BUILDING OUR FUTURE THROUGH UNDERSTANDING OUR PASTHow a Knowledge of Patterns Can Help Us Understand Our Future
Stephen Murgatroyd, PhD FRSA, FBPsS
Chief Scout, Murgatroyd Communications & Consulting Inc
Vancouver, June 27th 2011
Marriot Pinnacle Hotel an RSA Fellows Event

History is a mystery, but the future is clear
Ben Bernanke

BUILDING OUR FUTURE THROUGH UNDERSTANDING OUR PASTHow a Knowledge of Patterns Can Help Us Understand Our Future
This presentation will look at six current revolutions and their significance. The six revolutions are:
Technology
Global Economics
Global power balances
Demographics
Climate Change & Water
Personal Identity
The underlying structure of these revolutions suggests
The consequences of understanding these interlocking pattern are..

Technology
The First Revolution

Technology is Everywhere
The iPad is the fastest growing technology ever to be sold iPad 1 sold 1 million in 28 days (April 2010) and the iPad 2 sold 1 million in 3 days (March 2011) a total of 19.5 million have been sold in 12 months
The 10 billionth app for the iPhone/ iPad was downloaded on January 22nd 2011 at 1045 am
640 million Facebook users in 6 years
In Q4 of 2010 Smart Phone shipments outstrip PC shipments 2:1

Adoption Speeds are Getting Faster(number of years to secure 80% penetration)

Technology is Changing IndustriesThe Forest Sector
Cellulosic Ethanol
Pulp & Paper
Nano Crystalline Cellulose
Bio Active Paper & Packs
Building Material
Renewable diesel
Aircraft Fuels
Energy
Bio Plastics
Food Additives
Bio Oils
Methanol
Textiles
Renewable Tires using Lignin
Bio Pharmaceuticals

Music / Movie Rental Industry
iTunes has changed this industry, with over 5 billion downloads
iTunes Store also has the largest music catalogue online, with over 8 million tracks.
iTunes Store is now renting over 50,000 movies daily, turning it into the most popular movie store, too, with a catalogue of over 20,000 TV episodes, over 2,000 films, of which over 350+ are available in HD quality.

Health CareThe Robot-Biotech Revolution
In Canada/US 75,000 robotic surgeries each year and growing at 12% CAGR in North America
Nanotechnology products in health care now appearing:
Drug delivery system
Inner nano-bots monitoring systems
Growing organs for transplant
New neuroscience and biotech permitting new kinds of proesthetics

Technology Revolution
Broadband based technologies are disruptive
They are fundamentally changing service industries, e.g.
Banking
Travel
Music and Movies
Books
Newspapers
Education
Digital and robotic technologies are increasingly disruptive. They are changing industries, e.g.
Forestry
Health care
Manufacturing
Logistics and supply chains

The Pattern Here..
A disruptive technology changes behaviour of large number of people which institutions and organization are initially slow to respond to
Over time, new products and services emerge which change industries (e.g. itunes, iPad)
Other sectors then are emboldened by developments in related sectors and seek to adopt/adapt
New firms emerge which get the technology and create new products and services e.g. yet2.com
Over time. Established firms (Blockbuster) are replaced by new players (Netflix)

The Tech Bubble S Curve(Think RIM)

History Tells Us About This..
The S Curves History
Horse replaced by the car
Candles and gas lights replaced by electricity
Silent films replaced cinema talkies, Videos replaced by PVOs and DVDs, Blockbuster by Netflix
Disruptive technologies create new classes of workers, new kinds of drivers for wealth and new kinds of organizations
Social structure changes in line with technology, but generally slowly
Speed of technological replacement of core societal technologies has been slow, but is now accelerating..

