Strategy perspective

Important issues about strategy and the changing business environment


Sometimes I feel like we all live in an upside down world. When preparing a lecture I suddenly saw something that could illustrate this. Maslow's hierarchy of needs have been important for how social scientists and others have been looking at our society. If things really are upside down, why not try to turn the hierarchy of needs upside down as well and see what's happening? (No, I do not have any deeper knowledge about the ideas behind the hierarchy or its current status in psychology...)
Somehow it sounds right to me that more and more people actually see the world this way. Mostly young people I believe, but it have been spreading for some time. Here we can refer to e g Anthony Giddens discussion about modernity...

Even if I saw this mostly as a fun experiment, it really made me think about how modern western societies are organized. They are built to support the lower levels of the Maslow hierarchy of needs (not the upside down version) which are believed to be the basic needs of the citizens.

Can it be so that the basic needs logic of the modern citizen in the western world have changed when the whole society have moved up the hierarchy?

I wonder if one of the major problems we have in our society today is that the largest group of the population have the needs of the two top levels of Maslow's hierarchy? I am not saying that there doesn't exist needs belonging to the lower levels as well, but the reasons for that may include that the democratic system fails to support the now basic needs of self-esteem and actualization? Instead the society's most active, energetic and competent people search fulfillments of these needs elsewhere and most commonly in different activist groups or in spiritual or religious communities. Communities which in some cases are in harmony with the rest of the society, but sometimes in conflict with it. Regardless of which they are separate communities defining new visions, values and norms in parallel to the visions, values and norms which the democratic systems promote.

Google have released a new fascinating and probably controversial tool onto the world: Google Trends. By simply letting users search directly in the meta-data some of the higher level patterns of what people search for is out of the box. If you e g search for "united states", you get a list of regions from where this particular search is being done from. In this case most of the searches for "united states" have by far being done from inside US. Surprise!

It becomes more interesting when you get surprised over the answer. It took me just a couple of minutes to find results which made me wonder what Google Trends really shows. When searching for "sweden", Nigeria surprisingly comes up first on the list. Why do Nigerians search that much for Sweden? I tried with countries like Norway, Denmark and Finland, and they themselves show up first on the lists of search origins.

Another peculiar thing that came up was when I searched for "system dynamics", the greatest inquiring region by far was Iran. Why is that? Do Iranians have some special relation to system dynamics or are they just inclined to search the Internet about it?

The discussions about what search engine statistics really can tell you have now started. Especially since a tool like this sounds like it could be extremely valuable for different kinds of business and military intelligence.

To me as a forecaster the value of a tool like this is huge. The development of how people search for certain words can tell a lot, even if you have to be careful on how you interpret the results. Look for instance on the rise for interest in Wikipedia and compare it to the rise of the word blog. It becomes quite obvious that the word "wikipedia" since the middle of 2005 catches on faster than the word "blog".

After having read Jared Diamond's book Collapse, one of the stories of civilization collapse that sticks is the one about the people on Easter Island. I wrote about the book in futuramb blog in March last year (in Swedish). It is both puzzling and intriguing to ponder about what the people on Easter Island were thinking when they were cutting down the last tree throwing their civilization into starvation, civil war and cannibalism.

Two scientists are now presenting another theory on what actually happened. It is a far less dramatic and less long one and where rats were responsible for the deforestation and not the people.

[Carl] Lipo thinks the story of Easter Island's civilization being responsible for its own demise might better reflect the psychological baggage of our own society than the archeological evidence.

Read the short article in LiveScience

Regardless if their theory holds, they really have a good point about how our own perspective and our own problems are ordering the way we look at the history.

Article in NetworkWorld says:

In an IBM survey of 765 CEOs and top executives, 65% said they plan to radically change their companies in the next two years in response to growing competitive and market pressures. But it won't be easy: More than 80% stated that their organizations have not been very successful at managing change in the past.

When asked where the news ideas usually are coming from only 14% refers to internal R&D and 35% say that the greatest obstacles are the company culture and climate.

