Futures Research Methodology Second Semester, Class 3

Environmental ScanningWild Cards

Prediction Markets

The Azerbaijan State Economic University March 8, 2013

Reyhan Huseynova, AFSS & ASEUJerome Glenn, Executive DirectorTheodore Gordon, Senior Research FellowElizabeth Florescu, Research DirectorJose Cordeiro, Venezuela Node Chairwww.millennium-project.org

Semester 2 Course Schedule

READ: https://themp.org/content/methods-table-of-contents.html•February 22, Class 1: Review Semester 1, Introduction to futures methods,

individual and class projects•March 1, Class 2: Delphi, Real-Time Delphi (RTD) (Future Day!)•March 8, Class 3: Environmental Scanning, Wild Cards, Prediction Markets (IWD!)•March 15, Class 4: State of the Future Index (SOFI)•March 22, No Class: Spring Festival, Happy Novruz!•March 29, Class 5: Data Mining, Cross Impact Analysis and Trend Impact Analysis •April 5, Class 6: Scenarios, Interactive Scenarios, Normative Forecasting •April 12, Class 7: Mid-term Exam (Status Report); Gaming and Simulations•April 19, Class 8: Statistical Modeling, IFs, Chaos and Non-Linear Systems•April 26, Class 9: Collective Intelligence, Futures Wheel •May 3, Class 10: Participatory Methods•May 10, Class 11: Frontiers of Futures Research•May 17, Class 12: Final Exam (written reports, briefing presentations and videos)

Review of Class 2

• Delphi and Real Time Delphi (RTD)

• Azerbaijan SOFI• Review Az-SOFI 2011• Real Time Delphi online access

• Peace Scenarios (Middle East example)http://www.millennium-project.org/millennium/rd1-mepeace.html http://www.millennium-project.org/millennium/rd2-mepeace.htmlhttp://www.millennium-project.org/millennium/MEPS-rd3.htmlhttp://www.millennium-project.org/millennium/study04.html

• Review literature and treaties• Real Time Delphi online access

Set up RTDs for Class Projects

Az-SOFI 2013https://themp.org/rtd/azerbaijan_2013_sofi/

Peace Scenarioshttps://themp.org/rtd/azerbaijan_peace_scenarios_study/

• Use the administrator login: student@FScourse.net(but do not change the password)

• For editing, please access: https://themp.org/rtd/

Assignments for Class 3• Reading of chapters in FRM v3:https://themp.org/content/methods-table-of-contents.html

• Environmental Scanning (Chapter 2)• Wild Cards (Chapter 10)• Prediction Markets (Chapter 26)

• Preliminary results of the RTDs set up• List of variables and historic data for Az-SOFI• Discussion on the peace preconditions• List of experts to be invited to participate

• Selection of Topics for Individual Projects

Final Class Projects

Individual research on a specific topic

Class (2 groups) reports on Future of Azerbaijan

State of the Future Index (SOFI) for Azerbaijan

Peace Scenarios (Nagorno-Karabakh conflict)

Written report, briefing and video

Choose a specific subject, e.g.: economy, energy, technology,

governance, environment, health, international relations, etc.

and show how its evolution could impact the future of Azerbaijan

Written report and briefing

Written report, briefing and video

Optional: contributing, writing or editing an article in Wikipedia or GFIS (Global Futures Intelligence System, The Millennium Project)

Individual Research Topics

Examples (4-5 pages for final class, including graphs):• Improving innovation in Azerbaijan• Alternative energy futures for Azerbaijan by 2025• Alternative economic drivers for Azerbaijan by 2025• Post-oil futures for Azerbaijan• Employment distribution by 2025• Social demographics of Azerbaijan to 2025 and beyond• Geopolitical futures for the Caucasus region by 2025• Health in the future• Artificial biology and its effects on Azerbaijan• Tele-Azerbaijan

Environmental Scanning

• Everyone does environmental scanning• Vital to futures research – as Crow’s Nest on a ship• “Environmental Scanning” used in the 1960-1980s• Other terms used today:

• Futures Scanning Systems• Early Warning Systems• Horizon Scanning• Futures Intelligence Systems

• Increasingly the output is being called “Collective Intelligence”

Purposes of Scanning Systems1. Identify threats and opportunities

2. Monitor information sources about these threats and opportunities that can provide early warning

3. Support the analysis of the information to produce intelligence and incorporation into an information system

4. Respond to feedback about the utility of such early warnings in order to change information sought; and hence, continually improve the system and the collective intelligence for strategic planning, policies, and decisionamking in general

Horizon scanning capability - ‘systematic examination of information to identify potential threats, risks, emerging issues and opportunities, beyond the Parliamentary term’

Jon Day, Chairman of the Joint Intelligence Committee, UK

Scanning Steps• Determine the theme and key words

• Choose sources

• Recognize signal of noise

• Identify issues

• Identify patterns

• Recognize strong and weak signals

• Examined the issues separately and in context

• Use ICT tools to expand knowledge (collaboration, social networks, tweets, blogs, etc.)

