The rise of 3D printing – what I want, when I want it

3D printing via Wired ‘Found – Artifacts from the future’ Dec 2006

One of the scanning hits I am currently on the look out for is the rise of 3D printing. This has been an emerging technology which is well along the adoption curve now, you can get a latte with your printing in Tokyo. The first real image I used of this possible future was in Wired’s Found series in 2006 and is reproduced here. I used this image in my Masters classes and also with clients to ask people about how disruptive they thought this technology could be. This particular technology is one which generates many interesting conversations about urban infrastructure, manufacturing policy and consumption based industries. The world looks quite different when I am choosing the product, buying the raw materials and printing on demand. Already, I can design my own doll via Makies which means I could manage my children’s access to commodified images of women, and I could design a copy my own body to keep them company when I am not around.

There are already 3D printing vending machines in a University in Virginia and plans to build a room full of plastic furniture (thanks to Emerging Futures). What is interesting to me is how this emerging technology intersects with the values shift to collaborative consumption, the movement from ownership to stewardship.

Could the rise of closed loop manufacturing aligned to 3D printing seed new industries in recycling, garbage mining and regional warehousing of raw materials?  Given the link between fossil fuel use and climate change, this is a shift we have to become much better at making do with what we already have access to.

These trends also intersect the internet of things along the way making the rise of internet enabled, home manufactured recycled goods a very interesting industry sector. What do urban areas look like when stuff isn’t being moved around? What do transport systems look like? How is economic confidence measured if we aren’t out buying all the time? What will people do with their need for retail therapy? Under these conditions what has value in terms of work and skills? What will we buy when we have choice over how it looks, how it fits and the materials it is made from?

Are you considering the future impacts of these issues in your planning? How do you have conversations about these things in your executive team?

IMF working paper predicts oil will double in price by 2020

The image below this post comes from the latest IMF working paper (May 2012) looking at the “The Future of Oil: Geology versus Technology” (opens pdf) which attempts to take both the models of oil availability – that proposed by geologists and that by technologists and work out what the likely price implications are going to be to 2020. An internal working paper that “does not presume that there is a constraint on how much oil can be taken out of the ground. It prefers to believe that extraction rates will depend on the price that will be able to be charged for the final product”, it makes the wonderfully understated point that “the future may not be easy”. I continue to be amazed at the number of people I meet, sitting in leadership positions, who are unaware of this issue. I have heard from colleagues of engagements in the past couple of years with groups of senior decision-makers who have refused to discuss the issue as they believe it to be a fringe problem.

World Oil Price IMF 2012 (in 2011 dollars)

This is in fact a core strategic issue for all businesses, community service providers and governments, especially if what the paper finds holds true. In the introduction, the authors state that they will:

Discuss and reconcile two diametrically opposed views concerning the future of world oil production and prices. The geological view expects that physical constraints will dominate the future evolution of oil output and prices. It is supported by the fact that world oil production has plateaued since 2005 despite historically high prices, and that spare capacity has been near historic lows. The technological view of oil expects that higher oil prices must eventually have a decisive effect on oil output, by encouraging technological solutions. It is supported by the fact that high prices have, since 2003, led to upward revisions in production forecasts based on a purely geological view. We present a nonlinear econometric model of the world oil market that encompasses both views. The model performs far better than existing empirical models in forecasting oil prices and oil output out of sample. Its point forecast is for a near doubling of the real price of oil over the coming decade. The error bands are wide, and reflect sharply differing judgments on ultimately recoverable reserves, and on future price elasticities of oil demand and supply.

The paper is technical and, I am assuming rigourous, it is clear from my reading of it that they were struggling to model to large range of unknowns on the process that they had set themselves. They state that there are wide bands of error in the model as the future is unknown, “there is substantial uncertainty about these future trends that are rooted in our fundamental lack of knowledge, based on current data, about ultimately recoverable oil reserves, and about long-run price elasticities of oil demand and supply”. The model forecasts a “near doubling of real oil prices over the coming decade”, with a global average growth rate of between 3-5%. Given that the Chinese, Indian and Brazilian account for 25% of global GDP and their growth rates are forecast to be at least 5% over this period, it suggests many countries will stagnate or go backwards.

