Tag Archives: EUBS

Trends About Trends

William Nelson and Richard Hepburn explored some long term trends in the UK – reassessing them and exploring new qualititative techniques such as crowd sourcing. Such trends have an impact on economics and government policy, as well as fundamentally affecting the way we live our lives (ten years ago I would never have guessed the impact carrying a mobile phone would have on my behaviour!).

The themes they identified were

  • changing structure of households (what Nelson called “home-alone v ‘all together now'”): there have been increases in young people staying at home, people living by themselves, couples cohabiting, and young people sharing till later in their lives.The current state of the economy and the jobs market is driving a lot of this as young people stay at home or have to because they can’t afford a place of their own (apparently leading to an increase in squatting in London and some novel approaches to communal living and working elsewhere), but of course it also has economic impacts. Immigration and demographics (which Nelson also covered) will have an effect, too.(
  • “smart v connected”: drawing on “the internet of things” – the ability to give any object its own internet identifier – Nelson argued against the need for “smart objects” (all those food-ordering fridges PR-savvy white goods manufacturers say we’ll be buying) but reckoned our homes would become more connected – but under our control. He foresees us using our mobile phones as universal controllers, switching on heating, lights and cookers remotely. As technology converged, he also believed that it would be gas or electricity companies who would own the interface, not the telecoms or media companies that currently own our broadband connections, prompting competition for control of our homes: remote controlled central heating might be the killer app. (Maybe Sky will buy British Gas?)
  • social networking to networked socialising: we’ve been living in a technology-mediated networked society since the advent of the telephone in the early 20th century, but we’re increasingly connected. The ability to carry the internet in our pockets has changed the way we behave. Whilst our lives might be more and more busy, we’re also procrastinating more: we might arrange to meet people, but the details – where, when, what – are more flexible and subject to change: we are less willing to commit to a fixed schedule, with frequent and repeat rescheduling. People are more willing to take the best offer that comes along (apparently 40,000 people are stood up every day!). A lot of this happens on mobiles – people are checking what’s on and booking more last minute tickets, which effects artists’ and venues’ planning and pricing strategies.Their is also an increase in “leisure as performance” – people tweeting or Facebooking (is that a verb? I guess so…) photos of themselves at events – the ease of one-to-many communications is turning us into a nation of show-offs – and sharing information about our plans to go to events becomes a currency. Interestingly, one doesn’t actually need to go to the event – you can share the information that, for instance, you’ve got a ticket for the Olympics (posting the details and a photo of the ticket, perhaps) before selling it on. Data about the event can be more valuable than the event itself.

    (It also means we are under self-imposed scrutiny: the more we share online, the more we are building the panopticon… And I am shocked that there is a data analysis firm called Panopticon. Maybe we get the future we deserve.)

  • the gender revolution finally happens: decades after the 1960s, Nelson reckoned that changes in gender relations have now become so normal as to cease to be newsworthy – and when things get boring, change has happened. (I know many feminists who may disagree with this; please don’t blame me for sharing his views with you!) There are now more female graduates than male, and they get better degrees; they’re also better at getting jobs than male graduates. Nelson said that women aged 20-29 now have higher hourly wages than men (I have searched the ONS website, which is full of fascinating data, but I can’t figures split by gender and age, so I’ll just have to take his word for it!).As women become more equal to men, they are becoming less equal to each other: there are growing disparities between women. And whilst pay hourly pay might have moved in their favour, women still spend more time on housework (in the US) and are the prime provider of childcare. It’ll be interesting to see if those roles change with women having the higher earning potential.

    There may also be pressure on employers to change their models of employment (strongly rooted in the early 20th century?) to cope with highly qualified, high earning women who want to fit in childcare and their home life, too: this might add pressure to develop more flexible models of employment.

  • ageing population: the “demographic timebomb” has almost become a cliche, but it remains important, affecting policy and opinions for decades. 2012 sees a spike of people reaching 65 – the results of a mini baby boom in 1946 and 1947 as soldiers returned from the war. Since Britain didn’t really recover economically for another decade or so – it was in 1957 that MacMillan asserted “you’ve never had it so good” – it won’t be until the 2020s that the wave of over-65s resulting from the 1950s baby boom reach 65.The ONS predicts that the proportion of over-60s will continue to grow whilst the proportion of under-14s is static and the proportion of those aged 15-59 decreases – hence worries of a decreasing working population having to support an increasing number of the old.

