This episode of the CompFutures Podcast features Australian futurist Paul Higgins, founder of Emergent Futures. Paul has a fascinating background, a veterinary surgeon who turned toward foresight after a simple ad for a futures studies grad program. In this episode, he describes when executives should think about the future versus tending to execution, how the future of trust will be key to our social institutions, and why Australia is a fascinating vantage point from which to think about global business.

Arik Johnson is the chairman and founder of AuroraWDC, a top competitive intelligence firm based in the United States. Arik is one of the world’s top thoughtleaders in the field of intelligence and management. The concept he talks about most these days is stochasm, a funny but meaningful word that is Greek for the difference between what you think you know and what you actually know. In this world of Black Swans and wildcard scenarios, there is a lot of that going on these days.

Arik is concerned with the future, leadership, and the intelligence required to meet new, unprecedented challenges. In this thoughtful discussion, he covers:

• Why the chaos of the current moment is a perfect time to think about how you think
• Why our current obsession with “performance” may be misguided given the mysteries of the world
• How the corruption of the monetary system puts all of our business metrics in jeopardy

Since Tim Powell did such a great job summarizing our podcast, it would be a shame not to include his salient points here. This is why he’s such a great interview on the subject of market research, competitive intelligence, and more:

• Businesses have always wanted and needed to know about each other’s activities.  Until the 20^th century, this was mostly handled by direct conversations among business leaders.

• The conditions that created the need for modern competitive intelligence in the US began to be laid by the anti-trust legislation of the early 20^th century.  When businesses were legally prevented from sharing information, they had to devise some other way to obtain it.

• The mid-century rise of TV as a business force gave rise to one of the immediate predecessors of competitive intelligence – market research.  Companies needed structured information about the world outside their borders, so they could increase the return on their advertising spending.

• Another immediate predecessor of CI – financial securities research – was pioneered by Merrill Lynch and flourished during the latter half of the 20^th century.

• Corporate intelligence was first organized as a discipline in the mid-1980s, when the post-World War II world dominance by US business began to be challenged by Japan.  What was originally called the Society of Competitor Intelligence Professionals was soon amended to the Society of Competitive I.P. (the “-ive” implying a more global approach), and is now the Strategic and C.I.P.

• Since the 1990s, data collection has become much easier, thanks mainly to the Internet. So easy, in fact, that the primary problem now is one of determining, of the massive amounts of data, what has relevance to the job of business—creating value for shareholders, customer, employees, and other constituents.

• The Internet and other information technologies have vastly expanded our reach over information, but also can leave us without an organic connection to what it actually means for our organization.  Companies like Procter and Gamble have actively fought the tendency of their managers to sit behind walls of abstract information.

• Knowledge producers (business analysts) and knowledge users (decision makers) are often separated by a cultural and professional gulf or barrier.  Bridging these barriers is one of the primary challenges of intelligence professionals.

• The term “intelligence” does not translate easily to other languages and cultures, especially with people who have not worked with it before.  To some, it implies a self-serving smugness.   To others it connotes espionage.  Others find it just plain scary.

• Intelligence professionals need to move away from “stick fetching” – reactive and responsive data collection – toward strategic intelligence, where they become the stewards and curators of information about trends and events in the outside world likely to indicate opportunities and threats to their enterprise.

• Intelligence professionals need to become good at filtering things out and focusing management’s attention on those things that really matter.  In order to do this, they need to sensitize themselves to how the business actually works and creates value.

• To that end, intelligence should go beyond delivering data and analysis, and should also be comfortable with proposing a constrained set of options, and even with making recommendations.

• A rival or competitor is defined as any organization or product that attacks or diminishes the value of your own organization or product.  Competitive intelligence is too often defined narrowly to focus on direct rivals – and in so doing can miss the sea change disruptions that can change the economic rules that govern an industry.

• Business leaders typically are faced with an “information archipelago” populated by analytic fiefdoms that are usually poorly coordinated, and even sometimes at odds with each other.  These can include Market Research, Competitive Intelligence, Business Strategy, the Corporate Library, and Information Technology.  These must be integrated into a more holistic strategic intelligence capability.

• Your intelligence programming should be driven by your strategy.  A company like Apple actually creates its future, therefore has less need for traditional CI or even Market Research in order to be successful.

• Good intelligence does not obviate the need for making good decisions.  You can get killed in the marketplace by slavishly imitating what your rivals are doing.  We call this “competitive myopia”.  (I’ll post more on this soon.)

• The best research may not give you all the answers – but it should give you the strategic parameters around which decisions are needed.

• Corporate intelligence as a discipline has had mixed success.  It has succeeded in inculcating competitive thinking, research, and analysis into many more business decisions than previously.  Its goal of creating a “profession” of corporate intelligence analysts, however, has not yet been realized.

• It may be premature to seriously consider professional credentialing for business disciplines like intelligence, when business leaders themselves are not certified, licensed, or otherwise formally credentialed.  Even MBAs – which represent only about one-third of leading company CEOs – do not have to pass qualifying tests like doctors, lawyers, accountants, and other professionals do.  While this creates a more open and integrative talent pool, on the other hand it leads to significant variations in quality and, frankly, “professionalism”.

• Business strategy is now more about intelligence – continual flows of information and analysis about the outside, and about the future – than it is about “planning”.  Strategic planning is a Cold War-era concept that has diminished relevance for our fast-paced, turbulent world.

With a rapidly changing world, more and more organizations are hiring dedicated analysts to understand what’s next. Intelligence professionals are a hot commodity for both companies and governments in the years to come. That’s why the Competitive Futures Podcast is turning to our friend and colleague Tim Wood Powell, the CEO of New York City’s The Knowledge Agency, to tell us about the past and future of this most important discipline.

In this insightful interview, Tim tells us:

* Why Teddy Roosevelt’s antitrust laws made competitive intelligence necessary

* How most quantative management is “predicting the past”

* Why modern intelligence is a question of data vs. analysis

* The ways intelligence professionals are often at odds with senior management

* That getting beyond competitors is the next level of competitive analysis

With forty years of intelligence and decision making, Tim has insightful ideas about where the whole profession is headed. Enjoy.

Does anybody need economists?

This is the subject of a fascinating polemic raised by our colleague Gregor MacDonald. He notes, in an incredible understatement, “economists don’t ‘do’ energy.” They are content to set Keynes and Hayek in a never-ending cage match over monetarism versus free markets, while petroleum dwindles, Boomers retire, technology flattens work hierarchies – while real things are actually happening.

