Trends and Challenges (Mega-Trends)

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.

Sometimes we hang onto trends too long, eg starting in the late 1990s and lasting for over a decade, the Chinese economy was the only thing growing. Yet since the global financial crisis, China has stalled and could have problems restarting as its wages are becoming uncompetitive. Yet people have not accepted this change. In 2016, the Mexico-Texas midwest corridor was probably the most dynamic part of the world.

Other areas of concern include

- the global push by central banks to flood the world with money; this could unleash an inflationary wave and has serious consequences for the developing world where the cost of food is going up. Anti-government activism and populism by the discontent are flourishing as a result and it's global in nature.

- analysing the wrong data, eg in Australia, official inflation is low yet everything is expensive. there is

"...disconnect between the official data and inflation vs the cost of living and the actual pain everybody is in..."

Philippa Malmgren as quoted by Joanna Gray 2016

- the importance of the Chinese policy "One Belt, One Road", ie

"...Over the next 25 years, China is going to build physical infrastructure from China through Central Asia into Western Europe and along the coast line of Asia around India into the Middle East, around Africa, up into Europe and across Latin America..."

Philippa Malmgren as quoted by Joanna Gray 2016

This is going to have a huge impact on the world economy.

Mega-trends

Introduction

Need to understand geopolitical and historical trends, and their impact on your markets, industry and organisation. There are no easy answers to deciphering the forces at play in global markets. Need to turn information and knowledge into insights. This requires imagination, curiosity and context plus understanding the transmission mechanism, eg in 2016/17 events like BREXIT, Trump's election in USA, terrorist attacks in western countries, North Korea dispute, mass shooting in Les Vegas, growing power of China, etc. For example, technology is a far bigger threat to jobs than trade. In the current situation with information overload there is a need to prioritise information

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.

For example, the rise in populism worldwide since GFC, eg BREXIT, the election of Donald Trump as President of United States, rise of populist leaders in Europe, etc, is posing a challenge how to handle popular prejudices against people of different racial/ethnic groups, immigration, globalisation, distribution of benefits, etc. There is a dire need for leaders to explain complex truths in a compelling and comprehensive way.

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).

War, crime, disaster, poverty, etc still exist today. They are more likely to be the exception than the rule

"... Despite what we hear on the news and from many authorities, the great story of the year is that we are witnessing the greatest improvement in global living standards ever to take place. Poverty, malnutrition, illiteracy, child labour and infant mortality are all falling faster than at any other time in human history. Life expectancy at birth has increased more than twice as much in the last century as it did in the previous 200,000 years. The risk that any individual will be exposed to war, dying in a natural disaster, will be subject to dictatorships has been smaller than in any other epoch. A child born today is more likely to reach retirement age than his forbears were to live to their 5th birthday..."

Johan Norberg 2016

"...in the past 25 years, the number of democratic countries in the world has almost doubled......people living in extreme poverty in the world has plunged from almost 40% to less than 10%..."

Barack Obama as quoted by Der Spiegel 2016

This progress started with the intellectual enlightenment of the 17th and 18th century where people adopt a more scientific/objective approach rather than being content with authorities, traditions and superstitions. Its political equivalent was classical liberalism which delivered people from the shackles of heredity, authoritarianism and serfdom. Industrially, the Industrial Revolution of the 19th-century further helped to conquer poverty and hungry. Then in the late 20th-century with globalisation, Internet, digitalisation, etc the progress continued at a faster pace and larger scale.

"...humans are not always rational or benevolent, but in general they want to improve their lives and the lives of their families, and with a tolerable degree of freedom they'll work hard to make this happen. Step-by-step, this adds to humanity's store of knowledge and wealth...... more people are allowed to experiment with different perspectives and solutions to problems than before. So we constantly accumulate more scientific and other knowledge..."

Johna Norberg 2016

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)

Recent technological breakthroughs around communications are important. On the other hand, some of the past technological breakthroughs have been pivotal and include

i) artificial fertiliser, especially nitrogen, has been the most powerful weapon against hunger and poverty. Nitrogen helps plants to grow. German chemist Fritz Haber demonstrated how to produce ammonia from hydrogen and atmospheric nitrogen. Another German, Carl Bosch carried out around 20,000 experiments to come up with the right process to synthesise ammonia commercially.

