Nice scenarios to follow NICE decade

Posted on April 27, 2009

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Forum for the Future has done it again with an extremely interesting Acting now for a positive 2018, preparing for radical change  (report pdf).   They present four scenarios of what the world might look like in ten years’ time.   ICT gets a special consideration in each scenario.

First though, they recap the last ten years of  “fast-paced market-based change”.   They use Bank of England Governor Mervyn King’s description of the NICE decade “non-inflationary, consistent expansion”.   However, unlike King, who saw the past decade as largely positive, this report also presents the “nasty consequences”:

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The lives of many people improved (though by no means all), and in some cases were transformed, in both the developing and developed worlds.  However, growth built on historically cheap debt, energy, food, labour and raw materials has faltered in the face of turbulence in the financial markets and the first effects of natural resource constraints leading to increased energy and food prices.

 

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Whilst the going was NICE, there seemed little point in questioning the purpose of business. Some companies tried to create profit with a social or environmental agenda, however the purpose of business has been to maximise shareholder value, with the public benefiting from the goods and services sold, the economic growth created and the returns on investment.

 

but now:

Now leading companies are realising the impact of sustainability considerations on their core business, including resource  constraints, climate change, labour rights and poverty. They are identifying how these are affecting and motivating their customers, suppliers, and investors.

the nasty consequences are starting to take effect, the leading edge of the debate is shifting to opportunity and sustainability…Factors such as reducing operating costs, increasing revenue from customers’  greener needs, and managing supply risks are driving leading companies to make a compelling business case, tailored to the corporate specifics of sector, capabilities and location. Mainstream investors are beginning to recognise environmental, social or governance (ESG) issues as critical differentiators between otherwise similar companies.

 

Four scenarios are presented.   These are not seen as predictions, rather:

 

By highlighting how the business and sustainability agenda might become distorted, we hope to create an imaginative engagement with what is possible and to generate commitment to real actions now.

 

To give this imagination some structure, uncertainties are developed, largely stemming from the consequences of the NICE. 

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Global Interest – Only this  “better than expected” global interest scenarios really matches King’s description of post-nice now “not-so-bad“.   An effective globalised response to global challenges prompts increased resource productivity and low-carbon growth. Companies have to play a greater role in supporting public services and infrastructure but reap the benefits of a broadly free, stable and prosperous world.  Businesses are either global (with changed structures to allow maximising shareholder value over years), niche (with fast innovation cycles and shared sense of purpose), or social (with business models to generate positive social or environmental outcomes and cover costs). 

Sustainability is seen as common goal in shaping global system.   As sustainability becomes mainstreamed and embedded in the business there is opportunity to maximise value through material efficiency (hence reduced environmental impact) but this is normal business.    Competitive advantage will come from “undiscovered” social problems such as poverty or human rights.

Just like the quality movement, which started life in a single manufacturing department and is now everyone’s responsibility, the global interest scenario sees the business-critical parts of sustainability embedded into the fabric of the company. Successful companies equip their people to make judgements on what sustainability really means for the business, and then create the management approach to deliver.

National Interest – Nations hoard their own resources and tighten their borders in a retreat to nationalism and protectionism. Global businesses all but disappear and companies are expected to support the national interest. 

Sustainability (in this scenario) is about sustaining the success of the home region. Environmental priorities include climate change adaptation and resource productivity. 

Individual companies become national champions in strategic sectors like defence, extraction, energy and steel. There is talk of a renewed ‘military-industrial complex’.  ‘Progressive’ companies who see business as having a wider role are rare.

Not surprisingly, the authors don’t like this scenario:

Businesses must act to avoid this scenario. Not only is it disastrous for poor people and the planet, it is a bad scenario for business too. Environmental overshoot ignores national boundaries, and needs global cooperation to tackle it. Ignoring the global for the local will only lead to more challenging times in the future.

Patched-up Globalisation –  Successful companies are multinationals with a local feel, helping to deliver local development needs. Emerging markets rise and today’s players may no longer be critical (they say “China stalls” following collapsing ecosystem services).  The end of cheap inputs means low-carbon technologies thrive, particularly biofuels.  

However, there is a strong onus on companies to tailor their activities to the local situation to get the best returns. In practice, the regional head offices are in charge of sustainability, working closely with the core business to understand and implement contributions to the particular development goals of a country.

Me and Mine, Online – (note, I think the book would benefit from a more objective disclaimer here, it is sponsored by out-sourcing firm Capgemini).  A highly networked world undermines individual countries and companies. Successful companies are now more like branded hubs, coordinating often temporary and short-lived supplier relationships to deliver customised products.

In this scenario ‘sustainability’ for business means protecting the trust and relationships central to success:

Many reputation strategies are ‘open-source,’ meaning anyone can see what their strategy is and copy it for themselves.  

Consumers are pursuing satisfaction from non-consumption. Thus, profit centres are furiously innovating the technologies and the business models that do deliver customer satisfaction from less environmental impact.

In a way that goes beyond van Pedro’s Sustainability 2.0, the authors suggest that business needs to be prepared for the possibility of disruptive change to organisational models:

- open source hardware

- radical transparency

- look to margins to find disruptive technology.

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