Enter the age of anxiety
Now let
me repeat a phrase that I have frequently
heard spoken. People are saying to each
other, particularly in the City of London and New York, ‘if the times are
so good why do we feel so bad?’ This is when the stock markets
have been
averaging 40% compound growth. There is no possible reason why people should
feel so pessimistic about the future. And then, as you will all remember, a
famous film –Titanic was released. $200 million was spent on making the
film, and the producer was very nervous when the film first came to the
market. He could not see how he could get an economic return on his
investment. We assured him that he would get an exceptional return on it,
because the theme was about ‘anxiety’. We were proven correct
when the box
office netted over one billion dollars!
And it is
amazing how this world, despite the successes we’ve enjoyed over the last
decade or two, has a terrible sense of foreboding, or anxiety, about the
future. This is because the future today appears so uncertain to us all.
My challenge is to give you a glimpse of what I believe the future may be.
And my talk is going to be provocative. I don’t pretend that we understand
the future any better than yourselves, but at least we’ve thought about some
frameworks, and I’m going to share these with you today.
Ralph
Waldo Emerson said: ‘This time, like all other times, is a very good one if
we but know what to do with it’. I think our current situation presents
an enormous challenge, particularly to the new generation coming to work in
the City. How do we exploit the opportunities that present themselves,
because they are so bewildering in scale and quantity? Will London be on the
vanguard of change, or be left out in the cold? The answer is surely in your
hands.
Change in the rate of change
I’d like
to journey back 30 years to a moment in time when a famous futurist, Alvin
Toffler, published a book called Future Shock. He stated in that book ‘there
is change in the rate of change’. Now today that sounds perfectly
obvious, but believe me, when he came out with that notion 30 years ago it
was a revelation. And interestingly, as we come to the very last weeks of
the 20th Century, we’re beginning to say
that there’s not only change
in the rate of change, but a confluence of all change. It is not just
changes in technology, or economics, or politics or the social agenda. It
seems to me that there is change occurring in every dimension of society
today. And it is the interaction of these changes that’s producing the very
dramatic effects we observe on the stock market and elsewhere.
Let me
give you some illustrations of the extent of change. In the last ten years
$750 billion of new wealth has parachuted into Seattle. Just think about
that. This is partly due to the Microsoft phenomenon - accounting for $300
billion worth of new wealth. Now we hear that Yahoo! is capitalised at the
same price as Unilever. Wealth is beginning to appear from areas that we
never even conceived of before. It is not about displacing production in
Asia or in Africa or in Europe. This is entirely new wealth, the sort of
wealth that we’ve never experienced or seen before. And that really does
give us some food for thought.
At a
technical level, the rate of progress is even more daunting. I don’t know if
any of you have recently bought a singing birthday card, but it costs you
about £3 in the UK. After the birthday celebrations are over and you
throw that card into the waste paper basket, you’ve disposed of the same
amount of computing power that existed in the whole world in 1950. That is an
extraordinary revelation. Again, if any of you are lucky enough to own a
BMW Seven series, you’ve got as much computing power on board in that car
today as the Apollo 11 spacecraft needed to land the first man on the moon.
And if you extrapolate these trends forward, in seven years’ time we predict
that a regular household dishwasher will have as much computing power as the
Apollo 11. This presents detergent suppliers with an entirely new
challenge!
With
these developments in mind, let me welcome you to the Trillennium. Let’s
rename the next decade as the beginning of the Trillennium, not the next
Millennium. Why? Because I anticipate the first Trillionaire prior to 2020,
and the first Trillion dollar corporation, too. I doubt that Bill Gates
will be the first Trillionaire. It is more likely to be a spotty youth who
hasn’t even finished school yet. But he or she will be the beneficiary of
the most important force of the New World – the law of increasing returns,
made possible by global connectivity. We are indeed heading towards a new
epoch, not just a new Millennium!
