Introduction

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Introduction

Themes (uncertainty)

There is one common theme

"...we basically do not know what the world of tomorrow will really be like, except that it will be different, more complex, more fast-paced and more culturally diverse..."

Edgar Schein, 2004

In addition to the traditional dynamics of uncertainty, embodied by political, financial, social, etc, shifts, there is another, and newer, element of uncertainty. This element is the fact that the economy is increasingly the product of our skill, talent, creativity, knowledge and imagination which cannot be defined in the familiar ways. These aspects are

"...linked to another concept - reflexivity - the idea that the way we react to reality in turn alters the reality we are all reacting to.......Consumers' choices between services and goods on offer change the range of choices. Small, everyday decisions - what to watch on TV, what kind of savings account to open......- are swiftly analysed......for later programming decisions or for the design of new products..."

Diane Coyle, 1999

Every organisations is facing uncertainty, ie

"...today's world is a maelstrom of changing markets, technologies, customers, and products that are milling so fast that they cannot be ordered in a manager's mind..."

Geoffrey Colvin, 2006d

This can be well demonstrated by looking at the change in ratings of equity risks using the Standard and Poor's method which ranks from A+ for the least risky companies to D for the bankrupt ones.

"...in 1985 around 41% of companies earned the least risky rating, while 35% were in the high-risk grouping. By 2006 only 13% were highly rated and 73% were high-risk. That's what economists call a secular shift - a big, broad increase in uncertainty and volatility..."

Geoffrey Colvin, 2006d

Furthermore,

"...managing amid the chaos has become the central problem for companies of every kind. It is a predicament that arises from the very nature of today's economy. And the solution requires a retraining not of skills but of mindsets and assumptions. The biggest challenge has less to do with corporate strategy or management structure than with the nature of human beings and instinctive reactions to change..."

Geoffrey Colvin, 2006d

One of the biggest challenges is how to handle the unexpected/unknown/uncertainty. Nassim Taleb (2007) describes 2 types of randomness linked with uncertainty or an unexpected events, ie Mediocristan and Extremeistan; characteristics of each are

Mediocristan

Extremeistan

Classifiable

Unable to classify

Mildly random

Wildly random

Small to mediocre impact

Large impact

Many winners

Winner-takes-all

Small audience

Larger audience

Limited constraints

Unlimited constraints

Generally corresponds to physical qualities

Generally corresponds to numbers

Most likely found in current environment

Most likely found in a new environment

Equality

Inequality

Easily understandable

Difficult to understand

Tyranny of the collective

Tyranny of the accidental

Easy to predict as based on past performance

Generally unpredictable

Continuous improvement

Quantum leaps

Follows the bell distribution curve

Does not necessarily follow the bell distribution curve

(source: Nassim Taleb, 2007)

According to Nassim Taleb (2007), some reasons we fail to see the unexpected events are

- errors of confirmation (we focus on preselected observations and generalize from them to the unseen)

- narrative fallacy (we believe that stories will display regular patterns)

- human nature (we are programed to handle the expected rather than the unexpected)

- distortion of solid evidence (we see what we want to see, ie these mis-perceptions become our reality)

- tunnel vision (we focus on a narrow range of well-defined sources of uncertainty)

Future minds

In looking to the future, Howard Gardner posed the following question

"...What kind of mind do we need if we are to create a world in which we would like to live..."

Howard Gardner, 2006a

His answer is 5 kinds:

i. a disciplinary mind (includes a mastery of a school of thought such as science, mathematics and history, and at least one professional craft; possesses self-disciplined characteristics)

ii. a synthesizing mind (ability to integrate ideas from different disciplines or spheres into a coherent whole and to communicate that integration to others)

iii. a creative mind (capacity to uncover and clarify new problems, questions and phenomena)

iv. a respectful mind (awareness of and appreciation for differences among human beings)

v. an ethical mind (fulfilment of one's responsibility as a worker and a citizen, such astaking responsibilities as a world citizen; ponders the nature of one's work and the desires of society in which one lives; in an interlinked world, intolerance and disrespect are no longer a viable option) (for more details, see succession planning under Ingredient 7)

We need to understand that the human mind suffers from "triplet of opacity" in understanding the past

"...a) the illusion of understanding, or how everyone thinks he knows what is going on in a world that is more complicated (or random) than he realizes;

b) a retrospective distortion, or how we can assess matters only after the fact, as if they were in a rearview mirror (history seems clear a more organized in history books than in empirical reality); and

c) the over-valuation of factual information and the handicap of authoritative and learned people, particularly when they create categories..."

Nassim Taleb, 2007

Types of organisations

As Lauren Keller Johnson (2004a) states, organisations encounter predictable challenges related to growth and change. For example,

- some organisations become bureaucratic, slow and overly-politicised as proliferating layers of management interfere with decision-making

- others, forced by their increasing mass to decentralise, spawn confusion by setting up uncoordinated structures and processes across functions

- healthy qualities of resilience, adaptability and focus give way to sluggishness, chaos and passivity.

Furthermore, Lauren reports that there are 7 types of organisations

"...i) resilient: anticipates and proactively adapt quickly to market shifts, yet remains focused on and aligned with a coherent business strategy

ii) just in time: is less proactive but can "turn on a dime" without losing sight of the big picture

iii) military: succeeds through sheer force of top executive's will

iv) passive-aggressive: demonstrates surface-level agreement and congeniality but entrenched, underground resistance defeats attempts at change

v) fits and starts: has scores of smart, motivated, talented people but they don't pull in the same direction at the same time

vi) has grown: is too large to be controlled by a small team of top executives but moves slowly because it doesn't have democratic decision-making

vii) over-managed: has multiple layers of management and suffers from "paralysis by analysis" ..."

Lauren Keller Johnson, 2004a

It is generally accepted that knowledge-based organisations are the way of the future. According to Karl-Erik Sveiby et al, (2006), there are 10 characteristics for successful knowledge-based organisations;

i) daily leadership (recognized expert(s) show leadership based around the core knowledge/competencies of the organisation)

ii) quality and quality control (true experts do not accept inferior quality; quality control involves self-assessment; flat organisational structure; high levels of trust)

iii) respect for know-how (the power structure is based on individuals' levels of knowledge and respect, not on positional power; leadership roles are context-specific, especially in professional/technical areas)

iv) combination of the professional and management know-how (leaders possess managerial/professional know-how and are respected for it)

v) a strong, well-defined culture (staff know what the organisation stands for, ie understand its statements (values, vision and mission) and 'walk the talk')

vi) focus on the core knowledge (staff are multi-skilled but each person focused on fulfilling their role)

vii) knowledge preservation (retain key staff; secure knowledge management procedures and processes

viii) develop the staff (training, career paths, performance management, mentoring, etc are all in place)

ix) process for changing key people (succession planning, recruitment and selection process, etc in place)

x) stable organisational structures (stable administrative procedures and processes are in place)

For organisations it is difficult to sustain performance without growth. There are 3 components to growth:

i) portfolio momentum (growth achieved through the underlying growth rates of the market your organisation participates in)

ii) merger and acquisition (net revenue growth from your organisation acquiring or divesting activities)

iii) market share (revenue growth achieved through gaining or losing market share)

Generally portfolio momentum accounts for around 66% of growth; M & A account for around 30%; market share around 4%. Furthermore,

"...a company's choice of where to compete is almost 4 times more important than out-executing its competitors within its market. Superior execution to drive market share gains explains on average only 21 percent of the differential gross performance. It's hard to escape the conclusion that the effort companies put into hard work and smart execution doesn't get them very far......That doesn't mean execution is no longer important but it does mean that it has become a ticket to the game - not a differentiator..."

Mehrdad Baghai et al, 2008

"...in terms such as growth industry and mature industry.....are loaded, imprecise and often downright wrong......the real definition of a growth market exists at a level much steeper than industry. Most so-called growth industries have sub-industries or segments that aren't growing, and most mature industries and geographies have a few sub industries or segments that are growing rapidly..."

Mehrdad Baghai et al, 2008

For example, in the telecommunications industry, the wireless and mobile areas are growing more quickly than the fixed line segment, and within each there are significant variations, eg fixed line broadband Internet is experiencing rapid growth, while voice is declining.

Thus need to have a good knowledge of market segments within an industry in order to understand customers' needs and the capabilities required to meet their needs effectively.

"...to uncover pockets of opportunities, executives need to dig down to the deeper levels of a business and organisation..."

Mehrdad Baghai et al, 2008

This is called granularity and refers to the

"...size of the components within a larger system..... Involves a large number of components. Insights into sub industries, segments, categories and micro markets systems..."

Mehrdad Baghai et al, 2008

For example, in the food industry there is frozen food, and this can be further divided into the weight conscious segments, etc.

In summary, an organisation which is

"...formulating its growth strategy needs to develop insights into trends, future growth rates and market structures at a much greater depth than the aggregate industry level..."