"...world population - its expansion from 1.6 billion people in 1900 to today's 6 billion - would not have been possible without the synthesis of ammonia..."

Vaclav Smil as quoted by Johan Norberg 2016

NB Nitrogen has some negative impacts, ie it makes everything grow (including weeds) and causes toxic algae blooms in waterways and coastal areas

ii) agricultural technology, ie automation

"...150 years ago it took 25 men all day to harvest and thrashed a tonne of grain. The modern combine harvester, a single person can do it in 6 minutes. In other words, contributed to a 2,500-fold productivity increase. It used to take half an hour to milk 10 litres. Wwith modern milking machine it takes less than 1 minute. Expanded trade, better infrastructure, cheap electricity and fuel, food packaging and refrigeration have all made it possible to move food from surplus areas and places of shortfalls. In the USA it took around 1,700 hours to the purchase the annual food supply for a family in the late 19th century. Today, it takes no more than 260 hours...."

Johan Norberg 2016

iii) diet

"...In the mid-19th century, the every daily calorific intake in western Europe was between 2,000 and 2,500 - below what it is in Africa today. In 1950 it was already around 3,000. One indicator of health is average height, since the human body reduces its growth if the necessary amount of nutrition is not available. The historical records show that the difference in height between Western Europe and the rest the world was marginal until 1870. After that, the average Western European grew in stature by around 1 cm per decade......this was incredibly important to health......generally live longer......children who receive better nutrition can resist disease...... stood a better chance of surviving..."

Johan Norberg 2016

At the same time fertility was falling, ie

"... As people become richer and better educated, they have fewer children......US fertility rates plummeted from seven children per woman in 1800 to 3.8 children in 1900 to 1.9 children in 2012 - below the replacement rate. This trend is the same all over the Western world..."

Johan Norberg 2016

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

More details on each mega-trend

1. More from less

Organisations and people want to live longer and better but budget constraints mean that we have to do it with the same, or fewer resources. This is only achievable if we are smart and innovate our way to the future

- 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. With is a widening gap in net wealth between "haves" and "have nots"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

silk_road

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

Extended lifespan with people are living longer, eg Australians born since 2001 likely to live more than 3 decades longer than a century ago. As a result, brands, organisations, etc are starting to focus on the "older persons" market, eg

- development of personalised medicine including DNA beauty plans

- tent pole learning (studying for degrees in their 30s to 70s)

- life-lasting "whealth" (wealth and health) programs

Also, people are becoming more accepting of science and technology in the home, eg sensors, Internet, digitalisation, smart phones, algorithms, etc

"...A recent survey found 54% of people in Britain were willing to provide blood, skin and hair samples for testing to develop a personalised product when a decade ago they would refuse to provide their fingerprints..."

Patrick Durkin 2016d

"...it's no longer just those very functional things that help you lose weight......elp you monitor a medical condition; it's increasingly this idea of let's look at how you are feeling..."

Chris Sanderson as quoted by Patrick Durkin 2016d

Products are being developed like pplkpr (people keeper, right) to personalise products and services to deliver not only the physical, but the emotional and mental state of individuals, eg measuring your heart rate, who stresses you, who makes you happy or arouses you and then makes recommendations to optimise your social life.

This is called "fluid technology" that creates symbiotic ecosystem with the individual and the technology. Some examples,

- Amazon Echo is like a personal assistant at home where verbal commands to add products to a shopping list is fulfilled in the warehouse and can be delivered promptly

- Pause App is designed to help us slowdown in the 24/7 society

Ageing workforce/population can limit long-term economic growth as a smaller percentage of people are of working age and this lowers the capacity to produce goods and services. One possible way to handle this is by increasing labour productivity (via use of technology) so that more can be produced to maintain GDP per capita. Technology requires differently qualified workers as more routine tasks are automated. Cognitive tasks (these require knowledge) can be automated. For example, translators: some of the tasks they perform include identifying the phrase, its grammatical structure, and then translating it. As this is a cognitively routine task, online translators can perform this. These digital translators are improving their accuracy as they are learning patterns of behaviour.

