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Why Would You Publish a Book About the Future Without a Kindle Version? (or another ebook version)

/ futuristpaul (Paul Higgins) / 7 Comments

Or why you have to remove all possible friction in your customer’s buying decisions

I went to Amazon to look at purchasing James Howard Kunstler’s new book yesterday after seeing a couple of recommendations from people in my social network that I trust.:

Too Much Magic: Wishful Thinking, Technology, and the Fate of the Nation

As far as I could tell there was only the hard cover version.

I don’t know about everyone else but I have stopped buying non fiction print version books.

That has happened for two reasons.

The first is convenience. I now carry an iPad almost everywhere I go and the Kindle application works fantastically well. For non fiction books the opportunity to dip back into them and find notes that I have made is important for my work and thinking. I am also constantly referring to my favourite books and authors and the convenience of being able to open up the iPad and show people the book is a nice thing to do.

The second is the ability to make a purchase decision when I want to and have the product straight away. Particularly for the non fiction books that I purchase it is highly unlikely that they will be available locally. Therefore I have to order them in which can take quite a while. The Amazon system is great in terms of being able to order and download immediately.

The fact that I could not get the book straight away means my attention has gone away from it and I may never return. I am constantly talking to clients and in my keynote presentations that they are not competing with their standard competitors any more. Now that my attention (and my money) has gone somewhere else it might not be focused on a different book, it might be focused on backing a Kickstarter project, or making a charitable donation, or buying a new music album. The demands for my attention are myriad and are coming from all sorts of places that were not there 5 years ago.

So why would you publish a book without an easily obtainable electronic version in this day and age. All you are doing is putting an obstacle in my way of buying your product. The same applies to lots of other product and service offerings. In a modern world you cannot afford to do that for long.

Paul Higgins

ps: I still buy printed versions of fiction books because I like the idea of reading in bed with a book and the same on planes for take-off and landings. We are all dinosaurs in some part of our behaviour!

The Looming Crisis for Crowdfunding – Why it is a Good Thing

/ futuristpaul (Paul Higgins) / 2 Comments

Crowdfunding, where you put up an idea for a project and ask people from all over the world to back it with a pledge from their credit card is all the rage at the moment but it will experience a disaster in the near future. That disaster will not kill the value of the system but it will cause a re-organisation and re-evaluation of value.

As an example of the system I have backed a crowd funded project here in Melbourne for the Scanbox (http://www.kickstarter.com/projects/limemouse/scanbox-turn-your-smartphone-into-a-portable-scann) which is a portable box that folds down flat when you travel and stands up with small magnets when you set it up. You can place your phone on the top and it acts as a stable platform for taking photographs of receipts and documents up to A4 size. While you can already do that with your phone in your hands the photos can tend to be a bit blurred which causes problems with optical recognition systems and search. The project was designed by Lime Mouse (http://www.limemouse.com/) an app developer in Melbourne. They asked for $12,500 but raised $189,499. I have been giving Scanboxes away in my conference presentations and workshops for the last 6 weeks or so as a “prize from the future” and they have been so popular that I had to increase my level of backing to give more away.

In practice what happens is that people back a particular project and receive a reward related to the level of funding they have committed. This reward may be in product in the case of a music album or a new product, or it may be in recognition for community or environmental projects. This means that beyond raising money it is a great system for testing markets and support for ideas. If lots and lots of people love your idea and commit to taking product from you then you have tested the market in the best possible way – actual buying commitment rather than focus groups and market research questions.

Until recently you could not raise share capital on these systems here in Australia you can in Europe and the recent JOBS act in the USA is allowing that to occur in limited and controlled ways and that change is likely to spread. The system is going mainstream with the Australia Council for the Arts running a crowdfunding road show in July and August to show people how to use the system. (http://www.australiacouncil.gov.au/events/2012/crowdfunding-seminars)

There has been huge growth in the last 6 months alone. I presented on crowdfunding as an option for the Daimler Financial Services Asia Pacific leadership team for financing car sharing systems in February. At that time the largest crowdfunding site in the world Kickstarter had not had a single project that had raised $1 million. By the middle of June there were 7 projects that had raised over $1 million, including musician Amanda Palmer who raised $1,192,793 for a new album, book and music tour, and Pebble which raised $10,266,845 for an e-paper watch that connects to your smartphone. The Economist reported in June that research firm Massolution was forecasting US$2.8 billion will be raised this year compared to US$530 million in 2009 (see chart).