The model doesn’t necessarily tell the whole story as yet. A couple of quotes stood out for me as the heart of the matter as it relates to peak oil.

Our data and analysis suggest that there is at least a possibility that we may be at a turning point for world oil output and prices. A key concern going forward is that the relationship between higher oil prices and GDP may become nonlinear if oil prices become sufficiently high. The problem is that, at this moment, historical data contain very little information about what that relationship might look like. But we are not entirely without information, because a number of authors in other sciences have started to ask pertinent questions, and have done some early pioneering work.

This is a key issue – because we have no past data it is very hard for economists to predict future behaviour as they base most of their modelling on the past. I think this is a key issue for most corporate leaders as well. The past holds an important place in their thinking and moving to a situation which is untried and very difficult to predict fills many people with a deep sense of unease. People may attempt to lift their unease by falling into previous behaviours that have worked for them – following the crowd (best practice), bunkering down (being conservative), not making decisions (reviewing the direction) are three that come to mind. unfortunately, these are not the behaviours that will assist organisations to deal with the situation.

The second quote follows on from the first:

The simulations find that following permanent declines in the growth rate of world oil output, the model generates much larger negative output effects than the conventional neoclassical model, because a share of the stock of technology would become obsolete. This channel has never yet been of sufficient importance to explain the historical data, and our empirical model does not contain it. Changing this would lead to simulation results with lower GDP growth.

So, I understand this to mean that when the stock of technology that would be obsolete (once oil is too expensive to run it) is included in the model, the downwards effect on GDP will be greater than they have stated. This driver has not been included as it does not explain historical behaviour. I would think that is because we have not had a situation where our technology has decreased in complexity rather than increased. Our historical trajectory has been to move to cheaper and more dense forms of energy, which as they became cheaper and ubiquitous generated large amounts of technology which relied on that energy. As the energy intensity of our economy decreases, this technology will no longer be useful (as it will be too expensive to run). This inconvenient (physics) truth gets in the way of the substitutability concept, a key concept in economics, as they own later in the piece.

Several important contributions challenge economists’ automatic assumption that elasticities of substitution between oil and other factors of production must be much higher in the long run than in the short run. The objections include that this assumption is not consistent with the historical facts (Smil (2010))13, with real-world practical limits (Ayres (2007)), or with the laws of thermodynamics, specifically entropy (Reynolds (2002), Ch. 10). Our empirical model presently makes the conventional assumption that elasticities will after some time be higher at higher prices. A plausible alternative that could reconcile the economists’ view with the above objections is to assume that elasticities are very low in the short run (due to rigidities, adjustment costs, etc.), significantly higher in the medium run (as the rigidities are overcome), but much lower again in the long run if there is a sufficiently large shock to the growth rate of world oil supply, because there is a finite limit to the extent that machines (and labor) can substitute for energy. If this assumption was incorporated, the model would forecast significantly higher oil prices in the event of a sufficiently large and persistent shock to world oil supply.

So, if the economists admit the energy physicists know what they are talking about, then the effect on the price of oil will be WORSE than what they have already modelled. Politicians, policy makers, corporate and community leaders need to get their heads around this information and what it means for their businesses, communities and countries.

We have less than 10 years.

Revolution to a world made by hand?

Yesterday, I saw a link to the trailer for the new J.J Abrams TV series which is apparently slated for a Fall 2012 showing in the US. The publicity blurb below explains its premise.

Our entire way of life depends on electricity. So what would happen if it just stopped working? Well, one day, like a switch turned off, the world is suddenly thrust back into the dark ages. Planes fall from the sky, hospitals shut down, and communication is impossible. And without any modern technology, who can tell us why?