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.

More on cognitive computing

"...cognitive computing will usher in a new wave of change, giving organisations the power to gain insights and make decisions from vast amounts of data......use natural language recognition and machine learning to discover new insights on vast amounts of unstructured data, at a speed never before possible..."

Beverley Head 2016

For example, banks are deploying cognitive solutions to help employees identify customers' needs faster and in a more personalised way. Additional uses are in fraud analysis and investigation, automated threat intelligence and prevention, and smarter financial advice.

"...intelligent, increasingly autonomous systems now have the capacity to reshape business, health, education, government and society by augmenting human intelligence..."

Toby Walsh as quoted by Beverley Head 2016

Some examples include

- legal practices (an intelligent platform will be able to effectively handle discovery rather than junior clerks poring over thousands of corporate documents.)

Artificial intelligence has 2 elements, ie

i) learning from the past, eg machine learning and big data

ii) decision-making based on improving efficiency and effectiveness by using what has been learnt from the past, eg rostering of staff, scheduling of production, reducing overtime, etc.)

- personalising healthcare (in the developing world people are dying from diseases that we know how to diagnose and to prevent/treat cheaply. We already have the technical ability, via smart phones, to diagnose and fix these problems)

- personalising education (systems are being developed that will follow you for life, ie knowing what you know, what you need to know and identifying gaps in your knowledge. Also, the system will know how you learn and how you best understand)

- job selection/career development (linking psychometric testing with job opportunities to find the right people)

Banks are deploying cognitive solutions to help employees identify customers' needs faster and in a more personalised way. Additional uses are in fraud analysis and investigation, automated threat intelligence and prevention, and smarter financial advice.

IBM is now in the business of cognitive computing, ie a combination of digital business and digital intelligence. The cognitive element is augmenting our intelligence, ie man and machine working together to improve decision-making. IBM's cognitive computing platform (Watson) was launched commercially as a cloud-based platform in 2014. It allows, via application programming interface (APIs), organisations to embed cognitive services into existing business processes. This will unlock and an organisation's latent knowledge and link it with natural language processing. It should help strip away the unconscious bias we as humans have; it is providing an analytical perspective and insight. On the other hand, humans need to provide the moral compass to balance the objectivity of the machines.

The combination of cognitive computing, block chain and the Internet has the potential to be very powerful, eg "...in logistics......blockchain. is a process is already seen as significant. Add to that, data delivered by IoT sensors that feed into the block and cognitive computing insight engine and the process is radically improved..."

Dee McGrath (IBM) as quoted by Beverley Head 2016

An example is with in the health industry with melanoma (skin cancer). If melanoma is discovered early, it can be treated. Using cognitive technology to support early diagnosis; building on the work done with MoleMap (collected 40,000 visual analytics around melanoma). Cognitive technology (IBM's Watson) was able to demonstrate a 91% accuracy in detection of melanoma

"...building algorithms that recognise the morphology of a mole or lesion and then help clinicians interpret the morphology by examining its symmetry, border, colour and dermoscopy pattern, in order to then predict the level of confidence about whether melanoma is present..."

Beverley Head 2016

"...we are teaching Watson how to see. We are teaching Watson the science of melanoma and to become that trusted adviser. We are reshaping what's possible: our thinking on cancer for example......the system has ingested 200 medical journals and 300 textbooks and has been trained by clinicians to read x-rays and EMR images..."

Joanna Batstone (IBM) as quoted by Beverley Head 2016

Courtney Best estimates suggest that 95% of all the world's data was created in the last 3 years but 80% is not readily available. Computers can store this information and be programmed to recognise its relevance (Beverley Head 2016).

The biggest benefits will be in prevention of health issues. Once this is integrated with genomics, this will personalise medicine and have the possibility of heading off chronic disease and multiple morbidities.