Mehrdad Baghai et al, 2008

To correct an under-performing organisation, the following ingredients are useful

- understand the varied forms of dysfunction that organisations typically encounter as they evolve, eg culture of "no", too much concentration on process, using diversification as a smoke screen to hide problems, paralysis by analysis, passive-aggressive, etc (for more detail, see the section on common management errors)

- diagnose your organisation's dysfunction

- define a healthier way of operating

- manipulate organisational structures, incentives and other levers to achieve that optimum state

- recognize and diagnose any dysfunctionality (personal, organisational, etc)

High performing workplaces have a concept of flow, ie

"...a mental state of operation in which the person is fully immersed in what he or she is doing, characterised by a feeling of energized focus, full involvement, and success in the process of activity..."

Mihaly Csikszentihalyi as quoted in Catherine Fox, 2006g

There are 8 components of the concept of flow, ie

i) clear goals (expectations and rules are discernible)

ii) concentrating and focusing: to a high degree of concentration on a limited field of attention (a person engaged in the activity will have the opportunity to focus and to delve deeply into it)

iii) a loss of self-consciousness: the merging of action and awareness

iv) a distorted sense of time ones subjective experience of time is altered

v) direct and immediate feedback (successes and failures in the course of the activity are apparent, so that behaviour can be adjusted as needed)

vi) balance between ability level and challenge (the activity is neither too easy nor too difficult)

vii) a sense of personal control over the situation or activity

viii) the activity is intrinsically rewarding, so there is an effortlessness of action..."

Catherine Fox, 2006g

Traditional Business Models Under Threat

Some traditional business models under threat include

Car (almost all of the big firms were saved financially by US Government after 2008)

Music (decades ago, big studios were owned by a few key record labels, large retail chains & disc jockeys dominated; now the Internet has allowed musicians to dominate & resulted in closure of retail chains, eg
- Tower
closed 89 US outlets in 2006
- Virgin
shut its last USA megastore in 2009
- HMV shut dozens of stores while in receivership in 2013

In 2007 an English pop group produced their songs on a note-book computer & sold 3 m. copies on Internet and made around $US 4m.

The iPod and iTunes changed the way people purchased, listen to and stored music, replacing CDs and MP3 players; similarly, iPhone was a disruptive innovation as it was a true mobile computer, and in addition it

. collapsed the power of a desktop computer into mobile phone with powerful operating systems
. integrated Wi-Fi and mobile Internet access
. allowed software writers to operate on it
. introduced app stores where Apple could centrally manage and distribute all mobile computer programs
. changed the keypad and freed more space for a larger screen
. included sensors like GPS (tell you where you are), magnometer (tells which direction is North), accelerometer (detects iPhone mobility)
. allowed further development of apps

More recently there is a trend to streaming, ie renting rather than buying a song (Spotify, Pandora, Apple's Beat, etc). Spotify has 60 m. active users with 15 m. subscribers to its free service & a library of 20 m. songs (2014). Each subscriber pays $ US 10 per month for unlimited access to the library of songs. It added 2.5 m. customers in last 2 months of 2014. Close to 1 in 5 Australians have tried Spotify. It benefits from the explosion of mobiles. In 2015 it contracted with Sony for its 64 m. users of PlayStation network; Sony has not been successful in getting music directly to customers and lost its leading position in consumer electronics, but content production is still profitable

There has been a shift from downloading to streaming
"...while Apple once enjoyed enormous negotiating power as the dominant force in digital music - an area it helped pioneer more than a decade ago with downloading - it now faces an array of new competitors and finds itself in the position of needing to modernise its offering to catch up to the streaming revolution..."
Ben Sisario et al, 2015

Beats (hip headphones and streaming digital music services provider) purchased by Apple in 2014 for US$ 3 b. will be used to compete with streaming new players like Spotify, Rhapsody, Rdio. Spotify started in Sweden in 2008 and in USA in 2011; has 15 m paying subscribers around the world plus 45 m who listen free. Beats plans to introduce its own subscription streaming service to enhance Apple's iTunes Radio and iPhones music app. Music listeners are shifting from downloads to streaming, ie in the USA, downloads generated sales of US$ 2.6 b (2014) which was down 8.5% from 2013; streaming made US$ 1.8 b and exceeded CD sales for the first time

To re-establish itself in the marketplace, Apple has had to lower its subscription rate to below the market standard, ie from US $10 - 8 per month. Apple is playing catch up while before it was in a position of strength

Streaming makes music more accessible than downloading. It is controversial among artists owing to its low royalty payment system based on artist popularity; payment varies from US$ 0.006 and US$ 0.0084 per stream. But very few musicians have market power to resist it. It is claimed to have reduced piracy in the music industry (Carrie LaFrenz, 2014)

A further development is by Shazam (music app). They uses an algorithm that created a unique acoustic fingerprint for each music track by turning the song into a piece of data. Shazam (started in 2002 before the smart phone) has been downloaded 500 million times and used to identify some 30 million songs. In addition to being a handy tool for identifying unfamiliar songs, it can be used for early detection, ie by studying 20 million searches every day, Shazam can identify which songs are becoming popular and where and releases an interactive map overlay with its search data. This allows users to zoom in on cities around the world and identify which songs are becoming popular in different cities. It is a real-time seismograph of the world most popular music and helps identify new artists, ie

"...searching, streaming, downloading and sharing to answer the question that the music industry has been asking for a century: what do people want to hear next? It's a question that label executives once answered largely by trusting their gut. But data about our preferences has shifted the balance of power, replacing experts' instinct with the wisdom of the crowd. As a result, labels have become much better at understanding what we want to listen to..."

Derek Thompson, 2014/5

. TV broadcasters (national free to air broadcasters & pay channels losing to digital, on-line, on-demand viewing, ie viewing content wherever & whenever you want to)

. Print media (changing from print to digital, on-line, on-demand, etc; eg one media group's digital subscription annual targets were reached in 4 weeks)

. Movies (large studios to independent film-making; digital photography & editing; "big" screen (cinema) to "small" screen (computers/ mobile phones' with media at finger tips, ie YouTube - 6 ( hours watched per month)

. Financial (banking from branches to internet to mobiles; competition to all parts of banking business from the following

- Internet players like Google, Amazon, Facebook, etc competing on payments, deposits & lending; seeking to capture customer transaction data

- Telcos, like NTT Docomo (Japan), moving into the payment space, etc with the proliferation of mobile devices)

Also, digital banking with banking moving from branches to customer digital interaction on internet, smart phones, tablets, etc.; eg CBA has 5 m active online customers & 2.6 m used its Apps in 2014. There claims that 50+% of all banking will be done on mobile phones by 2018 (Philip Baker, 2014a).

In banking

- customers are in control, ie how they spend, manage & move their money around, check their accounts, apply for loans & pay their bills whenever & wherever they are!!!!!

- use of big data, cloud computing, etc to reduce storage & analysis costs

The Murray report on Australia's Financial System (2014) mentioned the impact on the banking industry of the digitalisation of society. Technology-driven innovation is transforming the finance system with the emergence of new business models like crowd financing, mobile banking, cloud computing, new payment services, etc. All these are subjecting the financial system to more market forces including competition which should enhance both productivity and outcomes for consumers. To handle the maze of financial service regulations, the Australian Securities and Investment Commission (2015) has established a special unit to focus on these novel developments. They need to harvest the opportunities that the digital age is creating while mitigating the risks, ie

"...actions which promote entrepreneurship, innovation, adaptation and skill building, that reward 'real' risk-taking, while providing a stable macro economic environment and a well functioning financial system..."

Glenn Stevens (Governor, Reserve Bank of Australia) as quoted by James Eyers, 2015a

Use of smart phones and soaring customer expectations about service means that the banks are competing with global technology giants and fin-tech (financial technology) start-ups. This means that the banks have to improve how they use data, innovate, deliver new products, understand potential new rivals, improve customer service, etc. Thus digital banking is a cultural challenge rather than a technological one, with the latter requiring new hardware only, ie
- do you have a culture that is interested in technology?
- do you hire people who are digitally literate, ie understand cloud, apps, robotics, artificial intelligence, etc?
- do you have enough diversity of thought, ie people involved from different cultural backgrounds, gender, etc?
NB It is better to put more resources into the culture as that will generate more value than IT infrastructure investment

Tele-medicine (virtual doctors with fully digital health service like in Israel)

Trends and Challenges

The are 4 drivers on long-term trends, ie

i) technology (smart phones, social media, internet, digitilisation, automation, etc)

ii) demographics the rising expectations of the world's growing middle class, aging populations in developed countries, etc)

iii) resources (climate change, finite resources, renewable resource, etc)

iv) psychology (neuroscience, etc)

Organisations need to keep a "watchful eye" on trends that could impact on them.