Now, 15 years later, life is back to what it once was long before the industrial revolution: families living in quiet cul-de-sacs, and when the sun goes down, the lanterns and candles are lit. Life is slower and sweeter. Or is it?

On the fringes of small farming communities, danger lurks. And a young woman’s life is dramatically changed when a local militia arrives and kills her father, who mysteriously – and unbeknownst to her – had something to do with the blackout. This brutal encounter sets her and two unlikely companions off on a daring coming-of-age journey to find answers about the past in the hopes of reclaiming the future.

From director Jon Favreau (“Iron Man,” “Iron Man 2″) and the fertile imaginations of J.J. Abrams and Eric Kripke (“Supernatural”), comes a surprising “what if” action-adventure series, where an unlikely hero will lead the world out of the dark. Literally.  (http://www.nbc.com/revolution/about/)

Putting to one side the plausibility, or not, of all electrical power suddenly evaporating, the depiction of how society might look 15 years after such an event is interesting from a foresight point of view. When I watched the trailer, I was immediately struck by the similarities with the work of James Howard Kunstler in his book ‘World Made by Hand‘ which is mentioned in a previous post.  The rise of warlords, and the move back to an agrarian way of life, alongside the dilapidation of the built environment are all features of his novel. Rather than the  overnight removal of electricity, Kunstler alludes to a gradual decay of infrastructure and services as the price of keeping everything going rises off the back of peak resources. In his world, there is community which is strong and interconnected but this is in an area of the US which is difficult to access. Urban areas and those rural areas close to large cities are less secure and many millions of people have died.

Revolution seems to take us back to a world which is similar to that described by Kunstler, with the urban areas reminiscent of the wild west in America shown in TV series such as Deadwood (but this time with ninja-like fight scenes). It will be interesting to watch the series with a foresight eye, to identify what the assumptions about the present have been and how these play out into the future. What I would like to see are some depictions of how we might move to a positive future in the face of such challenges, is it really our fate to be thrust into a violent world of oppression and fear?

Have a look at the trailer below and see what you think.

Short term gain for long term pain

Interior York Minster

The dynamic of trading off the long-term for the short-term appears hard-wired into our systems. Our brains discount the future, our body wants us to eat fats now to save for later and so we enjoy this process far too much. As a society we are unable or deeply unwilling to put off today so we can have tomorrow.  As small children, those who demonstrate the ability to wait for something have higher achievement scores later in life, so the ability to wait does reward us but not until later and it is this later which is the issue.

I recently recorded a keynote for a virtual conference on place based poverty run by UnitingCare which considered the long-term view for people in poverty and what might be needed to bring about change. My core message was that joined up, holistic and long-term planning for services, infrastructure  and service delivery were the key issues. I said this knowing that under current systems, it is very difficult for Governments and their service delivery agencies to deliver. Not for a want of trying, but rather funding and reporting requirements, both in Government and in the service world, actively work against it. However, all of these requirements are not ‘real’ in the sense they can be altered, they are simply constructions of a time and place. Committed people can change these requirements and therefore the results delivered on the front line.

Richard Slaughter in the Biggest Wake up Call in History discusses the mafia in Italy and says that the reason there is garbage piled high in southern Italy is the short amount of the time a crime boss stays at the top of a syndicate results in short-termism of thinking – why provide for the future if you won’t be around to enjoy it? Our brains find it difficult to think about how good something might feel in the future or how bad the consequences of poor behaviour might feel – ask anyone with a hangover.  As the reigns of those at the top get shorter with electoral cycles, CEO roles, share returns all under constrained time frames, the propensity for short-termism will increase, ironically at the same time, as we need to be thinking long-term. This is not a coincidence, it is the nub of the challenge we face. We have to become cathedral builders rather than property developers.