Exploring an uncertain future
My thesis
in today’s lecture is that we are entering a point of major transition, the
like of which is only seen every five hundred years. You have to look back,
in our view, five hundred years to see anything as consequential as the
current changes we’re experiencing. It was five hundred years ago that the
European Renaissance took place - a time during which great thinkers like Da Vinci and Machiavelli
came together. These people collectively altered
the shape of society in the space of little over fifty years. The outcome
was the invention of science, economics, medicine and the current industrial
age.
And
again, one of the fascinations of the Renaissance period is that it wasn’t
just the individuals who had those great thoughts, but it was the
communication of those thoughts that created a revolution. In
particular, it was the Gutenberg printing press that enabled new ideas to be
conveyed to the masses, not just the clerics. In today’s language, the
Internet looks remarkably like the Gutenberg printing press on steroids!
Slightly
facetious, but there is an important point here. Transformations are often
enabled by technology. However, it takes great thoughts and great people to
change society in a way that we believe society is being transformed today.
At SRI,
we worked with Shell in the seventies to develop a tool to explore an
uncertain future – scenario planning, which Gill Ringland writes about in
her excellent book. The value of scenario planning is to examine all
possible outcomes of the future, not to actually pinpoint one particular
outcome. Scenario planning creates a set of plausible alternatives within
which the future is most likely to transpire – often described as the window
of uncertainty. And to carry out scenario planning one has to look at all
the different dimensions that influence the structure and shape of that
future.
These
dimensions include policy, economics, the social agenda and technology -
PEST. We believe that these are the main drivers that will shape tomorrow’s
society. And given that we are at a major transition point, a five
hundred-year delta, it is appropriate to ask what may happen to each of
these critical elements. By doing so, we are able to see more clearly how we
might work and live, particularly in the City of London, in the next 20 to
30 years. So I’d like to share some of our ideas with you about these key
dimensions of change.
Technology – becoming connected
Let’s
look first at information technology. IT is having a profound effect on
everything we do. I mentioned the greeting card, but there are so many
different aspects of our lives today that are influenced by IT. The
important driver in the next 20 to 30 years will be ‘connectivity’, because
that’s the most valuable benefit IT gives us. It is the ability to connect
across the world, across communities, across society, in a way that could
never have been imagined a hundred years ago. The telephone itself is well
over a hundred years old.
And it is
quite interesting that when the mayor of New York was first shown a
demonstration of the telephone by Alexander Graham Bell, the Mayor said:
‘Well, this is an absolutely fascinating device but what could I possibly do
with it?’ Graham Bell responded: ‘Imagine that if we could have many such
telephones, you could talk to people in other cities across the United
States’. The Mayor was surprised by Bell’s logic. He responded: ‘why would
I want to do that? I don’t know any people in other cities ’.
What
comes first, the chicken or the egg? Connectivity gives us the ability to
communicate across the world. But why do we communicate? Because we have
friends in remote locations. And today, it is the extraordinary capability
of the Internet itself that sets the standards by which we communicate. We
have an emerging language ‘formerly known as English’ which is becoming the
language of the Ethernet. Whether you’re in China or Japan, London or New
York, this language enables you to communicate together. The fascination
for us all is not just communication between people; today there are about one billion telephones and 200 million PCs in the world, but there’s six
billion microprocessors. The real interest is to contemplate how embedded
technology will create even more complex and powerful networks than the
inter-personal networks that we’re all so dependent on to today. And what of
the other factors at work?
Social agenda - The consumer takes
control
There are
four simple words that continuously reappear when one considers consumer
aspirations in the new social order. To Go, to Be, to Do and to Know.
One is to
Go: despite advanced communications technology we still want to
travel. We want to experience so many different things and we’re now
beginning to talk about entering the ‘experiential economy’. Well done, BA,
on the adoption of this word for its new airline.
We want
to ‘Do it’, just as the Nike advert says. A whole new generation of
consumers are just ‘doing it’ by wearing the Nike swish sign. What they are
really doing is confronting all the institutions that would dearly love to
tell them what to do – parents, teachers, and employers.