It is important to sort out the trends from the fads. The trick is picking a real trend as opposed to the fake trends. As Neil Shoebridge (2004) reports, some of the factors to keep in mind are demographic changes, complexity (including age, gender, life-stage, income, etc), convenience, health, sensory, individualism and connectivity (for more details see management fads in this volume and in volume 5 - Section on Customer Management). There are 5 rules to help define trends

i) unlike fads, which are linked to short-term movements such as fashion, trends last at least 10 years

ii) for every trend, there is a counter-trend, which can create untapped growth opportunities

iii) there are "rich pickings" for organisations that cover 2 or more mega-trends

iv) fads, when under-pinned by a mega-trend, can generate sales spikes and keep brands fresh

v) if marketers cannot straddle 2 trends, consumers will that is, people will find a way to satisfy 2 or more needs regardless of what marketers try to make them do.

Mega-trends

Introduction
They are gradual yet powerful trajectories of change (social, economic, environmental and/or technological) that will at some point express themselves with explosive force. We need to read early signals before they become strong and take proactive action early. We ignore these forces at our peril.

"...there are trends - patterns of change over time - that signal this possibility, which morphed into likelihood which morphed into certainty which morphed into reality..."

Stefan Hajkowicz, 2015

We need to be careful of complacency, especially as many trends are positive, such as improvements in longevity, incomes, education levels, health facilities, governance, etc. But this does not guarantee a better future.

These megatrends are different from wildcard events like black swans, ie nobody saw them coming

It is often hard to distinguish the difference between signals and noise.  For example, fragments of seemingly unconnected data and information exist well before an event occurs. This is relevant whether the events are major, eg September 11 terrorist attacks (2001), collapse of the Berlin wall (1989), Cuban missile crisis (1962), 1970s oil shock, global financial crisis (2007), etc or small, eg somebody hurting themselves, a car accident, meeting someone by accident, etc. In hindsight it is relatively easy to identify what information mattered and what information was irrelevant. On the other hand, connecting the signals in advance of the event requires great analytical skills, pattern recognition and powers of deductive reasoning.

"...Part of the challenge is thinking outside the box. We need to make imaginative leaps into the future to envisage what might be possible. This takes us beyond the world as we know it today..."

Stefan Hajkowicz, 2015

Our ability to respond to events is based on our ability to accurately identify, interpret and act upon signals, and to separate the signals from the noise. By getting a picture of how the world is changing, it's possible to start separating signal from noise and to make wise choices, ie right choices at the right time, and develop strategies to best handle them.
We need to understand how online things happen.
Foresight is the art and science of understanding change and exploring plausible futures so that you select the most suitable.

"...the future is slippery and hard to grasp. It's a fascinating place where emotions are mixed with logic and it becomes difficult to neatly separate imagination from evidence.
To think about the future we need a mental model to give structure to our thoughts......thinking about the future is about preparedness..."

Stefan Hajkowicz, 2015

Use the 4 Ps ( possible, plausible, probable & preferable) to look at the future, ie
i) probable (past events that are likely to recur, eg using long-term, historical rainfall patterns to forecast the likelihood of future rainfall (within set levels of confidence), financial booms and busts like tulip mania in 17th century , South Sea bubble in 18th century, Great Depression of 1930s, Asian currency crisis in the 1990s, NASDAQ technology crisis in 2000s, GFC in 2008, etc)

ii) plausible (events that may not have occurred and are not necessarily feasible to occur; evidence-based on logic and reason, eg the emergence of online retailing in the late 20th century was a plausible event with the development of the Internet and associated functions like websites, credit cards payments, electronic banking, encryption technology, transport and logistics systems to deliver goods, smart phones, etc)

iii) possible (anything that potentially could happen in the future, irrespective of probability and unknown consequences, eg aliens visiting earth, increasing human lifespan, etc; unknown unknowns)

iv) preferable (the desirable pathway of change; where foresight (what might happen) makes changes in your selected strategy (what should we do about it); making unknowns knowable)
Four stages of foresight study (systematically exploring the future)

"...To see the future we need inside to understand pattern change, ascertain their importance, deduce likely future scenarios and then make wise choices......history provides critical insights about the future..."

Stefan Hajkowicz, 2015

i) environmental scan (exhaustive search of the signal trends potentially relevant to decision-makers; cast a wide net seeking relevant information)

ii) validating and prioritising (identify trends and risks that are happening and are important)

iii) narrative of the future (evidence-based, coherent and compelling story)

iv) communicate the findings (telling the story that connects to the audience)

There are 8 megatrends

1. More from less (increasing demand of limited natural resources)

2. Going, going..... Gone? (harder to improve sustainability, ie protect biodiversity, habitats, environment, global climate, etc)

3. The Silk Highway (overland and maritime; changing economic focus to the developing world, eg Asia)

4. Forever young (uneven wealth/income distribution plus aging population with impact on changed retirement patterns, chronic illness and rising health-care expenditure)

5. Virtually here (digital/Internet/social media, etc technology is reshaping everything we do, ie greater connectivity)

6. Great expectations (changing consumer expectations for products/services, experiences and social interaction)

7. An imperative to innovate (accelerating technological change creating new markets and disrupting existing ones)

8. Safety (personal security, eg privacy thru to global safety, eg terrorism)

More details on each mega-trend

1. More from less
- resource scarcity with increasing demand of limited natural resources (food, water, energy, mineral resources, etc) owing to population growth and demand for economic growth

- change the way markets operate and the way societies live, work and govern themselves, eg go for low resource use options like recyclable materials, etc. This leads to price rises and allocation away from the world's poor people, and an increasingly significant underlying cause of armed conflict and geopolitical instability

- billions of people's basic needs are un-met owing to poor natural resource sustainability management and inequitable wealth distribution

- need to find ways to extract more value out of limited resources with increasing reliance on innovation and technology as the solutions to using resources efficiently, minimising waste, reducing pollution and fairer wealth distribution

- intelligent governance structures are equitable, effective and efficient in sharing of resources accross competing needs

- increasing automation of agriculture and migration to the cities results in more urbanites needing resources and less subsistence farming, with the resultant need to produce more from less; with improvement in agricultural technology allowing greater outputs from fewer inputs (Can technology keep pace with increasing demand?).

NB There are contradictions in this, eg around 1 b. people are always hungry (under-nutrition with too few calories) and another 1 b. suffer ill health because they eat too much food and/or the wrong types of food (over-nutrition with too many calories)!!!!. The world has enough food. This means there is not scarcity or inadequate food production but a food distribution and wastage problem, ie FAO estimates that around 22% of edible food is wasted; this wastage would feed all the hungry people. People are more likely to starve from impacts of armed conflict, forced migration, bad governance, corruption and poverty than natural disasters, food production, etc. This raises the issue of food security and is linked with poverty eradication.

Some statistics:
- in the last two decades around 700 m.  people have escaped from extreme poverty
- there has been a 41% drop in mortality rate of children under 5
- a reduction in number of hungry people in developing countries from around 23% of the total population in 1990s to around 15% in 2012
- over 2 b. people gained access to improve potable drinking water between 1990 and 2010
- the transition from subsistence agriculture to manufacturing to service industry focus is putting more pressure on use of resources, eg China.
- some large opportunities for economic growth revolve around handling the challenge of lifestyle-related elements of mental health and physical health (see below for more detail); by improving our diets, sleeping patterns and lifestyle we can save money in the healthcare system and increase productivity. For example, in the USA, slowing the annual growth rate of healthcare costs by 1.5% would increase GDP by 2% in 2020 and by 8% in 2030
- around 2004 there were 8 Chinese companies in the Fortune 500; in 2015, there were 100.

Behind this trend is explosive population growth and income growth, ie
  i) explosive population growth is a result of advances in agriculture, medicine, manufacturing, etc. For around 180,000 years, human population grew only by a few million people; at the end of the 20th century there were around 1.5 b. people; at the start of the 21st century, there are 6.1 b; 2015 there are around 7+ b. Estimates of the human population by 2100 will be around 10 b. Thus from now until the end of the century, resources are needed for an extra 3 b. people!!!!! The population growth will be uneven with most growth occurring in the world's poorer countries where living conditions are the hardest. Also, people are choosing to live in urban areas, ie data forecasts  expect by 2020 the world is 56% urban and by 2050 it becomes around 70%. It is projected that China will construct almost 2 cities the size of London every year over the next 20 years to accommodate its rural to urban migration. When people migrate into the urban areas, they cease to be subsistence farmers and become dependent on others for resources (Stefan Hajkowicz, 2015).