General Model of Scanning• Category/Domain/Theme• Sources (news, reports, papers, etc.)• Leading issues • Leading sources (most reliable and complex)• Data availability (indicators, databases, etc.)• Knowledge gaps• Significance to the future (timeframe,

importance, scope and spectrum of impact)• Objectives

General Model of Scanning (cont.)

• Relation to other issues/domains

• Current status and potential trajectories

• Actors

• Potential strategies

• Timeframes

• Who is observing the issues (subscribe, establish contact)

• Write report

Tools for Scanning• Feeds (RSS) , news listserves, Google News,

tweets, etc.• Social network analysis (blogs, facebook, etc.)• Wikies• Bookmarklet• Data Mining• Use of aggregators• Computer-augmented collaborative systems• Create your own files with categories and scores • Personalize collective intelligence software

Daily News Scan Example

Use ICT to aggregate:• News• Expert opinions• Identify clusters• Find agglomeration of items, or items that are

“outsiders”• Identify patterns• Update present situation

Open Source frameworks make data available on the emerging semantic web using sets of conventions

Aggregation

Experts and those with Insight • Candidate panelists can be identified through literature searches,

nomination by two or more peers, "daisy chains” and recommendations of professional organizations

• Panelists should be compensated • Important qualifications of panelists are their discipline, experience,

work, and interests, creativity• Questions of fact should be directed to panelists who are experts;

panelists should be able to excuse themselves from answering questions beyond their expertise

• Panelist responses should be anonymous when fed back to the group as a whole, although the list of participants should be known to all

• In any practical design, the number of respondents will be small; therefore, an environment "lookout" panel cannot produce statistically significant results.

Environmental Scanning Example

• Emerging Environmental Security Issues (http://www.millennium-project.org/millennium/env-scanning.html)

• Monthly(see also http://www.aepi.army.mil/reports)

• Organized by themes (e.g. ES-2010-11.pdf)

Monthly Scanning Reportwww.aepi.army.mil (click reports)

Item 1. An Emerging Nordic-Baltic Alliance Might Have Security Implications……………1

Item 2. International Air Cargo Screening Cooperation Requested…………………………1

Item 3. Fuel efficiency standards are changing around the world…….……………………...2

Item 4. Prosecution of Pillage of Natural Resources as War Crime………………………….2

Item 5. Technological Advances with Environmental Security Implications………………..3 5.1 Flexible Supercapacitor Could Power Wearable Environmental Sensors……..…….3 5.2 Nanoimprint May Create Synthetic, Chemical-Free, Anti-Bacterial Surfaces……....3 5.3 Potential Bioweapon Countermeasure against Ebola and Marburg Virus……..…….4 5.4 Charged Particle Generators Produce Desert “Rainstorms”……...…………………..4 5.5 New Detection and Cleanup Techniques………...………………………………...…4 5.6 Environment-friendly Cement Processes………..………………………………...…6

Item 6. Updates on Previously Identified Issues…………………………………………….....6 6.1 UN Review of Sustainable Development in Preparation for Rio+20 in 2012……….6 6.2 More Aggressive Action Needed to Curb Ozone Depletions………………………..7 6.3. The Battle for Rare Earth Elements Continues…………………………………...…7 6.4 EU to Set Resource Efficiency Targets………………………………………………8 6.5 NATO Continues to Develop Cyber Defense Policies……………………………….8 6.6 India Urges Strengthening Outer Space Treaty……………………………………....9 6.7 Climate Change………………………………………………………..……….…….9

6.7.1 Scientific Evidence and Natural Disasters……………………………………..9 6.7.2 Food and Water Security……………………………………………………..10 6.7.3 Melting glaciers and sea ice…………………………………………………..10 6.7.4 Health…………………………………………………………………………10 6.7.5 Computer Modeling and Scenarios…………………………………...………11

6.8 Nanotechnology Safety Issues……………………………………………………....11

Item 7. Reports and Information Suggested for Review……………………………………..12 7.1 Comprehensive Assessment of Environmental Security……………………………12 7.2 New Global Land Cover Maps……………………………………………...………12 7.3 Evolution of Environmental Management Philosophy in China……………...…….12

Appendix…………………………………………………………………………….…………..14

Example of a Scanning ItemItem 3. Fuel efficiency standards are changing around the world

UNEP in cooperation with other agencies has developed guidelines on sustainable procurement of vehicles for the UN. Recent reports by international organizations are pointing to the need for globally harmonized standards for assessing the efficiency of different fuels and relevant new technologies. The UN Industrial Development Organization (UNIDO) report Motor Systems Efficiency Supply Curves notes the lack of a transparent methodology for quantifying the energy efficiency of motor systems and insufficient data for documenting present and future cost effectiveness potentials. The International Energy Agency’s 50by50 Prospects and Progress report calls for global fuel economy reduction to about 8L/100km with emissions halved in new automobiles by 2030 and in all automobiles by 2050 (by the Global Fuel Economy Initiative). A European expert group states that alternative fuels could replace fossil fuels by 2050. A RAND Corporation study Alternative Fuels for Military Applications concludes that the military should direct its efforts more towards increasing energy efficiency rather than investing in alternative fuels.