Two years ago the survey showed that cost cuts were in focus, now it is time to adapt to change and increase revenues.

What does this mean? To me this signals that there will be a lot of turbulence and maybe drastic structural changes coming on. Most of the companies will probably not be chopped in smaller pieces, which maybe would be the most effective way, but sewn together in new and more spectacular strategic partnerships. All for the purpose of change company culture and find new ideas from other organizations.

During this transition period (how long it will be...) the involved companies will probably be even more hesitant to hire new people. Increasing or maintained unemployment rates will follow.

Outsourcing will pick up speed, and not die since it is a managable way to change the company drastically from a strategic, or structural level i e the board level.

The gap between the strategic levels and the operational levels will increase even more because some people on the strategic level will in their frustration set up even more far fetched and disconnected visions and plans, which will be even more furiously thrown down the elevator shaft. All while people on the operational level will try to keep the company together. Those who are wiser than that will take the problem into their own hands and change the company on the level where they have power, at the structural level - read outsourcing and strategic partnerships.

All this because the companies in the western world are not capable of downsizing, or at least reframe the reality from being growth industries in a pretty stable and expanding world to become mature industries in a volatile world, which in many areas are not expanding at all any more. A world in which strategies of growth are applicable for only a few, and strategies of survival probably will be the new norm. is getting focus again, and this time by using catchy videos.

I am usually teaching, talking and consulting around scenarios, and how they have the potential of changing the world. Go to the campaign site and look at the film! I think of the film Koyaanisqatsi and sequels directly...

From a methodological stand point I think it is interesting to compare these kinds of media arguments in the debate to the scenarios we usually produce as a result of an analytical process. Most of these scenarios doesn't reach their audience since they don't get the right shape and form. Media can be both suggestive and convincing. Why not meld these two forms together more?

As expected muslim hackers are active and mirroring the protest in the digital world. Roberto Preatoni from reports about and lists hundreds of sites been attacked, and the attacks seems to be continuing.

This is just a confirmation that the digital world is just another plattform for our social activities. I commented about this in my blog post The future of Internet is social re-organization where I also noted that wide spread catastrophs caused Internet connected people to organize and collaborate in new ways creating new adaptive and long lasting connections and structures. The enabling tools and platforms was the new social software like, wikis, wikipedia, blogs and rss.

The learning effect which could be seen from the catastrophs last year was that the learning from previous ad hoc efforts was that people were much faster in reacting and organizing the next time. The structures of wikis, blogs and people just re-awakened and slightly readjusted to support the next global rescue mission. The network shows that it is adaptive and learns all the time.

Regardless what the effects from these digital and analog protests from the Muslim world will be, we can be sure that the Muslim digital network of wikis, blogs and people will be better organized next time. In the digital connected society few activites can be repeated, they are instead dress rehearsals for the next event which is different but will be handled better of the learning network.

It is scary to see the rapid upscaling of the Muhammed cartoon conflict. Especially since I commented on it in my blog the other day as a possible sign of an ongoing mental shift in the Middle East. My concern then was searching for the uncertainties affecting the future oil price. Now the mentality shift almost seems as a reality - and it seems that it could affect the world on a different level than the oil price.

There are questions suggesting there are invisible structures beneath the protests. How did people in the Middle East in surprisingly short time become so knowledgeable about Denmark that they know which flag to burn in public, but also apparently can produce Danish flags to burn? We could be seeing a reaction initiated by fundamentalistic muslims, but gradually turned into a smart mobs phenomenon where the communication channels between groups and individuals are instrumental in a spontaneous collective action. Different fundementalist groups are of course part of this but are by no means leading or controlling it any more. It is then a movement with a similar structure to e g the Anti-Globalization-movement but on a much bigger scale.

