Posted: January 20, 2009

Fourteen future trends for business in 2009 and beyond (Part 2)

Global shifts will cause a new social order to emerge

By Thomas Frey

(Editor's note: This is the second of two articles offering seven business predictions from the senior futurist of the DaVinci institute. Click here for the first installment with the initial seven trends.)

To a futurist, the chaotic nature of interconnecting trends and the extreme possibilities appear at times like a spinning compass needle. The disarray that we find ourselves in cries out for answers — a view to the unchartered waters that lie beyond the horizon. I'll give it my best shot.
 
Battle of the alternative energy sectors
Even though big oil has taken a beating in the press, and an army of innovators are working overtime to develop alternatives, oil remains our most important energy source, the lifeblood of the American economy.

However, the push for alternative energy has only begun. Over the coming years, alternative fuels will expand exponentially, moving into additional areas beyond energy production, into energy transmission and energy storage. Legislators will attempt to legislate change and innovators will attempt to innovate change.

In the area of production, the familiar alternatives of wind, solar, biofuels, geothermal and hydrogen will continue to jockey for position. But while each is battling for market share, Hyperion’s home nuclear reactor concept could emerge quickly from underdog status to give a fresh new face to nuclear power.

In the area of power transmission, the smart electric power grid will dominate early discussions. But look for wireless power concepts to build momentum as the nation wearies of its unsightly transmission lines, regardless of how smart they are.

Energy storage, on the large city and regional scale, is surprisingly absent from our playbook. State-of-the-art science involves pumping water to a higher altitude lake during off-peak times and letting it drain down through hydroelectric generators during peak times. Look for a new surge of innovation to occur in this area over the coming years.
  
Two wars
Contrary to what many had hoped for, the wars in Iraq and Afghanistan will not end soon. Both countries went through a tremendous brain drain when the wars began, with prominent citizens and working professionals moving temporarily to other countries waiting for stability to return. Their plan was to return home once the country regained stability.

Problem is stability has taken far longer to return than anticipated. Ex-patriots are growing more comfortable with their new digs and news from the war zones is not encouraging.

This leaves both countries with a catch-22 problem. The most talented people won’t return until the country is safe, yet at the same time the right people are not available to build a stable, credible government.

The Obama teams will attempt several new plans of action in hopes of stabilizing the new governments. But in the end, the most stabilizing force in both countries will be the announcement of long-term U.S. involvement, such as setting up permanent bases.
 
Feeding frenzy
The proposed US government stimulus packages will cause a massive feeding frenzy to occur as money gets released in Washington, D.C. Not only will we see lobbyists and politicians jockeying for position to feed their constituencies, but virtually every organization in the world will set in motion some angle to position their grasping hands under the trickling flows of money.

While the allocation of funds will happen quickly, the distribution of money to actual recipients will take years to complete. These vast amounts of cash will infect many with greed, and an outbreak of rationalizations is bound to follow. Expect to hear comments like: "Hey, there was over a trillion dollars in play, and I only wanted an insignificant million dollars."

The size of available money will also inspire countless conspiracy theories, both real and imagined, along with countless incidents of graft and corruption. Unlike FDR’s New Deal of the 1930s, today’s society clicks to a far faster metronome, and the public mindset operates with a far looser morality. Checks and balance systems will be difficult to monitor as the courts begin to fill with unscrupulous people caught with their fingers in the cookie jar.
 
Severability
The current economic turmoil has given us strong signals that our current debt load has become unmanageable. The stimulus packages seem to indicate a general effort to inflate our way out of this problem, making past debt relatively small in comparison to the value of future money.

Individual countries are tightly interwoven with their financial institutions and many are now taking extraordinary measures to shore up their currencies and teetering banking systems. In doing so, several are now on the brink of a national bankruptcy. Since we’ve had little experience dealing with national bankruptcies, we have a poor understanding of the global ramifications. But rest assured, no country wants to find themselves in this position and will take extreme actions to prevent it from happening.

As a result, many large multinational financial companies will begin to shift some of their riskier divisions or portfolios into separate companies, and base these companies in small countries to both sever responsibility and transfer blame. Portfolios will be “sold” to newly created companies, and some may go so far as to create these companies in newly minted nation states. In many cases, this approach will be mandated by the host country as a measure to protect its own people.

{pagebreak:Page 1}

Speed of government
The U.S. government, as in most countries, has been designed to react in a slow and thoughtful manner. Many governmental agencies have built-in processes and planned delays to slow the rate of change. But widespread governmental foot dragging will soon end.

Unlike the “turn-out-the-lights-our-office-is-now-closed” approach to running agencies, staffers and department heads will be placed “on call” with teams working 24/7 schedules as government syncs to the needs of business and other global demands.

Not only will we see a host of new early warning systems with real-time tracking of economic indicators, but virtually every level of government is being primed for a top-to-bottom “efficiency overhaul.” Huge opportunities await the companies that can provide the right solutions here.
 
Total collapse
A sufficient jolt from the national defibrillator on our aging society's heart might get us going again, but we run a risk approaching 80 percent for an economic meltdown. We won’t know the actual shape and form of the collapse until it is already upon us.

The word "collapse" has some very ominous overtones associated with it, but think more in terms of it being a "managed collapse." The world doesn't end. Rather, it changes abruptly.

One of the more extreme scenarios has a number of smaller countries declaring insolvency. With the interconnected nature of our global society, an accelerating domino effect could collapse nearly every economy in the world in a matter of weeks as nations hit the panic button.

In this scenario, the result will be a two-to-four week shutdown of all banks and monetary systems as global leaders convene an emergency session and create a plan for emerging from the disaster — unchartered territory indeed.

Unlike economic disasters of the past, our current global infrastructure demands a far more rigorous level of attention and involvement. Without a fluid monetary system in place to keep all of the balls in motion, we invariably create treacherous stumbling blocks that will force change with or without our blessing.
 
Creating the new normal
After the stimulus money is spent, perhaps the most daunting task will be to establish a new standard for what it is to be “normal” again. Investors are confused by a directionless Dow Jones that swings erratically 1,000 points from day to day. Regaining a sense of value in a post-stimulus economy will be challenging.

Over the years, we have seen a growing number of companies add “infraction fees” to the bills we receive as consumers. These range from late payment fees, to over-limit fees, to inactivity fees. Because of this constant barrage of fee assessments, consumers have become very wary, and frankly, tired of living under these conditions. When government turns a blind-eye to corporate abuse, it destroys consumer confidence and destroys system confidence. Over time it erodes our ability to discern right from wrong, and our capacity for making good decisions. Freedom means little when we feel like victims.

Few tears are shed when a bank collapses because most people on the street see it as justice for a corrupt institution. Cannibalized bank accounts leave a lingering, long term animosity from people who number in the millions.

The notion that companies have free rein to penalize their customers for bad behavior is consistent in a world that rewards a widespread breach of ethics and principles.

Until recently, the phrase “bank on it” was a term that translated to an assumed confidence in institutions. That phrase is in danger of extinction. A return to normalcy is not possible without meaningful change, change that is reassuring to shaken investors and depositors. Standards of practice need to reflect attention to re-establishing integrity and ethics. Perhaps what is needed is a standard bill of rights for people doing business in the new economy.

We now have a colossal need for global system architects, a job title reserved for the anointed few; people with unparalleled vision, wisdom, and determination.
 
But unlike many of the doom and gloom forecasters, I see the coming turmoil as a golden age of opportunity for the world.  We will have the chance to experiment with new systems that in the past would have never been possible.

Ultimately, we have the opportunity to emerge as a far better world.

{pagebreak:Page 2}