Military Implications: It is fair to speculate that the UN procurement guidelines might be expanded to peacekeeping operations and therefore affect the military and its contractors. At the same time, fuel efficiency standards are increasing around the world, which increases the likelihood of global standards with assessment methodologies eventually affecting the military. The opportunity for military-to-military programs in fuel efficiency should be explored.

Sources: Buying Better Vehicles for the UN http://www.greeningtheblue.org/news/buying-better-vehicles-un New report gives green light to the feasibility of halving carbon emissions from new cars by 2030 http://www.iea.org/index_info.asp?id=1775 Clean Transport Systems http://ec.europa.eu/transport/urban/vehicles/road/clean_transport_systems_en.htm RAND study concludes use of alternative fuels by US military would convey no direct military benefit; recommends energy efficiency instead http://www.greencarcongress.com/2011/01/rand-20110125.html

Collective Intelligence

Generic Futures Scanning System

Collective Intelligence

• It is an emergent property• from synergies among

• data/info/knowledge• software/hardware• experts and others with insight

• that continually learns from feedback• to produce (nearly) just in time knowledge

for better decisions• than these elements acting alone

Millennium Project GFIShttps://themp.org

https://themp.org/digest/

Wild Cards• Surprise events that:

• are “barely possible” according to conventional thinking • have low probability of occurring• would have high impact if they would occur• act as “disruptors” • shock the entire system• have consequences that not obvious

• Black Swans• rare/surprise event• extreme 'impact‘• retrospectively (not prospectively) predictable

Types of Wild Cards

• Known or unknown • Predictable or unpredictable• Announced by weak signals or not• Single or cascading event(s)• Avoidable or unavoidable• Simple or complex• Positive or negative• Immediate impact or prolonged • Monitorable or non-monitorable

Examples of Wild Cards• Past: 9/11; stock market crash; discovery of DNA;

understanding the “unknowables” in chemistry; man-made or natural disasters;

• Potential: SIMAD; asteroid strike; shift of system of values; worldwide famine; UN system collapse; energy revolution; satellites system collapse; faster-than-light travel; hackers take over online banking and/or information dissemination; immortality; revolution of robots; extraterrestrial contact; etc.

• www.iknowfutures.com

Identification and Assessment• Identification:

• Environmental scanning• Surveys• Workshops• Experts• Science Fiction• Historical analogies

• Assessment:• Impact, rate of change• Timing• System's vulnerability• Potential evolution• Monitoring possibility• Reaction possibility

Monitoring Wild Cards

• If monitoring is possible:• Identifying areas of vulnerability • Discipline the wild card• Increase resilience

• Unconventional methods:• Intuition• Systems thinking• Creativity training• New theories and techniques • Reference Impact Grid (RIG)

Energy Price

unbelievable "free energy"

Suppl

yFracking

Biofuel

Subsidies

Sol

ar Win

dGHG

CO2

KXL

Nabucco

Supply shock

Consumption model

Combustion

motors

Vehicle capital

public capital

Energy policy

Demand

Nuclear disasterEnvironmental security

New

conflicts

Other renewables

Geoengineerin

g

Electric

vehicles

Major oil spill

“known unknown”

asteroid strike

infrastructure collapse

“unknown unknown”

energy revolution

Prediction Markets• Prediction markets are competitive betting games designed to tap

collective intelligence to predict the future. Lumenogic http://www.newsfutures.com/

• Participants rewarded function of accuracy (precision and timeline)

• Help:• improve forecasting• gain customer insights• create idea markets • evaluate uncertainty about expectations• focus attention to some weak signals or wild cards

• Predictive power increased by: • cognitive diversity • informed contrarian opinions (non-informed ~ loss)• Increased cognitive performance

Accuracy of Market Prediction More accurate than other common forms of predictions such as polling, surveys, and expert opinions

Examples and References• Lumenogic http://www.newsfutures.com/

• Predictocracy: Market Mechanisms for Public and Private Decision Making, by Michael Abramowicz

• The Foresight Exchange Prediction Market http://www.ideosphere.com/ Top 10 Claims:

•Cold Fusion •US President Visits Cuba •Collapse of US Govt. by 2025 •US non-Christian President by 2016 •Humanly mobile robot by 2036 •Operational fusion reactor

Assignments for Next Class

• Read about State of the Future Index (SOFI)• SOFI and Interactive SOFI (FRM, Chapters 34 and 38)• SOFI in the 2012 State of the Future (2012 SOF, Chapter 2)• Az-SOFI done in 2011

• Review Status of the RTDs• Status of RTDs set up• List of variables and historic data for the Az-SOFI 2013• Discussion on the peace preconditions• List of experts to be invited to participate

• Discuss Status of Individual Projects