  ii) income growth - the proportion of people living in developing countries in extreme poverty, ie less than US$ 1.25 per day, fell from around 50% of the total population in 1992 to less than 25% in 2010. Yet people in developing countries can spend up to 80% of their income on food. The expansion of the world economy (measured by Gross Domestic Product, ie GDP which is an average measure that hides the unequal distribution of wealth, but is an important indicator of income) is happening faster than human population growth, ie in 1960 annual income was US$ 455 per person; by 2012 it was around US$10,000 (adjusted for inflation). However distribution of wealth has become more uneven. One of the benefits of income growth is consumers' buying power increases. This will increase the demand for resources. On the supply side there is a different story. Unfortunately, despite advances in exploration and extractive technology, natural resources have finite availability and limited regenerative capacity like soil, oil reserves, water, energy, etc.  We need to utilise our resources more effectively, efficiently and equitably.
For example, with agriculture, FAO has estimated a 70% increase in food production by 2050 is needed to meet demand yet the world is annually losing 12 m. ha of productive agricultural land (capable of producing 20 m tonnes of grain) to land degradation resulting from human activities like overcultivation and deforestation. Also diets are changing: in developing countries, meat consumption is increasing at around 5% annually. Supply constraints result in volatile food prices; increasing prices result in the many millions of people not having enough food to eat and the resultant socio-political instability/unrest and humanitarian crises. One of the most important factors in food prices is the oil price. It is an ssential requirement of farming - used for tractors, farm machinery, transport of food to markets, an essential ingredient of fertilisers, to power machinery in food processing, etc. Yet there is no real, financially-viable substitutes, ie modern agriculture basically converts oil into food. It has been estimated that industrialised farming practices consume 10 calories of fossil fuel to produce 1 calorie of food energy. This explains why oil price changes are closely linked to changes in food prices, eg a 10% rise in oil prices translates to a 3.3% increase in fertiliser cost and a 1.8% increase in food prices (Stefan Hajkowicz, 2015). There are also issues that need to be addressed around using fossil fuels in agriculture, such as carbon emissions, impact on climate change, etc

(NB These figures do not include the massive infrastructure costs around establishing and maintaining the grid with its poles, wires and generation plants that are only needed for a small portion of the day during peak load)

Increasing income and wealth does not necessary make a better person and/or achieve true happiness. It has been found that wealthier/high income individuals are statistically more likely to
a) break the law while driving
b) exhibit unethical decision-making tendencies
c) take valued goods from others
d) lie in negotiations
e) cheat to increase their chances of winning a prize
f) endorse unethical behaviour at work

In other words unethical behaviour is more likely in the presence of wealth abundance

2. Going, going..... Gone?
- need to improve sustainability, ie protect biodiversity (especially endangered species), habitats (marine, aquatic, land-based, sky, etc), environment, global climate, ecosystems, etc.
- human activities like
i) rapid industrialisation and resultant pollution (like
- electronic waste (ewaste) is one of the world's fastest growing challenges. Informal recycling using crude heating methods to extract metals exposes communities in many developing countries to significant health risks
- human-induced greenhouse gas emissions which are trapping the sun's heat within the Earth's atmosphere leading to increased temperature (including the sea which will change patterns of ocean circulation) and changing weather patterns with more extreme events (like cyclones, droughts, flooding, etc); a previously1 in 20 year event is becoming a 1 in 5 year occurrence
ii) habitat destruction (such as deforestation of rainforests, pollution of coral reefs, residential and agricultural development encroaching on natural habitats, etc) are threatening many species.
  a) most of these habitats are very fragile and a minute change can have disastrous consequences
  b) it is estimated that there are around 9 m. unique plant and animal species with the majority not being formally described;
  c) rainforest habitat (tropical and tenperate) being home to 50+ % of the world's plant and animal species; also these habitats help regulate temperature and weather pattern, and are a possible sources for medical treatments
  d) it is estimated that normal rates of background extinction are in the range of 1 or 2 species lost per year; however, the current rates of extinction are thousands of times this
  e) since mid 20th century, there has been increasing public awareness and action around environmental issues, ie existence value (people derive value by merely knowing that particular species or habitats still exist) (see below for more detail on this)
  f) increasing chance of inhospitable climate patterns that will challenge our current concepts of how we live, etc

3. The Silk Highway (based on an ancient trade network, called the Silk Road, for goods (like silk) and ideas extending thousands of kilometres across Europe and Asia with connections)
- refers to the economic focus shifting to the developing/emerging world, ie shifting from West to East (into Indo-Asia including countries like India, China, South Korea, Vietnam, Indonesia, etc) and a lesser extent from North to South (into South America including countries like Brazil, Chile, Argentina, etc and African subcontinent like South Africa, etc)
- a fundamental restructuring of the world economy with the emerging economies in Asia, Latin America and Africa producing the major share of the global economic output, eg experiencing growth rates of around 10% compared with the established Western economies of around 3%; by 2010 the world's wealth was split evenly between OECD  and non-OECD countries, but by 2030 is expected to be 60% non-OECD and 40% OECD economies. Over the 6-year period from 2005 to 2010, direct investment outflow from China to the rest the world increased from US$ 12.3 b. to 68 b., eg average annual growth of around 80%.

- rapid economic growth and urbanisation is reshaping lifestyle patterns and has the potential to build a wealthier, more stable, better connected and friendlier world. For example, China, over a few decades, has transitioned from an agriculturally-based economy to an industrial one and is now entering a service sector economy.

- in the coming decades it is estimated that 1+ b people will transition out of poverty and as income levels rise, more food will be consumed with a preference for high-protein foods like meat

- some industries that will benefit include the service industry such as tourism, investment, education, soft commodities (agricultural products, especially high-protein, etc) etc, eg Chinese tourists travelling overseas has gone from 10 m. (2000) to 70 m. (2011)
"...the basic premise is that as per capita GDP (ie people's income) grows and over 1 million people in the Asia region alone cross and an income threshold from being poor to middle-class, they shift expenditure from products to services..."
Stefan Hajkowicz, 2015


4. Forever young
-  there is an ageing population, especially in the developed economies. For example, Japan, in the 1950s around 4.5% of Japanese population was over 70, by 2010 it was 23% and by 2050 it is estimated to increase to 40%. This is the result of
i) declining birth rates/fertility rates (this is linked with the fall in child mortality; thus the reduced need for large families as a greater percentage of children survive to adulthood)

ii) increasing life expectancy (this is a result of technological advances in agriculture, nutrition, medicine, public health, infrastructure, etc)
- the ageing population has an impact on

i) productivity (reduction in working population as a large number of people move into retirement, ie fewer people will be working to support more retired people)

ii) changed retirement patterns (including retirement savings gap, ie people need to work longer to afford a comfortable retirement; people are staying in the workforce longer so that they are able to pay for this  longer time in retirement before death. In Australia around 100 years ago, the average male life expectancy was around 60; in 2015 it was over 80. Generally older people prefer some employment during retirement; they are better suited to jobs that involved mental activities, like those in the knowledge industry, etc rather than physical, like construction industry, etc. Also older people are keen to become involved in community life-styles activities and remain physically/mentally active)
NB Older people hold a wealth of knowledge, wisdom, experience and skills

iii) rising health-care expenditure (as people are living longer),

iv) chronic, mostly preventable, life-style based illness (linked with unhealthy diets and physical inactivity; it is the basis for obesity. Life style-related illnesses include Type II diabetes, cardiovascular diseases, degenerative illnesses, certain types of cancer, etc associated with obesity and sedentary lifestyles. People, especially in developed countries, continue to eat excessive amounts of fast foods and confectionery products, eg over the past 50 years, the US daily calorie consumption per person has increased by 30%; the consequential rise in chronic illness is costing the public health sector large amounts of  money that could be better utilised elsewhere. It is suggested that the impact of obesity could reduce our life expectancy. Obesity is a problem worldwide and in all age groups including children: it is estimated that 40 m. children are obese and that 70% of the north American population is obese)
NB Also, general health-care costs are rising because people are living longer with more chronic health issues; it is estimated that adults in the USA need least 2.5 hours of physical activity per week to stay healthy, but fewer than 50% of US adults get enough exercise
- mental health (it is the foundation of all other types of health and quality of life; thought to be of greater importance and impact than obesity, eg almost 50% of all Australians have experienced a serious mental health disorder at some point in their life. As we age, there is an increasing the risk of deteriorating mental health including

i) dementia which involves a progressive deterioration of cognitive functions that limits the ability to think, reason, make decisions and perform everyday tasks. Some of the symptoms include memory loss, confusion, personality change, apathy, withdrawal from social situations, etc. Alzheimer's disease (neurodegenerative disorder) is the physiological cause of dementia

ii) depression (patients feel deeply unhappy for a prolonged period of time, often with no clear or rational cause; it is estimated that 5% the world's population suffers from depression; the percentage increases significantly as we get older)
in summary

"...we have an ageing population, with more age-related illness, plus a population increasingly adopting unhealthy lifestyles..."

