Councils and Foresight – Critical Differences

Since I published my Councils and Foresight post last week I have had some comments and questions via social media about the key differences between Councils and Commercial Organisations in particular and what they mean in terms of different approaches to foresight. Along with those questions three comments that were made last week during our foresight session at the VLGA Mayoral Leadership Conference have stuck in my head:

  1. I demonstrated our quick and dirty scenario approach prefaced with the statement that it was useful when you had a spare ten minutes. One Mayor talked to me afterwards and said she would love a spare ten minutes for anything. That is a major concern, No time for strategic thinking.
  2. Two mayors talked to me about reading 300 page briefing reports for council meetings, which ties in with the problem in point 1.
  3. One Mayor talked about the glacial pace of change in councils, which I am sure is true in most people’s experience.

These comments tie in with the different approaches that need to be taken with foresight issues in councils and they relate to the structural issues of how councils operate:

  • Firstly compared to commercial entities councils do not have the luxury of appointing a skills based board (council) based on getting a diverse range of expertise and perspectives. Having said that many commercial boards do not do that well either but at least they have the capacity to do so.
  • Secondly many councillors commonly come to council without a deep understanding of the detailed operations of council or in the management of large organisations while in many cases commercial boards are selected on that basis.
  • Thirdly councils are far more tied into, and exposed to the needs and views of their community while large commercial entities in particular are generally distant from their smaller shareholders. There are pluses and minuses to either situation but there is nothing like being confronted down the street, in the pub, or at the local footy club to bring home the reality of what you are trying to do.
  • Fourthly commercial entities are able to make faster decisions and have a much clearer measurement of success in terms of profit and loss, balance sheets, and share prices, albeit allowing for the weaknesses of some of those approaches.

So in terms of foresight and thinking of the future I think that councillors need to:

1/ Work much harder at bringing a diverse range of perspectives into the foresight and strategy processes of council, and ensure they are not the same old faces. This compensates for the lack of capacity to have a planned diverse council.

2/ Let go of the need to get across of all the detail and concentrate far more on critical thinking and questioning skills. Having been involved in representational agripolitics and party politics I realise that this is a lot easier said than done. Voters expect you to be across all the detail but if you spend all your time reading 300 page briefing papers you will have no time for thinking strategically. Councillors need to allow council officers to do the detailed work but have the capacity to clinically question what is put before them or develop alternative strategy, not try and do the operating job.

3/ Concentrate on areas where there is going to be faster than glacial movement. In areas of the economy that have been disrupted recently the key  has been a strong and direct link between the producer of products and services and the customer. Think books, music, airline travel, etc. In council affairs this relationship is sometimes more diffuse. The key area of direct contact and pressure is either funding by government or rates. In this efficiency and effectiveness of council service provision are critical. My view is that critical areas to be looking at here are:

  • The development of artificial intelligence systems and robotics. MTR in Hong Kong is already using an AI Boss to supervise and schedule its repairs and maintenance system.. X.ai is supplying an AI as a personal assistant which I have had personal experience with, and it already works well. There are going to be huge opportunities for reducing costs and improving the effectiveness of council service sin the next 5-10 years.
  • Crowd funding as a mechanism to test the real desire of people to get various things done in their community, perhaps by providing matching funding for projects. This has to be carefully managed as it raises the value of the voice of people who have money versus those that do not.
  • The rise of social enterprise were world class business operations also have a social purpose. The Bendigo Community Bank is an example of this where 50% of the profits are returned directly to the community in which the bank operates but there is likely to be big developments in this area.

4/ Concentrate on longer term issues and start the discussions well ahead of time. If pace of change is going to be slow then we need to engage the community in longer term discussions on what change looks like. Examples include:

  • Driverless cars are likely to be adopted in a significant way in the future. The time frame of that wholesale adoption is likely to be 10-20 years away (see post : Implementation of Driverless Cars – A case for public subsidy of private transport systems) but will have significant impacts on requirements for parking, public transport systems, road planning, work/living relationships (changing value of certain suburbs versus others). Council needs to be thinking about these issues well ahead of the adoption curve.
  • The future of local democracy. What does that look like in a networked world, tied in with crowd funding systems, electronic voting systems, virtual reality , etc.
  • The possible havoc that improvements in artificial intelligence and robotics might wreak on employment and what it means to the local economy and job market.

The pace of change is likely to accelerate. Councillors need to step back and see where their limited time can be used to create most value in that future.

Paul Higgins

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

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.