To build a cathedral is to toil for centuries without one generation seeing the outcome, it may their sons/daughters or grandchildren that see the finished product. Why do such a thing as for most of us there has to be individual gain, and in medieval times it was grace – or the points you accrue before you try to get into heaven.

What might be the modern equivalent?

What long-term goal with an individual payoff and a longer-term societal good could we identify?

Safe and sorry

An interesting report has just popped out from America. The Georgetown University Center on Education and the Workforce has just published their Projection of Jobs and Education requirements through 2018. And it is a very interesting read. The report, called Help Wanted, is scathing in its criticism of previous job and education forecasts pointing out that the data is available to make better forecasts but the data is not used.

“Unfortunately, the poor quality of the official projections cascades downward through state and local data systems into the hands of policy makers . .. Ultimately, the official data misinform the educational choices and career plans of individuals. These are the wrong times for inadequate information on jobs and skill requirements… Educational and career planning need to catch up and adjust to this new reality.”

I agree completely with the above sentiments of the report authors but, as a foresight thinker, I disagree with their conclusions. Let me explain.

The report writers find that the historical data back to the 1970s (correctly) shows that jobs requiring post high school education have grown quicker than forecast and that jobs requiring only high school education have disappeared faster than forecast.  Their projection based on this is, of course:

“By 2018, about two-thirds of all employment will require some college education or better “ (in 1973 it was 28%).

The report goes on to say that recessions have been where this shake-out is most stark, because the jobs that disappear do not always return.

“In the past two recessions, the typical job loser was a high school-educated male in a blue collar job, such as manufacturing or construction, working in the middle of the country. In the past two recoveries, the typical job gainer was a female with a postsecondary education who lived on either coast and worked in a service occupation—particularly healthcare, education, or business services. That picture is not changing.”

In that single finding are a world future pain in areas like social cohesion and health outcomes. A future where a previously dominant group lose power, income and social standing is one fraught with turmoil and upset. That is not news. But the clincher for me is that last sentence.  What has happened over the past 40 years will continue into the future. But will it?

As you dig further into the report you find findings like these:

Hundreds of thousands of low-skill jobs in manufacturing, farming, fishing, and forestry have been permanently destroyed because the recession has further prompted employers to either automate those positions or ship them offshore to take advantage of cheap labor. Overall, we project 637,000 jobs in the Manufacturing and Natural Resources industries will meet such fates by 2018.

And where will the new jobs be appearing?  “The most intense concentrations of postsecondary workers are in the Science, Technology, Engineering, Education, Healthcare, Community Services, Arts, Managerial and Professional Office Occupations.”

In the 21st century, computers and related inventions are transforming the U.S. economic landscape—boosting productivity so companies can produce more with less and spurring an economic shift from Manufacturing to Services. That is why, when old-line Manufacturing and Natural Resources jobs disappear, they often don’t come back.

So the thrust of the report in simple terms is Primary and Secondary sectors jobs will continue to disappearing and the growth will be in the Tertiary sector. The historical data supports this, the logic says that this is valid and thus our future projection is a certainty.  This is about the place that a foresight thinker is looking for the exit from the theatre.

This is an utterly safe, logical, rigorous and evidence-based piece of policy analysis that makes perfect sense … and wait for it … only if the assumptions of the single scenario world of 2018 come true. And what are those (unstated) assumptions? They are quite simple really – in the future we won’t need to worry about growing, digging and chopping things up and then turning those resources into physical things because in the future it will be cheaper for someone else to do that for us. It’s all about cheap energy stupid, we have had lots in the past 40 years and we will continue to have lots into the future.

I’ve looked long and hard to find those assumptions stated in the report but I can’t see them. I guess the writers and the readers don’t need to be aware that other scenarios are possible.  It’s safe to assume that things will remain the same.

The future doesn’t always cooperate with those who play it safe. Billy Joel’s song Allentown described the young of Pennsylvania whose predecessors’ ‘safe’ future didn’t actually work out

Well we’re waiting here in Allentown

For the Pennsylvania we never found
For the promises our teachers gave
If we worked hard
If we behaved.