Stefan Hajkowicz, 2015

- changing behavioural pattern (neuroscience (for more details, see elsewhere) has shown that the brain prefers established habits/patterns, etc rather than creating new ones as the latter is energy expensive. This helps explain why changing people's behaviours is hard work, eg dieting, exercise, etc. Maybe an increased focus on preventative medicine is part of the answer)

5. Virtually here
- information technology (includes digitalisation, Internet, social media, world wide web, automation, artificial intelligence, mobile phones, etc) is reshaping everything we do, ie greater connectivity, more goods/services sold online, etc

For  many years around 75% of future jobs in the most rapidly growing industries will require skills in Science, Engineering & Mathematics (STEM) (MGS 2016)

- the virtual world is becoming the real world, eg shopping, education, communications, work, leisure, etc. More devices like phones, laptops, traffic lights, air-conditioners, supercomputers, iPods, etc are being plugged into one enormous and rapidly expanding network of gadgets. It's the emergence of a network, all plugged into each other that has the impact, ie meta-level functionality, like cloud technologies. There are some suggestions that they will get smarter than us and we will merge with the machine!!!!
- increasingly changing lifestyles and redesigned labour markets like

i) robotics will replace more professions, jobs, etc, eg artificial intelligence, automation, etc

ii) "bricks and mortar" stores being replaced by online retailers which includes overseas sites, etc. It is estimated that the global e-commerce markets is worth around US$ 1 trillion and is growing (2015). It is thought that for the tradtional store to survive will have to have an "experience factor", ie a place to interact with trained and knowledgeable people who could help the consumer navigate his/her way through the many options and buy a product that meets budget and needs. It will provide an experience with emphasis on services, not the products.

iii) more sophisticated, responsive, background supply chains, eg consuder logistics: use of drone-like delivery vehicles; in Australia parcel delivery is more profitable than mail; increase in land, sea and air deliveries

iv) information technology will allow us to live and work away from the traditional office. This has caused a rethink in our design of office buildings and cities, with a move away from open plan office layouts to activity-based layouts. More people are working from home, eg virtual offices. More people are working as freelancers who sell their services to the global market from any location. The office of the future will be more fluid, dynamic, connected.

v) democratisation of knowledge with more knowledge free and accessible. 
- create exponential growth linked with nanotechnology, quantum computers, big data, bio-mimicry, P2P, etc. This involves understanding the second half of the chess board analogy, ie doubling output when going on each space of the chess board, and that we are limited only by our imagination about what the future holds

Cognitive Computing
It is like the brain and nervous system sitting on top of the Internet of Things. It helps us to make sense of the 9 b.  connected devices operating in the world today which generate 2.5 quintillion bytes of new data daily.

Leveraging cognitive computing will augment human intelligence to deliver exceptional service to customers, etc.

"...new generational computer hardware - massive parallel processing networks, leverage graphic processing, corralled in server farms - along with real-time diverse data collections and highly advanced learning algorithms, that form deep neural networks, are resetting the state of the possible.  The past eight years has seen a 10,000 fold improvement in processing speed and the dawn of quantum commuters will deliver another step change..."
Beverley Head, 2016

NB As humans we experience things, try things, learn, create implicit mental models, ie we see, we hear, we sense the world around us - we know that if we push the door, it opens.  Cognitive platforms similarly ingest information, make sense of it, learn from it, optimise themselves based on that learning and then set up something useful, ie smart machines will find patterns in data and extrapolate generalisations from these patterns.

With powerful and cost-effective computer systems, more information can be processed at high speed.  Link this with Big Data collection, social networks, sensors, etc plus the advances in machine learning and deep neural networks, etc and it is possible to use cognitive platforms to generate more useful insights. 

It is the technology behind autonomous vehicles, natural language computer interfaces, smart homes and factories, etc.

These cognitive computing platforms range from dealing with the routine automatically, like the automation of contact centres to handling routine enquiries to supporting specialists in more complex challenges such as training young surgeons via haptic devices that give tactile feedback before the surgery starts.

Some more examples include
- providing computer-based support for elderly people living alone or recovering from an operation (Annacares)
- search-based marketing tool which matches brands to non-branded search items by understanding what people are really looking for (YourAmiga.com)
- using information in project reports to develop insights to give guidance in investment in design, fabrication and construction ( Woodside - oil and gas company)
- to assess life-insurance wrists (Swiss Re)

"...today's cognitive platforms, such as IBM's Watson and Google's Deep Mind, can...... ingest large bodies of information, including unstructured information such as images, video and speech, detect patterns that people cannot that people cannot......appear to understand large bodies of medical literature, case study law or content to provide deep advice for experts; make self driving cars possible; manage productive dialogue with customers; and - importantly - make mistakes..."
Gartner as quoted by Beverley Head, 2016

IBM's Watson was the first commercially available cognitive computing platform that demonstrated its capacity in 2011 when it read 30 m. pages per second to win the US game show Jeopardy. Watson was launched commercially as a cloud-based service in early 2014.

"...Cognitive computing is about amplifying human cognition.  They don't do your thinking for you, they do your research for you so that you can do your job better, that could be as mundane as asking a question or as profound as recommending the right treatment..."
Bob High as quoted by Beverley Head, 2016

For example, Watson Oncology provides support to doctors as they diagnose and treat patients, analysing vast amounts of research and published papers, and leverage micro segmentation to tailor treatment recommendation for individual patients.

Leverage of these cognitive platforms will help organisations expand. There are many industries like life-insurance, banks, government, education, etc that have much unstructured data, will benefit from these corporate IT platforms.  For example, a pharmaceutical company could leverage its data to become a consumer health management business.

NB More data, more accurate and smarter the cognitive platform gets. The learning capabilities of cognitive platforms mean that they are effectively writing code using their own neural networks and without human intervention.  It is hoped that humans and machines will work together and be able to outperform machines or humans working independently.  There will be governance issues around this, ie to prevent misuse and the need for human conscience

Recently the development of neoro-morphic chips is a further but limited gain, ie

"...cognitive computing is based on deep learning neural nets which have some degree of similarity with how the human brain functions.  But the neural nets are very basic compared with human neural systems: we currently use one sort of neuron, one type of synapse; the human brain has it least 150 different types of neuron..."
Bob High as quoted by Beverley Head, 2016

These systems are tuned for inductive reasoning, ie where the answer to a question exists somewhere in the knowledge base and can be served up with a degree of probability.  This could be extended to more deductive reasoning, especially for health care and finance.  Then the system could be tuned to abductive reasoning.  In other words, all forms of reasoning intended to help humans do their jobs.

- increasing focus on human inter-action despite technology allowing people to work on their own, ie it encourages linkages and communications for a range of activities like friendship, family, romance, hobbies, emotional support, learning, activism. etc. The "6 degrees of separation" has change to around 4, ie

"...the online world is bringing people closer together, increasing the speed and distribution of information flows. This will continue to have a profound impact on how people obtain, trust and use information into the coming decades..."

Stefan Hajkowicz, 2015

6. Great expectations, ie "the way you make me feel" (Michael Jackson)
- changing societal and consumer expectations for experiential products/services
, experiences and social interaction rather than material goods. Technology, income growth, rising levels of educational attainment and cultural change have had an impact on the experience economy, eg in the past the families would make a special cake for a children's birthday party, with the cake being remembered for its great taste; now as people are time-poor, they will buy a pre-made, birthday cake with outstanding decorations and the decorations will be remembered; from now on, more parents will outsource the entertainment, hire facilities, etc for the party, eg hire clowns, use facilities like McDonald's restaurant, etc which include a themed birthday cake and the whole experience will be judged and remembered. Thus, there has been a progression from the experience of tasty ingredients of the home-made birthday cake through to the experience of remembering the event, ie the emphasis has shifted from the physical ingredients to a complete experiential package. Research (Stefan Hajkowicz, 2015) shows that people are getting less satisfaction from acquiring more material goods; on the other hand, more satisfaction is derived from life experiences. In fact, aspirations for financial and material success were reportedly associated with increased behavioural problems, worse mental health and overall diminished well-being.

"...regardless of age, income, or culture, materialistic people face greater risk of depression, anxiety, low self-esteem and lack of social intimacy. Materialism makes you miserable......more fun, less stuff..."

Stefan Hajkowicz, 2015

Research shown that individuals who are altruistic and have caring behaviours enjoy better mental and physical health. As long as your altruism is manageable and not overwhelming!!! It has been observed people live longer who volunteer and it is almost as effective as other preventive health matters, like stopping smoking

"...quality of life also comes from a less materialistic culture where people are focused on experiences and interacting with - helping - other people instead of acquiring  stuff......social science studies show beyond all reasonable doubt that materialistic lifestyles not only can use scarce environmental resources, can generate misery. Lifestyles built upon positive experiences and caring for others tend to generate happiness..."

Stefan Hajkowicz, 2015

(NB According to Oxfam, around 1/2 of the world's wealth is owned by 1% of the population; the income gap is widening, ie 7 out of 10 people live in countries where income inequality has increased over the past 3 decades!!!!
- our rising discretionary purchasing power (this is linked with improved technology, ie with the same or less inputs we are getting more outputs). Income growth gives people discretionary expenditure beyond the essentials for life. Previously we spent most of our money on the basics, eg food (includes drinkable water), clothing, shelter, personal safety, health (includes hygiene, medicines, etc), education, power, access (roads), communications (radios, mobile phone, etc), etc. As our income grows, we start to spend more money on non-essential items, eg instead of basic clothes, we buy fashionable clothes; instead of preparing meals at home, we go out to a restaurant; instead of watching TV at home, we go to movies, nightclubs, restaurants, etc. Thus a greater portion of our budget is allocated towards purchases which have little or no essentail component. Successful manufacturers know that their products must have an experiential factor, ie people want more than a gadget - they want a product that is simple, visibly appealing and makes them feel good. For example, Apple with its iPod, iPad and iPhone has stressed fonts, colours and sounds as well as the technological advances. This has resulted differentiating its products and being able to connect to the massive and growing market. A similar story for 3M (started in 1902) it has supplied many innovative office-like products such as scotch tape, post-it notes, etc

"...design brings innovation to life with arresting beauty, captivating stories and exceptional attention to detail. We search for unexpected solutions to create passion; stepping beyond function towards the iconic. It's innovation worthy of love..."