 

 

Via: http://www.economist.com/node/21556973

In addition to market testing and fundraising the crowdfunding system is also changing the way that business models work. It is allowing musicians like Amanda Palmer to go their own way, outside of the standard music industry structures. Other musicians are using it to plan tours by committing to go to places that promoters would otherwise not even look at. In the future I can see venture capital firms that have high levels of trust and high profiles allowing their initial backing of projects and companies to then be used to influence people to back that company. That would increase the power of the entrepreneurs along with the influence of the best venture capitalists.

But there is a dark cloud among all this silver lining. There will almost certainly be a major financial or project scandal on one of the major crowdfunding sites in the near future. Those of you who have read my other articles will know that I don’t really believe in forecasting, so you may be asking yourself why I am making this prediction. The reason is the only sure fire way I know how to predict things is by looking at long standing human behaviour. If you had asked me 20 years ago what would dominate large sections of the internet I would have responded with gossip, gambling, pornography, and crime because humans have been carrying out those activities for thousands of years and would continue to do so on a new platform. People have been having wild and crazy ideas and scamming people for thousands of years, therefore it is highly likely to happen in a crowdfunding situation. What will happen is that an idea that is being promoted will not come into reality and therefore people will not receive the product they were promised, or someone will run off with a bucket load of money. That will generate huge publicity.

That disaster will re-shape how crowdfunding works with trust being a key determinant of success. The perceived increase in levels of risk will mean that funding will flow more towards those people with a strong track record, or with some sort of other validation from a trusted individual or organisation who would not risk their reputation or brand in a problematic venture. Over time this will strengthen crowd funding, and personally I would like to put my trust and money in the hands of an open and transparent system like crowdfunding than in the hands of bankers and traders given their track record in the last few years.

 

Car Sharing about to Explode?

/ futuristpaul (Paul Higgins) / Leave a comment

I wrote a post back in May on

The Mental Shift in the Collaboration Economy and Why it Matters to Everyone

The post is about how collaboration and sharing is taking off and specifically mentioned car sharing as a key example.

On Tuesday GigaOm had a notice up that GM was partnering with Relay Rides to allow users of OnStar to rent their cars out via a mobile app:

GM opens up OnStar with peer-to-peer car sharing service

This is the implementation of an announcement from back in October.

This is a big deal because it is about building services on top of existing installed technologies rather than people having to pay for new technologies.

It is also a big deal because OnStar has an installed user base of 6 million people which immediately gives the idea scale.

Our cars are one of our most expensive capital and operating budget items. In a time of financial uncertainty and risk a method which safely allows us to offset that cost by lending our car to a trusted social network may take off in a big way.

If that is the case then car makers better look out because they can throw out all their projections on future car sales.

STEEPeD in Environmental Scanning

/ futuristpaul (Paul Higgins) / 4 Comments

I am back posting again after a brief 2 month hiatus where we have been the busiest we have ever been in the life of our company. During that time it has been my privilege to work with people like the CEO and 180 senior managers of YMCA Victoria, the senior staff and associated bodies of the NE Catchment Management Authority, and the Expert Advisory Group for the National Farmers Federation Blueprint for the Future of Agriculture among many others.

One thing that has consistently come up has been discussions on change versus disruption. We all experience change in our working lives and it seems for many people that this change has become more rapid and more exhausting. On top of that we are also experiencing more disruption which I would define as sudden and abrupt change that fundamentally changes the way that we operate. Commonly people have regarded that as the province of large companies that are suddenly blind sided by a fundamentally changed technology or way of doing business as we have seen in the last few years with the iPhone and Android phones blind siding Blackberry and Nokia. More and more these changes are affecting organisations of all sizes and people are constantly asking us how do we spot disruption before it destroys us?

There are three basic principles that we use to answer that question.

1/ The first is that the disruptions while they might seem abrupt at the time quite often have a long lead time before they create the disruption. The figure below from Business Insider shows the RIM (manufacturer of the Blackberry) share price from the date the iPhone was announced by Steve Jobs. This is clearly a technology that has completely disrupted RIM’s business model but it took several years to do so.

Image

2/ The second is that you can look around a search for possible disruptions to your business model. You do this by looking outside of your industry area but also by looking more deeply into trends and developments than just the surface stories. More on this below.

3/ The third is that you must accept that you are not going to see all disruptions before they arrive. This is particularly true in the developments of technology changes. As Kevin Kelly says in his book What Technology Wants social use of a modern technology changes the technology and the use. If you put Microsoft Kinect in the hands of 10 million people then some of them are going to use it for different things. So we now have Kinects being used to manipulate micro-satellites, being the sensory head of robotic guide dogs, and being used as 3d scanners in archaeological digs. If you think you can predict or know where 10 million hackers and innovators might take 50 different technologies and business models then good luck to you. If you accept that you cannot do that then you must build a resilient and adaptive business model that can cope with disruption. One that is not reliant on a single future taking place one that you are constantly challenging.

