August Jackson: social network analysis for intelligence (part four of four)
by Eric Garland
The thrilling conclusion, in which we talk about social network analysis from a real-life perspective and why it represents a powerful holistic world view.
August Jackson: social network analysis for intelligence (part three of four)
by Eric Garland
August Jackson shares how studying the link between people, companies, and technologies makes social network analysis a very powerful strategic tool.
August Jackson: social media analysis for intelligence (part two of four)
by Eric Garland
August keeps on a roll, telling you how to run a network analysis yourself, how to pick good sources (not necessarily LinkedIn!) and how this type of thinking represents a more holistic way to see your markets.
August Jackson: social network analysis for intelligence – (part one of four)
by Eric Garland
Sure, your teenager may hear the word “social networks” and think of a great way to coordinate a social life. August Jackson, Competitive Intelligence and Strategy Professional, Tech Pundit and Social Software Evangelist working for Verizon, knows that social networks are the key to advanced competitive intelligence analysis and extremely relevant, accurate business forecasts.
In part one of this four part interview, August gives us the nearly fifty year background of this analytical discipline, how we can better understand competitors, partners and customers alike, and why you should NOT start with software but make your first attempts at this work just with your brains and pen and paper.
Paul Denlinger: China’s Strategic Future
by Eric Garland
In this episode of the Competitive Futures Podcast, we interview Paul Denlinger of China Vortex, an author, investor, and executive advisor who specializes in U.S. – China commercial activity. He’s a rare bird indeed, completely fluent in Mandarin and English and totally familiar with the executive leadership mentality of both countries. In this episode, he gives the audience some forecasts about China that you (unfortunately) just won’t be hearing in other media:
- The crash of 2008 shook China’s faith in the U.S. and sent their strategy away from engagement to the creation of a massive Chinese middle class they hope to drive the world economy
- China will ramp their use of coal significantly on the way to dominating the world market for renewable energy
- The markets for many raw materials are being cornered by China today and may leave other countries in the lurch if they don’t act soon
All of this, plus invaluable insight about how the Chinese mentality on the future differs considerably from that in the West.
We hope you enjoy listening to this interview as much as we did making it.
The Dow Jones: Celebrating 10 years at 10,000!
Past returns are no indicator of future success. This one sentiment is the rationale for future-focused thinking, especially for countries and companies that have achieved prosperity and greatness. The cleverness of our forebears will not guarantee future returns, financial, cultural, social or otherwise.
Which brings me to a discuss of the stock market of the future. The Dow Jones just celebrated ten years hovering around 10,000. Some doomsday types are predicting a potential fall to 1,000, some are more sanguine, and the world’s pension funds appear to expecting a long boom.
Back in 2008, when everything was up for debate, I remember the violent reaction many Americans had to the notion that the stock market might not rebound. I recall floating this idea back when the banks fell over, and I people acted as if I had insulted their mother, slapped Santa Claus, and kicked a puppy. Of course the Dow will come back. Don’t you know that since the Great Depression it has always been a good investment? This means it will be a good investment in the future. To suggest otherwise is a mix of ignorance and intentional blasphemy.
2010 marks an important anniversary – the Dow Jones Industrial Average has remained at 10,000 for ten full years. If you only take the last ten years, your savings account was a better investment than stocks. You could make money trading stocks, but it is increasingly clear that the only people doing this effectively have football field-sized computers for high-frequency trading and a phalanx of astrophysicists providing the mathematical formulas.
What will stocks do in the future? That’s not really the issue here. Start by accepting the notion that past returns are no guarantee of future performance. And then, keep thinking.
Brazil: A bright future overcomes inflation fears
Welcome to my first of many dispatches as director of economic risk analysis at Competitive Futures, Inc. I look forward to sharing with you some the insights we provide clients on current economic trends from around the world. Jumping right in: Is Brazil’s economy too hot?
These days, the orthodox view is that economic growth is GOOD, inflation is BAD. Most countries around the world have too little of the former and risk far too much from the latter, mostly from profligate spending and “quantitative easing.” Which is why it’s easy to see Brazil as a bright spot in the global economy. Brazil’s GDP growth is at a scorching 9%- which would normally be so hot as to cause worry of inflation. But wait – Brazil’s inflation won’t cause the same problems that the world will see in all the other countries at risk of inflation due to monster deficits. The land of futbol, caipirinhas and Copacabana is more dynamic and innovative than ever before, and will overcome inflation through investment.