Kevin Gilboe (Head, 3M's Global Design Branch) as quoted by Stefan Hajkowicz, 2015

Need to think about how consumers will experience the product, ie shifting the emphasis from selling the product to selling the service, eg the power company doesn't sell electricity - it sells light and comfort; cafes don't you sell food and drinks - they sells ambience, aroma and a feel-good factor.
- focus on authenticity, friendliness and personalisation with increasing products and services labelled as environmentally and socially responsible, eg from 2005 to 2010, there was a 2,000% increase in sales of these products (certified fair trade products) in Australia and New Zealand. Some investors are preferring to invest in firms that deliver improved social and environmental performance, ie ethical principles, despite the possibility of lower financial returns. It is estimated that around 11% of all US funds are managed with ethical guidelines (Stefan Hajkowicz, 2015). There is increasing consumer demand for information about the environmental and social performance of the firm, eg almost all of the world's 250 largest companies conduct sustainability reports on a regular basis. There is increasing pressure organisations to show greater transparency around governance, ethics and integrity, supply chains, anti-corruption and greenhouse emissions. In the resource industry, there is a concept gaining traction about firms needing "to gain and maintain a social licence to operate" in relation to social inclusiveness and gender equality principles
NB  Much of the impact of rising income can be summarised by Maslow's Hierarchy (1943). This explains how people first are in survival mode to meet their basic needs like food (includes drinkable water), clothing, shelter, personal safety, health (includes hygiene, medicines, etc), education, power, access (roads), communications (radios, mobile phone, etc), etc. Once these basic needs are met, then they move on to more advanced needs like social networks, self-esteem, etc and put their money into more advanced experiential activities like culture, entertainment, etc rather than basic necessities (see diagram of Maslow's hierarchy below for more detail)


source: Wikipedia, 2016

7. An imperative to innovate (improved technology)
- new mode of economic development based on knowledge, creativity and ideas with a lower ecological footprint. At the same time, some subsequent innovation could yield a decreasing margin of productivity
- technology will continue to change the way people interact and in the way people obtain information and make decisions, ie

"...technology can extend the length and improve the quality of human life. Technology allows us to find food and water and handle famines and droughts. Technology can tip the world geopolitical balance. Technology can create both build bridges, and divides, between people..."

Stefan Hajkowicz, 2015

- generally technology is a combination of many gadgets, tools, and ideas. For example, the iPhone is not really brand-new technology. It brought together a bunch of existing innovative technologies in a single product. Generally technological innovation occurs when ideas are shared, ie borrowing and building upon technological innovations, theories and ideas of other people; technologies become self-selecting, ie those which improve their effectiveness are eventually adopted by many

- accelerating technological advancement owing to
i) information and knowledge based upon which future advances will be built as ever-expanded pace. Technology is just waiting for somebody to connect with other new technology

ii) rapidly advancing economies of China, India, etc are increasing their R&D efforts; as a result are they are importing less technology.

- the importance of innovation to create new markets and disrupting existing ones, eg

i) rise of regenerative medicine to extend the length and quality of human life, eg telomerase, manufacturing and transplanting replacement body parts including skin, organs, etc; on the other hand, there are ethical issues around future health inequalities resulting from income inequalities, ie as the new services will cost money, the rich will be able to afford them, while the poor will lack access to these services

"...we have the amazing intelligence and ingenuity needed to grow organs in a laboratory. But will we have the ingenuity to find ways of ensuring that life extending treatments are accessible to all people?..."

Stefan Hajkowicz, 2015

Gene-editing where human organisms are developed in other species like pigs

ii) advances in energy storage systems (batteries). to create a better world, we need more energy but it is in scarce supply relative to escalating demand. The challenge of energy supply is becoming less about finding new ways to make energy and more about new ways to store energy.This is linked with the following challenges

- the fluctuating demand for electricity; with peak demand spikes at certain times, eg mass usage of heaters and/or air-conditioners. To handle these rare occasions requires a massive amount of infrastructure like poles, wires, generators, etc which are comparatively idle most of the time. Use of batteries to store electricity generated in off peak periods will negate the need for the excessive infrastructure, ie the batteries will flatten out the peaks and troughs of power consumption

- erratic nature of renewable energy sources like wind, solar, etc; solar works well when it is sunny and wind when it is windy!!!! To be most effective they will depend upon energy storage so that renewable energy systems are able to capture and store electricity when conditions are right, eg windy and/or sunny. With a greater number of energy users such as households, factories, shops, etc becoming self-sufficient, the current concept of centralised power generation is no longer valid

- electric vehicles - these have the benefit of being quiet and having low emissions of carbon dioxide and other pollutants when compared with conventional, fossil fuel-driven vehicles. There is a possibility of using household generated renewable energy to recharge electric vehicles and to use the vehicles' batteries to store electricity for household use when required; another possibility is to use the road itself to recharge an electric vehicles' batteries, eg solar powered road/car parks surface built from photovoltaic solar panels so that you don't need to stop at fuel stations. Solar road technology has the potential to generate enough electricity for all our needs. Hybrid vehicles can switch from renewable energy sources to fossil.

Current research on improving energy storage systems by increasing power, improving longevity, reducing recharge times and decreasing the weight of batteries. Other possible areas for advance are
a) using nanotechnology with lithium-ion batteries
b) producing electricity by reacting hydrogen, methane and oxygen
c) developing a nanotube-enhanced ultracapacitor battery
d) using algae from seaweed so that the lithium-ion batteries can use silicon anodes rather than graphite anodes, etc
iii) automation, ie artificial intelligence and autonomous systems. Robots have replaced many manual jobs as they are often safer, faster, more precise and cheaper. It is having a major impact on transportation, military, mining and agriculture industries. Some examples

a) mining. Automation will help mine in isolated areas, and also release people from jobs that are repetitive, strenuous, difficult or potentially hazardous/dangerous. Rio Tinto has moved 100 m. tonnes of rocks using a fleet of 13 drivers-less trucks in the Pilbara region (Australia). Automation in the mining industry is cost-effective, with productivity increases of up to 25% plus improvements in environmental and occupational safety. It is expected to be expanded to trains carrying ore, mining equipment (drilling, digging, etc), etc. This is heading towards a fully automated, isolated mine site being controlled by staff and computers in an urban office!!!! A similar story prevails for off-shore, ocean oil-and gas-drilling rigs. These types of technology advances change labour markets with an increased demand for highly skilled jobs and decreased demand for low skilled jobs. Overall research has shown there is an expected net gain in employment and economic growth.

b) military. Battlefields by definition are hostile and dangerous environments. Automation is replacing troops with robots to achieve objectives with fewer casualties plus provide greater precision, speed, endurance and strength. In 2015 it was expected that US military would have 1/3 of all aircraft and ground vehicles robotically controlled, eg pilotless drone aircraft and driverless trucks.

"...An autonomous robot has the capacity to diagnose a situation, identify options, select the best option, then act accordingly and with potential lethal force..."

Stefan Hajkowicz, 2015

The use of robotic devices by the military raises some ethical questions. There is no problem using robots instead of people in hazardous situations like locating, disarming and removing deadly bombs. On the other hand, the use of the robotic devices cannot incorporate moral issues into their judgement the same way that humans can. But robots do not have emotions such as anger, fear or jealousy which can be associated with unethical behaviour in humans

c) agriculture (there is the potential to automate using artificial intelligence, sensory systems and robotics to reduce human labour inputs on the farm). For example, wine making where pruning vines is a time-consuming but important task. Pruning is required in winter months to ensure the emergence of new shoots with a maximum production potential; it is a labour-intensive exercise as pruning requires skilled workers. Researchers in New Zealand have developed artificial intelligence algorithms to reduce the labour burden, ie a mechanical device takes an image of the vine and the algorithms analyse the image to identify the optimal location of pruning, followed by a mechanical cutters performing the pruning automatically; it was found that the automation was better than the humans 30% of the time and as good as the humans around 90% of the time. Other examples include
# advanced sensory systems to optimise crop and pasture production,
# LIDAR (a laser mapping system, that is used in Google's driverless cars, to allow robotic devices to map and identify agricultural plans in 3-D
# BoniRob (an agricultural robot that automates tasks such as weed control, soil tillage, seeding and spraying; it could be an alternative to tractors and manual labour on farms as it has the ability to identify different types of plants and apply the right treatment
# other robotic devices include those for picking tomatoes, strawberries and apples

"...Sensory systems are continuing to improve, giving robotics new capabilities to detect sound, light, moisture, heat and a wide variety of other situational variables. Perhaps the major leaps and bounds will occur not viasystems that capture more data but via systems that can interpret data..." like artificial intelligence algorithms "...artificial intelligence sits at the core of an autonomous device because it gives the device the ability to interpret its environment and make decisions..."