If you want to start looking around more at what might affect you and your organisation then one of the ways that we recommend people do that is a structured environmental scanning system.

The most common way of doing that is to use a framework such as STEEP which stands for Social, Technological, Economic, Environmental and Political. If you collect information and possibilities and test them against these categories you can see where you are looking and bolster your scanning in areas that you are normally weak in.

On top of that we recommend looking for possible disruptions and so use the STEEPeD acronym to describe that. At the end of this post I have put in several examples of disruption that we have seen in the last few months. A disruptive change can be in any of the categories of STEEP but must have the ability to significantly challenge your business model.

As well as looking around you to see what might happen you need to have a structured approach to try and make sense of what you are seeing. We use a simple system of questions to structure that approach which are:

  • Did you See it? (are you looking in the right directions?)
  • Did you Heed it? (when you saw it did you really notice it?)
  • Did you Understand it? (have you looked beyond the surface for implications)
  • Did you Execute? (did you actually do something or are you just daydreaming? – Making a decision to do nothing is different than doing nothing)

So if you follow these principles you can improve you ability to spot disruptions before they occur and to change your business models to take advantage of disruptions but you must always remember that you will miss lots of them and your strategies must be able to cope with that.

Here are some interesting disruptions from our scanning in the last few months:

Automate or Perish

http://www.technologyreview.com/news/428402/automate-or-perish/?nlid=nlbus&nld=2012-07-06

Successful businesses will be those that optimize the mix of humans, robots, and algorithms.

Jeff Jarvis

We are seeing a widespread disruption of institutions: not just economically and technologically but also in their status in society. Note: Gallup finds that more than half the institutions it tracks have hit historic lows in confidence in the last five years.

E-Commerce Is Head Over Heels for Pinterest

http://allthingsd.com/20120615/e-commerce-is-head-over-heels-for-pinterest-and-theres-a-good-reason-why/

 evidence that Pinterest is skyrocketing: 

  • In Q2, referral traffic from Pinterest is up 2,535 percent year over year.
  • In Q2, referral traffic from Facebook is up 2.7 percent year over year.
  • Conversion rates from Pinterest are 0.43 percent in Q2, up from 0.29 percent in Q1 2012.
  • Conversion rates for Facebook are 0.61 percent in Q2, up from 0.49 percent in Q1 2012.

Disruption in Film Making

http://wiredinsider.tumblr.com/post/25307743475/diy-cgi

Every aspiring filmmaker should get really excited right about now. A group of programming enthusiasts have successfully hacked a Kinect to produce a stunning new hybrid of video and computer generated imagery. CGI is hard. And expensive. This technique puts it within reach of anyone with a Kinect and a digital camera.

Scoot Airlines Cuts 7% of Aircraft Weight and Slashes Fuel Bills by Switching to iPad 2 Rental

http://worldnewsresource.com/scoot-airlines-cuts-7-of-aircraft-weight-and-slashes-fuel-bills-by-switching-to-ipad-2-rental/1948/frank-little

No more airline entertainment systems or servicing!

If you are interested in increasing your scanning capacity then we offer a free month’s trial for our scanning database which contains all the future orientated stuff we see. You can access the trial by going to http://www.emergentfutures.com and entering your details at the bottom of the page.

Paul Higgins

The Mental Shift in the Collaboration Economy and Why it Matters to Everyone

/ futuristpaul (Paul Higgins) / 1 Comment

I am a strong believer in the increasing strength of the collaboration economy where we share things and resources rather than own them or use commercial options.

On a personal basis we no longer have a second car. I use Flexicar here in Australia to get a car when I need it. This reduces our costs of car ownership, reduces the resources we use, and reduces the parking pressure on crowded streets in our neighbourhood. In addition I have used airbnnb quite a bit for travel, staying in other people’s homes and apartments at a lower cost but also for an improved experience.

There are two points that are interesting to me about how this might change the nature of how we make decisions and act together.

The first is that in the car sharing example it changes the decision point on costs. You no longer have the big decision to make on a major capital expenditure, but the main thing is that the cost gets transferred from a distant, annualised cost and is applied to the decision to do something at the time of making it. For example I am doing gym rehab for a broken leg and dislocated ankle that I suffered last year by being hit by a car while triathlon training. Previously I went to a YMCA gym around the corner but as that is closed for refurbishment I have to drive to another YMCA gym. Our first car is mostly unavailable during the week as my partner has to use it to get to work. Therefore every time I go to the gym in the share car it costs me $19.90 including petrol. Whilst previously I would just jump in the car and go, now I think about the cost every time I make a decision to go or not. Previously I was happy to have the second car sitting around most of the time at a cost of about $200 a week. Now I baulk at spending 10% of that to go to the gym. I still go because it is important to my health but moving the cost to the point of making that decision really makes me think about the value. The arrangement has certainly got me walking, cycling, and using public transport more which is a great thing.