Some of the debate is set off by the paper embedded below by a Federal Reserve Bank economist. As the title indicates, he doesn’t think much of the input of non-specialists. We then have a similar question for his profession – how is it that we all participate in economic activity, and only you feel qualified to comment on it? And while we’re on the subject, why didn’t you predict an absurdly obvious bubble and subsequent crash?

Some things are too difficult for the laity to understand. Most of the hard sciences are really impossible to comprehend to outsiders, and news reports on their breakthroughs are often comically misunderstood. But is economics a hard science? Isn’t it a social science based around people trading things? Can we discuss our economy without the need for technocrats of this sort?

Economics is Hard

Everybody wants a profitable, just, humane, creative, interesting, healthy future – it’s just that while we are working in groups to achieve it, a bunch of other stuff happens along the way. Such is life in a world defined by bureaucracy, and instead of complaining about it, we need to realize why we’re having so much trouble actually thinking about the future. Until we recognize our collective problems, all the trends and scenarios in the world won’t help us create organizations with a strong sense of foresight.

The above statement is the central thesis for my next book, which will be a detailed, rich manual on exactly how NOT to study the future. I have identified twenty-five common traps into which leaders fall when attempting to think about the future. Before you get flogged with any more reports about nanogenetics or the rise of the Ghanaian automobile industry or reports on cell phones implanted in your molars, we need to look back at the past fifty years of futurism and see why it didn’t necessarily result in a world full of visionary futurists.

Given my new mission, I was excited to find this beautifully-presented look at cognitive bias in groups.  The authors outline for us all the ways our group dynamics can result in dangerously inaccurate thoughts about the future:

• The 19 social biases
• The 8 memory biases
• The 42 decision-making biases
• The 36 probability/belief biases

I love this presentation in the way in does not invite to blame or ridicule – these are natural phenomena that occur within groups of people. I may have committed 75 of these mistakes before breakfast myself – it’s that easy. When we come around to such self-analysis with a touch of humor and understanding, we may finally be in a position to move on to organizations that are more sophisticated and more effective.

Cognitive Biases – A Visual Study Guide by the Royal Society of Account Planning

Corporate espionage. Security. Keeping your precious trade secrets from The Bad Guys, whether they be competitors or government agents looking to destabilize your economy.

This. Is. Serious. Stuff! Just ask Washington’s Eamon Javers, who just published Broker, Trader, Lawyer, Spy, about the use of former MI5, CIA, and KGB agents in the corporate wars over market share in the chocolate toy segment. Spies are involved!

He’s even on the Daily Show, the highwater mark of all important information.

So again, This Is Serious Stuff. Kids, break out your Cold War Mindsets!

This past weekend  I spoke at the George Washington University’s graduate program for high-tech security to discuss the future of intelligence. As the professors expect, I take this from a much more broad perspective, bringing competitive intelligence, futures studies, scenario planning, stochastic thinking, and general irreverence into a bouillabaise we call Intelligence 2.0.

The real news piece here is that I am excited for the next generation of leaders. The dialogue that ensued among these future security professionals was broad-ranging, insightful, and fun. We’ll need plenty of all three in order to meet the needs of organizations that exist in a world of pervasive media, and these young people seem up to the challenge.

Some major points that came out of our dialogue:

• A command-and-control mindset about information will not fit with a world of social media – the goal will be to limit risk for a certain number of activities, not to funnel all information through one conduit.
• Asymmetry of analysis will be more important than asymmetry of information – it’s not who collects the most data, but who is the best at deriving insights who will be most effective.
• A corporate culture of constantly hiring and downsizing employees with decreasing levels of engagement is no recipe for data security – many corporations are begging for their data to hit the wild Internet through shoddy HR practices.
• The shift to Gen X management will be huge – while Boomers came up on strictly hierarchical, militaristic command structures, Gen X and Y believe much more in sharing information, decisionmaking power, even credit. This will change what “secure” means in the future.
• Increasingly multinational corporations are turning to nation-state legal apparatuses to enforce their own security needs – even though the economic benefit will not necessary transfer to the nation-state in question. Over time, tension will increase about this issue.

Not bad for a grad school class on a Saturday before lunch, am I right? If these are our future leaders, I couldn’t feel any more secure.

Professor Karl Moore from McGill, who did that interview with Michael Porter the other day on the future of business’ role in society, is back with a TED talk he gave on the future of post-modern management. He notes that as the internet creates a system of “algorithmic authority” and tears down the rigidity of authority, “leadership” and “management” will have less impact on team-building than partnership, especially for those under age thirty-five.

Given the role of larger and larger bureaucracies in many key industries, this reality will be quite disruptive.

This is a timely and very mature view on the changing role of business in society. Michael Porter, still the world’s leading authority on traditional business strategy, leaps out and asks some fascinating questions of private industry as a whole: does it realize the difference between its narrow self-interest and the broader society to which it is indelibly interconnected?

I particularly like how he distinguishes between multiple levels of not understanding social interconnection and responsibility. One end of the spectrum, you have the Madoffs and “banksters” of the world, pathologically removing value from society and giving absolutely nothing back. Toward the grey zone, you have businesses who may profit while destroying the social and economic fabric of the places around them, throwing on some charitable giving as a band-aid.

This talk is an important signal to private industry. Clearly, the lack of connection between business and society is so great that you not only have the occasional death threat on banking executives for taking bonuses straight from the US federal treasury, you have well-paid, world-famous consultants actually asking the question, “So why do we even have business, anyway?” Seriously, Michael Porter isn’t exactly a Trotskyite radical.

This isn’t connectivity for the sake of feeling good, it is a methodology that will lead you to provide value to your customers and withstand the forces of competition. Superconnection is the future.

Clay Shirky recently began exploring a significantly important idea in Intelligence 2.0, that of algorithmic authority, a new form of trust that befits the complex informational environment of the 21st century. For those of us who assemble large amounts of data for decision makers, authority is critical, and it is under major stress due to the Internet. Until recently, you could help leaders make the most informed decisions by assembling the most authoritative sources, interpret the implications of that data, and go forth understanding several potential courses of action. Today, we must also add a new dimension – evaluating the validity of the information as the barriers to entry fall in the world of printing and distribution. Shirky’s theory helps us in this regard:

Algorithmic authority is the decision to regard as authoritative an unmanaged process of extracting value from diverse, untrustworthy sources, without any human standing beside the result saying “Trust this because you trust me.” This model of authority differs from personal or institutional authority, and has, I think, three critical characteristics.