    None of this is news – the “demographic timebomb” has been written about for decades. But by looking at the detail, we can plan and change – both public policy and our personal choices. For instance, Willie pointed out the market for Saga will grow by 7% pa (I think – I didn’t write the figure down!), without the company doing anything at all. The effect of demographics on policy – the provision of health care, pensions and social care for the elderly, for instance, as well as indirectly affecting, say, transport, housing and industrial policies – and of course the economy

  • “the youth of today”
    It was in his discussion of youth that Nelson really challenged our assumptions. The young are not hoodie-wearing rioters drunkenly threatening passers-by: Nelson gave figures from the UK for reducing youth crime, decreasing youth drug and alcohol use and a decreasing teenage pregnancy rates – not the stuff of tabloid headlines.At the same time, parents are being more protective of their children – driving them to school and managing their leisure time (back to the panopticon there…) – in part driven by a culture of fear: children are taught about “stranger danger” when other risks may be more relevant. What effect will “paranoid parenting” have on future generations? Will they learn to assess risk if protected during childhood – surely a key part of growing up? And what will such cosseting have on our children’s future health?

These are just some of the trends that Nelson has worked on; perhaps most interesting is where they intersect: for instance, the effect of the changing nature of networked socialising as the population ages; or the changing form of households when examined through the lens of changing, less rebellious youth; or the impact of changing economic power of (some) women on household structures and the balance between generations.

“The Future Is Already Here”: looking at future trends

July saw the Edinburgh University Business School alumni conference, the topic this year being futurology and “Trends”.

It started off with a panel discussion on “Futurology”, in which all three speakers were very careful not to talk about the future. They did though have much to say that was interesting about the past and present, and what that might mean for the future…

Murray Calder told a great story of American Scotch whisky salesmen asking why it wasn’t possible to simply make some more… of a 25 year old malt! Coming from an industry where current possibilities are clearly shaped by decisions made years – decades – before, Murray described the future as a range of outcomes and opportunities – I pictured the diagrams used by the Bank of England to describe possible inflation rates.

From www.clearonmoney.com

Looked at this way, the future is necessarily contingent – possibilities looking like quantum maps rather than binary outcomes. And as we are all too frequently reminded, the past is no predictor of future performance (though it may be the best model we have!). Murray described the future in Darwinian terms: those best adapted to change are likely to survive.

Alan Fowler similarly viewed the future as a range of options – but options which we can shape. By taking control and envisaging the future we wanted to create, he proposed “backcasting” to work out how to get there. For organisations, tying in strategy and workstreams to the hoped-for future could lead to big rewards; it also needed constant re-planning, since of course the starting point will have changed the moment one finishes planing. (He expanded this in his talk later in the day – the Isochron website outlines their approach to change management.)

William Nelson also concentrated on clients’ strategic objectives. Starting from a quantitative perspective, his clients want – need – narratives that they can work with: stories that can help define their future. (Francesca Elston recently wrote eloquently on the power of stories to shape our thoughts.) The need to create compelling narrative to help effect change is a powerful story of its own. Interestingly, Nelson also said that PR people and journalists need facts rather than the general story: they want solid information, despite there being a lot of evidence that journalists don’t know what to do with data.

They were each asked to identify the top trends they saw emerging; all picked some variation on mobile technology and social interaction. For Murray, “social” was nothing new, but we had access to new tools to accomplish these interactions; as mobile devices become ubiquitous, access to information and networks changes the way we behave in social situations, on- and offline. (We must all have seen people sitting in a bar with their friends – all interacting with people elsewhere through their mobile smartphohes.) Google, Wikipedia and IMDB have killed many old-form pub conversations…

Willie reckoned that smartphones have the capacity to become universal controls in our homes, allowing us to interact with otherwise “dumb” tools like central heating through an interactive hub. His really interesting take on this was that it would probably be a utility firm like British Gas which would get first mover advantage on this, not a technology giant or an ISP. Technology firms have been predicting the “internet of things” for a long while – Microsoft thinks we’ll have thinking mobiles, 3d screens and wholly integrated lives whilst Ericsonn foresees sentient hoovers, bickering cookers and interactive tv – all vying for our attention – and they may be right (at least for a tiny percentage on the top of the ladder); but I agree with Willie that using our phones to switch on the heating when we’re on the bus home or switching on lights at home when we’re away on holiday seems a much more likely future for most.

Willie’s other key trend was the changing structure of families – as cohabitation and divorce become more common, different ways of organising in social structures may emerge. (I have friends who talk about “their family of choice” – albeit that’s what I think I call friends…) As people marry or settle down later (if at all), and the economy continues its sideways slide, different ways of organising homes might increase – such as “co-living” or (for the less well-off?) squatting (the latter especially if the sympathy for the Occupy movement and the opprobrium heaped on rich bankers continue). Willie looked at both these trends in more detail in a later session.

Alan’s take was somewhat different: he saw mobile technology disrupting as well as strengthening social interactions, to the extent that it could damage community. (At these point all those who see “online community” as the future will be throwing their arms up in disgust.) He definitely saw technology increasing the gap between the “haves” and the “have-nots” – the government certainly sees access to technology as a driver of economic growth – and those without access by economic situation, location or choice are at risk of getting left behind. Alan foresaw an increasing gap between those at the front edge of technological innovation and those at the back.