There are small signs that technology is playing a role in the events. The burning of the Danish and Norwegian embassies in Damascus is said to have occured because of a rumour from Copenhagen saying that there have been circulating SMS-messages urging people to burn the Koran. Small, probably false, pieces of information, travels almost instantly from Copenhagen to Damascus which indirect ignited the embassy fire.

If we are seeing a smart mobs movement which don't have one leader we will not be able to stop by just call somebody and say: "We surrender!". It is then in essence a collectively orchestrated manifestation of feelings and beliefs on grass root level. The problem then is that there is a risk that whatever action you take the protests will increase in strength and attract more followers unless somebody pushes exactly the right button. This is highly unlikely since the problem is to know which button that is and there is a significant risk that you will fuel the protests rather than calming them down. If you look at these kind of self reinforcing systemic movements there are two basic ways of handling them:

  • Apologize ("make a poodle") and lie down and do nothing until the movement runs out of steam
  • Disturb the communications between the different reinforcing factors

The sharp diplomatic protests from the Scandinavian governments against that Syria did let the burning of the embassy happen is exactly that kind of institutional reflex reactions that could fuel the protests rather than calming them down. It is however not the first time reactions on a diplomatic level causes unintentional and unexpexted harm to the public reactions.

Most organisations and institutions are usually very bad in managing these kind of public reactions, and it is especially difficult when the reactions cross national borders, i e outside of the infrastructural control of one governing organization.

Judging from the current situation it is very hard to understand how much potential energy the protest could gather, but they seems to spread extremely fast and are still growing.

Regardless of outcome this situation have already cause an irreversible shift in perspective when talking about the relations between the West and especially Europe and the Muslim world in the Middle East and South East Asia. Carl Bildt asks "Is the clash of civilizations here?" and I think it is really a valid question. Especially since the institutions and organizations involved in the crisis seems slow in understanding the nature of the protests.

After reading articles and blogs about the protests I would argue that the West's greatest enemy here is not the Islamic fundementalist movement but our own fundamental inability to understand that "common sense" is also a biased perspective. If you think common sense is a better, higher or more fundamental way of reasoning you are completely lost when confronted by a person or a group which thinks are claiming to have a more fundamental and true belief. A common sense and pragmatic down-to-earth perspective is very often blind when it comes to perceiving more symbolic or collective values.

Futurist Eamonn Kelly puts it like this when he write about weaknesses in the secular model in his new book Powerful Times: Rising to the Challenge of Our Uncertain World:

The complexity, connectedness and volatility of the world today require us to amplify our comfort with ambiguity, tolerance of difference, and openness to alternative interpretations.Yet our embedded forms of secular reasoning sometimes stand in the way of this. The secular world-view is built upon reason and "truth" discovered through scientific methods and debate. This rationalist model has little tolerance for ambiquity or doubt; indeed it tends to be structured around a crisp "either/or" logic through which ambiguities can be conclusively resolved one way or another.

Happy new year to all!

The future is of at least some interest to all of us, even if the majority is not as explicit about it as I am. But even I feel that it is valuable to reflect on what was once in a while. It is crucial to understand both the present and the past to be able to talk about the future. What happened in 2005 that will have lasting effects on the world? A lot of different things of course but there are some things that comes to my mind, and which will be parts of my future analysis for some years.