First, it takes in material from multiple sources, which sources themselves are not universally vetted for their trustworthiness, and it combines those sources in a way that doesn’t rely on any human manager to sign off on the results before they are published. This is how Google’s PageRank algorithm works, it’s how Twitscoop’s zeitgeist measurement works, it’s how Wikipedia’s post hoc peer review works. At this point, its just an information tool.

Second, it produces good results, and as a consequence people come to trust it. At this point, it’s become a valuable information tool, but not yet anything more.

The third characteristic is when people become aware not just of their own trust but of the trust of others: “I use Wikipedia all the time, and other members of my group do as well.” Once everyone in the group has this realization, checking Wikipedia is tantamount to answering the kinds of questions Wikipedia purports to answer, for that group. This is the transition to algorithmic authority.

The most important implications of any strategic trend is usually not that your organization must do something drastic, it is that your organization is obsolete and can’t respond effectively at all.

Case in point: newspapers and the Internet. It’s not so much that newspapers could have done something to maintain their business model of classified advertising, it’s that they need a brand new business model and structure to survive. If that is the major implication of the trends we track as strategic analysts, then we almost must develop skills to help organizations change quickly and painlessly.

On that note, check out this talk from Aurora WDC’s Arik Johnson on the future of organizations, recorded at last month’s Intelligence Collaborative meeting in Washington.

A sneak preview of August Jackson’s presentation at the inaugural Intelligence Collaboration meeting coming up this Thursday.

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.

It is more than enough work thinking about how the world is changing. Exceedingly few people think about how people think about the changing world. I’m proud to say I know some great folks who are on the cutting edge of understanding intelligence and decision making. Here, we’ve got a copy of the latest Competitive Intelligence Podcast, the brainchild of August Jackson. This time, he’s interviewing our friend and colleague Arik Johnson of the intelligence consulting firm Aurora WDC, on his view of the present and future of intelligence and its effect on leadership. The interview is broad ranging

• A new paradigm of intelligence: scarcity of analysis instead of scarcity of information
• The “perpetual beta” mindset, one of rapidly-changing technology and reduced barriers to entry
• The next decade of competitive intelligence: CI 2020
• CI’s evolving role as a mechanism and process to correct for cognitive bias
• The importance of a customer-centric model in delivering intelligence

It’s a great year to revisit our assumptions on how decisions are made. This is a great discussion to get you kicked off.

It is impossible to fix any problem while continuing to use the mindset that created that problem. This is an old saw, used to extoll the virtues of examining your assumptions.

Naturally, if you want the opposite of the Wall Street-speculator-growth-at-all-costs model, you need to talk to people who remember lots of past and have been around to see lots of future – Native Americans. I have the great honor of working with Mr. Jack Soto, director of the Washington Internship for Native Students (WINS) program at American University on issues of tribal leadership and the future. Jack’s program brings native students from around the continent to Washington to connect them with the mechanistic workings of Washington.

In this podcast, we go deep into the difference in perspective between US corporate, suburban culture and the constant rebirth going on in the native communities, what it means for their nations, and what we can learn from each other about the recreation of communities.

And we’re not diving into the typical, “Native Peoples Are More Holistic” claptrap. During the hour, we get into the deep background in complex business transactions that most tribes have, their process of constantly recreating nations and governments to suit evolving reality, casinos and their effect, Jack Abramoff (“Live and Learn“), why natives aren’t really environmentalists, and much more.

Enjoy.

From the insightful analysts at CNBC:

At 10:14am:”Stocks Slide on Swine-Flu Fears”

At: 11:21am: “Stocks Rebound as Traders Find Flu Trade”

No further comment is required.

Seth Godin stands conventional wisdom on its head:

The Prius was developed after the marketing thinking was done. Jones Soda, too. In fact, just about every successful product or service is the result of smart marketing thinking first, followed by a great product that makes the marketing story come true.

This makes quite a statement about the inherent value of products and services. Is something only ever as good as we are convinced it is? Is perception now 110% of reality?

Late-edit: Mr Keen has pointed out that the title here is not entirely accurate – he doesn’t think we’re doomed to fascism, but that it is a risk – a point with which I agree.

>>>>>>>

I have to give it to Andrew Keen to be willing to give an interview while pounding rum and coke. Keen is well known for his book The Cult of the Amateur, which decries the loss of professionalism in the public marketplace for ideas. In this frank (to say the least) interview, Keen is in Amsterdam (hence rum & coke) discussing the next web. His views seem to be increasingly dire on the future of services like Twitter, saying that the feudal lords are going to make Web 2.0 even more elite than the supposedly democratic market of professional broadcasting and publishing.

I always value what Keen has to say. He is dramatically wrong in this case, falling for his own confirmation bias toward experienced, “talented,” official sources of media and away from the ignorant masses.

• The goal of Twitter and related Web 2.0 is not to generate the most audience, as it was in the TV days, and as Mr. Keen suggests now. The point of these technologies is to reduce the distance and cost between connecting niche markets to ZERO. I don’t care that Ashton Kutcher has a million followers, I don’t even WANT his followers. I want my followers. Florists want flower freaks. @NJHockeyMom wants to connect with New York area hockey fanatics.
• The recent economic crisis has shown us what happens when all of one kind of information – in this case, economic and commercial – is broadcast exclusively by experts. That expertise came by way of conflict of interest and isn’t necessarily more reliable. As a result, I’d rather be listening to @GregorMacdonald, @HowardLindzon, and @StockTwits
• In the video he talks about Web 2.0 being more fascistic than “the democracy of industrial media.” WHAT? are you kidding? Six billion people talking peer-to-peer versus a view white guys sitting on top of the capital required for broadcasting? This is ludicrous logic. Information is more free than ever, and young people have less interest in hierarchical institutions than in the last five centuries. But we’re headed for Mussolini 2.0? You’ll have to back this up.

The idea of Social Media is that for once, have more followers is not necessarily a judgment on your worth as a human being, but how much you interact with a certain group. Try pushing that philosophy in a Hollywood pitch meeting. It’s show me the numbers or HIT THE BRICKS.

Web 2.0 won’t be perfect, but it’s already great. And sorry Andrew, not headed toward fascism.