Another example is in the oil and gas industry. Woodside (Australia's largest independent oil and gas company) has so much data that making sense of it is hard. It is using a cognitive platform which has suggested much of the firm's data. For example, 1 of its 7 platforms draws on 28,000 project documents (each at least 100 pages long) that represents 30 years of projects. A technical question can be answered very quickly. This is enabling graduates and young professionals to gain knowledge that would normally take decades to develop.

"...Machine learning capabilities mean that over three months the platform has lifted its performance from 1 in 20 success rate to 1 in 4. And the platform will continue to grow as Woodside adds a further 12,000 documents......plus data from 200,000 sensors..."

Shaun Gregory and Russ Potapinski (Woodside) as quoted by Beverley Head 2016

Furthermore,

"...from cognitive we get continual insights and mimic human thinking from a program that we can learn from mistakes, apply inference and use natural language. With block chain the entire premise is that each block has provenance in historical context, and that insures transactional trust..."

Nitin Gaur (IBM) as quoted by Beverley Head 2016

"...technology is part of the cure and part of the problem. In the last revolution, the industrial revolution, we had to change our society in a big way: the introduced unions, child labour laws, universal education to help get people jobs. We potentially face equally challenging times......with education as a lifelong activity..."

Toby Walsh as quoted by Beverley Head 2016

 - 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

- need to focus more on advancing techniques rather than cost competitiveness. Advanced techniques include robotics, automation, materials and composites, digital design, 3-D manufacturing, data analysis, bio-manufacturing, micro and precision manufacturing, virtual reality systems, etc. New skills are required in the areas of cyber security, data science, artificial intelligence and cognitive business (Ben Potter, 2017)

- need to move away from incremental new-to-the-firm innovation to big step innovation which is new-to-the market.

- need to find ways to translate ideas into businesses.

"...There may be a perception that it's about the genius having the individual breakthrough, rather than the systematic application and iteration and bouncing back from inevitable failures..."

Charlie Day (CEO innovation and science Australia) as quoted by Joanna Gray 2016c

- In the software industry, relevance and impact are more important than longevity; the industry does not respect tradition, only innovation.

Human challenges around technology

What does it mean to be human when interacting with and perhaps being dominated by machines and as the machines are becoming more human like?

One of the challenges is capture, curation, circulation and sense making of data

Impact of technology

An example - the cost of core banking since early 2000's has dropped by 100 fold (James Eyer, 2017). The key to success is knowing how to apply the right methodology to the right people and the right problem. Linked to this is the need to put the mechanisms in place that will encourage the changes of behaviours that are required to handle the future, eg failure needs to be rewarded, not punished. Too often experimenting that is not successful is seen as a failure and has a negative impact on careers. Rather, it should be seen as an important part of learning.

Organisations need to realise that they are now Internet companies.

In fact, no industry is safe owing to technological changes around the internet, artificial intelligence, digitalisation, software usage, access to data, etc. Social media, smart phones, internet connected gadgets, blockchain, quantum computers, etc are challenging almost all industries. 

Most of the disrupting is being done by large tech firms like Apple, Alphabet (Google), Microsoft, Amazon, Facebook, Netflix, Spotify, etc. The first 4 are the world's most valuable public companies by market capitalisation; Facebook is in the top 10. Combined these 5 are worth almost US$ 3 trillion (mid 2017). For example,Google

"...controls around 90% of Internet search market...... Amazon, which has decimated bookstores and is hurting shopping malls, is easily America's biggest online retailer. Facebook dominates social media. Apple sold 78 m. smart phones last year......The tech industry is not only highly disruptive against non-tech players, but former Internet highflyers have also fallen victim to creative destruction. MySpace, an early social media network was obliterated by Facebook. Yahoo! dominated Internet search market in the 1990s before Google took over. Yahoo!......was recently acquired by Verizon Communications for US$ 5.5 million, a shadow of its near US$ 140 billion......in the dot com bubble era in 2000. Fellow Internet pioneer America on-line (AOL), the software service company that allowed computer users to access the Internet community, suffered a similar fate after broadband destroyed its dial-up Internet access model...... when the US government moved to regulate IBM as a monopoly due to its dominance in desktop computing and software, Microsoft and Intel emerged as disrupters..."