So the graduations hang on the wall
But they never really helped us at all
No they never taught us what was real

http://www.metacafe.com/watch/sy-70349537/billy_joel_allentown_official_music_video/

If you are looking for a contemporary image of how the future might play out when the ‘safe’ scenario doesn’t work out then check out Howard Kunstler’s post peak oil novel – The World Made by Hand which includes this memorable exchange between a young ‘tertiary  educated’ male whose education didn’t fit a low energy world that needed primary and secondary sectors skills rather than the safe future tertiary ones  and an older male whose life had spanned both worlds – pre- peak  energy and post-peak energy.

Shawn limped slightly.

“Did you hurt yourself?” I said.

“I fell off Mr. Schmidt’s barn roof.”

“What were you doing up there?”

“Fixing it. What do you think?”

We walked a ways in silence. I hadn’t known him to be so irritable before.

“It’s been might hot lately,” I said.

“It’s not just the heat . Jesus, Robert, look how we live? I’m practically a serf. You know what a serf is?”

“Of course I do. I went to college,” I said and regretted it right away. “You know, Shawn, even back in normal time’s people got down and depressed. In fact, you could argue that people are generally better off now mentally that back then. We follow the natural cycles. We eat real food instead of processed crap full of chemicals. We’re not jacked up on coffee and television and sexy advertising all the time. No more anxiety about credit card bills –“

“I don’t want to debate.”

“I bet its true, though.”

“Find someone else if you want to have a debate.”

“It’s just conversation.”

“Whatever you call it, quit trying to persuade me that everything is great okay” he said and stopped in his tracks. I stopped too. His face was red and tendons stood out in his neck. He was a large young man, and he looked a little scary.

“You frustrate the hell out of me son,” I said.

“Do I? I work like a dog. Harder than this dog. From sun up to sundown, like a medieval peasant.  I do it with hardly any sense of a future, and the last thing I need is a lecture from the generation that screwed up the world.”

I can imagine all the safe reports that preceded that exchange between the past and the future. All the rigorous and evidence based data that was used to create a better future. Safe and sorry.

The Worst Case Scenario

One of the most easily understood ways of evoking foresight when you are part of a decision-making process is to utter the phrase “what is the worst case scenario?” Almost everyone understands when that phrase is asked then they have to imagine things not working out as they expect/hope and then to decide whether the ‘risk/opportunity’ arising from the decision outweighs that non-preferred future. This is one way to test the Goal Commitment of decision-makers.

The worst case scenario is also used when a person is trapped in a low-hope circumstance and they believe that a recommended course of action will only make things more hopeless. When the worst case is closely examined and does not seem so disastrous then a low hope person can find the self agency to take the course of action and hope can be restored.

The attraction for practitioners is to think that such a commonly understood use of the foresight can be deliberately employed to open up a foresight space in decision-making processes. Further it could be imagined that evoking ‘worst case’ will lead to better, more foresightful decision-making. But will it? I have just read a very useful book on this very topic. Called, not surprisingly, Worst Case Scenarios by Cass Sunstein (2007), and it takes a serious look at the strengths and weaknesses in this foresight approach. The book does makes for uncomfortable reading at one level as it clearly concludes that the serious consideration of the ‘worst case’ is a bridge too far for most people. Still within it I did find some hopeful signs.

While there are a few examples of the social capacity to consider the worst case scenario (e.g. CFC gas bans, Y2K, Swine Flu) history, at the present, is replete with examples of policy and leadership trainwrecks in this regard (Hurricane Katrina, global warming, 2009 Victorian bushfires) and few issues that keep some of us awake at night (GM food, nannotech). Sunstein’s hypothesis is that we can’t use worst case scenarios about futures that people don’t have a current referent for. So domestic airline security was not a referent for a worst case scenario on 10 September and it was on September 11. This is quite depressing as it does suggest that we will need to experience something like the worst case before we will be able to think about the worst case. Bugger.

