Gregor Macdonald on the future of energy, economics, and society
For those of you who know Gregor MacDonald, you know you’re in for a treat with this podcast- a full hour of some of Gregor’s latest forecasts on energy, economics and society, insights you simply won’t get anywhere else.
For those of you who haven’t discovered Gregor yet, he is one of the top energy analysts in the world, and in our minds, one of the top analysts of anything, period.
This podcast covers sweeping ground:
- Why we’re at peak automobiles
- The end of cheap oil
- Coal’s role in the development of the world economy
- The return to human capital and small towns
- Why waterways are the future
- Our current period of “late phase economic decadence
- Why PAKISTAN holds the key to the Copenhagen Protocol
Crazier still, we could have spend ANOTHER hour talking to him and still not exhausted him of insight.
Enjoy.
An introduction to the Intelligence Collaborative
I’m very excited for our upcoming inaugural meeting, this Thursday of our new, increasingly global, professional society, The Intelligence Collaborative.
The following video explains what intelligence is, why we need to collaborate, and why now is the perfect moment.
Have a look at the video, and if you’re anywhere in the MidAtlantic region, consider a trip to our nation’s capital this Thursday. Tickets are free – just bring your interest in how social media will change the practice of intelligence.
Forecasting works: Functional foods 1999 – 2009
Today, the airwaves are filled with advertisements for consumer foods that aren’t simply nourishing but portrayed as practically medicine. A slew of softdrinks are marketed as hangover cures, energy, memory enhancers, cognitive enhancers, help with clairvoyance, and fuel for flight. Fish isn’t just fish, it’s OMEGA-3 FATTY ACIDS. And somewhere along the way, trans-fats replaced “Ebola virus” as the world’s deadliest substance. Is this random or could you see it coming?
Food as medicine was a theme we predicted for 2010 way back in 1999 when studying the future of food and health for a group of global consumer product manufacturers. The world seemed to be at a turning point at that moment, with a number of trends appearing to collide in the decade to come:
- Super-size and family value packs had reached their apex, due to increasing penetration of fast food and big-box retail throughout the world
- Obesity epidemic reaching a pitch, not only in America but also in unexpected places like France, Greece, China
- Litigious American culture had finally apexed with its war on cigarette liability, and a new target was likely to be next
- Biotechnology was promising new technological abilities for all plant life (this was the era of the Human Genome Project and techno-positive rhetoric was off the chart)
- Boomers were aging, and increasingly interested in immortality on the cheap
- Sustainability was increasing as a concern, and farming would be one of the most effected industries
- The “Slow Food Movement” was beginning to point back to heirloom breeds of livestock and produce and encourage local diversity in favor of industrial solutions
Disruptive Innovation and the Bankruptcy of Ritz Camera
I was just surfing SlideShare for some competitive intelligence – always a great source of left-of-center information, unusual sources, and stuff that never gets published. I cam across a provocatively titled slideshow about how digital imaging killed the corner camera shop. Even though the market exploded, the model shifted to one where there was no margin for customer service of any sort.
Food for thought for this Monday.
Jack Welch declares shareholder value “dumbest idea in the world,” employees number one constituency
This is perhaps the top entry in the Guinness Record Book of Complete Philosophical Reversals.
Jack Welch, “Neutron Jack,” the great father of steroid-pumped management, “Flourish Elsewhere” human resources, cutting the bottom 10%, and evangelist of shareholder value as a singular strategy, has now declared the whole “money for Wall Street” thing is the “dumbest idea in the world.”
For those of you who have heard the term “shareholder value” abused in every possible context, a phrase used as a placeholder for an actual strategic thought, this reversal is akin to hearing the Surgeon General come out and say, “You know Marlboros and tequila get a bad rep – I think they are part of a healthy breakfast.”
This too is an overcorrection. People who bet their money on the performance of a for-profit enterprise will expect a certain level of return compared to stockpiling gold or letting money sit in a savings bank (assuming you can find a solvent bank these days.) Jack is right, shareholder value is a result and not a strategy – but it’s still a fine goal.
The difference in the next economy will be that half the world won’t be investing through Wall Street for the basic societal functions of assuring a dignified retirement for aging citizens. Once the pensions set to grow at 8% fail (coming soon to an economy near you!) people will get even more hesitant to invest in nameless, shapeless glass and steel buildings. Investing in for-profit companies will return to where it ought to – a risk undertaken by the very professional and very observant.