And, most
importantly, we want ‘to Know’. The Internet gives us almost infinite
access to knowledge and to information, as well as an ability to carry out
transactions – anywhere, anytime, any-place. We want to shop, communicate
and learn electronically through the Internet. In time, we will want to ‘Go
Virtual’.
We also
want to ‘have fun’. I think the most interesting new concept to emerge from
recent work is the ideology of ‘having fun’. We are working for one of the
world’s largest toy manufacturers, who intends to bring fun to the work
place. And I think there’s a serious thought behind the concept of having
fun. When you wish to be at your most creative you need to have fun.
Children are very creative and very innovative, and they have fun being
innovative. I think we as adults have got to go back to our own childhoods,
and we’ve got to learn to have fun again. London in 2020 should be a ‘fun’
place to ‘be’.
Economics – based on intellectual
property not physical goods
Economics
is the primary driver behind social and political order, defining the
principle sources of value in society and the mechanisms for its
distribution. With the five hundred-year delta in mind, what will be the new
economic model to replace the industrial age? How will this differ from
today’s concepts of material wealth and well being? Most political regimes
of the world are based on managing the disparity of material wealth – I want
what you have got: I vote Labour, or I don’t want to part with my material
possessions: I vote Conservative. Many of us talk about the information
economy, and we know that the industrial economy is gradually coming to an
end, but do we have any idea about what the information economy is based
on?
I’d like
to share with you a particular view of the new economic order. And I’ll
start by introducing a popular American word, ‘stuff’. In the US everyone
talks about his or her ‘stuff’ – good stuff, really nice stuff. And we’ve
become extremely effective over the last hundred years in producing more and
more stuff. So much so that the poorest households in North America today
have as much stuff as the average middle class households had in 1971. They
all have their refrigerators, washing machines, cars, toasters, etc. And the
better and faster we become at producing new stuff the more difficult we
find it to sustain differentiation.
One major
furnishings company has a campaign to make the garage the new ‘decoratable’
space in your house. And you have to ask yourself: what are they trying to
achieve? Most of us today spend much of our domestic life in the kitchen.
20 or 30 years ago a kitchen was a scullery, no one would ever dream of
spending time in the scullery. Today the kitchen is the most popular room
in the house, and certainly the most highly invested in terms of technology
and decoration. So now corporations are looking for new frontiers: the
garage becomes the new decoratable space! That may sound farcical today,
but I’m sure that in 10 or 20 years’ time we’ll be spending most of our time
in the garage.
Where
does the material rat race end? In the West, we’ve all got enough stuff to
keep us happy for several lifetimes. Do we really want more? And the
interesting aspect of stuff is that whatever Sony produces in the laboratory
this week, Philips or Panasonic will be able to produce next week. In a
sense the world has become a giant copying machine, and there’s almost no
possibility of sustained differentiation in producing better stuff. Thus the
value crisis for companies in the fast moving consumer goods business.
So the
big corporations are asking:
How do we sustain our value in a world that has
become a giant copying machine? How can we generate new value for the
shareholder in this highly competitively, highly tuned production economy?
I recently talked with the CEO of a major oil company, and he had to admit
that the fuel that his company puts into your tank isn’t a million miles
different from the fuel that you’d receive if you went to a Shell or a
Texaco filling station. There is absolutely no difference in the base
product. And so many of our major industries, both production and service
based, are being commoditised. The real question that chief executives are
asking themselves is:
How do we escape from this commodity trap? Because
there’s little value left in producing yet more stuff.
The fact
that Yahoo! has reached the same market capitalisation as Unilever must shed
some light on this dilemma.
Give Me What I Need
The key
question facing us as we enter the 21st century is that if the
production economy loses its current organising role, what will take its
place? I’m going to describe a concept that we’re developing around
intellectual property. And I don’t refer to rare manuscripts in the British
Library. I mean knowledge of your personal styles, your tastes, and your
individual characteristics. That’s your own intellectual property: where I
want to go on my holiday, what music I like to listen to, how I like to
spend my leisure time. That’s becoming increasingly valuable information.
And the interesting thing is that such information could be harnessed to
help us better understand how to be, go, know and do.