The reason I am writing this post is that it got me thinking about the nature of decision making and value. If the collaboration economy grows it means more and more decisions are made at the point where we decide if they are valuable or not. That combined with increasing transparency and social media recommendation systems mean real value becomes even more important.

The second aspect of the collaboration economy is a longer term one. Systems like GetAround which supply technology for your car so you can rent it out to your social network are building user groups based on social interactions. As numbers grow these groups are going to become more powerful in our economy and move beyond just car sharing. They will put relentless pressure on prices for all sorts of things including tyres, petrol and insurance. Beyond that why will they stop at motor vehicle related products? For instance they provide a massive group that can decide to support a charity and make a huge difference to the mission of that charity. Due to their social nature they are likely to vote on what to support so true value and results will become far more important in the not for profit sector. I see these sorts of groups as the next generation beyond the current group buying sites like Living Social and Groupon. The key differences will be that they will be driven by the user base and their social nature rather than the core company. Therefore value and purpose will be more important to them. This will be a fundamental shift.

I would be interested in what people think. Meanwhile I am off to rehab in my share car

Paul Higgins

Why Great in the Market Place of Ideas Means a Power Drill not a Revolver

/ futuristpaul (Paul Higgins) / Leave a comment

Last week Jason Calacanis sent out an email of his post that was up on The Launch blog called The Age of Excellence. In the post Jason argued that in a world of relentless openness and transparency it was no longer enough to be good, you had to be great.

Jason illustrated this by an image of a revolver, saying that your reviews had to look like a gun with lots of five star reviews making up the barrel, a few four stars making up the chamber, and very few 3 to 1 star ratings making up the handle. This creates an image as follows (from the launch post)

I agree that this totally applies to the world of start-ups and applications where the user experience and word of mouth from that experience is all important. However it is a dangerous analogy or way of looking at things in the world of ideas even though I have followed it almost exactly when buying books on Amazon. Reading this post has made me change my behaviour which is the greatest compliment anyone can pay to someone writing about an idea.

If you are involved in making applications for tablets or smartphones, or in producing movies for pure entertainment value  then you should be aiming for this sort of picture. However most of our work is involved in the marketplace of ideas and we deliberately avoid trying to achieve this picture. When I present a keynote at a conference I am actually looking for a picture that looks more like a portable power drill with a batter pack at the bottom:

Image from Amazon

With lots of fives, a few fours, then hardly any twos or threes but a fair number of ones.

The reasoning behind this is that we are trying to push people to change their thinking and re-examine their mental models in order to actually change what they do. The people that will do that are contained in the group that gives us a five star review. However if everyone loves what I have said or presented then I have not pushed the 5-star group hard enough. If I haven’t done that then there is likely to be less action in the five star group. Our mission is to leverage our skills and thinking to enable other people to take action.

There are plenty of quotes out there about ideas that change things first have to be seen as subversive or ridiculous. Therefore it is my view that if everyone likes what is being presented to them then it is too bland and too mainstream. That is fine in the area of entertainment or applications but it is dangerous in the market place of ideas. Our mission is to leverage our skills and thinking to enable other people to take action so if we are not pushing hard enough we are failing to be great. I agree totally with the sentiment of Jason’s overall post which is that in a modern world you have to be great because good is not good enough. However being liked and being great are not always the same thing.

Paul Higgins

If you want to see more about how we present and some of our audience ratings go to the Keynotes and Presentations section of our website

Internet and Reading

/ futuristpaul (Paul Higgins) / Leave a comment

Over at Tumblr I re-blogged Alex Madrigal’s article from the Atlantic showing a chart of the percentage of Americans reading books over time:

http://emergentfutures.tumblr.com/post/21017030486/the-next-time-someone-says-the-internet-killed

The original article (which is linked to in the re-blog) shows the following:

 

 

The reason that I am putting this up here is that the re-blog had a very high number of responses – likes, re-blogs and comments. I put up the post on Friday 13th April at 7.20pm and by this morning (Sunday 15th at 9am) there have been 1057 responses which is the highest for any of our posts in such a short time.

