here.
The Boston Consulting Group recently produced a report on the Rapidly Developing Economies (RDE's - a new acronym). It defines a group of 14 countries, accounting for 17.6% of world GDP in 2006. These countries are growing trade with each other fast - for instance trade between China and India grew 38% in 2006. And the report points out that if China's exports grow at the current rate, it will be the world's bigest exporter in 2008. The full report can be found on the BCG site at: http://www.bcg.com/impact_expertise/publications/files/Global_Challengers_Dec_2007.pdf .
An introductory presentation on scenario thinking, as given to the APM Forum of NGOs, can be found here. The questions posed to the forum on views of the future provoked an almost 50/50 split af agreement and disagreement - we would be interested in your views, to futureviews@samiconsulting.co.uk.
November 2007
Some thoughts about emerging issues, from SAMI Fellows:
At the European Futurists Conference (http://www.european-futurists.org), one of the topics for debate was the future of intellectual property in the digital age. Germany's success in chemicals was over a period when Germany did not actively use patents - what is their role in a time of high innovation? Does digital change the questions as well as the answers? The European Patent Office (http://www.epo.org) has developed a set of scenarios that explore these issues, though a number of people at the conference felt that they were not radical enough.
A thought provoking video, "Shift Happens", highlights, from a US point of view, the comparators with China and India, and also the burgeoning expansion in knowledge and in technology capability. We can't claim any credit for it but found it a useful set of perspectives. http://www.albinoblacksheep.com/video/shifthappens. Your comments welcome as ever.
I have been asked to present at the 2nd Annual Conference on Stress Testing. Stress Testing is the term used in the FS industry for their use of futures and alternative scenarios, particularly in relation to risk management under the Basle II requirements. The topic is Data Analysis - the use of expert judgement and statistical analysis, building and implementing scenarios and models and integrating different risk types. The topic is very timely - would data analysis have prevented the sub-prime crisis? Or did we need hypothetical thinking? The presentation is on the SAMI web site here. (Powerpoint 0.5Mb)
May we wish all our friends and colleagues a very Happy Christmas
October 2007, no eVECTOR, hard copy circulated. (pdf avaialable on this site soon)
September 2007
After the summer break, three short papers to stimulate the brain cells.
To start with, the first of an occasional series that looks at some of the unexpected consequences of current trends. Here SAMI principal Martin Duckworth considers the future of electricity prices in a carbon-constrained world.
Second, a provocation by SAMI Associate Dr Malcolm Cooper on what should have been covered by IT in 2057 - if as a result of reading this you would like to see the DVD of IT in 2057, it can be ordered from the BCS web site www.bcs.org.
Did you see “The Full Monty?” The film starts with a scene from a promotional film from the sixties, extolling the virtues of a booming Sheffield. At that time, the city was a prosperous industrial cluster based on one high-tech industry – steel. The scene then cuts to twenty years later, showing a derelict and deserted former steelworks. Could the same thing happen again – but with different industry in a different town? In this opinion piece, Martin Duckworth has some thoughts on the asset price cycle.
August 2007, no eVECTOR
July 2007
This issue of eVECTOR looks at three aspects of using futures thinking to make decisions.
Colin Fletcher, SAMI Fellow and Gill Ringland, SAMI Fellow, recently worked with Think London to brief a breakfast meeting of senior business advisers, to look at the priorities for Think London over the next decade. We presented the major trends affecting London over the next ten years and asked where surprises might come from. A summary is here.
We were asked recently whether there was evidence for the usefulness of futures thinking. A study of 886 organisations found that planning style was indeed linked to performance, but that visioning without it being carried into the organisation was counter-productive. The paper in Long Range Planning looks at the empirical evidence linking company performance to various styles of planning; see the reference in the summary here.
Black Swans are highly improbable events with three characteristics: they are unpredictable, they carry a massive impact, and after the fact we concoct an explanation that makes them appear less random and more predictable. The short note here explains how scenarios reduce the frequency of unpredictable Black Swans and reduces their capability to surprise an organisation
June 2007
This eVECTOR covers two approaches to capitalism - a report from a conference on American capitalism, highlighting the development Al Capone style of capitalism in Russia and Eastern Europe (rather than the Milton Friedman style of American capitalism) - and a review by Adrian Davies of a Harvard Press book "The New Capitalists".
We also include an update on the Future of Services to the Public project and a link to the recent VECTOR containing the background to the project
Finally, a review of "Resonant Leadership" by Richard Boyatzis and Annie McKee; containing a rallying call by Goethe
‘‘What you can do,
or dream you can,
begin it.
Boldness has genius,
power and magic
in it.’’
April/May 2007
No eVECTOR because a paper version was circulated. See Vector May 2007
March 2007
The City of London held a seminar on London's Competitiveness, at which the topics were the Global Financial Centres Index, London's Place in the UK economy, and SAMI's Scenarios for India and China to 2015: Implications for the City of London. Pdfs of the reports can be found on the City of London web site, http://www.cityoflondon.gov.uk/.
SAMI Principal Dr Wendy Schultz has won the award for best paper in "Foresight" in 2006,
on "The cultural contradictions of managing change: using horizon scanning in an
evidence-based policy context", Vol 8 No 4. The main point of the paper is to point out that there is a cultural
contradiction between horizon scanning and traditional research. Traditional research looks for consensus, is mostly
mono-disciplinary and theoretically grounded. Horizon scanning for emerging issues is based often on one or two cases,
and experts will often violently attack reports of emerging issues of change, as they represent challenges to current
paradigms and structures of expertise, power, and entitlement; are often noticed initially by fringe sources and
challenge previous theoretical structures, forcing the construction of new theories. This cultural contradiction
is one of the reasons that organisations - whether public or private sector - find it hard to react effectively
to the results of horizon scanning.