Andrew Keen: Web 2.0 Is Fucked (The Next Web 2009) from Robin Wauters on Vimeo.

I am glad to see Douglas Ruskoff weigh in on our current situation. He’s a fantastic thinker, humanistic and often contrarian, the author of many books including the recent Get Back in the Box: Innovation from the Inside Out, which is about the foolishness of senseless innovation. If I read Rushkoff correctly, he sees economics as a distinctly human, connected enterprise, and the absolute opposite of where our commercial leadership has taken us.

He presents some major, major ideas:

• The recent goal of business has been to make every company a holding company, one whose purpose is the acquisition and/or management of debt as opposed to a group of competent people who do things for other people
• People at all levels have become more interested in the perceived value of assets (homes, shares of companies, CDOs) than the actual value that they might ever produce
• Most of these ideas are supporting people who may not even be in the system – long-gone investors, maybe even dead guys
• The monetary system is not about encouraging trade, but often preventing trade
• The American Revolution came about because England forbid people from providing each other with services
• LOCAL CURRENCIES used to be very popular and could be again
• We were probably better off economically in the Late Middle Ages (the Black Death notwithstanding)

We need to revisit our total concept of value creation. It’s great that Rushkoff is lending a hand.

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.

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.

Those of you who read Future, Inc. know my special love for beer. It’s a magical substance for oh, so many reasons, but among its many mystical properties is that it’s RECESSION-PROOF.

This is a simple local news story about a Carolina brewer starting a business in a down market. The punchline is that it’s almost always safe to start a business doing delicious craft brew beer, since sales of alcohol are the last to slump, and since the segment is still growing 14% a year.

One of the things we discovered about local beer was that it ends up being the flag for local economic recovery. So, neighbors out of work? Tough times ahead? Drink your local beer with your friends – it may be the signal of economic vitality right around the corner.

I recently became a fan of Gary Vaynerchuk, along with about 74% of the entire Internet population. His real business is specialty wines, which he sells through his passionate mix of New Jersey culture, extreme hard work, and expert use of social media. Speaking as a lover of fine wines, any oenophile who uses a New York Jets bucket to spit in has got to be all right by me.

His videos on wine are fun, and highly recommended, especially for those who want an impartial at look wines in all price ranges and styles. Gary has a knack for picking out the Next Big wine varietals to hit, and also has many trenchant things to say about Brett Favre.

Speaking of foresight, I find myself in a bit of a quandary with Gary’s most recent video. In it he promotes “Reactionary Business” not predicting the future,” and “talks about how important it is to see things early on and not obsess over predicting the future which so many in social media do way too much of!”

There’s a kernel of truth here – at the end of the day, it comes down to investing early in new lines of business and executing your vision quickly and professionally. The money doesn’t get made in the next 20 years, it gets made when the cash register rings.

But otherwise this message seems to miss the spirit of the times. We are in this current financial crisis precisely because people stopped thinking about the long-term implications and focused on making short-term gain. Without a long-term strategy, your short-term tactics will likely meet an abrupt end one day. Disruptive technologies. Population migration. Draconian regulation. The banks ultimately fold and put most of New Jersey out of work, and then there’s nobody with enough money for a bottle of the really good Pouilly-Fuisse. Big trends ultimately impact the tiny details.

It’s all about combining long-term strategy with short-term execution.

MUST READ, from intelligence thought leader August Jackson:

Social Networking More Popular than Porn: What it Means for Competitive Advantage « augustjackson dot net:

Policies in information security, public relations, human relations, marketing, sales… the list goes on all have to take this reality into consideration. Old “sledgehammer” strategies are not going to work going forward. The best and the brightest are going to go where they can maintain and grow their self actualization through social tools both inside the company, with partners/customers and their social lives. Many boundaries are going to collapse as a consequence. It’s not going to be all flowers and happiness because everybody involved is going to have to be a lot smarter.

August is on to something big. The drive for social connection is incredibly powerful, more powerful than all other forces including the sex drive. As he points out, the companies may change in social media, but the social trend is here to stay for the rest of our lives.

This will change all organizations, all strategies.

As Pfizer prepares to buy Wyeth for $68 billion.

The details state that Pfizer helped finance the deal by raising $22 billion dollars in debt from “a consortium of banks.” Who had $22 billion laying around in this credit crisis? Just curious.

Somewhere around the time that Americans were forced to write checks to bail out companies “too big to fail,” it occured that maybe “big” was the problem all along. For these reasons, the small, nimble, intelligent organization maybe the star of the next decade.

Let’s look at some applicable statistics (especially given the post on Dvorak.) Here’s what a decade’s worth of mergers and acquisitions in the pharmaceutical industry has wrought in terms of new drug applications, according to the FDA: From 1998 – 2008, flat. There is no noticeable benefit in the number of saleable pharmaceutical therapies, despite the total growth of the industry, and its concentration in a few hands.

Pfizer put together, as the result of mergers with Upjohn, Searle, Warner-Lambert, Pharmacia, Parke-Davis, Kazakhstan, Australia, and the planet Saturn, the largest private R&D organization in the world. Their 2008 R&D expenditure was $7.5 billion. That’s right, they had an organization bigger than most corporations dedicated to working on things not yet proven to make money. This by itself looks pretty cool, but it seems that the real revenue – Lipitor, Viagra, etc – comes from acquisitions, not research. Smart is nice, but big is the real strategy.

And big may be deleterious to research organizations. According to Derek Lowe’s blog In the Pipeline – which is likely the best industry blog on the whole Internet:

First, of course, is sheer size. As I’ve said numerous times, I think that many things scale as a drug company gets larger, but research productivity isn’t one of them. If anything, it may go in the other direction. Pfizer is an excellent example of just what I’m talking about. If there were any reliable correlation of size to internal research success, this is where you’d expect to see it. But Pfizer has been notoriously unproductive in its own labs. Some of that has been sheer bad luck, but you can’t use that explanation to cover the whole problem.

Put simply, I think that really huge drug companies are a bad thing. A collection of smaller ones carved out of the same resources would probably explore more therapeutic avenues, and in a more nimble and focused manner. I also like competition in this business, because it keeps us moving, and because it leads to a wider variety of approaches being tried out for each problem. Mergers and buyouts have, I feel sure, not been good for the ecology of the industry, and Pfizer is the absolute champion of that style. Large and productive research organizations have disappeared beneath the waves because they had the misfortune of discovering something that Pfizer wanted to buy.