Inflation in hot economies is often caused by a lack of sufficient infrastructure to meet growing demand. In Brazil, this won’t be a problem going forward, to listen to the country’s forward-looking economic policy makers. The country’s economic future appears to be poised to grow past any inflation concerns. The consumer market has grown exponentially for the past 15 years; massive investment opportunities such as the 2014 World Cup across Brazil and the 2016 Rio Olympics will see inflows from across the globe; and mass infrastructure projects in energy, transportation, and extraction (Franco fields and Tupí finds) are increasing. In a world where North America and Europe look backward to find their Golden Age, Brazil is looking at the next decades.
Imagine businesses looking for growing seeing Sao Paolo as a better bet for stability than the ailing eurozone or deficit prone North America. Brazil won’t be “one of the BRIC countries” it might be “where we have our headquarters.”
Assuming a bright future – pensions drag down General Motors
by Eric Garland
One of our more accurate predictions at the end of 2008 was the soon-to-be-discovered catastrophe of unfunded pensions. As 2010 develops, we see that many of the current hotspots in the ill-defined “financial crisis” are tied to this one issue of having overvalued the future at the expense of the present.
California is sitting on around $500 billion (!) in liability. The state of Illinois is short $78 billion for it’s pensions. Now, here comes The New General Motors, still losing billions after a taxpayer bailout. The Government Accountability Office has recently released a report about how pensions will likely drag the ailing manufacturer down starting in 2012 or so. (h/t to Megan McArdle at The Atlantic for quality analysis here – also, the comments section is a stitch)
What happens in 2012? The bulk of the Boomers start cashing in those defined-benefit pension plans, heading to the doctor’s more often, and generally turning 65 at the rate of 7000 per day. Aren’t forecasts useful? This is why we call it a megatrend – it will impact car companies, state governments, universities, national governments, baseball teams, travel agencies – everybody.
Nothing is more dangerous than a business decision based entirely on, “sunny, bright scenarios of fantastic success at 8% returns for all of our investors, forever!”
A good guess about the Internet from 1969
Forecasting isn’t perfect, but sometimes it gets really close.
Check out this video from 1969 about what information technology would look like “in the future.” Online shopping and online banking – hey, that looks pretty close.
From a technique point of view, this is more conjecture than trend extrapolation, since nobody but a few DARPA engineers really knew about the Internet. Still, hey, good guess, right?
Why don’t we listen to doom scenarios more?
by Eric Garland
A couple years after the world financial system quite predictably melted down, it seems some of the more mainstream journalists are becoming interested in what we call “wildcard scenarios.” Kevin Drum sat down with Reuters’ Felix Salmon and learned:
We should all be more worried about the potential of a mass casualty event — an epidemic, a gigantic earthquake, a massive hurricane, etc. — to annihilate the insurance industry and take out the rest of the financial system as a side effect. The AIDS epidemic nearly did it, Felix says, and missed only because most of its victims weren’t insured. A really big hurricane hitting Long Island could do it, though.
Yes indeed, why don’t we think more about low-probability, high-impact scenarios? It’s not because these are new concepts, oh no. Herman Kahn from RAND Corporation introduced scenario analysis in a modern context to deal with the possibility of nuclear war. He made his entire reputation by bringing leaders unwanted outcomes (notably, destroying the planet) and walking them backward (“backcasting“) toward ways to avoid negative consequences (such as everybody dying). We’ve had fifty years to absorb Kahn’s messages.
Why don’t we think more about wildcard scenarios? It’s not that they haven’t become popular in the business world. Shell’s scenario group supposedly got on the right side of the oil crisis of the 1970s and built the next forty years of success on their understanding of probable outcomes. Those responsible published heavily and built wonderful speaking careers telling others about how to think in terms of scenarios.
Heck, I even wrote a book about how anyone, from a high school kid up to a CEO, can use trend analysis, scenarios and implications for anything. Why didn’t I end up on Oprah’s couch, telling everybody how to save the world with scenario analysis? Now available to the masses in non-jargony language and using the future of beer as a case study! Fun for the whole family!
Let me ask you the reader – how prevalent is scenario thinking in your organization? How many of your senior leaders are willing to entertain the possibility – however slight and “wildcard-y” – that the world may turn out in a way that could make their decisions the wrong thing to do?
And, a better question, what percentage of executives would take such intellectual exploration – hypothetical, mind you! – as a direct challenge to their authority?
How many public relations and communications staffers would find conjecture about potential futures, turning up unfiltered on social media ,as a direct challenge to the message they are trying to craft?
These are the cultural questions of bureaucracy we in the intelligence and strategy world need to deal with before turning out anymore 1500-page analyses of potential world events. We should save the toner cartridges until we deal with how organizations actually work.
About Eric Garland
Eric is one of the world's pre-eminent thoughtleaders in forecasting and strategy. He helps leaders of business and government make critical decisions about their futures.Connect with us
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