Let me
just give you an example of some work we’ve recently done for a US bank.
They have an enormous customer base: several million accounts. We suggested
to them that they identify those customers who have moved house more than
twice. The Bank did a lot of digging into this segment of their customer
base. It is a relatively modest population in terms of numbers, but what
they found was that, typically, after six months, such a house buyer
exhausts every line of credit, with the installation of a new kitchen,
landscaping the garden, repainting the house or whatever. And it is a very
visible group.
So five
months after a move, we suggested that the Bank rang its customer up and
asked ‘How would you like some more credit?’ The customers couldn’t believe
it. They were so excited; they said: ‘how did you know? Of course we’d like
some more credit.’ And, believe it or not, that has become the most
profitable, the safest line of credit this Bank operates today. It is all
about anticipating need. Everybody wins!
It is
also about providing you as individuals with more information, more insight
into your own interests and habits - ‘Help me better understand myself
through my interaction with you’. And again we’ve done some fascinating
work with Sony in New York in their CD superstores. The problem with one
Sony store was that Virgin opened up just one block away offering CDs at a
12% discount. Now, there really wasn’t much that Sony could do other than to
drop its prices. And that was pretty bad news because they were only just
breaking even. We offered to create a different value proposition. We worked
with Sony Inc. to create a multimedia booth where you can walk in and the
first thing you hear is a computer voice that asks ‘tell me a particular
recording artist/musical artist that you’d like to listen to today’.
Trying
out the booth on a sultry New York summer afternoon with lots of attractive
young women wandering by, I remembered my student days and said: ‘I’d love
to hear The Who live at Leeds’. I hadn’t heard that record for probably 20
or 30 years, and when the music came wafting into the booth, lots of
memories flooded back. As the music stopped, the voice asked ‘would you like
to hear another artist?’ I chose the Steve Miller Band, and then Eric Clapton – all from the seventies era. This went on six or seven times until
the voice said ‘Would you like to know which artist influenced four out of
those six people you’ve just listened to?’ And of course I said: Cool! – in a
true American accent. It turns out to be a guy called Chess Atkins whom I’d
never heard of in my life. But guess what? When I walked out of the CD
store I was carrying three of his albums. And I didn’t mind paying a 12%
premium to buy them, either.
The point
here is that we are recognising that commercial success is first and
foremost about influencing and anticipating individual consumer choice. The
consumer’s in control. But because consumers don’t always know what they
want, it is an interaction, a dialogue, between the providers of products
and services and the consumers that will lead to a clearer anticipation of
personal preferences and needs, and give more insight about what you
genuinely want. Today we receive so much junk mail; we’d really like help
to know what we want.
Securitising your own intellectual
property
Now, that
leads to an even more bizarre and intriguing proposition. David Bowie last
year issued bonds on himself; based on the future earnings of his own
intellectual property – and he raised $60 million. The question to be asked
is ‘how much do you think you could raise on your own intellectual property’
– i.e. the value of the knowledge about all the products and services that
you might buy in your lifetime. The answer may well be in seven figures!
We are
discovering that information about a transaction is becoming more valuable
than the transaction itself. For example, the Official Airline Guide (OAG)
made more money than all the US airlines put together over the last ten
years. Getting back to the individual, the information about what you will
transact in the future, your choices, and how those convert to the purchase
of products and services, could have real economic value. And the very
interesting question is who has ownership of that economic value? Is it
your personal intellectual property, or is it the banks, the supermarkets,
the airlines, who are at the moment sucking you dry because they’re
recording every transaction and trying to understand from those transactions
what particular preferences you have.
It is
becoming apparent to all of us that information is increasingly an abstract
object that is tradable. Data mining is the wrong paradigm. Data
interpretation is a two way, interactive process, and not a historian’s
journey into our personal past transactions.
And that
leads us to a new economic model. We call it intimacy economics, based on
the value of personal intellectual property. It gives us a rationale for the
outrageous market values of Yahoo! TheGlobe.com, and even Dixons. Such a
model presents almost infinite opportunities to reuse such intellectual
property to assist each of us to pursue richer and more satisfying lives.