Strong words. And perhaps the trend for large R&D organizations may be coming to an end – even Pfizer is making noises that it will be cutting research expenditure due to the financial slowdown.

But that’s not the end of the culture of big. Pfizer’s looking at generic competition to Lipitor in 2011 and a thin pipeline despite the billions spent. What does that mean? Well, naturally, CEO Jeffrey Kindler is looking to do major acquisitions to grow revenues.

Big is a culture. It won’t change overnight, except in response to sharp financial pain.

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.”

The financial crisis in the United States illustrates this theme perfectly. Financial institutions were merging at an unprecedented rate, devouring already huge national banks until only a few savings banks, investment banks, and insurance companies remained. The international approach leaves managers little room to be creative or to make exceptional strategies. Once you are at a global size, you are less able than ever to adapt to a changing world. All these companies had the same goals and the same risk models. To obtain profits for their international stock holders, they felt obligated to balloon the size of the housing market – even though this ultimately destabilized the world economy. Presumably, smaller companies would have had the agility to choose different strategies in response to these unprecedented changes.

As a result, I believe the counter-trend of the next couple of decades will be SMALL, ENTREPRENEURIAL, and LOCAL. This is the opposite of many of the trends we have seen in the past decades, which is why I believe we are in such a critical moment in history. This point should be of particular interest to Koreans, since this change will have important implications for the chaebol system.

The pharmaceutical industry illustrates why small and smart companies may likely beat large organizations in the future. The past decade has seen unprecedented mergers and acquisitions in the pharmaceutical sector, making enormous global corporations like  Pfizer, GlaxoSmithKlein, and Novartis. The thought was that large corporations could combine their research and development budgets and make new, maybe even revolutionary drugs faster and more profitably. That simply hasn’t happened. New drug applications at the Food and Drug Administration appear to be unchanged since 1999. The strategy today, as a result, is to find small, innovative companies and to buy their intellectual property while it’s cheap. The implication is interesting -  it says that size is not the benefit it has been assumed to be.

What efforts should countries make home and abroad, respectively, in order to be a leading power.

The future of economic prosperity will be dependant on a number of social, economic, and political factors, but there are some characteristics that will make the winners of tomorrow.

INFRASTRUCTURE: A country’s infrastructure – railways, airports, roads, hospitals, electrical grids, telecommunications, etc. – leads the way for entrepreneurial companies to create new business. Look at Asia versus Latin America. The Western countries have moved significant portions of their manufacturing sector to Asia in the past twenty years.  The theory behind this is that companies wanted to take advantage of lower labor costs – after all, China is a long way from France and the United States!

But wait, if all America needed was cheap labor, Latin American countries featured low-cost labor forces, all of whom speak a language closer to English than Mandarin, and much, much closer. The difference was infrastructure – the port of Shanghai can process container ships in a few hours, while the ports of San Salvador can require WEEKS of wait time. Interconnected rail, roads, airports, and seaports made the difference in the economic fate of nations.

You can thus see the potential winners of the future today. China is investing 9% of its GDP in infrastructure. The Korean government’s “Vision 2030” program focuses heavily on infrastructure investment, which you can see in that it has the best Internet connectedness in the world (I believe.) Meanwhile, the United States is investing less than 2% of its GDP in infrastructure – and our levies are bursting (Hurricane Katrina) and bridges are collapsing for no reason (Interstate 35 in Minneapolis.) Europe is fixing bridges and building more high-speed rail.

Another part of infrastructure is EDUCATION. This will be particularly interesting in light of the trend in online education, which could bring all sorts of training to the developing world. We’re evolving into a knowledge economy, moving to higher value-added products. Education and job skill training will determine who will win and lose in the coming decades. Once again, I am particularly worried for the United States, which has been increasing the cost of education at a rapid pace without increasing the quality. As a result millions of our young people enter the job market with thousands of dollars in debt.

Also part of national infrastructure is HEALTHCARE. Since the population of the developed world is aging at such a rapid pace, success will come to those countries who can provide their citizens with good quality healthcare without overly taxing businesses and citizens.

What strategies and blue prints for the future should business leaders have?

ANY plan for the future would be nice. I think that a professional approach to foresight must be standard skills for every leader of business and government. I travel the world talking to executives, and it shocks me how few leaders are able to answer the following question: “What are three major trends in the world, and how will they affect your organization in the long-term.”

So I don’t have specific recommendations for future blueprints – I simply recommend that leaders learn how to make them.

What would happen in the global economic landscape when all the dust in the financial markets settles down?

My prediction is for an increase in trade barriers, slowing of globalization, and increase in national regulations.

Globalization is positive in the way it has increased prosperity and alleviated poverty – but the downside is that it is very hard to manage. We can trade together, but it quite difficult to manage multi-national problems such as global warming and the credit crisis because all leaders must answer to their own citizens, each with a special set of values and goals. The credit crisis has been particularly toxic, since so much of it began in the United States and its decisions about regulations in finance and housing. What do you do if you are affected by one set of decisions, but you can’t really influence them? I think the answer will be to insulate nations from the decisions of other countries, at least in the short-term.

What are the challenges for the new president of the United States regarding the financial debacle?

The challenge is to regulate while allowing innovation. It’s not fair to any one president -  an incredible task in the face of decades of policy that lacked foresight – but I believe the Obama Administration can set the stage for decades of success or failure in its reaction to this crisis.

Many American policymakers, unlike their Asian and European colleagues, have been operating under the assumption that private industry can act in its own interest with minimal guidance from national policy and regulation and that the result will be positive for both individuals and nations as a whole. The financial crisis shows that actually, companies can act in their individual interest and lead both individuals and the nation off a cliff.

The answer is NOT the establishment of giant national regulatory bureaucracies that remind us of Soviet-era politburos – it was a disaster then, it would be a disaster now. So this government has to strike a very delicate balance – it must set up a strong national economic and industrial policy, accompanied by regulators who can exact penalties on companies that commit transgressions. But it must allow those companies to be started quickly and easily and to choose innovative strategies, to keep the spirit of American entrepreneurialism alive and well.

I think the Obama Administration has a lot of work ahead of it.

Let’s say the America used to be the center of the world in the past and China would take over the U.S. in the future. What changes would the ordinary people on the globe experience in a world where China is the most powerful country?

First, it will be difficult to directly compare China directly to the United States in the post-Cold War era. The United States had an economic, industrial, political, and culture advantage in a way that might not ever be duplicated. The rest of the world has been developing economically in the meantime, and the United States is unlikely to disappear from the world.