John Kehoe, 2017

These successful Internet companies take control of their value chain

Amazon online sales is decimating the shopping malls and changing retail industry, eg dominant US retail department chain (Sears) that sold almost everything like life-insurance, clothing, bicycles, tools, music records, electronic goods, farm machinery, etc) announced the closing of 150 stores (2017); its share price was then around US$ 7 compared to a peak of US$ 192 around a decade ago. Furthermore, Amazon is becoming a sprawling conglomerate across e-commerce, cloud computing, online subscription television, small business loans, artificial intelligence and in-house devices.

Evidence of the Amazon behemoth status totally overwhelmed e-Bay. At one time eBay was a leading in Internet retailer with a market capitalisation greater than Amazon. By mid 2017 Amazon is 10 times the value of eBay.

These large tech companies compete against each other such as in online music, videos, driverless cars, drones, etc. To survive they need to keep innovating to reduce the chance of being disrupted themselves.

The data that these companies collect poses a threat to privacy and could block the emergence of competitors. These databases and algorithms that are controlled by the likes of Amazon, Google and Facebook are thought to be very valuable and necessary for success as it gives them an understanding of people's behaviours, consumers' preferences and personal characteristics.

Many people are concerned about the rising power of technologies and the firms that own and operate it. On the other hand, humans have been through this before like arrival of electricity and television. There were similar concerns about the impact on society. For example TV in the mid 20th century

"...Was it going to make us into Americans? Is it good for our kids? The technology is 70 years old and we still bedding it down inside our culture. We are still rearrange our furniture around screens. And it took regulatory moves, second-wave kids, all kinds of stuff to get that sorted...... society usually takes a bit longer to catch up..."

Genevieve Bell as quoted by John McDuling, 2017

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

On the other hand, post GFC we are not seeing the recovery that economic theory states should happen, ie make money cheaper by lowering interest rates to stimulate growth including wages. What has happened is that we are still having low growth despite the low interest rates and higher debt (both public and private). Most of this cheap money has caused asset growth, like in housing and shares, which has increased the gap between the wealthy and the poor. The poor have suffered no real growth in their wages. This has increased the dissatisfaction amongst the masses. In addition, job markets are changing owing to new technology like automation, artificial intelligence, etc. This has resulted in traditional jobs, like in manufacturing, disappearing. This dissatisfaction has resulted in people favouring more popularist politicians like Trump.

Oxfam claims (2016) that the wealth of 62 people globally is on par with that of 3.6 billion of the planet's poorest. In real terms, this means that 1% of the population is in possession of US$ 1.7 trillion of the world's wealth.

Before 1990s, most people's wealth came from tangible assets like products. Since the 1990s wealth has come from services like Internet, finance, software, big data, social media, digitalisation, etc that has given birth to a new economy. In the future, wealth is expected to be generated from areas like data visualisation, genomics, quantum computers, bitcoinomics, artificial intelligence, stem cells, synthetic biology, outer space, etc. People growing up in this era have little or no memory of the world without the Internet, mobile phones or downloadable apps.

The young rich are rejecting terms such as authenticity, craft, artisan, heritage and provenance. These are being replaced with global, future-faced, innovative, peripatetic. Ownership is less important than access; it is important to share.

"...In the past we equated wealth with greed, conspicuous consumption and taking out......(young)......high net worth individuals...... it's about considered consumption, giving back and embracing the very things that are the antithesis of establishment......embrace radical transparency, pay their workers a fair wage, use eco-friendly manufacturing processes..."

Martin Raymond 2006

Some community issues will focus around "ABC", ie AIDS, breast cancer and child poverty

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

samr

Need to move the debate from technology's direct impact like automation, efficiency, speed, connectivity, etc to how to make the world a better place using technology, ie

"...these debates are as much about ethics, morality and cultural philosophy and the world technology appears to be creating as they are about technology itself..."