Global economy
Revolution 2

US Debt to 2019

Workers Share of National Income (US)1947 - 2010

GDP Growth Doesnt Equate to Genuine Happiness Growth

Other Data Confirm ThisNo Happier than when Truman was President of the US

The Dynamics
Emerging BRICs economies are having a major impact on the global economy
Brazil now the 5th largest holder of US debt, will grow at an average of 4.4% annually between now and 2050
Russia - will grow at an average of 4 % annually between now and 2050
India - will grow at an average of 8.1% annually between now and 2050
China the largest holder of US debt, will grow 9.3% in 2011 and average 5.9% to 2050
When we look at the economic shape of the world in 2050 it looks somewhat different from now

Other Complications to the Normal Economic Order..
PIGS economies remain weak and vulnerable, especially Greece
Japan will take a considerable time to restore economic health given its level of debt and the impact of the tsunami / earthquake which had a significant effect on global supply chains
The middle east unrest (especially Syria) are having a destabilising effect on that regional economy and could have a medium term impact on oil prices and inflation
US debt (Federal $14.3 trillion and growing / 48 US States in severe financial trouble) coupled with the inability of the political system to agree a strategy is extremely problematic
Oil, commodity and food inflation will have a significant impact on the world economy, especially the worlds poor
Structural sovereign debt is everywhere we are headed to a decade or more of austerity in the developed world with major impacts on trade and employment
Central bank balance sheets are bloated and will be adjusted down with higher interest rates, which will have a significant impact on global trade
Labour supply in the developed world tight and challenging. Global war for talent is on.

G-Zero for Global Institutions
Its a flat but lumpy economic world
Historically, the G7 (then the G8 and then the G20) met twice a year to adjust elements of the global economic strategy. The IMF and the World Bank were also directed through these meetings.
These organizations are now dysfunctional we live in the G-Zero age with no institution fully engaged/ able to step up to a significant transition, though the IMF and World Bank are seeking to fulfill this role.
Our economic institutions are in the process of rebalancing and redefining their roles
Meantime, we have a an unusually uncertain environment (Ben Bernanke) code for were flying blind.

Global power balances
Revolution 3

Its Safe To Say..
We are witness to the beginning of the decline of the US as the worlds global super-power
Vietnam Iraq, Afghanistan, Libya not military successes
Economic power clearly in decline as the BRICs economies emerge
Political messy-ness characterizes Washington
Low rates of democratic participation (55-56% and as low as 49% in 1996), especially amongst some ethnic groups and fractionation of politics (T-Party, lobbying)
Banking system in relative permanent state of uncertainty
Low performance on PISA educational attainments 24th in the world on mathematics (lower position than 2006) and 7th in the world on reading.
Europe going through a major transition EU 27 struggling to gain identity in a time of austerity and tension between Germany/France/UK on the one hand and the PIGS economies on the other as well as between the UK and Eurozone
Former global powers of the G7 nations (US, UK, France, Japan, Germany, Italy and Canada) are shifting with some in serious economic trouble (US, Japan, Italy) and some seeking to punch globally above their weight (UK, Canada, France) and some unsure about their status (Italy)

The Post Washington Consensus(Birdsall and Fukuyama, March 2011 Foreign Affairs Vol. 90(2))
Post recession:
The assumption that emerging economies could benefit from the stronger flow of foreign capital (the foreign finance fetish) has been questioned by the huge financial externalities imposed by foreign capital (and its volatility) for these economies.
Regulated financial markets are just as important for the US and Europe as they are for the emerging economies
Social safety nets make a significant difference to the speed / costs of post recession recovery
Re-emergence of the importance of industrial policy
Recognition that the market is one force and balancing this with government is essential
An effective, quality public sector is a critical ingredient in the efficiency of post-capitalist market based economies
The emergence of multi-polarity: Pole 1: US, Europe and Japan; Pole 2: Brazil, China, India and South Africa with many countries join one orother, depending on the issue.

Other Aspects of the World Are Also Changing
Hans Rolling BBC 200 Countries / 200 years in 4 minutes

• Shifts in the balance of power in Africa, Asia
• Middle East and the Summer of Unrest emerging democracies (fed by Facebook and Twitter)
• Quickly growing middle class in Asia, India and Africa
• Health quality rising in formerly unhealthy regions