 

This had me wondering why. If you set aside some of the comments on the gap in the data between 1957 and 1990, which way the graph should run, and issues of cause versus correlation I think there are some very interesting things here:

 

  • Scrolling through the comments (which I acknowledge are a skewed subset of blog readers and online enthusiasts) you get a real sense of outrage that the modern generations are being accused of reading less and that some older time was a “golden age”
  • There is a real debate about what constitutes literature versus just reading. It is my view that as long as people are reading books the fact that they are not “high literature” is irrelevant because it is sparking the interest in reading that it important.
  • There is a strong aspect of critical thinking and critical review which a lot of people worry has been lost by modern pop culture and reductions in attention spans. It is certainly my experience of interacting with younger people (and again my sample if probably very skewed) that they are very strong in their thinking and assessments of arguments.

 

From the large number of responses where there was no comment, just a like or re-blog it is obvious that this article immediately touched people and they wanted to share what it was saying. I think that this is an area which is of critical importance for our future and it is my view that the sharing and availability of books via the internet is a positive thing which will only be enhanced as our tools around “social reading improve”

From my own personal point of view I find my experience going in the opposite direction. I was a complete outlier in terms of book reading, reading 2 or 3 a week and having 8-10 on the go at any one time. I have certainly found that our work and need to maintain scanning of up to date ideas on disruption and change has reduced that significantly as the influence of the internet has grown. Although I  am sure that I am still on the heavy side of the general population. I think that overall my reading experience has been enriched by information access that the internet has provided but I find myself having to work harder and harder to find the space to read longer form material, including books. 

This is more true of non fiction material that it is of fiction because despite the fact that most of my non fiction reading has now transferred to the Kindle app on my iPad I am still a dinosaur when it comes to reading novels. This is largely because my novel reading tends to be a habit that is now largely confined to reading before going to sleep, especially when travelling for work and I cannot make myself move to do that on an iPad.

 

I would be interested in knowing what other people’s experiences and thoughts are.

 

Paul Higgins

Books I like Around Future Thinking

/ futuristpaul (Paul Higgins) / 7 Comments

Mostly Incoherent Ramblings on Tumblr sent me the following message:

Hey Paul,

I really enjoy your blog. The idea of futurism really interests me and seeing that you have a masters in the field I was wondering if there were any books on the matter that you would recommend to a blogger looking to get a sense of what futurism is all about. Thanks in advance.

I think that thinking about the future means understanding the past as much as possible and identifying new possibilities while being able to find assumptions and blind spots in thinking that can blind us to those possibilities. Here are a few of my favourites I have pulled off the bookshelf behind me and explanations about why I think they are important. Most of them are not specifically futures books or methods books but I think they are invaluable to anybody seeking to think more about the future.

Future Inc by my friend Eric Garland is an accessible book on thinking about the future although he has just published an article in The Atlantic saying he is withdrawing from the business of Strategic Intelligence

Expert Political Judgement by Philip Tetlock is a very good study on prediction and how it does not work. Very dense with statistics but worth persevering with.

Here Comes Everybody by Clay Shirky. I love Clay’s writing and speaking and this is a great one on how the internet and the platforms of technology attached to it are changing the way we organise ourselves.

Where Good Ideas Come From by Steven Johnson. This is a great book on the history of innovation and especially on how different perspectives and the intersection of ideas and disciplines feed into new ideas.

The Future of Management by Gary Hamel. I strongly believe that tied in with the ideas in Clay Shirky’s book above that the nature of organising is changing the nature of work and how large businesses work. I am currently reading Gary’s new book What Matters Now on my iPad

What Technology Wants by Kevin Kelly is a great book on the drivers of technological change and how social use of technology is changing the world. I am a big believer that technological change is one of the big drivers of change for our future and so understanding why and how is important

Predictably Irrational by Dan Ariely. Because understanding how people’s minds work is important for a futurist this is a great book which looks at all sorts of ways we think and act differently than our rational selves would believe.

The Rise and Fall of Strategic Planning by Henry Mintzberg. Because I believe that standard strategic planning no longer works that well it is important to understand it and it strengths and weaknesses. This is a great book on that from a giant in the field.

The Innovators Dilemma by Clayton Christensen which looks at how innovation occurs and how large organisations struggle with it meaning most disruptive change comes from outside. Disruptive change is one of my areas of interest because I believe it is reshaping the world.

The Halo Effect by Phil Rosenzweig. A great book, that among other things shows how we interpret success through rose coloured glasses and this colours our future thinking in ways most people do not understand.

Thinking Fast, Thinking Slow by Daniel Kahneman because understanding how we think is really important. This looks at type 1 and type 2 thinking and decision making and how we think and decide in different situations.

The Information: A History, a Theory, a Flood. by James Gleick. Because Information is so important in our modern world. This is a book with a huge sweep of history and detail. Not a light read but most worthwhile

Physics of the Future by Michio Kaku because understanding science and technology is important when thinking about the future and far too many people have a poor understanding and therefore predict stuff which is highly unlikely.