Genevieve Bell, 2017

Debates continue around ethics in technology, eg data privacy and ownership, the right to be forgotten and algorithmically transparent, etc

Genevieve Bell believes that if we envisage a better world, which is better than many, not just ourselves as individuals, we are morally obliged to implement it by advocating it passionately

"...historically, we've backed ourselves with a big of vision of what we stood for analysing wonders for ourselves, our families, each other and our country. Things that would not have happened without a bigger vision, and things that at times ran counter to market forces and conventional wisdom.....We need to keep reasserting the importance of people, and the diversity of our lived experiences, into our conversation about technology and the future. It is easy to get seduced by all the potential of the new wonders technology promises......Over the last quarter century, the Internet, Web, mobile phones, at this, and now algorithms have found their way into our daily practices. We move from analogue to digital, and digital to data centric. The data centric world seemed benign at first - smartness has helped us. Devices and services you ask, gave us recommendations that food and books and movies and news, helped us remember past words, and websites, and make sure we didn't get lost or stuck in traffic. More recently those devices and services remind us to walk more, to vote, to leave for the airport. They promised us better dates and hook-ups, better travel times, ticket prices, cheap data plans because we were in the airport, advance warning which fires in our area, and reminders to take umbrellas or wear sunscreen. They helped label our photos, and curate our memories, and find our friends. And it turns out they have been shaping our conversations, our views, and our attitudes......computer records, at a scale we can't had anticipated, have ensured that much is known about us. The Internet was a place where we would be anonymous but instead it was a place where we would be exquisitely and absolutely known......along the way it stopped being about bits of information and became what information revealed when accumulated and aggregate. and more significantly still, what greater patterns and rules can be discerned from my information, and your information, and a whole lot of other people's information to. We have been produced, in this way, to our past data and patterns it produced...... it can be automated..."

Genevieve Bell, 2017

Linked with this are algorithms (a set of instructions that tells the computer what to do) that reflect on how the world works, ie they are riddled with human biases and flawed logic, eg we have seen algorithms that were racist, sexist, heteronormative, violent, competitive, lawbreaking, aggressive, etc. Also we have lived with the more benign and invisible ones for years that are used by the likes of Google, Amazon, Apple, Facebook, etc.. Algorithms are the building blocks from which artificial intelligence (AI) is created. It is the idea of manufacturing human-like intelligence with reasoning, rational thought, decision and strategic abilities. Questions (Turing Test) related to this include

- Will machines think?
- Will machines reason like people?
- Can they fool us into believing they are human?
- What distinguishes people from machines?
- What might be the consequences of machines achieving intelligence and capability of independent thought?
- Would the thinking be like our own thought processes, or might it represent a new form of reason?

(source: Genevieve Bell, 2017)

This is based on the assumption that

"...every aspect of learning or any other feature of intelligence can in principle be so precisely described that a machine can be made to simulate it. Can machines make languages, form abstraction and concepts, solve kinds of problems now reserved for humans and improve themselves..."

Genevieve Bell, 2017

This means viewing people as mechanistic, reducible to electoral impulses and operant conditioning, ie replace stimulus with data that is measurable and mechanistic. AI is more than just technology, It is an assembly of cultural and technical things and human agendas that are fuelled by ideas about our humanness and our capacities with our idiosyncrasies like biases and flaws.

"...the idea of raising a machine in our likeness is a lasting human preoccupation, but it seems the notion of things coming to fruition is also driven through with anxiety..."

Genevieve Bell, 2017

The digital world is about 3 things, ie speed, smartness (like artificial intelligence) and connectivity (24/7). Linked with this is what does it mean to be human in a world of digital technologies. To understand this better, we need to understand how we have handled past technological changes.

"...all technologies have a history and knowing those histories doesn't mean we can predict the future, but it does mean we can ask better questions of our future..."

Genevieve Bell, 2017

On the other hand, it is comforting to imagine the past might hold lessons for the future. But it can be misleading as history does not necessary repeat itself!!!!