Surely this is a good prospect for
cities in the next Millennium?
Politics - Going global but acting
local
Finally,
let us consider the dimension of policy. In a world of satellite
communications and the Internet, how will governments keep a grip on their
economies when high earning members of the population can transfer their
lives and businesses into virtual space? This is beginning to be a major
problem already. The nation state is eroding fast in favour of regional
trade zones – Europe, the Americas, and the Far East, commonly referred to
as the Triad. These threaten to exercise enormous power and sovereignty over
our lives.
But at
the same time, we’re beginning to recognise once again the importance of our
local communities. The rise of the city itself seems to be a key landmark of
21st century life. We’ve done some very simple calculations that
suggest in the year 2020, 72% of the world population will reside in only
580 cities of the world. Instead of us all becoming creatures of the
countryside where we can enjoy the quality of the air, we’re rushing back
into these big cities. What is the attraction of the
city that encourages
such behaviour? When every city becomes overcrowded, costly, stressful, why
are we returning in such numbers? There are some interesting parallels to
the European renaissance.
We use
one word to describe the compelling nature of tomorrow’s
city – the ‘Mythopolis’,
or ‘City of Your Dreams’. I believe that in the new economy cities will
attract the most creative, innovative people, and give them the right
social, economic and domestic environments to maximise their potential.
That’s why I personally came down from Yorkshire some 20 years ago to live
in London. There seems to be a compelling power to cities such as London
and New York. Who doesn’t want to spend some time in Manhattan? What we
observe is the city becoming the nation state of the future. London is
going to have a population of 15-20 million people. It is already the size
of most countries and we are about to elect a mayor, who in many respects
will become every bit as important as most state presidents. Should he or
she sit in the United Nations? Scottish devolution fades into insignificance
here!
How will the
forces of technical, economic, political and social (PEST) change interact
and evolve?
We’ve
talked about global connectivity; new economics based on intellectual
property, the consumer taking control, and borderless nation states. How
do man and machine coexist in this new era? If you look back to the
production economy, the emphasis was on utilising physical assets, with
their related financial metrics and measuring systems – SAP hasn’t done too
badly on this meal ticket. And interestingly, the accounting profession
today is built entirely around such metrics. It can compute and measure in
infinite detail just how much a company is worth in terms of its physical
and cash assets. Everything else is neatly pigeon-holed into a vague item
called goodwill. As we move into the New World, our systems of metrics must
change. As our measurements change, so do we! Just imagine how much goodwill
Yahoo! would represent in a take-over!
From Corporate Body to Corporate
Mind
Microsoft
has a market value five times that of General Motors. And yet the turnover
of Microsoft is a fifth of General Motors. Gauged by this example, we are
moving into a new economy where physical assets are peripheral. GM is a
classic example of a company with a massive physical manufacturing and
distribution infrastructure. It takes several years to launch new products,
and does so on a global scale – mass-produced. The new economy is
characterised by intellectual assets, that are
rapid to create and reproduce, rather than physical assets. We are moving into a world where corporate
‘mind’ rather than the corporate ‘body’ represents value. At the heart of
the corporate mind is information: patents, knowledge about customers,
knowledge about processes, the quality of our human resources. This is the
source of new value. Just look at Dixon’s shares after it entered the
cyber
economy.
Successful corporations will learn to exploit and share their knowledge base inside the organisation and increasingly outside as well. A lot of
people are now beginning to divert their attention away from the traditional
balance sheet, based around physical assets, to focus on intellectual assets.
There is some fine work being done at the moment to quantify intellectual
capital as the primary asset of a corporation. For example, Scandia, an
insurance company in Sweden, publishes an addendum to its annual report that
quantifies the value of its own intellectual property. And it believes that
by doing so it has added 30% to its share price. In the future we expect
stock markets to value and trade intellectual capital.