Some more joyful points from Sunstein; he found that the shibboleth of the futures community, the Precautionary Principle (having no evidence that something won’t go wrong is not a basis for doing something anyway), is basically useless in situations of significant complexity because the principle prevents all actions and inactions because whichever way you move you will offend it. After trashing the much-loved Precautionary Principle, Sunstein then found favour in the much-hated ‘future discounting’ approach to the worst case. While futurists hate the idea that the future is less ‘valuable’ than the present, Sunstein found that it is an effective way to consider worst case scenarios. If consequences can be monetarised then decision-makers do have a basis of making preventative and precautionary decisions. Importantly though Sunstein also found that future discounting did not work in worst cases that involve the loss of human life.

I’m very glad to say that Sunstein did find a need for worst cases to consider Intergenerational Neutrality to be fully effective as a decision-making tool. He favours processes that explicitly draw back the “veil of ignorance to the intergenerational question.”  Rather than avoid the question of whether our actions (or inactions) suit us and our choices, he favours worst cases that consider the impact on those not present now who will live in a worst case that they did not choose. He also favours processes that make decision-makers explicitly declare their view that a life today is worth more than a life in the future as part of their cost-benefit approach – what he calls the ‘morally objectionable’ viewpoint.

Ultimately I think that managing worst cases is at the core of our purpose as practitioners. Being better able to navigate such treacherous waters must be one of our core competencies that we can offer to our clients and organisations to assist them.  It appears that technique will only get you so far and that ultimately it is our ability to reason and act morally in considering the worst case that will determine whether we are a help or a hinderance.

An ass out of you and me….

Assumptions are the sworn enemy of robust forward planning of any type. One of the basic axioms of foresight is that our assumptions blind us to possibilities. So we need to examine our assumptions as much as possible…right?

Easier said than done as assumptions play a fundamental role for us. If we did not have them, and everything started from first principles, we would not get out of the house in the morning. We use assumptions to short circuit thinking processes – when I turn on the hot tap I assume hot water will come out of it. How many minutes have you wasted in hotel rooms with unfamiliar showers trying to work out where the hot water comes from?? Assumptions speed up this type of process. Where they trip us up is in big picture thinking about the future. Any report, modelling or forecast will have assumptions built into it as the future is not yet known therefore we MUST assume something. Can you critically examine these assumptions and better still can you catch them before they are accepted as fact?

So, how do we deal with assumptions in organisations and when thinking about the future? We need four ingredients – mindset, culture, embodied behaviours and systemic rewards.

Mindset – can you ask dumb questions? Are you able to be the ‘idiot’ who asks the question that you may be the only person who doesn’t know the answer to? Are you able to question the emperor’s new clothes – can you take risks? The internal ability or mindset to approach problems with a beginner’s mind, to ask the dumb questions and to risk your incompetence being demonstrated is a key attribute of able long-term thinkers. If you self-image is wrapped up in always being the expert or looking competent then there is a very high likelihood that you will never be an able long-term thinker. If you are able to put down the need to be right and pick up curiosity and develop the ability to ask excellent questions then you are part-way to developing a capacity for the long term view.

Culture – is the uncovering and questioning of assumptions ‘allowed’ within the culture of your organisation? Or are the elephants in the room outnumbering the people?  Many groups do not allow the unspoken assumptions to be questioned and those that do are asked to remove themselves. There is always risk in asking the obvious question, especially if you are exposing those higher up the hierarchy to difficult questions and asking them to make hard choices. There are many organisational cultures that allow assumptions to flourish in order to duck hard decision-making and these organisations invariably end up in difficult places.