Also, language will change how China can extend its power in the 21st century. English is currently the international language, and that is unlikely to change no matter what China does. There are already billions of people who use English as a first or second language.

What is your outlook on the Asian economies, including Korea?

One of the biggest issues is AGING POPULATIONS. Japan, China, and Korea all have unprecedented proportions of their populations reaching old age in the coming decades and an insufficient number of young people of working age to support social programs. This is no different than Europe and the United States, but both of those regions will benefit from more liberal immigration policies to attract talent workers. The future of Asian economies will depend significantly on the responses to this issue.

Otherwise, I’m interested to see how China will balance its rural populations and its newly urbanized industrial population on its east coast. The difference in the values and needs between both populations will cause much difficulty for the Chinese government, and there is already the spectre of unrest that threatens growth in the country.

Could you tell me ‘keyword of future’ that people need to know.

Entrepreneur. The future belongs to those who can create new businesses quickly in respond to rapid change. Nations need to create a culture and an infrastructure to encourage entrepreneurial activity, or these changes will appear very unwelcome.

The last question. Could you give some advice to Koreans as to what they must do to prepare for the future?

Maintain your national identity! The age of undifferentiated global brands and mass manufacturing seems to be coming to an end, and those who are thriving (nations and companies) have a competitive advantage because they do something very well that nobody else does. France still does luxury very well, as does Italy. Japan and Switzerland excel at ultra-complex manufacturing because as a people, they love details.

Besides if you give up kim chi, bulgoki, and tae kwon do, I’ll be very upset.

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.

The theme of 2009 and beyond is “Doing New Things.” After all, it’s not enough to describe which institutions (banking, media, governance, etc.) are breaking down – we’ve actually got to build new insitutions in their place. This is exciting – this is scary, too.

While you’re thinking about doing new things well, watch this great video from Tim Ferriss, author of The Four-Hour Workweek,” on how showing up and working hard is not enough when trying new things – there are special tricks involved. These are the kinds of skills we’ll need to master if we are to navigate so many changes in the years to come.

Again, stop whatever elese you were doing, like reading things I wrote about 2009, and read Jim Kunstler’s forecasts about 2009. The author of The Long Emergency is experiencing the unenviable task of seeing dire structural change ahead, change that won’t be mollified by new gadgets, and being right about its consequences.

Some highlights:

He’s not a fan of techno-solutions. (not unlike yours truly)

The various tech industries are full of MIT-certified, high-achiever Status Quo techno-triumphalists who are convinced that electric cars or diesel-flavored algae excreta will save suburbia, the three thousand mile Caesar salad, and the theme park vacation. The environmental movement, especially at the elite levels found in places like Aspen, is full of Harvard graduates who believe that all the drive-in espresso stations in America can be run on a combination of solar and wind power. I quarrel with these people incessantly. It seems especially tragic to me that some of the brightest people I meet are bent on mounting the tragic campaign to sustain the unsustainable in one way or another.

He sees Dow 4000:

A consensus in the blogoshpere says that the stock markets will rebound strongly during the first Obama months. This is possible just on the basis of pure “animal spirits,” but the Obama Bounce will occur against a background of continued dismal business and financial news. It will appear to defy that news. By May of 2009, the stock markets will resume crashing with the ultimate destination of a Dow 4000 before the end of the year.

He believes that you’ll actually need positive cash flow to make a business run (old-fashioned, but radical!):

We’ll turn around early in 2009 and discover that we are a much poorer nation than we thought because from now on credit will be extremely hard to get for anyone for anything. The businesses that survive will have to keep going on the basis of accounts receivable…Giant enterprises requiring giant loans to get from quarter to quarter will tend to not make it. Borrowing from the future will become a practical impossibility as past bad debts from previous borrowings continue to unwind, cease performing, and get written off.

Real change. Not new technologies for old philosophies. Nobody will save the day. We’ll need to make workable solutions for many different types of people.

And still – people will need things. Goods and services will be required, perhaps just different types.

Business development will need to be on its toes! Are you ready?

Next up on the bailout list: car companies, cities, healthcare, schools. I guess nobody’s business model is working very well, and now everybody needs money from the U.S. federal government, which of course is half a trillion in the red this year. Companies losing billions want loans from a government that’s losing billions.

I think that a lot of things are going to need a redesign in the next few years, to put it mildly.

Regardless, yesterday’s stars were the automotive CEOs who flew into to Washington DC to plead for the U.S. government to provide aid to its most important companies.

But wait, are they American companies? Chris Kelly at the Huffington Post provides an excellent bit of polemic, reminding us that Chrysler is actually owned by a $60 billion hedge fund called Cerberus Capital which owns, in addition to Chrysler:

A Japanese bank called Aozora
A Japanese real estate company called Showa Jisho
A Japanese golf course company called Kokusai Kogyo
An Israeli bank called Bank Leumi
A German bank called Handel und Kredit Bankhaus
A reinsurance company called Scottish Re, with headquarters in Bermuda
A British TV rental chain called Boxclever…etc.

This is a great point – we’ve spent decades making global capital so fungible, so fluid that it readily cross borders, ignores nationality, changes hands without making news. So can a corporation possibly be a national entity for which a certain government (and its taxpayers!) might claim responsibility?

If Chrysler isn’t a potent enough example, how about Citibank, which is getting “trouble asset relief” from the U.S. Treasury but is now is owned to an even greater extent by Saudi princes?

This begs HUGE questions. What is a corporation? To whom does it belong? What is the relationship between a corporation and the nation-states of the world?

If you’re in business today, and plan on staying in business through 2009 and beyond, these aren’t just philosophical discussions. This is your future. Give it some thought.

One of the most outrageous things I heard about this current financial crisis was that “Nobody could see it coming.” Early warning was written all over this systemic collapse – and people actively made fun of this view.

Watch this video of economist Peter Schiff and the ridicule he must endure for accurately predicting the systemic weaknesses in the economy.

Think about this kind of dynamic the next time you need to spread news of a systemic disruption in your organization.

At Competitive Futures, we’re thinking long and hard these days about what the next generation of leadership will need to look like. 2009 will feature a variety of new events, services, and dialogues around what we need to do to thrive in the face of all of these crises.

Just found a great way to describe the leadership mindsets of the different generations via Jessica Margolis, a futures-oriented thinker on this subject, and wanted to post her insights in their entirety. Go check out the whole thing.