Race Against the Machine by Erik Brynjolfsson and Andrew McAfee because if technology is going to reshape the world I think it is important to understand how and why and what is might mean for society.

Besides these books and their authors people that I always like to hear from include Fred Wilson from Union Square Ventures, Umair Haque from Hava Media Labs, Stowe Boyd from New York.

I anybody wants to add other books people should read then please add them in the comments.

Paul Higgins

How to pick a good Futurist from a snake oil salesman

/ futuristpaul (Paul Higgins) / 2 Comments

“Some of them wanted to sell me snake oil and I’m not necessarily going to dismiss all of these, as I have never found a rusty snake.” 

-Author Terry Pratchett on some of the 60,000 emails that he received after announcing he had been diagnosed with early onset Alzheimer’s disease

(You can read his full speech on the matter here at http://www.freerepublic.com/focus/f-chat/1986843/posts . It is well worth the read for its humour and its candour alone. If you have not read his books I would also recommend that you start)

What we tell people consistently when we work with them is that “How you think is more important than what you think” and there are two simple tests you can use straight away:

The First Test – Are they more right about the future than the average on a consistent basis

If I demonstrated to you over 10 weeks that I could predict which way the stock market would go each week would you then give me $10,000 to advise you for the next week so you could take out an option on the share market index result at the end of the month?

If the answer is yes then you had just fallen for one of the classic scams which is possible on the internet. This is how works:

  • On day one you send out 10 million emails stating that you can predict which way the stock market will go in the following seven days.
  • In half of those emails you tell the people that the stock market will go up and the other half you tell them that the stock market will go down.
  • The following week you send 5 million e-mails to the people that received the previous correct “prediction” and in half of those e-mails you tell the people that the stock market will go up and the other half you tell them that the stock market will go down.
  • In the third week you send out 2.5 million emails to the people that received the previous two correct “prediction” and in half of those e-mails you tell the people that the stock market will go up and the other half you tell them that the stock market will go down.

And so on ……

At the end all the 10 weeks you will have 9,766 people who have received a correct prediction from you 10 weeks in a row. If 10% of those send you $10,000 you have just netted a cool $9,766,000. Not bad for ten weeks work pressing an email button once a week!

The point of this story is that many people have been propelled into the spotlight as “knowing what the future will be” purely by chance.

During 2008 as oil prices surged the media were full of stories about the analysts who got the oil price forecast right:

The price of crude oil could soar to $200 a barrel in as little as six months, as supply continues to struggle to meet demand, a report has warned………….. Mr Murti correctly predicted three years ago – when oil was about $55 a barrel – that it would pass $100, which it reached for the first time in January of this year.

 

–          BBC News May 7, 2008[1]

 

Maverick economist Jeff Rubin, who is at the top of his game these days, says Canadians shouldn’t be surprised to see gasoline at $1.50 a litre and oil at $150 (U.S.) a barrel within the next four years – possibly much sooner……. He correctly predicted in 2000 that oil would average $50 by mid-decade and, two years ago, was right when he said oil would hit $100 by the end of 2007 (though Goldman Sachs made the prediction a year earlier).

 – The Star January 11 2008[2]

……the investment guru Jim Rogers the latest to predict that the only direction is upward. Mr Rogers, who two years ago correctly predicted oil would reach $US100 a barrel, told investors at a conference in China over the weekend that he expected prices to go even higher than their present level. They will keep rising, “unless someone finds a major oilfield very quickly, in accessible areas”, he said.

 – Sydney Morning Herald 30th June, 2008[3]

Now I wish to make it clear that I am not criticising the individuals who are quoted in these articles. but expecting that one successful prediction (if in fact they really are that) in a volatile market makes you an expert about what the future will bring is clearly ridiculous. If I wrote on 27 pieces of paper a price of oil between $40 a barrel and $300 dollars a barrel and stuck them on a wall and then asked monkeys to throw darts at them then one of the monkeys will almost certainly correctly predict the price of oil in a years time. I would be laughed off the stage if I then tried to sell that monkey as an expert on oil prices and rightly so.

[2] http://www.thestar.com/Business/article/293042 . Accessed July 8, 2008. The article goes on to say: “I think my calls have been pretty good,” said Rubin, who first grabbed the spotlight in 1989 when he went against the grain and correctly predicted a collapse in theToronto real estate market. But sometimes his calls have fallen flat. In 1992, Rubin forecast an economic recovery from the 1990-’91 recession and for several years nothing much happened. And in 1995 he called for more aggressive cuts to the federal deficit, only to backtrack a year later and blame the deficit payoff for sluggish economic growth. More recently, he predicted the S&P/TSX composite index would hit 15,000 by the end of 2007, but reality came nowhere close. And now he is locked into a prediction it will reach 16,200 by the end of this year at a time when the economy is slowing.