Stefan Hajkowicz, 2015

One of the challenges is striking the right balance between human and computer control. It is hard to write computer software code that handles all feasible scenarios. One of the aims is to use automated systems in vehicles in situations where minimal judgement and instantaneous responses are required. Currently the use of radar, lasers, accurate mapping, advanced software, etc is laying the foundations for a staged transition towards full automation.

iv) informatics (turning masses of data into knowledge into power by using autonomous systems, artificial intelligence, etc)
It is thought that we are in the Information Age (a new capability to acquire, store, analyse and interpret vast amounts of information). It brings together different fields of research like statistics, mathematics, psychology, economics, software engineering, information technology, etc. It will help us manage natural resources efficiently with minimal waste, allocate health care resources efficiently, improve forecasts of natural disasters, allow governments and firms to ineract with millions of citizens and customers directly. Some examples of artificial intelligence beating humans are
a) Deep Blue (a computer chess program developed by IBM which in 1997 defeated the current world champion Garry Kasparov),
b) Watson (a computer program developed by IBM to compete in the TV quiz show "Jeopardy" defeated the 2 best human competitors in 2011),
c) Alpha Go (a computer program developed by Google for an ancient Chinese board game called Go (claimed to be the most complicated game ever invented) beat the human world champion in early 2016)

This means that designers can give structure to unstructured problems and build computerised systems that work more efficiently and effectively than humans on certain tasks.  Information-rich and information-dependent industries like medicine, journalism, finance, legal, etc will be transformed by innovative informatics technology. These algorithms are capable of searching vast quantities of information systematically that humans could miss. For example, one company (MarketBrief)

"...its website to write up to 3000 financial stories per day, each within 0.8 - 0.9 seconds of the source information being discovered. It claims to cover 500,000 companies and analyse over 10 million documents..."

Stefan Hajkowicz, 2015

These computer-generated reports are best when factual and are less likely to make mistakes than humans-generated reports.

"...the world generates 2.5 quintrillion bytes of data every day......estimates that 90% of the data in the world was generated in the last 2 years..."

IBM as quoted in Stefan Hajkowicz, 2015

Data is being generated by increasely diverse sources like satellite remote-sensing systems, electromagnetic telescopes, social media, digital cameras, online documents, stock exchange, etc. The sheer amount of data is now called "big data" (for more details see other parts of this publication).  It involves developing faster, more efficient and effective ways to capture, analyse and interpret vast quantities of digital data to help people make better choices in every sphere of government, industry and society.  This analysis makes use of "data exhaust", ie the digital trail people leave behind when they search for information, buy or sell goods, express thoughts on social media or travel, etc. Some concerns around the use of this information involve privacy and confidentiality.  Some positive uses of big data include
- improved forecasting about human and natural disasters like famine, floods, droughts, migration, etc
- firms/governments can interact 1-for-1 with millions of customers, ie allows retailers to know what customers want even before the customer does!!!!
- identifying trends, eg investment choices, employment, agricultural commodity prices, etc
- finding new resource deposits for mining

"...innovative informatics will change our jobs, industries and lifestyles..."
Stefan Hajkowicz, 2015

v) more innovative ways of extracting, using and recycling resources, eg aluminium drink cans - in 1970 1 kg of aluminium made 48 drink cans - owing to innovative technology, by 2005 it makes 73 cans!!!!
vi) innovation is required to handle challenges like increased infectious disease risk in a mobile world, the rise of drug-resistance microorganisms, world poverty, income inequality, etc
- 24/7 availability

8. Safety
- global to personal
(rise of extremists like religious fundamentalists, terrorists, etc; personal safety in local communities; ability to provide basic needs like food, shelter, power, etc)
- technology impact
(invasion of privacy from the use of technology, eg social media, digitalisation, etc; the military use of drones rather than soldiers on the ground; use of safety cameras around buildings to identify and record threats, etc)
- volatile times
a) stability is no longer the norm (yet much of organisational development theory is based on stability, etc)
b) past success is no guarantee for future success
c) uncertain world with few definitive answers, ie many shades of grey
d) need to be flexible to handle many "unintended consequences" or "unplanned events"
e) change is a journey, not a destination, it is on-going
f) "business as usual" is less likely to be a sustainable option

(source: Stefan Hajkowicz, 2015)

Some other interesting trends include:

Spending habits are changing with people expecting a more personalised offering and value from their products while paying less; an emphasis on more ethical and environmentally-friendly consumerism. Some examples
- instead of buying instant coffee, people patronise a cafe that sells organic, fair-trade beans and promotes the story of its coffee growers. The cocoa and chocolate fair trade purchases in Australia increased from A $5.5 m. in 2009 to A $87 m. in 2010 (Fiona MacDonald, 2014)
- shopping holidays may be replaced with more intense experiences like volunteering; 1.6 m. volunteer tourists visit a year, with the worldwide industry worth A $2.6 b. (Fiona MacDonald, 2014)
Worldwide population
- it exceeds 7+ b. & is expected to reach 10 b. by 2050
- people in the developing countries are living and staying active longer, ie 22% of the world's population is expected to be 65 + by 2056. For example, in Australia by 2050, life expectancy at birth is expected to increase to around 90 years. Also, 2.7 people will be working to support every person aged over 65. On the other hand, many Australians, who are 65+, are willing and able to work into their 70s.
Global food production needs to increase by 70% to meet anticipated demand in 2050. This means the world needs to produce 470 m. tonnes extra meat annually (in 2013 we produced around 200 m million tonnes); we currently produce 2.1 b. tonnes for cereals, but would need to increase this production by 3 b. tonnes). On the other hand, we are losing 120,000 square km of farmland to degradation and over-cultivation annually.(Fiona MacDonald, 2014). We need to learn to live on less!!!!!!
Fossil fuels
Based on current global usage: we have 50+ years of oil reserves and 100+ years of coal reserves (Fiona MacDonald, 2014). Yet fossil fuels, like coal and oil, are under threat from nuclear and renewable energy like solar, wind, water, biogas, etc owing to fossil's pollution impact. on the environment
Economic growth
- more than 1b. people in Asia will move out of poverty and into the US$ 6,000 - 30,000 annual salary bracket over the next 10 years
- economies of developing countries in Asia are growing at around 8% annually
- by 2030 the bulk of global GDP will be generated from non-OECD countries
- Chinese growth (GDP) has almost tripled in the past 2 decades; between the early 1990s and 2000s, Chinese percentage of the global foreign exchange and gold reserves increased from 2.7 to 21.9.
- since the early 1990s, global trade marks held by Chinese residents have increased from around 6% to 32%
- in the 1980s, the geographic centre of the world's economy (calculated by measuring GNP across 70 locations) was located over Atlantic Ocean between Europe and the USA; it is predicted that by 2030 that the centre will lies somewhere between China and India. This change in focus will go beyond trade and require a better understanding of this region's peoples, cultures (including languages) and institutions.
"...in a changing world, if you stop moving too long, you'll sink; success lies in knowing which direction to steer..."
Fiona MacDonald, 2014
Flora and fauna
- only 1.5 m. of the Earth's estimated 5 million species have been formally described
- 1/3rd of all species could become extinct if climate change continues as predicted and 80% of all genetic diversity could be lost along with the species
- 70% of the world's plants are currently threatened with extinction
- 210 k. square km of land has been protected around the world since 2002

organisational development change management

In summary,

"...in a slower-paced world, even senior executives spent most of their time managing fairly stable ongoing operations. The personal characteristics that made for success reflected the bureaucratic organisational structures of the time - personal stability and reliability, being highly organized, following rules, supporting existing cultural values, being tough-minded and in a blokey world, often aggressively demanding conformity. Now the prime requirement is the ability to manage ongoing organisational change, incremental at times, but often transformational, and to create a culture that fosters innovation..."

Dexter Dunphy as quoted by Luke Slattery, 2007

Some changing paradigms

Globability - the world is flat, not round

Business - small fish eat the bigger ones

Demography - with time you become younger

Organisations - growth is not vertical but virtual

Product - fortune at the bottom pyramid (source:Nouzab Fareed, 2014)

People - commitment does not have time dimensions but value dimensions

- labour changes (low-skilled) over the years in USA

- in 1900, 40+% of workforce employed in agriculture; now around 2% (tractor, harvester, etc)

- in 1950s around 1/3 of Americans worked in manufacturing; now it is around 10% (assembly line, robots, etc)

- total retail workforce tripled (1940 to 2000) to be the largest source of jobs; now growing slower than general workforce, ie employing fewer people than in 1990 (digitalisation, internet, automation, etc)

Some examples of recent trends in the rules of running a business are explained by Betsy Morris (2006):

i) old rule (big dogs own the street); new rule (agile is best; being big can bite you)

Until the mid 1990s, a company's stock market value was linked with revenue. In 1993 Microsoft's market value exceeded IBM even though its revenue was 1/22 the size of IBM.

