected adversely will be more receptive to populist politics. The tide of populism may continue to rise.

The message of ESPAS was clear: we need to embrace the 4thIndustrial Revolution: change is inevitable.  But Europe’s desire to control and regulate it may be impossible in practice.  We heard that last year 40% of capital investment in AI went to China, 38% to the USA, and the remaining 22% was spread around the rest of the world including Europe.  If the US and/or China lead the 4thIndustrial Revolution, then it will be likely to have American and/or Chinese characteristics.

Will Europe be able to shape the 4thIR, or will it be swept along in its wake?

The Economic Outlook

There was some encouragement about the relative economic recovery in the state of the European economies, but speakers warned that much of the damage of the years since the crash had not yet been undone, and that there remain pockets of relative poverty, as well as high unemployment, and skewed patterns of debt across the Eurozone.

Looking to the future, Europe lags behind the US and China in investment in infrastructure and Research & Development (for example, the figures above on AI investment) and any rise in unemployment as a result of the 4thIndustrial Revolution will reduce the revenue from employment-linked taxes, which are currently 48% of revenue across the EU.  Where will Europe rank among the economic heavyweight contenders?

Will Europe rank among the economic heavyweight contenders or will it become an economic middleweight?

Europe in the World

Speakers from Asia and the Middle East observed that Europe had declining influence in the world. From being one of the main influences on developing nations and their politics and economics, Europe was now lagging far behind other powers.

Against this background, the competitive advantage enjoyed by the USA and China in AI and other cutting edge technologies suggests that Europe may be on a trajectory of declining influence.  This comes at a time of global threat, with the rise of non-state groups destabilising countries and regions, and the spread of frozen conflict, as well as the resurgence of Russia, and regional powers tempted to follow undemocratic models of governance. One speaker warned that Europe was ignoring the threat posed by Russia.  Others said that Europe has “gone to sleep” since 1989.

Europe is not alone in being concerned about this.  Liberals beyond Europe want to see Europe be more assertive in promoting its values.  And, from a US point of view, Bruce Stokes, Director, Global Economic Attitudes, the Pew Centre took an Atlanticist view, warning that the US and Europe were declining in influence, and therefore had very little time to seek to influence the upkeep (or reform) of multilateral rules-based global governance.

More encouragingly, we heard from E Gyima-Boadi, Director of Afrobarometer, that support for democracy in Africa is strong, about 70% (not following the downward trend in the west).  Also there is support (75%) for term limits for office holders, and a growing willingness to protest, especially among the rising numbers of middle class and young people.

Economics aside, what can and should Europe do to promote western liberal and democratic values?  What are the prospects of success?

The Demographics of the Global Village

Based on UN Demographic Projections, the West (Europe and North America) will comprise only 8% of the world’s population by the end of this century.  What price European values when the World is much more Asian and African, and the economic centre of power has shifted back to Asia (where it lay for centuries before the 1stIndustrial Revolution).

What Is to Be Done?

The mood at the Conference was mixed.  There was a sense among some of “declinism” – the sense that Europe has fallen behind the leaders, and will fall further back as the century progresses.  Others believed that European values were of a superior character, and could still win through. Clearly the EU wishes to do what it can to promote a multilateral, rules-based system of world governance based on liberal, democratic values and with proper transparency and accountability in place.  But does Europe have the economic heft and political will to rise to the challenge?

ps. Don’t mention the Brexit

Had there been British Brexiteers at the Conference, they might have been surprised and even perhaps disappointed at the lack of discussion of Brexit.  It featured in the various discussions of the rise of populism, and there was some regret at the UK’s imminent departure.  Ramon Valcarel Siso MEP, a Vice-President of the European Parliament, described Brexit as one of the saddest events in the history of the EU.  But the prevailing mood was that Brexit is a done deal, sad though it may be, and that Europe needs to focus its entire attention on these future challenges.

Written by David Lye, SAMI Fellow and Director 

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

Megatrends and how to survive them – Economic Activity

November 28, 2018

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

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

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

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

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

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

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

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

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

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

Megatrends 7Third, in Doughnut Economics, Kate Raworth reminds us that economic growth was not at first, intended to signify wellbeing. Simon Kuznets, who standardised the measurement of growth, warned: “The welfare of a nation can scarcely be inferred from a measure of national income.” While economics in the 20th century took as its dominant model “rational economic man”, she argues that the aim of economic activity should be economies that “make us thrive…”

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

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

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

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

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

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

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

We live in exciting times!

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

The views expressed are those of the authors 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

New Scientist Live 2018 – a review

November 21, 2018

The “New Scientist Live Festival of Ideas and Discovery” took place at ExCel London from 20th-23rd September, the third in a series of annual events started in 2016. I attended on the Saturday.

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The show was once again divided into five zones: engineering, technology, humans, earth and cosmos, but better laid out than for the first show two years ago.  The stage areas had been given more space allowing more people to attend the speakers’ lectures. While the major exhibitors included big players such as BAE Systems, the European Space Agency and Shell as you would expect, it seemed to me that there had also been an increase in the number of stands aimed at families and trying to attract children to science.