Some examples

- Typewriters were a significant breakthrough in mechanising writing. In the mid 19th century, the new commerce around the Industrial Revolution required a significant increase in paperwork and bookkeeping for industries like banking, insurance, taxation, regulation, publishing, advertising, accounting, etc. With pen and paper the average bookkeeper could write around 30 words a minute; then stenography was developed and it was basically 4 times faster than writing alone and close to the speed of speaking. Then the typewriter was invented and used to automate writing completely in the late 19th century. It was felt that women would handle the typewriter better than men as they were more patient and detailed focused. The presence of women in the workforce drove a range of other social and structural changes like need for woman's facilities at work. Disposable income in the hands of single women drove new cultural activities and helped underwrite things as diverse as penny dreadful novels, department stores, new entertainment experiences, and helped unlock the late 19th century suffragettes' movement.

"...a technology's legacies lingered long beyond the moment it was relevant..."

Genevieve Bell, 2017

- Robots were in use before the Digital age started. They are smart, technical objects that use artificial intelligence (see below). They vary from large industrial machines to simple self-check out machines at a retail store.

Our imagination has been stimulated to consider whether or not robots will be developed so that they can control us. Robots

"...taking firm root in fiction, radio, film, television and cartoons. The tension between mechanical perfection and the death of humanity plays out over and over again, and our imaginations were progressively fueled by more and more sophisticated robots..."

Genevieve Bell, 2017

How much is science fiction or science fact?

- Electricity as a network infrastructure could have lessons for the Internet. Electricity started out as providing light, ie street lights in the late 19th century. State-funded infrastructure and private/commercial enterprise provided a patchwork of connections to electrify sport venues, theatres, pubs, entertainment and cultural experiences were important drivers.

Electricity was not a popular choice for everyone, eg Australian gas companies fought back by successfully campaigning to keep stoves connected to gas and provided free cooking lessons.

It is not a case of here is new technology, so adapted it. New technologies do not always supersede the old ones.

For electricity, there were alternatives like gas, candles, windows, daylight, etc. Also, some of the initial negatives of electricity were the noise of the engine generating electricity, the lights were different from what people were familiar with (brighter than gas and produced a different colour spectrum), and the cosmetic unattractiveness of the wooden poles with wires attached that carry the electricity.

To encourage the use of electricity

"...the development of a whole host of appliances, both electrifying old ones and creating new ones, helped drive adoption and uptake. There were concerted efforts to engage...... public with the merits of electricity. Advertising, public demonstrations, showrooms, travelling door-to-door salesman and electricians, cultural spectacles......, the picture palaces and cinemas..."

Genevieve Bell, 2017

In Australia, organisations like the Country Women's Association took an active role in educating the public about how to manage electricity; "electric" cookbooks were published including instructions on how to manage electricity, electrical appliances and repair them.

These developments generate some important questions like

What is getting connected? Why? And how?
What drives infrastructure rollout? Efficiencies? A government or civic agenda? Cultural aspirations or experiences?
Who is doing the connecting, and what is their motive?
Will the network evolve and change over time?
What are the other voices in the story and what might be their themes?
What will it lead to?

- Computing history has has been linked with speed, ie doing things faster, and automation, ie needing fewer people to do the same job. Early computers were sophisticated typewriters and calculators used for developing models on weather forecasting, economic analysis, building designs, electricity supply, etc. Software or programming language emerged later to handle these computers. Then

"...The whole idea of computing evolve from being about complex calculations of scientific and military activities to computing as a necessary part of modern corporations. It became about business..."

Genevieve Bell, 2017

Computers promised to streamline work, increase efficiencies and liberate humans from drudgery and repetitive tasks.

Computers are getting faster and more powerful, ie what used to take a room full of computers can now be done on a handheld device. Also, they have changed shape and direction.

"...They went from mainframes to personal computers to mobile phones back to mainframes again, as servers that power the cloud that makes digital applications and services possible..."

Genevieve Bell, 2017

At one stage the Internet was a way of connecting the world's computers and all of us. This network allowed data to move more freely and without dedicated, pre-existing, fixed connections.