The City
of London, like any other historic institution, may be slow to respond to
these powerful forces at work, but recognise them it must. New metrics will
need to be adopted to assign value to corporations on our stock market if we
are to retain leadership as a major financial marketplace. Would Yahoo! have
chosen the City for an IPO? I think not. How can we attract innovative UK
companies to operate out of the UK rather than migrate to more lucrative
capital markets such as California or New York? The value of our stock
market could drain away to a mere residue of its current standing.
From Corporate Mind to Corporate
Soul
We are
making progress in recognising the importance of the corporate mind, but
what of corporate soul? We believe the next fundamental source of value
beyond intellectual property will be based on relationships. And
relationships are built on trust. In a world built upon intimacy economics,
how much trust are we, as consumers, prepared to place in our suppliers, such
as our banks, telecommunications suppliers, retailers? After all, the trust
that we can develop between external organisations and ourselves will
determine just how much of our own personal information we are prepared to
share.
And it is
interesting to ask yourself: Who do you trust in society? Who do you go to
talk to about very personal things? I doubt it is the high street bank.
I doubt it is John Lewis. Maybe
it is a pension company such as Equitable
Life. Maybe you talk to Virgin stewardesses, but who knows. It is going to
be very interesting to ask which will be those organisations that will
embody the most trust in the 21st Century. It may be the
not-for-profit organisations rather than current commercial organisations.
Trust will be an increasingly important aspect of being in business because
only by creating trust will you be able to exchange valuable intellectual
property. Empathy and relationships, in our view, are going to be
all-important in determining the success and the value of corporations in
the future. The City has been well known for the trust it engenders – my
word is my bond. This could be a key asset for the future.
Pushing
the model further, we are going to need the co-operation of more than one
trusted party to build really valuable information bases about personal
habits and life styles. Partnerships built between the banks, the retailers,
the manufacturers, the oil companies will need to be forged. Each party is
looking today at the consumer through a narrow telescope. What we seek as
individuals is the broader value proposition that mirrors our need to go,
be, do and know.
How do we
begin to determine and exploit the full scope of human need and desire? If
you consider the very basic things that we need as human beings, they
include education – not just in childhood, but education for life. We need
financial security. We don’t just want a bank account or an insurance
policy. We need someone to work with us and advise us throughout our whole
lives, even take the risks with us. We want physical well-being rather than
the occasional visit to a doctor when we are ill. We want physical and
emotional security, not just burglar alarms. The list is endless, but
difficult to imagine in our world of product and service silos.
And this
convergence of interests is just beginning to surface. Boardrooms are awash
with executives from other sectors talking about new partnerships. We
believe this is something of a random process today, but as we focus more
and more on the broader needs of the individual, these alliances or
partnerships will begin to make more and more sense in the future. We have
been organising cultural exchanges for many years to promote such new age
propositions.
The most
exciting aspect of all this is the prospect that the primary social
processes such as education, healthcare, employment and leisure are
beginning to re-engineer themselves. Students of MIT’s programme ‘Management
in the Nineties’ will understand that the expansion of information systems
across large organisations in the late eighties stimulated process redesign
opportunities. Thanks to low cost PCs and the Internet, these systems are
now spilling out across society at large. The ubiquity of IT has created the
fertile conditions for re-engineering on an unprecedented scale. London as a
city needs to consider its leadership role in enabling these macro-processes
to reform and reshape. Maybe the new Major should call us in to re-engineer
the city – its institutions, structures and
processes. Berlin is well down
this path already!
First steps towards sustainability
What are
the enduring qualities that will sustain London as a leading city of the
world through such turbulent times? We were asked recently by Shell to
investigate ‘what is success in business’ and we talked to over 90
companies who had been in business more than 150 years. We asked them what success
is all about and how had they sustained themselves in the last 150
years. And the answer came back that success is about ‘being in business a
long time’ – certainly a good banner for the City. All of these companies
cited four factors that had contributed to their longevity.
The first
was the availability of capital, particularly low-cost capital. Many had
gone through trading hiccups in the 150 or so years of their existence. Only
by having deep pockets or patient sponsors could they ride out these storms.
Many good companies have perished through poor liquidity.