Size did not insulate GM from its troubles. The large pharmaceuticals that were valued for the amount of R & D have struggled; yet it is the smaller biotech companies, such as Genentech, that generate new drugs.

"'technological advances and changing business models have diminished the importance of scale, as outsourcing, partnering, and other alliances with specialty firms (with their economies of scale) have made it possible to convert fixed costs into variable ones..."

Betsy Morris, 2006

Dell is a good example: keeping its cost down by outsourcing disk drives, memory chips, monitors, etc frees it to focus on direct selling and just-in-time assembly.

ii) old rule (be No. 1 or No. 2 in your market); new rule (find a niche, create something new)

Market dominance is no guarantee for success. For example, Disney's dominance in animated films offered it little protection against Pixar's digital innovation; Coca-Cola's dominance has been threatened by bottled water, sports and energy drinks, etc which were initially viewed as low volume distractions. Only other hand, Starbucks has never desired to be No. 1 or 2 in the marketplace. It has continually chased niches, ie it has continually chased a product (coffee), etc.

Organisations need to keep moving, evolving and trying new things so that they become the company of choice.

iii) old rule (shareholders rule); new rule (a customer is king)

The old rule involved focusing on earnings per share in the short-term; this could encourage anti-customer behaviours, such as costing cutting. The rule focuses on consumers' details, such as new products, service calls, customer satisfaction scores, etc that all add to the bottom line but not necessarily in the short term.

iv) old rule (be lean and mean); to new rule (look out, not in)

Concentration on being lean and mean, such as via 6 Sigma, does not encourage exploring new ideas and/or different approaches. In other words, innovation suffers, ie

"...Nothing will kill it faster than trying to manage it, predict it, and put it on a time line..."

Vishva Dixit (vice president, research, Genentech) as quoted by Betsy Morris, 2006

Old rule encourages an inward-looking culture that can result in missing opportunities in the ever-changing business world of disruptive technologies, eg VOIP threatening to make phone calls virtually free.

To be successful, businesses have to focus on what is going on outside rather than just inside the organisation.

v) old rule (rank your players and go with the A's); new rule (hire passionate people)

The old rule ranked employees on performance as As, Bs and Cs; and then the Cs were culled, ie rank and yank. The new rule encourages employing people who are passionate about what they do, like Apple and Genentech

vi) old rule (hire a charismatic CEO); new rule (hire a courageous CEO)

The old rule encouraged celebrity CEOs who squeezed costs, deftly managing financial and accounting decisions, using acquisitions to grow but not necessarily providing long-term solutions. The new rule encourages organic growth and taking risks that can take a while to pay off.

vii) old rule (admire my might); new rule (admire my soul)

Previously, being large meant that you were powerful and encouraged a focus on now rather than the future. More recently, corporations have a social responsibility in addition to making money. This involves more than contributing to causes or being transparent; it involves being sustainable in the long term.

Generalization vs. specialisation

Traditionally, specialisation or substantial expertise has provided greater status, the potential for being indispensable and financial security. Recently, however, specialisation has come under threat from increasing technological changes, such as computer, automation, etc. Even the jobs of highly educated people have been challenged by technological change. For example, cardiac surgeons who make most of their income from open-heart surgery are under threat with the development of new heart valves that go in like stents. These are replacing the need for open-heart surgery.

Similarly, organisations that are preferring to hire people who can demonstrate a diversity of skills (generalists or all rounders) and will hire expertise as required.

Furthermore, demarcation between jobs is breaking down. For example, in the airline industry, flight attendants and pilots now help clean the planes, etc. Job flexibility is on the increase.

Collaborative revolution

"...Tremendous movement towards collaboration, driven by social media type technology...... and the preference of young people to work across a number of disciplines and jobs rather than become deep experts in any field..."

Kevin Wheeler as quoted by Fiona Smith, 2011

Linked with this is

- crowd sourcing, ie a network is created when organisations pay a fee to post problems to find solutions. For example, Eli Lilly uses retired scientists, obsessive hobbyists, university students and others to try to solve their problems in return for cash rewards

- slash workers, ie people simultaneously working on more than one career, eg lawyers playing in a band at night, graphic artists running a nightclub, accountants having their own craft business, etc

Based on this, it is expected that the people who will succeed have the following characteristics

"...- Can interpret complex and disparate information

- are willing to experiment with risky solutions

- can figure out things, even without expert knowledge

- are connected and live with inner dependencies

- are aware of global trends

- collaborate with a broad range of others..."

Kevin Wheeler as quoted by Fiona Smith, 2011c

An interesting example of a trend is the "citizens disaggregation" movement, ie consumers turning their backs on mass production. Some examples include
- citizen journalist blogging on current affairs, etc

- citizen scientists contributing to global science projects

- citizen manufacturing using 3-D printers to produce everything from spare parts to prosthetic limbs

- contamination scares of packaged, imported frozen foods is making people more food safety conscious and concerned about the world of mass produced food of uncertain origin. This is increasing the appeal of farmers' markets and community gardens.

The approach to work has changed as shown by the following table

Organisation

Hours/week

Weeks/year

Years

Total (K)

Comments

Traditional

47

47

47

104

Work for one organisation for all working life

Recent Past

37

37

37

56

Working less and retiring early

Now & Future

60

50

17

51

Working longer hours, more weeks & frequently changing jobs

The traditional pattern is like a marathon while the now and future is like a sprint that has little room for error.

Summary of the challenges facing organisations:

A natural agenda of issues is shaping the future, especially for corporations with global scope

Social divide: the ever-widening gap between those participating in the increasingly interdependent global economy and those not. For how much longer can 15% of the people get 85% of the benefits of globalisation?

Redefining growth: economic growth based on ever-increasing material use and discard is inconsistent with a finite world. How long can we keep piling up more junk in the same box?

Variety and inclusiveness: developing inclusiveness as a core competence in increasingly multi-cultural organisations. Who is the "we"

Attracting talented people and realising their potential: developing commitment in a world of free agents and volunteer talents. What are we committed to, really?

The role of the corporation: extending the traditional role of the corporation, especially the global corporation, to be more commensurate with its impact. Just how accountable will society expect us to be?

"...The system seeing itself: the challenges of coordination and coherence in social systems. How can we stop going faster while our ability to see further ahead is decreasing?..."

"Marblehead Letter" (2001) as quoted by Peter Senge et al, 2005

Ten Major Trends in Agriculture

1. Costs and risk aspects of climate change & impact of carbon tax

2. The cost & scarcity of water

3. The declining competitiveness of the Australian agri-food sector, eg it costs around 2.4 times to slaughter and process a cow in Australia c.f. USA

4. The shift in value along the supply chain

5. Corporatised farming and foreign ownership

6. Market access & biosecurity

7. Social values & accountability (largely driven by social media)

8. Growing global demand for food

9. Threats to the agriculture supply base

10. Technology

(source: Andrew Cornell, 2013b)

Competitive advantages

Based on USA data (work of David Yoffe as quoted by Martin Moore, 2008), something that gives a competitive advantage has limited time period. For example,

- price has less than 60 days

- advertising less than 12 months

- innovation less than 3 years

- manufacturing less than 3 years

- distribution less than 4 years

- human resources less than 7 years

Thus competitive advantage with people providing the best and price the least competitive advantage.

Some critical details that are required to run a successful business, ie

- location

- staff and management (motivated, stable and enthusiastic)

- low-cost structure

- good margins

- satisfying customers' needs and wants

- efficient management information systems and supply chains

- flexible approach

- learn from mistakes/failures

Timing and Luck

For any organisation to succeed, timing and luck are essential. Timing - customers are ready for your product/service; luck - your product/service is ready when the market wants it. For example, Virgin Mobile is the fastest growing company in history to reach a $1 billion turnover. Virgin Mobile was ready when the opportunity in the mobile market present itself. Furthermore, chance favours the prepared mind.

Luck plays an important role in everything we do. Thus we need to find ways to handle and manage it. This involves preparedness and creating a culture that can adapt to the unexpected. These things are always going to happen but what separates different managers is their response

Six characteristics of Peak-Performance, Innovative, Agile, Resilient and Robust Organisations

Introduction

The 6 characteristics of the peak-performance, innovative, agile and robust organisations which best handle the uncertain and turbulent future are

i) customer-focused

ii) concentrate more on leadership and less on management/administration

iii) entrepreneurial (based on innovation)

iv) people-oriented

v) tightly focused on "decisive opportunities"

vi) resilient

(NB This assumes that you have costs and expenses under control!!!)

In summary organisation

"...requires astute decision-making and leadership. It requires discipline and innovation. It also needs attitude, a good sense of humour and, then I say, luck..."

Richard Branson, 2008

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