Thus, “Mad Science” set out to inspire primary school aged children on a scale that made a difference. Currently, 30,000 children take part in a Mad Science After School Club. The “Little School of Science,” running holiday camps and science clubs, was a place to learn, experiment, explore and play for 3-13year olds. With a wider appeal, “Maths in the Real World” was a combination of seven different mathematical organisations joining forces to promote the importance and use of maths in everyday life.

Elsewhere, a light bulb moment occurred while I was talking to a representative of the Association for Nutrition. The UK Foresight Report on Reducing Obesity from 2007 is perhaps one of the most well-known and well-regarded reports that the unit has produced, but I hadn’t realised that anyone can call themselves a nutritionist, and today “expert advice” on social media drowns out the professional voice encouraging a healthy diet. The British Dietetic Association faced a similar uphill struggle. Pause for thought. At least they were there, as was Wateraid with some simple straightforward material on how to get clean water and decent sanitation to those who don’t have them through appropriate low-cost, long-term solutions.

Finally, with regard to the problem that affects us all directly – climate change, Copernicus1, Europe’s flagship Earth Observation Programme, gave a most impressive demonstration of its databases that deliver freely accessible information on environmental issues. The climate change service provides quality assured information about the past, present and future climate worldwide, and can be searched with great specificity.

This gives a flavour of what was a much bigger exhibition. But to the speakers of the day. I settled down to hear four who were working at the frontiers of their fields.

Mathematical physicist Ivette Fuentes’ presentation was entitled, “How to build a quantum teleporter.” I must admit that I struggled to follow all the quantum mechanics(!), but the nub of what I understood her to say was this. At very small scale an electron can be in two places at once. It also has something called a spin property, explained as being either up or down. However, in this quantum entanglement, it is in a maximally correlated state or non-separable: in other words the “state” of the electron in one place must be the same as its state in the other. Thus if you can encode information in the electron particle in one place, it must appear in the other. If this all sounds rather weird, perhaps the more understandable and better known point is that at the very small (and very large) scale quantum mechanics applies, but classical physics does not work. The current problem is to work out how to link the two together. However, Ms. Fuentes stressed that the era of quantum mechanics was coming, and that the UK was in the forefront of initiatives on quantum technologies.

Astrophysicist Chamkaur Ghag addressed a parallel problem: “The Hunt for Dark Matter”. 85% of the universe was missing. Yet “Dark Matter” had existed since the beginning of time, and was the mysterious glue holding galaxies together. Addressing the key question of whether it mattered, he pointed out that in the absence of understanding it, how could we know what is going to happen next. How would it affect what we thought had happened in the past. To gain this understanding, we needed to go beyond standard model physics. He posited the question: “Where is the doorway?” Complex experiments had yielded no answers yet.

However, the talk of the day came from Daniel Davis on the latest developments in immunology. The basic principle of vaccination is the idea that an infection is dealt with more efficiently if the immune system has encountered the same virus or bacteria previously. By using harmless versions, vaccines work by provoking the immune system to build up defences against them. (Upon this basis I was vaccinated as a child against diphtheria, polio and tuberculosis etc.) Yet this is only adaptive immunity. It wasn’t until 1989 that Charles Janeway of Yale University postulated that the immune system must contain receptors that that interlock specifically with germs or infected cells. In other words there is a part of the system that may be called innate immunity. Since then:

“… the world of immunity has opened up to reveal … not a simple circuit involving a few types of immune cells, but a multi-layered, dynamic lattice of interlocking sub-systems, one of the most complex and important frontiers of scientific enquiry that we know of.”2

Professor Davis pronounced that this enhanced understanding of how the immune system worked had brought us to the cusp of a new world, and a revolution in how we deal with health matters.

The day ended with a keynote lecture from Carlo Rovelli on the nature of time. The context he outlined at the start of his talk – that time is not the timeline we think it is, that time is different in different places because of mass and so forth – will be familiar to readers here. I won’t attempt to denote the abstruse ideas he developed in his lecture (his new book3covers this subject) except to say that after listening to him for an hour it was easy to understand how he has become such a famous populariser given the calm charisma he brings to his delivery.

What must be mentioned was how the session ended. When the chair announced that there would be ten minutes for questions, my heart sank. (In my experience this usually means that some eccentric will drone on unstoppably about their particular high horse for nine of them without asking anything.) On this occasion, however, five pertinent questions were put and answered directly and compactly. The last of them, to do with free will, elicited the following approximate quote from Spinoza off the top of Professor Rovelli’s head: “Free will is a fact which happens in our brain: we can’t predict things about the world, or our internal state.”

Those of us who apply ourselves in trying to make sense of our possible futures spend a good deal of time looking out into the various aspects of our social, cultural, economic, political and physical environment and beyond. My day at New Scientist Live was a reminder to give due weight to the world underneath and alongside the tiniest atom of matter and the world inside the bodies within which we are confined. What we don’t know about what we don’t know may be more than we think.

REFERENCES

  1. The Copernicus ECMWF (European Centre for Medium-Range Weather Forecasts) websites demonstrated at the exhibition were:
    1. atmosphere.copernicus.eu
    2. climate.copernicus.eu
  2. DAVIS, Daniel M, “The Beautiful Cure”, The Bodley Head, 2018.
  3. ROVELLI, Carlo, “The Order of Time”, Allen Lane, 2018.

Written by Tony Diggle, SAMI Associate.

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

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