The questions raised many more issues, such as

  • is democracy hard wired to think short term only – politicians rarely have a horizon beyond the next election (although Alan pointed that in his experience working with the public sector, ministers and their civil servants are often involved in considering the impact of policies and planning for decades ahead)
  • envisioning the future often leads to its crystallisation – we create our own futures (the point of Alan’s session in the afternoon – a way of making that happen)
  • technological change prompts behavioural change – but behavioural change takes a lot of time, and may happen in ways that are not foreseen
  • “the future” needs defining – it starts now; unless something catastrophic happens tomorrow will be much like today for nearly all of us – so it makes sense to keep doing what works today (though continuing to be adaptable to change)
  • large organisations don’t seem adept at managing the unforeseen – catastrophic outages at RBS in June and O2 in July were surprising in that backup plans didn’t seem to work

The main takeaway message was never make predictions – because you’ll be wrong – but coming at trends laterally and challenging the assumptions may produce some interesting ideas.

I went to three other sessions: one each by Alan and Willie, and another by a digital agency, entitled “Digital Futures: Trends in Social Media”. They did discuss trends in social media, but they didn’t discuss the future at all: everything covered already existed, even if some of the content may have been new to some attendees. William Gibson is quoted as saying “The future is already here — it’s just not very evenly distributed” – maybe it’s just difficult picking out which future will actually come to be.

“Interpreting Extreme Events in Financial Markets”

John Hibbert of Barrie & Hibbert gave a talk on interpreting extreme events in the financial sector. Once more, a topic rather pertinent for these turbulent times.

His area of expertise is building models to stress-test the effect of external events on life insurers’ asset portfolios – although what he said probably works just as well for banks. Essentially, this is meant to help organisations’ managers effectively manage risk within their portfolio. The models are used to answer two different questions –

  • what is the fair value of an asset (which is a risk-neutral approach for pricing policies)
  • projecting what capital is required to maintain the asset (which is risk-based, using historical risk premia and observed probabilities of real events)

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Surviving the Downturn

I went to a talk a couple of weeks ago by Mike Clauser about surviving the downturn. Essentially he was discussing different strategies for small businesses and entrepreneurs to survive and – better – profit from the recession.

If you run a business which doesn’t need debt to survive – either because it is a low capital business or because it has lots of free cashflow – a recession can be pretty profitable, especially one in which deflation takes hold: your inputs become cheaper (commercial rent, advisers, commodities…), staff become cheaper and more available, and staff turnover (a big cost for businesses) can be greatly reduced.
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“Why Japan Can’t Reform”

Susan Carpenter called “Why Japan Can’t Reform” – same title as her new book. She has worked extensively in Japan, and seemed well placed to desribe the situation there.

I was curious – I know little about Japan, but given the sclerotic nature of the Japanese economy over the past couple of decades and the potential for Japan to be seen as a model for the global economy in recession, I thought it sounded interesting.
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“Hedge Funds: future trends and challenges.”

I went to a crowded talk about hedge funds and their future role in the financial system. There were four speakers, industry insiders – this meeting was conducted under the Chatham House rule – although I didn’t feel anything said was particularly sensitive. I was there out of curiosity and a desire to understand more about hedge funds and what they actually do.

One of the problems the speakers identified was one of definition: just about any fund can label itself as a hedge fund. Wikipedia defines a hedge fund as “a private investment fund open to a limited range of investors that is permitted by regulators to undertake a wider range of activities than other investment funds and also pays a performance fee to its investment manager”. Hedge funds use a variety of alternative investing strategies, including borrowing money to invest, to increase returns for investors, and charge on that basis. The strategies using a variety of investment tools, including short selling (selling assets they don’t own in the expectation the price will fall and they can then buy the assets back more cheaply – pocketing the difference in price), as well as a wide range of markets. Continue reading

James Cameron: After Kyoto

Last week, the management School hosted the third of its talks on climate change . James Cameron – no, not that one, this one – of Climate Change Capital gave his views of life after Kyoto.

It was a wide ranging discussion, covering all sorts of areas – politics and policy, economics, and, given his firm’s interests, business and investment. It was a very different approach to either Nigel Griffith’s or Richard Dixon’s – more concerned but hopeful, rather than apocalyptic.
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Two Perspectives on Climate Change

Edinburgh University Business School is running a series of seminars covering different aspects of climate change: so far, they have had a politician and a campaigner give talks; coming up in the new year will be a business perspective – and then a seminar featuring each of the speakers debating together. The focus of the talks is the background to climate change, the Kyoto protocol of 1997 and the forthcoming discussions at Poznan in December 2008 and Copenhagen in December 2009.
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“Rules for Revolutionaries”

This is a post I wrote elsewhere, in November 2007.

I went to a talk called “Rules for Revolutionaries”; since this was being given at the Edinburgh University Business School, you can guess that it wasn’t trying to get all the budding MBA students to emulate Che Guvera or Fidel Castro; instead it was proposing a different way of looking at management.

I should have warmed to this: it hit a lot of the right buttons for me; but I didn’t.
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