As we transition to a kind of leadership that is equal to our challenges, we will need to enter into many such deep philosophical discussions.

KOOL-AID-ISM

Baby Boomers had Jingoism, and Generation X has Kool-Aid-ism.  For the Boomers, Viet Nam was the question:  Would you go?  Would you NOT go?  If you didn’t go, would you protest? Leave the country?  What is a hero?  Where are your national duties?  You may have relatives who served or even died during World War II; how can you oppose your government’s call to duty?

Generation X has had a similar pivotal issue:  Will you go to work in corporation?  Will you refuse?  If you don’t go, will you start your own business?  How should you support yourself; what role should your livelihood play in your life? What about your family? Where are your obligations?  How should you effect change?

“Drinking the Corporate Kool-Aid” is an expression often used to mean the degree to which an employee buys into the goals and objectives as stated by the executives in the firm they work.

The degree to which (US-raised) Generation Xers bought into to the framework of unfettered capitalism is as much a litmus test as the degree to which Boomers bought into the framework of unfettered nationalism. It even has the same polarizing issues: If you’re going to do it, do it right! (Be much more aggressive in Viet Nam; make a LOT of money in the corporate world.)  If you object to the powerful treating you badly, then you’d better not do the same thing yourself  (“Make love not war”; “First, do no evil”).

How funny that the tools and principles of foresight are coming into vogue, this time without even the mention of a flying car or a rocket pack.

Take my friend Jim Cramer for example, host of CNBC’s Mad Money, textbook definition of an extroverted personality, and one of the greatest fund managers in history. Even he’s doing it. Last night’s show was entitled “Don’t Assume – You Know They Say,” and in it he spent the entire half hour inciting his audience to challenge all of their assumptions about the global economy.

You know, CRAZY intellectual exercises like challenging your assumptions about the price of oil around the global (under $60!), asking if America will have an automotive industry, wondering if the United States will keep taking cues from Evo Morales’ socialist administration in Bolivia. To play with the different possibilities that come out of each tweaked assumption – it’s a good practice for everybody.

Wait, if all the television hosts start thinking this way, what will we do for a living at Competitive Futures? I suppose I’ll go back to playing Latin music and enjoying our new intellectual Golden Age. For the moment, I think I’ll keep showing up at work.

For sometime I have been saying that we’re on the cusp of a wave of interest in the long-term future that is not driven by economic bubble or apocalypse per se. The normal cycle is that people are interested in the future when we’re inventing new technologies and profiting, or when we think we’re going to nuke each other. This time, perhaps for the first time, we’ve got a mix of both: technologies will likely be influential, the economy’s a mess, the world is largely peaceful, the climate is changing, etc. People are finally interested in the future not as a gimmick, but as the only way to wise management of public institutions.

Pretty cool.

The most recent edition of Business Week has a great example of this emerging mindset. Michael Porter, the intellectual godfather of competitive analysis, has written an article that is desperately needed today: “Why America Needs an Economic Strategy.”

You should read this in its entirety, but to sum up, Porter says that America has a lot of valuable assets, and no plan whatsoever for long-term prosperity. The United States has a great science and technology engine, the best technology transfer in the world, and a still-vibrant culture of entrepreneurialism. However, we are hobbled by our lacking social net, a mess of a public health system, decaying infrastructure, and creeping neo-mercantilism in the form of giant corporations that distort markets. The only way out is to think long-term, from small businesses up to national policy makers.

We couldn’t agree more! Too bad the economy had to be smashed into flints before we could notice it, but better late than never.

Tim Powell, a colleague and expert in competitive intelligence, sees the financial crisis as a complete failure of scientific management. We use numbers all the time because measurement is better than superstition. Numbers aren’t perfect. but if we don’t restore confidence in these techniques, the whole economy will suffer.

When people—and I include institutions here, they’re run by people—can’t trust the numbers, they can’t trust the capital markets.  When they can’t trust the markets, they will not invest in those markets.  If they don’t invest in the markets, the markets will freeze up.  When the markets freeze, business can’t operate and will itself freeze—and that is exactly what is happening.

Without honest, quantifiable management techniques, our economy will look like the Soviet block – based on raw power, cult-of-personality warlord leadership.

Metrics can get onerous, but without them, we’re in the Stone Age.

We speak often about the need for early warning when it comes to business intelligence. Usually, after something really bad has happened, leaders say “Oh, if only we had known sooner. Let’s get more interested in early warning.” This is also accompanied by observations like, “This was a failure of imagination” and “we’ve got to think out of the box.”

I submit that most times, people don’t want to see the most important changes. Such tectonic shifts mean that precious institutions (and assumptions) might be shaken to their foundations.

For example, have you ever seen this chart of American credit card debt?

It matches housing prices perfectly, matching real economic growth for twenty years, then skyrocketing after 2001.

But these together, and you can clearly see the fundamentals of the American economy changing in a radical fashion. Something about the largest economy in human history changed dramatically, and nobody really stopped to make a comment.

If we want a prosperous sane economy and functioning government institutions, leaders have got to get serious about the deep philosophical and analytical dialogues that need to accompany these kinds of changes.

The last thing we want is to watch an even bigger catastrophe than the past month, followed by the all-too-typical chorus of “we should be interested in early warning,” and “nobody could have seen it coming.”

You can see it coming as long as you are willing to watch what’s really happening.

It’s time.

With everything that has happened in recent days, we here at Competitive Futures are really examining what we do as trend analysts.

Trends are the result of decisions human beings have made. Track them all you want – it’s the leaders that count.

What kind of leader are you? Are you thinking about the future?

Yes, it’s a marketing message for our firm, but more than ever we realize that the answer to those questions impact us all.

It’s amazing how shaving a few trillion off the global economy can change things. It can even completely flip your view of the world. Just ask Mark Penn.

Penn was brought to most people’s attention as Hillary Clinton’s chief strategist, for better or for worse. This probably isn’t a fair introduction to the man, since tenure as a campaign consultant was more due to his work as CEO for public relations giant Burston-Marsteller. There, he specializes in extremely granular market research, defining people by tiny variances in beliefs and purchasing habits. He refers to this as microtrends, saying that tiny movements within a demographic add up to real change. He points to professionals with tattoos, “pet parents,” and protestant Latinos as burgeoning interest groups who will one day cause larger changes.