"...They seemed to make the world available to everyone; the Web would be about true democracy, transparency, and a place where we could transcend our bodies and their limitations..."

Genevieve Bell, 2017

"...the ultimate seduction of the digital world at its best - the future is right here, in your hand, and it seems so natural. You forget to ask where it came from, or why, or what will happen next. It's easy to be enthralled with the logic of new technologies; their promises of efficiency or fun, or some new kind of experience that will revolutionise everything..."

Genevieve Bell, 2017

New technologies rarely spring from consumer demand and/or work landscapes; they often come from unexpected places like robots from a play in Prague. They take some time to get to their current state. They usually start based on somebody's curiosity. New technologies change the way we do things but rarely in the ways we expect. Also, their timescale is unpredictable.

NB

"...the role of government, of the market, of cultural forces and regulations, can all say how technology arrives or doesn't..."

Genevieve Bell, 2017

Most new technologies are poarising, ie

"...the introduction of most technology is accompanied by utopian and dystopian narratives. Whatever the technology in question, we seem to perpetuate the notion that will change everything for the better or destroy everything we know and love. We talk about fast, smart and connected that way. The reality is usually far less stark. Most technologies do indeed change things. Rarely the things we anticipate and rarely in the ways we anticipate, and usually not as quickly as we predicted, or a seamlessly - bits of other technologies, infrastructures and networks keep peeping through......We need to know where the technologies come from, who built them, why and where, what people hope and imagine for them, and what the tacit assumptions buried within them are..."

Genevieve Bell, 2017

Some more thoughts

- Building a new approaches. The emerging data-driven part of the digital world requires us to think holistically and differently, ie we need to think outside the box

"...Either the engineers must become poets, or the poets must become engineers..."

Norbert Wiener as quoted by Genevieve Bell, 2017

"...Rather than just tweaking existing disciplines, we need to develop a new set of critical questions and perspectives......we will need new practitioners to tame and manage these new technologies, as well as those to regulate and govern them. Thinking through how to build a digital world in which we want to live requires asking hard and thorny questions about the nature of our humanness and how we might want to model that going forward..."

Genevieve Bell, 2017

New technologies are highlighting a shift in the acquisition of suitable skills, ie from labour-intensive, manual tasks to more cognitive tasks, and a change of teaching methods to adapt to new demands of the labour market as more tasks become susceptible to automation. This has resulted in a worrying increase in technological unemployment, especially with the ageing of the workforce.

- Investing in the human scale conversation. We need to have a hard conversation that tackle the ethics, morality and underlying cultural philosophies of these new digital technologies. We need to get beyond the conversation around "AI will kill jobs and the "robot apocalypse". We need to ask better questions, ie

What is the history of this technology? Where does it comes from? What are its vested interests? Who are its beneficiaries? What logic about the world is it normalising? What is the broader context in which it fits?

- Striving for accountability. There needs to be accountability, transparentness and openness. How would this be done? Where the duty of care lies in this new data-driven version of our smart, fast and connected digital world? How do we build the world that is not about our worst impulses, but our best? How could we help combat inequality? How do we develop the appropriate registry and policy framework? Who should own the data? How do we ensure that all the stakeholders fully understand these new technologies and infrastructures before they are released?

- Making our own futures. Do we want to be part of the new data-driven smart, fast and connected world or just another colony of some transnational, commercial empire? How much do we value our privacy? How much do we value our sense of being human, ie reflect our humanity, our cultures and our cares?

"...The future is already here, it's just unevenly distributed..."

William Gibson as quoted by Genevieve Bell, 2017

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.

Growth (there are two sides to it)

Growth can give a competitive advantage in size, ie economies of scale like improved purchasing power owing to size, significant savings from centralised services, greater opportunity for staff development, etc. On the other hand, there are some dis-economies of management, such as increased organisational layers with management more divorced from customer and staff that can restrict communications and organisational flexibility, increased chance of silos developing within the organisation. As an organisation grows, it tends to become more bureaucratic and process-control orientated.

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

 

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