The
second one was very important – sensitivity to the environment. And it is
interesting how companies have fads. They talk about the customer: we’re in
business to serve the customer. Two years later, we’re in business to
satisfy the shareholder. Five more years, and we’re in business to keep the
employees happy. And so it goes on. The reality is that most big companies
today have not just two or three stakeholders, they have forty or fifty
stakeholders to satisfy. They have employees who worked for the company and
then left, people who will work for the company in the future but haven’t
joined yet, the media, and the local community. There are a whole host of
different entities that are involved in their survival, and being sensitive
to them is a key factor for success.
The third
one is a tolerance to fringe activities. So many companies have gone right
back to the core, to the base of what they’re in business to do.
Re-engineering shook out a lot of the peripheral activities and focused
people ruthlessly on the current business that they’re in. Clearly, as we
enter such a time of transition and change, one’s ability to look at the
periphery of what you’re doing as well as the core is going to help you to
recognise those critical signals of change.
But the
most interesting thing that came out of the survey was that of the majority
of the companies we talked to, over 80% were in businesses that were
entirely different to the ones they started out in. For example, Nokia was
a rubber and paper company. Today it is one of the world’s leading consumer
electronics companies. General Electric earns 42% of its revenues through
financial services. That was clearly not what Thomas Edison had in mind
when he started the company over a century ago.
The rewards of re-invention
How will
London survive and flourish up to and beyond 2020? During the next twenty
years we are going to see a torrent of changes so profound that many well-loved companies and institutions will cease to exist. New and more powerful
ones will take their place. The answer must surely lie in learning to live
and work in an increasingly uncertain present and future. It is all about
re-invention at a rate that keeps pace with the external environment. Many
of us today talk about agility as a key success factor.
I believe
that we can go one step further than this obvious statement. Just as boats
must navigate every inch of a white water rapid, constantly switching
direction, the navigator must also have one eye on the horizon – be it the
North Star, or just a stable landmark. In doing so, he or she will not just
keep afloat but reach the desired destination. I think that many CEOs and
heads of government institutions – not least
of the
City, are too concerned
with keeping their heads above water to focus for any real length of time on
the final destination. It is the tyranny of the three-month earnings that
dominates City minds.
So, my
message today is to move your minds forward into the 21st
Century, look at those four driving forces that will determine the future -
technology, political, social and economic development; construct one’s own
scenarios, and continuously ask the ‘what-if’ questions. Clearly every
company that’s going to be successful in the 21st Century is
going to have to continuously learn to re-invent itself on a moment- by-moment basis. But they are also going to need a ‘guiding star’ that carries
them through the new era.
Write a five hundred-year plan
And
that’s why we’ve been asking companies not to look just at a one-year
business horizon or a five-year plan, but to develop a five hundred-year
goal. Given that we’re going through a five hundred-year transition that
makes some sense, and it is often easier to do than to work out a five-year
plan! Now, interestingly, there are some really good five hundred-year
plans about. We did some work with Coca-Cola, one of the highest
capitalised companies in the world, and they have a simple five hundred-year
plan – that is, to anticipate your need for refreshment. After all, we will
still be thirsty in five hundred years time. They understood that so clearly
that they’ve never veered away from it, always concentrating on the beverage
business. Pepsi, their nearest rival, went into the food business and lost
its shirt. Coca-Cola has stuck rigidly to the concept of refreshment, and
out sells Pepsi four-to-one!
So rigid
is Coca-Cola’s vision, we were recently asked to evaluate a new vending
machine that their scientists had come up with in the lab, which was
actually cold to the touch. As you got near to the machine it felt cold.
And they asked ‘does this fall in line with our five hundred year plan?’ and
we said of course it does, it is all about refreshment. You feel as though
you need to be refreshed when you’re next to this cold thing.
Do ask
yourselves: what is my corporate five hundred-year plan? If you have no
answer, do give this some serious time and attention. Remember that the
citizen of the future is going to take a keen interest in this. And as
Dwight Eisenhower once said, ‘I’ve always found that plans are useless,
but planning is indispensable’.
Don’t just stand in the queue