[3] http://business.smh.com.au/no-relief-as-opec-tips-us170-oil-20080629-2yup.html  Accessed July 8, 2008

The Second Test (and most important one) – Can they tell you a coherent logical story about why they have made their predictions

This test is important for two reasons:

Firstly it allows you to gauge for your self the depth of understanding and thinking that has gone into the forecast that is being presented so you can gauge how well the person who presented it thinks.

Secondly if you are told a logical and coherent story you can elicit from that story a number of important things:

  • What are the assumptions that the author of the story has relied upon (you should be able to tell this even if they can’t themselves). These assumptions can take a number of forms including the author’s view of how the world works (world view).[1]
  • What are the key trends that the author has looked at as the basis for their forecast? You have to be careful here because there is no such thing as a forecast trend, such a term is an oxymoron because trends are by definition recognisable patterns that are based on historical data.
  • What assumptions has the author made by extrapolating trends forwards.
  • What are the key forces at work in the forecast that has been described, both as individual players but other forces such as group behaviour, political actions, etc

Once you have that information then you are now in a much stronger position to assess the worth of the forecast but you can also now use the forecast to navigate as you go along. For example if you want to sit down every three months and re-examine the forces and assumptions and change any that you see changing in the real world you can alter the forecast yourself. You now have a tool, not a stone tablet handed down from on high.

Following on from the oil forecasting stories mentioned above I had a story published in The Age in August 2008 saying that I was willing to bet on the price of oil being below US$40 a barrel before then end of 2009. (You can access the article at our articles download page) I want to emphasise that this was a bet rather than a prediction. What that means is that I believed there was a better than even chance that this price would be reached in the time frame. At the time I was subject to a torrent of abuse and criticism from all over the world. I offered this bet at a number of conferences that I spoke at during this period and made a number of bets. Fellow futurist Mike McCallum was the only one that paid me but others made donations to charities at my request. I do not hold myself out as an oil expert but you can judge for yourself if I met my own criteria.

Paul Higgins

[1] For a useful description of how to surface explicit and implicit assumption in stories and strategies go to the following page on Wikipedia:  http://en.wikipedia.org/wiki/Assumption_based_planning

The Future of Australian Politics

/ futuristpaul (Paul Higgins) / Leave a comment

Antony Green, the ABC political analyst who does consistently great work has published a very thoughtful analysis of the state of the Australian Labor Party on his blog. In that analysis he has dug into the data and produced the following graph:

Image

The graph shows the percentage of lower house seats held by Labor over the last 43 years with the state of the Federal Government placed in the background with the pink sections denoting Federal Labor Governments. Anthony proposes that this shows that being in government Federally is deleterious on the health of the state parties as they consistently lose seats following the election of a Federal Labor Government.

I would like to provide an alternative view and some further comments and predictions as Anthony’s analysis may be confusing cause and effect. While the analysis is certainly plausible, the alternative is that rebuilding of the party’s power base come from the states rather than federally. If we look at the graph when Labor loses government nationally its total percentage of state seats is at its lowest ebb. Then the percentage of seats rises and Labor does not get elected federally until a significant percentage of state seats are won back. However due to a limited life cycle of governments by the time that has happened the State Labor Governments have started to be on the nose and so the percentage of seats held starts to fall. This is an alternative explanation of the decline rather than the election of the Federal Labor Government being the cause of the fall.

It is easy to find reasons why either of these explanations is valid. My theory would suggest that most of the effort from the Labor Party after a Federal defeat should go into building state party structures and campaigns rather than the Federal Party. I am conducting a “politics 101” training session for a not for profit organisations next week and these graphs will be a very useful addition to that session and I intend to raise these competing theories as a discussion point.

Beyond that analysis I would like to comment on the possible future of Australian politics and make some predictions. I certainly agree with Antony’s comments that there is now a larger percentage of people who are prepared to change their vote as evidenced by seats changing hands that have rarely or never changed hands (although some of that is demographic change), and the size of some of the swings.