The conference on "The Future of Services to the Public" will be held on 14th May.
The focus of this will be the future around 2025. By this time, the post-war consensus on welfare will be under severe
strain due to demographic change and to the increased capability (and cost) of potential health care measures.
So the futures considered need to include radically differerent societies while exploring the question -
what is the core role of the state?
For more details email us at fsp@samiconsulting.co.uk.
John Reynolds gave a presentation at the Richmond Group on "Resilence in
Corporate Planning", the slide set can be found on the SAMI web site, http://www.samiconsulting.co.uk/saminews.html.
February 2007
This month, risk in financial services, climate change and the future of
services to the public.
The FSA, in its Financial Risk Outlook 2007, identifies a benign central scenario
for the UK economy. In addition to the Central economic scenario they consider the likely impact of three plausible
Alternative scenarios on firms and markets, consumers and the financial services industry. These scenarios are derived
from underlying weaknesses or imbalances in the global economy that increase the downside risks to the central projection.
The Financial Risk Outlook can be found at http://www.fsa.gov.uk/pubs/plan/financial_risk_outlook_2007.pdf
LLoyds have published an excellent guide to the implications of climate change for the
insurance industry - as they say "We have created the Lloyd’s 360 Risk Project with one aim: to generate discussion on how
best to manage risk in today’s business environment. By tapping into the concentrated expertise and knowledge within the
Lloyd’s market – and bringing together the views of experts from the insurance industry and the wider business, political
and academic worlds – we want to stimulate practical, thought-provoking discussion about the issues that matter."
The details can be found on their web site http://www.lloyds.com/News_Centre/360_risk_project/
We are working with a number of partners (Acevo, CBI, CIPFA, ICAEW, Learning and Skills
Council, LGA, National Housing Federation, NHS Confederation, TUC) on a project to get a view if the Future of Services to
the Public through to 2025. If you are interested in details of this project please email us at fsp@samiconsulting.co.uk.
I was recently lecturing at a UNIDO event for Eastern European and Russian organisations,
and took some time to get their views of the future - some of their thoughts are on our web site
at http://www.samiconsulting.co.uk. One of my favourites was "the only certainty about the future is its uncertainty",
another is "The future belongs not to the strongest but to the fastest"
January 2007
This month, an article in the Financial Times Magazine on Saturday 27th January 2007 discusses the ways in which organisations use futures work.
The article may be found on ft.com. One example of successful use of scenarios quoted is that of MAN Group, and the full case study can be found here.
The Financial Services community in Europe is well advanced in taking on board risk assessment as specified by Basel II. We are particularly involved in the use of scenarios to extend the range of risks taken into account.
As a result of several assignments and conferences, we have realized that the word scenario has developed a different meaning in the financial services/Basel II environment from many other uses in corporate life.
In the Basel II world, a scenario is often related to a single event, and colloquially, we find that event triggers are often described as scenarios.
We also notice that events are described as historical or hypothetical, with the implication is often that hypothetical events should not be discussed.
As strategists we always comment that: first, historical events if repeated now are likely to have a different effect than the same event in the past, due for instance to differences in social attitudes to debt or bankruptcy;
secondly, in a time of change it is important to anticipate future events.
A number of organisations agree with this approach, others base their analysis purely on historical events.
eVECTOR last month lost the links to two papers: one by SAMI Fellow Colin Fletcher on the Potential effects of Climate Change on Property Portfolios, and the other by SAMI Fellows Mike Owen and Colin Fletcher on The UK Chancellor’s Pre-Budget Report. Please follow the links to read either of these.
SAMI Fellow Oliver Sparrow has been giving a two day course on Building Resilience into Corporate Planning Processes, to audiences from Doha to Latin America.
The outline can be found here, and we are happy to discuss audiences for which this – or a derived event – could be beneficial.
And, we are delighted to welcome two new SAMI Associates –
- Professor David Cheesman, who has joined us after a distinguished career in the Civil Service, where he was most recently Head of Policy, Research and Statistics at the Housing Corporation;
- Bill Ralston, well known as a scenario planner from his time at SRI, and author of the recent “Scenario Planning Handbook: Developing Strategies in Uncertain Times”.
December 2006
Happy New Year! and apologies if you got a blank test message earlier
Three short ideas to provoke thought as we start 2007:
The Stern Report has highlighted the costs of climate change –
but did not consider the potential effects on property portfolios.
SAMI Fellow Colin Fletcher discusses the threats here:
Comment on property prices and climate change.
The UK Chancellor’s Pre-Budget Report is based on a number of linear assumptions –
on climate change, transport, and the global economy. SAMI Fellows Michael Owen and Colin Fletcher
argue for a scenario approach to explore he uncertainties – as in the City of London Report
"Scenarios for India and China 2015: Implications for the City of London".
see their arguments here: Comment on Pre-Budget Speech.
The International Energy Agency (IEA) created Scenarios for Global Energy in 2050.
Gill Ringland has critiqued the scenarios for the January issue of Gas Matters,
in an article which suggests that by 2050 one of the few certainties is that some of the
rules of energy supply will have changed – whether due to the changed global economic order,
existing technologies, new technologies eg biological, and changes in consumer behaviour.
The article is available from j.elkins@gas-matters.com
Footnote
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