Pretty reasonable stuff. The only problem has been his tendancy to declare “the era of the megatrend is over.” Penn’s last several years have been dedicated to pushing the notion that these microtrends have primacy over the megatrends, that megatrends were so 1980s.

This made me discount most of what Penn had to say, because to assert that macrotrends in society and technology wouldn’t change the future is horrible, horrible analysis. Water shortage, healthcare expense, immigration, surveillance technology, global warming, skyrocketing national debts, the list of 20 – 50 year macrotrends goes on, and all of them trump the fact that 30 year-old analysts in Mark’s office were getting back tattoos.

It’s been a long couple of weeks, of course, and the effects are readily seen. For example, now Mark Penn is trumpeting the effects of megatrends in today’s Politico. It seems the impact of a collapsing world economic system does reach as far as political campaigns. (That is, if you think that Obama’s lead in NORTH DAKOTA has any significance.) Yes, but Penn unfortunately covers his most recent view of the world with a Monty Python quote, “Nobody expects the Spanish Inquisition!” meaning that nobody could have expected the world economic system to collapse.

Normally, a Python reference would warm my heart, but this is just a cover for the fact that some people would rather study what kind of Starbucks coffee people prefer instead of  examining the underpinnings of our economic system.

Mark, since you’re now into megatrends ,check this out. There’s lots more where this came from:

And welcome to the club. We need a hand figuring this stuff out.

We’re testing out the nice folks at blip.tv to see how their flash players work.

In this spirit, here’s a clip about the future of urbanization:

It’s great to hear from Thomas P.M. Barnett, author of the Pentagon’s New Map, and one of the top thinkers on foresight in the world. This recent article posits that the current global credit crisis may be the first time we get to truly see the interconnected nature of globalization in action.

As always, the question will be: What new rules and rule-setting venues emerge? Because eventually they must. The Asian Flu didn’t do it, nor have any of the other more regional shocks since, but eventually you need some entities to emerge to monitor and manage these cross-border financial flows. This gap has been clear for many years, but as long as informal collusion among the largest economies has worked–just well enough–no one’s been willing to surrender the power. Maybe this perturbation, then, is really the one.

I agree. The terrorist attacks and wars have really been managed through nation-states, so the fundamental calculus of governance has not really changed. It’s not like the Chinese, French and Canadian militaries started Facebook pages to share data on al Qaeda – we mostly went back to our old system of armies and allies. (And perhaps this is why the results are so mediocre.)

This crisis is different. We’re all in this together, but there’s no government to look over these international transactions. And maybe we don’t want one. Or can’t have one. But maybe it would be useful. It’s complex. In any event, new institutions will be required, hopefully ones more adapted to current realities than old ideologies.

One of the greatest successes of economic development has been Mohammed Yunus’ Grameen Bank and its microcredit. Richly deserving his Nobel Prize, Yunus proved that market mechanisms work wonders in bringing people out of poverty, provided those mechanisms are on a human scale, encouraging connections and society cohesiveness.

Now, he says big economies need to follow suit. Check this article from Der Spiegel about how only capitalism can save the economy, but that modern casino finance must stop. At its root, businesses must exist for more than just profit.

Organizations have been talking work-life balance and social responsibility for some time. This economic crisis is upping the ante.

A phrase continues to run through my head: “The future called. It’s waiting to see what you do before it happens.”

It’s an interesting moment to be involved with the long-term future – a moment when most people are too traumatized to see past the next few days. My next book is about the psychology of the future – not just how to study the future, but why most leaders do not. A concept I am exploring is the two levels of fear in organizational thinking.

The first level of fear occurs when the status quo is threatened. This might be exemplified by the events of mid- to late September, when the first banks started to buckle due to the subprime mortgage fiasco. Then, people started to worry about their stocks, their retirements, their home values – they were worried, in general, that if we changed too far from the current system, it would do them harm. People become more likely to rally around current institutions, defend them from fundamental change, because there is potential, undetermined harm on the other side of that shift.

If things get worse, we encounter a deeper, more interesting second level of fear. This occurs when people sense their institutions themselves are the problem, and there is much greater probability of harm from doing nothing. Now, people are much more likely to seek new structures, new intellectual frameworks, new rules. This is when leaders can take action and improve – or dramatically worsen – a situation.

This brings me to a lovely moment this past Tuesday, where I had the pleasure of speaking before the International Association of Corporate and Professional Recruiters. These are the people who seek out the leaders of tomorrow’s organizations, often interviewing and selecting potential CEO candidates for their clients. Their international meeting was in Manhattan, on 48th and Park Ave. Next to Wachovia, JP Morgan Chase, Merrill Lynch, etc. The mood is grim, shocked, calm, worried, and in many cases, angry.

This emotionally and intellectually charged atmosphere led to one of my favorite speaking events of the year. It was a great opportunity to speak before people who were interested in hearing about the challenges of the future, AND about what they could do to pick leaders with the appropriate mentality for those challenges. I could tell these executive recruiters, not to mention most of New York City, was open and willing to see how our institutions could realign with the future, to create a more just, prosperous humane world.

All this, followed up by world-class restaurants and guitar shops. Despite the crisis, I STILL love New York.

Think about the leaders we need for these challenges. Then, be those leaders. Or at least think like them.

This is how I’m explaining how futurism fits into strategic planning these days. Click for a bigger image.

Any thoughts?

-Garland

Any reason to get out of Washington’s recent slush-and-ice storms would have been a good one — but I
got to head for sunny Southern California for a great reason. February 27 was the annual meeting of the Association for Strategic Planning, a group dedicated to strategic management, vision, and leadership in general.

I have only one complaint: I didn’t get to spend enough time with everybody. What a fascinating group of people.

Here are some of the many ideas floating around in the conference, in no particular order:

• As much as people talk about strategic planning, they don’t always actually plan. (See Tanaia Parker and enterprise architecture for more)

• Having a decisive, aggressive strategy can lead to fantastic success, and also, total annihilation. (See Michael Raynor’s interesting new book The Strategy Paradox)

• TRIZ, a Russian methdology to solve engineering problems, can be applied quite cleverly to solving strategic issues — people love to take nebulous questions of strategy and use a rigorous methodology to understand them.

• People love getting together to discuss strategy with other professionals – there aren’t as many forums for this kind of thing as you’d think.

• Lucky for me, people still want to talk about THE FUTURE.

Now, time for our next stop on the Future Inc. tour…

-Garland