Embodied behaviours – do your senior managers ask dumb questions or are they too wrapped up in looking like they know it all? If the leaders within an organisation are not actively trying to uncover the assumptions operating within the group, there is little chance for a culture of open discussion and robust debate to be established, let alone flourish. If the CEO can model this behaviour but allows their direct reports to do otherwise, there is no chance a culture of questioning will flourish. Command and control works in situations that are complicated, with solutions that can be developed over time by smart people putting their heads together. It does not work in complex environments where solutions will only ever be partial and a system view is required to navigate past obstacles and to take advantage of opportunities.

Finally, what are the rewards generated by the system in operation? Humans like to operate within known systems. Most people coming new into an organisation will work out what behaviours and mindsets are required by the rewards on offer. Does your organisation reward the questioning of assumptions? Will you receive a positive performance review if you are happy to look stupid on occasion and say you don’t know, or are those who exude confidence and always have the answer given the bonus or the promotion? If you do not have questioning behaviours present in your organisation or you are constantly being undone by assumptions, then look at your system of explicit and implicit rewards to see what behaviours are being promoted over others. Remember the system always works perfectly, if you don’t like the outcome then the system will need to be changed.

Developing the mindset, culture, behaviours and rewards that support the review and questioning of assumptions is not easy but it will deliver the ability for your organisation to engage in robust planning for the future.

Actionable Foresight and Forecasting

Actionable Foresight operates from the premise that in order to usefully use foresight we need to:

1. Understand as best we can what is the fundamental issue we face;
2. Find new pathways of thinking about the situation, the circumstances and ourselves in order to expand the future option space;
3. Generate working models of those future options – including what happens to the fundamental issue, what happens to the circumstances, what else emerges and, very importantly, what is the pathway to that option; and finally
4. We need to choose an option and then commit to its future pathway.

This approach is consistent with our understanding of how people utilise ‘hope’ in order to transcend difficult circumstances and to find purpose. It is also a process that creates the favourable conditions for also ‘finding’ hope and purpose. So our approach bootstraps itself onto our innate capacities and also develops those capacities. Yet this approach is quite different to what most people would understand as the most useful way to use the future – making a forecast and then acting on the basis of what the forecast says. Does this mean that we don’t think forecasting is useful?

To answer this it is best that we ensure what it is we mean when we use the term forecast.  A forecast does attempt to make use of the future (like foresight does). A forecast:

1. Starts with a question or problem about the future – “will it rain tomorrow?” “how many people are going to need a hospital bed in ten years time?” “how much food are we going to need to produce on the planet to feed the estimated population a hundred years from now?”
2. Next you collect data that you think is relevant to the question you are asking;
3. Then you build a model of how the future will work itself out based on the data you are using. This model can be as simple as how you think the world works (“Give people more education and they will become more responsible citizens”) or as complex as a detailed computer simulation (The World3 simulation used in the Limits to Growth, the Climate Change models used by the IPCC or the Meteorological models used to forecast tomorrows weather);
4. Next you test your model on the only hard data you have of how the world really works – the past. You run your computer simulations time and time again, changing variables and weightings to reduce your forecast error or you use your memories of what happened in the past in order to test your ideas about how the future works;
5. Now you reach the big decision point – “Is my model valid based on all my testing against the past?”  If you answer “yes” then your answer to your initial question is what your model tells you the future will be based on the most current data you have. You have faith in your model – faith in your judgement of the past, faith in the past as a reliable predictor of the future – and so you act accordingly. If you say “No” then you doubt your model – you doubt your judgement or you doubt the past as a reliable predictor of the future – and so you need to do something else. Build a new model or try something different.

So, do we think forecasting is useful?

Employing a forecasting approach to the future gets you to a clear decision point. It closes down the potential future option space to a single point – “this will probably happen, so you should do this”. For issues that employ solutions that have very long development times – (the new Hong Kong International airport took 17 years to be fully built) a forecast is very useful otherwise how does it every get started. For issues that do not have a huge consequence effect if they are wrong (it will be fine tomorrow so I won’t take an umbrella) then a forecast is good enough. The most useful point about forecasts is that they are deeply compatible with conventional thinking. You don’t need to explain to most people how to use a forecast. Give a person a forecast then if they have faith in it (and you) then they may well act accordingly.