What is interesting if we look at the recent political polls on our leaders is that we seem to have lost faith as a nation. A series of political polls shown on the ABC Insiders program last weekend showed a consistent long term fall in the ratings of both Prime Minister Julia Gillard and Opposition Leader Tony Abbott. Further back this was echoed in the polls on Kevin Rudd as Prime Minister. It seems that the Australian people like their leaders when they are first elected and then when they get to know them they become significantly disappointed over time. The question is whether this is the fault of the politicians we have, or a set of unrealistic expectations that the electorate has of its political leaders. I think that it is a combination of both which leads me to my first prediction:

“There will be a significant and precipitous fall in the popularity of Campbell Newman in Queensland”

I do not make this prediction as a party political one (see disclaimer below) but as a comment on the state of mind of the people that voted Campbell Newman in and would apply to either party in the same circumstances. It takes a bit of a wrench for people to change their voting patterns in the sort of way that happened in Queensland and with that wrench will come an even higher level of expectation of change. There is a limit to which State Premiers can deliver that sort of change and so I am predicting a serious disappointment in Queensland in the next 2-3 years. I do not believe that will be enough to tip the government out and should no way be seen by the Labor Party as a revival for them.

My other comment is on the longer term future of politics in Australia. Antony Green has made a strong case in his blog that what we are seeing is unlikely to be the demise of the Australian Labor Party. His argument is basically that these things have happened before and the cycle always turns and he presents compelling evidence that this is the case. Of course such cycles and trends are always compelling evidence until the cycle or trend breaks and we are surprised. I am of the view that we are on the verge of significant political change.

As a futurist I am fond of saying that the best predictor of the future is long term consistent human behaviour. So if asked to predict the future of the internet 20 years ago I would have predicted that it would be filled with gossip, gambling, crime, sharing, and pornography because that is what people have done for thousands of years. In a political context the consistent pattern is that when enough people get upset then revolutions occur. On top of that human reaction we now have a range of communication and activism tools we did not possess a decade ago. Many people I am close to have commented over the years that my involvement in politics and industry organisations is just a waste of time and why do I do it. When I question them more closely it reveals that they are still involved in politics themselves but they have narrowed it down to where they can make a difference – in their local school committees or in organising a local event or protest. My conclusion is that they have narrowed down their focus down to a level where they can see they can make a difference and shut out where they think they have no influence. Therefore I believe that there is quite a lot of fuel out there because:

  • More and more people are dissatisfied with our political leaders and political parties (and less people involved as members)
  • There are a large number of people who will take action but feel they cannot make a difference.
  • There are more and more tools available for people to make a contribution and feel they are making a difference.This can change the discontented group into an activism group.

Once these combinations reach a certain point there will be an explosion. I am not sure exactly what that might look like but here are a few possibilities:

  1. More influence and members of such organisations as Get Up which increase the engagement of people in the process and also reduce the friction between people getting upset and being able to do something.
  2. More independent politicians, in part fuelled by dissatisfaction with the major parties, but also powered by new ways to communicate. In the past mass media has kept the major parties in power except in certain areas where an individual has a strong enough media profile to get significant coverage. Media power is starting to wane as new methods of producing and distributing content engage people more.
  3. A coalition of regional independents because once regional people wake up to the fact that they can hold the balance of power almost permanently by banding together on their major areas of concern they will support candidates outside of the major parties that will do that.
  4. A splitting of politicians into one group that has an even shorter life than now because of electoral volatility, and another group who have long careers and influence because they connect with the electorate far more. I do not mean that they have to be sycophantic but a combination of strong leadership and empathy will be key.

I said above that the sorts of changes that we are seeing in voter assessment of leaders are a combination of unrealistic voter expectations and problems with our politicians. I am probably in a minority of people who believe that most of our politicians are honourable people with great intentions who work hard for their communities. I have been exposed to politicians from all sides by my involvement in party politics but also in my role as Chairman of a national industry organisation. Sure there are corrupt and venal individuals involved, but I have been impressed by the majority of people who put themselves forward for political office. The fundamental flaw that seems to be occurring is that when they get to be leaders they try and hide parts of themselves from the general public or dissemble on significant issues. The Australian people have great “bullshit detection meters” and they see right through this sort of stuff. It is time for our political leaders to present themselves as who they are, and to talk honestly to the Australian public and let the cards fall where they may. The alternative is a slow rusting death followed by revolution.

Paul Higgins

P.S. Thanks to my friend and protagonist Chris Brennan who sent me the link to the Antony Green piece after a lively discussion on the Qld election last night

Disclaimer/Information: I am a member of the Australian Labor Party although no longer that active. I was President of Country Labor in Victoria for about 5 years before and after the Brack’s Labor Government took office. I ran for Federal pre-selection twice in the nineties and am profoundly grateful to the members who did not pick me to stand because I have seen more and more of how politicians have to live their lives and it is a difficult and thankless task. I presented to the Australia and New Zealand Clerk’s at The Table Conference in January on the future of parliament.