  • The public perception of the relation between man and nature got skewed a considerable bit. The tsunami in Asia, the hurricanes in the Mexican gulf and the earthquake in Kashmere made it clear to us that we are not in control as much as we have persuaded us to believe during a century of mostly man made catastrophies. Not even USA, the most powerful nation on the planet, was neither prepared for nor able to manage the effects of Katrina when it hit New Orleans, this seems to have been an awakening.
  • The pandemic threat got a more scaring face during 2005 - the Avian Flu. The reports about the flu from the first weeks of the year is, from a European perspective, increasingly frightening. The way Turkey is handling situation is in focus, and all governments are trying to stop panic from occur.
  • Our collective reactions to these catastrophies showed that we live in a new connected world where Internet was used by millions of people around the globe to spontanous organize in a way not being seen before. Internet and digital technologies like blogs, wikis, SMS and digital cameras in cell phones made it possible for people to report, analyse and communicate freely creating emergent organizational structures almost instantly. Wikipedia became one of the focal points where current information was integrated with scientific and historic facts. All this happened when most of the journalists and politicians where still asleep, or sitting in a plane heading for the catastrophy area. If we really are on our way to wire up humanity to reach new collective behaviours, I think we saw the first manifestation of that in 2005. BBC has a short article on what they call the rise of the digital citizen
  • The oil peak discussion caught on in the public perception, and the reason was of course due to the rocketing price on crude oil. Now the pressure is getting higher on oil producing countries to actually reveal their future production capacity, facts and forecasts which traditionally have been secret. An interesting question is if, how and when the oil industry is going to make the required huge investments in different part of the oil chain to be able to meet the huge demands of tomorrow. The most crucial point in the chain seems to be the refinery shortage which makes it difficult to provide enough gasoline, diesel and other refined products to the consumers. Some analysts say that the current price on crude oil at $50-60 is the new normal level, but since we stress the whole capacity of the oil chain and the production and consumtion levels are dangerously close, more fluctuations of the price are most likely, even if the energy market is becoming much better in dampening out the fluctuations when they occur. In 2006 and the following years we will see many new industrial and national initiatives to adapt the energy structures to this new situation.
  • Several sources have during this year started to compare present times to the medieval era and I agree that there are some similarities, even if there also are huge differencies. Both then and now the society seems to be in a transformation phase, with a lot of stress caused by crumbling societal structures, looming threats of diseases, wars and turbulence due to increases in the power of spiritual forces. I think that the key message is that we now have started to believe that we live in a transition period where most of our current luggage and attitudes are obsolete and that we now are slowly thinking along the lines that we have to start recreating the society from bottom up again. Remember, after the medieval times came the renaissance, which is constituted by the emergence of the individual, the nation state and new patterns of culture, economy and knowledge i e the modern society.

So welcome to the new medieval times! Let us start forging our new structures so that we can once more reinnovate our civilization.

Too few people seem to understand what is at stake in the struggle over Internet governance. Carl Bildt has been worried for some time and yesterday he wrote an article in International Herald Tribune on "Keep the Internet free". I definitely think he is right in his worries and agree that we must raise the issue of the future of the Internet to the highest level. Especially since European Union sees the problem differently and would like to share governance between society and business i.e. degrading the importance of the issue.

Carl Bildt urges the EU to understand the importance of the issue by saying:

There is time for Europe to reconsider its proposal. I refuse to believe that José Manuel Barroso, the president of the European Commission, or Prime Minister Tony Blair of Britain, which currently holds the EU presidency, know what has been done in their name. But if the issue isn't high on their agenda, I can assure them that it is likely to be very high on Washington's agenda if things go wrong.

The initiative to create a Internet Governance body which could work when Internet has become much more strategically important was started from within the Internet organizations in 1998. To me it has been an ongoing process in the background. Important, yes but I originally thought that it was better that the process was slow and the result better, than the other way round. Today the situation has changed. The last five years there have been a dramatic change in world order. It is the result of increased global threats from terrorists, scarce natural resources - right now the oil situation, changing economic situation with China and India and other emerging players actually starting to change the game. The current development is on its way to change how we define freedom.

This will without doubt affect the future of the increasingly more important Internet as well.

Regardless in which hands the Internet governance turn up, it will have a huge impact on the strategic map for all the other players. When I hear those people who today is in charge of the Internet, I hear extremely clever people who are well suited to manage the global machine from a technical point of view. The global strategic game of politics is another matter. There I am not so sure... What I hear tells me they are far too naïve to play that game.

The issue of future Internet governance may be one of the most important global issues we have to face, because Internet is today a prerequisite for almost all other development. The upcoming meeting in Tunis November 16-18 will tell in which direction this is going, but the situation isn't that good.