So forecasts are useful. Sometimes, but we believe they are also fraught. Everything up to step 5 in a forecast is a mechanical, logical process that is as good as the person doing it and the process being used. But the 5^th step is the critical one. “Do you have faith in your model – faith in your judgement of the past, faith in the past as a reliable predictor of the future?” If you have faith, then forecasts will be useful. If you have doubt, however, then we would suggest that Actionable Foresight might be useful. We do not say that Actionable Foresight will necessarily cause you to rediscover faith in your judgement or faith in the past as a reliable predictor of the future. But you might discover hope or purpose and we think they are very useful.

The Future is Active in Valencia – Part 1

“If you are willing to talk with me, I am willing to work with you”. The speaker is the head of a family owned company with a rich history of manufacturing who is facing a future in which he works in collaboration with his former competitors to re-shape the future of their industry.  Picture this: twenty representatives from small and medium companies from the same industry intently debating the future direction of that industry and how they might work together to shape it. They aren’t talking price, they are talking about survival in the face of large multi-national companies flooding their market with cheap, mass-produced furniture. There are disagreements, and former competitors are finding it difficult to imagine working together, but there is a will to try to create a different future for the industry than the one that is unfolding at the present. They are engrossed in learning a new way of developing a business model and planning framework using the future.

These scenes occurred during a recent trip to Valencia, Spain. I was working with family owned furniture companies involved in a Valencian Government funded research program run by AIDIMA, the government-funded furniture research centre in Valencia, aiming to assist companies to develop more competitive businesses through the use of foresight. This program has been running since the late 1990s. At its heart is the development of a robust and resilient furniture industry for Valencia. Spain, like many other high cost manufacturing countries, has seen an increase in imports from China, they have also seen the market share of the domestic companies overtaken by increasing market presence from large European companies such as IKEA. The Valencian region is resisting this trend and supports their local industry but they acknowledge the local companies have to become more competitive.

The process of providing the furniture companies with an accessible stream of competitive intelligence on what was happening in similar countries, and within Spain, began in the late 1990s. This developed into a trends spotting service known as the Trends Observatory. This service utilises environmental scanning to identify emerging future trends and reporting these to the local industry.

In 2005, the next stage of the process was devised as a foresight exercise. A number of scenarios were developed that chart the possible future for the Valencian industry over the decade to 2015. The next stage of the project is to develop new business models for each company that will give them resilience in the face of a changing business environment.

During 2007, the head of the project came to Australia looking for foresight expertise in the development of scenarios. Whilst here, he spoke to our domestic industry about the idea of assisting the long term sustainability of place-based manufacturing and, by all reports, they were perplexed as to why a domestic manufacturing capacity was important.

‘It is cheaper to manufacture in China’.  This demonstration that an industry appeared not to value the retention of domestic manufacturing expertise reminded me of something I had read about Britain after the Romans started to roll back their Empire. A king’s tomb that was dated to 300 years after Roman occupation included pottery from a part of France that had been renowned for its quality and craftsmanship. The pottery found was dated to around the end of the Roman occupation in Britain, but at that time it would have only been seen as suitable for the family of a worker. In 300 years, what was once seen as everyday had become so precious that it was buried in a King’s tomb.  The specialisation that occurred during the Roman Empire resulted in the British ceramics sector losing its ability to manufacture quality pottery, which left it no resilience in the face of shocks from external forces.

The Valencian Furniture industry is not looking to turn back the clock, they understand the future is coming to them, but they are also aware that their ability to maintain their resilience in the face of external shocks is rooted in the strength of their place-based manufacturing industry.

More details on the scenario process and the business model workshops in following posts.

AIDIMA  www.aidima.es

CEFFOR Project http://www.ceffor.com/index.asp?Idioma=en&IdIdioma=2