Will corporations really see employees as their number one constituency, as Jack suggests? He obviously saw value in firing over 110,000 employees in his tenure at General Electric – but it sounds like a nice idea.
The future may look like more of a balance between durable human relationships and the need to keep the doors open by making money.
The future is NOT in more bank lending
I studiously avoid day-to-day politics into the discussion of strategic trends, but in this moment of critical government decision it is unavoidable.
Listening to President Obama’s speech before a joint session of Congress, I tried to imagine the impact of the trillions in deficit spending on the global economy. America’s recapitalization of banks, according to the President, is to stabilize the economic system but also to get banks lending again.
The concern is that if we do not re-start lending in this country, our recovery will be choked off before it even begins.
You see, the flow of credit is the lifeblood of our economy. The ability to get a loan is how you finance the purchase of everything from a home to a car to a college education; how stores stock their shelves, farms buy equipment, and businesses make payroll.
But credit has stopped flowing the way it should. Too many bad loans from the housing crisis have made their way onto the books of too many banks. With so much debt and so little confidence, these banks are now fearful of lending out any more money to households, to businesses, or to each other. When there is no lending, families can’t afford to buy homes or cars. So businesses are forced to make layoffs. Our economy suffers even more, and credit dries up even further.
That is why this administration is moving swiftly and aggressively to break this destructive cycle, restore confidence, and re-start lending.
I have placed several graphics on this blog about the trillions of dollars in debt that have been created through this culture of debt in the past twenty years. This crisis is due largely to that culture. Surely, rolling lines of credit are necessary to running most businesses. There are fluctuations in cash flow that require a certain percentage of your annual revenue to be offered to you in credit to keep things functioning.
That’s not what has been going on. We’ve financed trillions of dollars of GDP through rampant debt. Note the difference between real GDP and economic activity financed through leverage:
This culture has destroyed the Anglo-American banking system. Many corporate mergers have been made possible only through billions in available debt. Education prices shot well ahead of wages due to availability of private student loans. Housing is crushing the middle class now that the bubble has burst – a bubble that would have been impossible without a reckless culture of debt.
If we are to recover, the culture must change. According to Mish, who should be one of your favorite economic bloggers:
With all due respect Mr. President, you and Congress want to force banks to lend when banks (by not lending) are acting responsibly for the first time in a decade. Mr, President can you please tell us who banks are supposed to lend to? Do we need any more Home Depots? Pizza Huts? Strip malls? Nail salons? Auto dealerships? What Mr. President? What? And why should banks be lending when unemployment is rising and lending risks right along with it?
Note that he mentions retail, also at an all-time high bubble, and which also will come down.
I’m in a mood to make short-term predictions about management: The future is in growing your business from organic growth, recapitalizing cash from operations. It will not be from exuberant bank lending policies, or this malaise will last an extra five years.
Obama tests Keynesian economics in 2009 – new hotness, or old and busted?
I thoroughly enjoyed the NPR segment yesterday entitled “Obama tests Keynes” in which a couple of young guys dig into the often-bewildering rhetoric of the economic stimulus package. Funny, relevant, and worth a listen.
It’s important that in this case it’s young journalists taking a fresh approach to the economic arguments of Baby Boomers. I don’t think the Boomers at the head of our institutions often recognize that the political ideologies discussed were born long before we arrived on the scene, and often have no connection to reality for Gen X & Y. The snarkiness between taxcutters and economic stimulators often generates as much deep-seated passion as comments about “Hanoi Jane” Fonda – it’s a reference to a fight that started well before our births, and may need minutes of explanation to even make sense.
Case in point: the radio program deals primarily with the multi-decade conflict between Keynesians, who believe that well-timed government spending can save flagging economies, and market fundamentalists who belief that the entire economy can be managed through tax cuts and manipulation of the interest rate. The Keynesians protest, “government spending led to winning World War II and got us out of the Depression!” Market fundamentalists tend to argue that the slump of the 1970s proved that it’s not a cure-all – and that only deregulation, tax cuts, and Greenspan’s masterful operation of the interest rates saved us from big government stagnation.
The radio program concludes by saying that after all the discussion about this once-in-a-lifetime event, the Obama plan is basically pure Keynesian economics. After this, we’ll be able to see once and for all if it works or if we were imagining it the 1940s. The exciting bit is, this may be the first verifiable test of classical economics!
This kind of thing makes me insane.
Here we are, heading straight into the meaty part of the 21st century, experiencing an economic emergency that could only be created by a combination of today’s special mix of globalization, Internet, post-hegemonic power vacuum, unchecked assumptions, and 6.8 billion people at an unprecedented moment in history. And the only topics our elites can discuss is:
“So should we spend a lot of money on credit or fool around with the interest rate?”
Every day, people wake up and turn on the television or radio or Web site of their choice and begin worrying about a select group of numbers that are forced at them daily. We hear these measures so often, people are mistaking them for important or relevant.
- The Dow Jones Industrial Average – a collective of large-cap equities, and the prices that Wall Street gamblers are willing to pay that day to take part in their eventual earnings
- Housing starts – the number of new suburban homes under construction, with the assumption that all human housing should eventually stretch to the planet Mars
- Consumer spending – The amount people spend on Guitar Hero and couches and other goods for their new suburban homes
- Interest rates – The rate at which money can be borrowed from banks to the Federal Reserve, to other banks, to people, through credit, through…oh cripes I have a master’s degree and still don’t really get it. Suffice it to say that the interest rate policy appears as logical as Aztec shamanism, and about as transparent as the election of the Pope
- Stimulus packages – The amount of fake money spent on real things, supposedly to be paid – with interest! – by future generations, who will repay this through all the fantastic, super-paying jobs that are right around the corner…so…uh…just let us retire in peace, um, and keep paying your taxes…
We follow these things excessively, and to the untrained eye, they don’t seem to be leading to better management of the world economy. In fact, the world has been managed exclusively through these kinds of measures, and our policymakers are stuck arguing on the radio about whether KEYNES got us out of the GREAT DEPRESSION using these numbers.
GUYS – CAN WE TALK ABOUT THE NEW STUFF HAPPENING?
U.S. manufacturing now resides in China. Our kids are in debt. The Internet is making new companies possible and other companies obsolete. Science and technology is rolling onward. This is probably just another phase of Kondratieff cycles or Schumpeterian creative destruction. We’re looking at a huge change of management between the Boomers and Gen X. The Boomers are going to start going to the doctor a LOT and will crush the private healthcare system. Mass media is about to go extinct. Europe is out of kids, while the average age of Iran in 24.
Now, how is it that the argument can still be down to deficit spending versus interest rate policy?
Here’s some new measure to try out on the TeeVee, just to inject a bit of new debate into the public sphere:
- The Gig Rate: Measure the percentage of people who just graduated with expensive student loans and got a job that pays for rent, food, and debt repayment
- The Grandma/Doctor Ratio: Percentage of grandmothers able to get to their doctors appointments as scheduled, not left at home, letting their prescriptions go out of date, because they can’t get transportation
- The Ebay Entrepreneur Stat: Number of cash flow-positive home-based jobs created through Internet technologies, allowing people to make money and still raise their kids
- The Youth Diabetes Drop: Number of young people diagnosed with Type II diabetes mellitus able to reverse their disease through diet and exercise, thus saving society billions in the long-run
- The Volunteer Volume: Number of people financially secure enough in their lives to donate time to a local charity, improving their communities at no cost to taxpayers
- The Revitalization Rate: Dollars generated through the repair of our natural and built environments, from wetland and waterways to city centers and school districts, creating economic prosperity while giving future generations even more opportunity
I don’t care if you use these – invent your own. Find a way of discussing economic prosperity in a way that doesn’t use these same, tired, busted statistics.
It’s time to leave John Maynard Keynes where he was: a Cambridge elitist who bounced around the London dinner party circuit, hating the working class and delivering all kinds of new, interesting ideas just for shock value. I think he’d be sorely disappointed in us if he thought that in 2009 we hadn’t moved past him, despite having gone to the moon, defeating communism, and inventing about 1000 new world changing technologies.
KEEP THINKING.
Business development in a time of transformative change
I really enjoyed last night’s event at the Connecticut chapter of the Society of Competitive Intelligence Professionals. True to this year’s theme, we discussed the future trends of 2009 and beyond, but moved immediately to positive action. About 25 of us put our heads together on the toughest problems of humanity, and tons of new business ideas came flowing out. Despite dire economic statistics, the mood is lighter and more positive than I’ve seen in years.
Here are last night’s slides for those of you who want to play along at home. We’ll likely have a webinar on this topic soon – we’ll keep you all posted!
Interview for Korea’s KRX Magazine: Small, smart companies and more
With the release of Future, Inc. in Korean and Chinese, I’ve had the great opportunity to do interviews with Asian business magazines. I find that they ask more interesting, more insightful questions than many of their Western counterparts, so they are often fun interviews. The only problem is, once they are translated, I have NO IDEA what they said.
I just finished an interview with Korea’s KRX Magazine, which covers the Korean stock market and business in general, and I decided to post the whole text in English, so someone can appreciate it.
The questions:
Companies have hard time in business due to the global financial crisis. What new trends can we look for?
The most important trend is away from the philosophy of growth at all costs. For years, particularly in the United States, management has followed a typical playbook – get big, quickly, through borrowing money from private venture capital or public offerings. Then, you can go national or international, reaching bigger markets and gaining leverage over vendors and distributors. Once you have leverage over vendors and distributors, you cut costs by firing excess employees and force downward price pressure on the market. With the extra cash from operating expenses, you buy more national or international companies. For around forty years companies have repeated this formula.
The theme here was BIG BIG BIG. The problem with “big” is that it sometimes comes at the expense of “smart.”
New Ways of Knowing 2.0: Social Media and the Future of Intelligence
We’re so excited about this upcoming SCIP meeting, I need to repost the entire meeting description:
It’s January 28th in Washington DC. You should come and be part of this discussion!
New Ways of Knowing 2.0: Social Media and the Future of Intelligence and Decision-Making
Intelligence is at a watershed moment. After decades of developing a profession to collect information and provide early warning, we find ourselves in a broad-reaching financial catastrophe that was unknown or ignored by decision makers. Despite a collection and analysis of economic information, most businesses walked unknowingly into a ruined banking sector, retail distribution on the brink of bankruptcy, housing grotesquely overvalued, American automobiles at the point of extinction – all while most leaders continued to view change as incremental.
This unprecedented current economic crisis seems to represent a failure of intelligence. After all, if intelligence cannot motivate leaders to action, then as professionals we must ask – what good is it? Many analyst voices in the desert warned about the risks in real estate, derivate markets and reliance on leverage, but it’s not clear that this led to action. Are we in our current mess because the leaders in business and government simply didn’t listen? If so, how can intelligence professionals deliver analysis that drives appropriate action?
The next generation of intelligence might solve the inherent weaknesses of Intelligence 1.0 by relying on a broad range of information, focusing on relationships over hierarchy and replacing official dogma with a continuous dialogue. Technology will be a major driver in this evolution: Web 2.0 and social media tools are moving into the mainstream– not just in the consumer space but also in business. 2008 has seen the year of “Enterprise 2.0.” Web 2.0 has gone to work to enable collaboration, smash silos and change business processes. Intelligence analysts have new tools and methods at their disposal for primary research, secondary discovery, collaborative analysis and communicating actionable insight.
“New Ways of Knowing 2.0″ will be an interactive educational event in which we will examine the potential of social media to improve the intelligent organization of the future. Participants can expect to teach as much as they learn and see connections among diverse concepts, tools, intelligence practices and business processes. Our panelists will include:
- Suki Fuller, social media maven and CI consultant
- Eric Garland, strategic forecaster, intelligence thought leader, author of Future Inc: How Businesses Can Anticipate and Profit from What’s NEXT, and principal of Competitive Futures, Inc.
- August Jackson, market and competitor intelligence analyst and Enterprise 2.0 evangelist at Verizon Business.
You will come away with this program with immediate and actionable advice about how you can incorporate Enterprise 2.0 tools into your intelligence processes to improve your ability to adapt to our ever-changing world. Discussions and highlights from the program will be posted to the new SCIP DC chapter blog at http://scipdc.wordpress.com.
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.New project: Manufacturing 2020!
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