In our last blog (which you can see here), I hosted a guest blogger, Chris Ritchie, who wrote about how the job market is a major problem for people in their twenties and early thirties (whom I’ll call “Echoes”), and got a spirited response from a number of readers. What I’d like to do this time is present some of the comments I got, and some further thoughts about the future of employment, and what it means for our collective future. Let’s start with the responses, many of which can be found in their entirety in the responses following the blog itself:

I got a number of responses that were supportive of Chris’ comments. The most succinct and direct was from Dr. Cheryl Cuttineau, who said, in part: “Great article, and the concerns are definitely worth our attention.” I got both public responses and private emails along these lines.

I also got a range of differing conclusions, such as one posted response from courtney: “In my opinion the fact the same Gen X & / or Gen Y are to blame for allowing their Boomer parents to ‘spoil and make it easy’ (most generally speaking of course) to the point where they in fact got conditioned to have mostly everything without having to work hard …”

I’ve said on numerous occasions that the Echoes are the spoiled children of spoiled children (the Boomers), so I can identify with a lot of what courtney says, but there’s also a little of blaming the victim in her comments. Are the Echoes to blame for the fact that they were spoiled by their parents? Do the Echoes have a responsibility to deal with the situation, regardless of how it happened? Inescapably yes, but I’m not sure I want to point fingers at them for being coddled by their parents (my generation).

Next, I received an email from one reader who is in his mid-50s, and said,

“…I worked 2- 3 jobs per week, went to school, raised a family and had to save and all the rest of it. Further as a middle/upper manager, I was displaced by computerization in 1990. It has taken consistent self motivation and work to stay competitive and further stay on top of my game. … Looking over the fence has never been constructive. I suggest the writer look at the sheer power of his advantage. He can harness his full creative power, produce something and market it, all inexpensively using new age tools, without being tied to any corporation.…”

Again, there’s truth here too. I replied that when I finished university in the 1970s, there were employers lined up to hire me and most of my peers, but that opportunity no longer exists for Chris and his peers. Yet, I also worked hard to create opportunities for myself, and quit my (third) job and went to work for myself after about 6 years of employment. Since then, I’ve worked for my clients, and created my own business opportunities, which is always challenging. And this is what the Echoes are going to have to do: shape their own opportunities. Unfortunately, they probably won’t have the advantages (financial and in terms of experience) of working for others before they make that leap.

A posted response from Dennis both commiserated and empathized, but also warned Chris:

“I feel for you in this job market, as I went through the same thing in the early eighties, while supporting a family of 4. 
I am now in the same situation, looking for work at a retirement age, as I need the income 
to live on. I am a design draftsman by profession, but lack the latest 3D software knowledge 
to compete in today’s market with your generation. Unfortunately the Boomers have left a huge mountain of debt for your generation & ones to come in the future. A lesson to be learned for your generation is to control your spending & debt levels.”

I don’t think I need to comment – it’s not just the Echoes who have suffered in this market, which is a theme I’ll come back to in a moment.

Another email I got was from a friend, someone I worked with years ago, and who went on to great success despite that:

“I found this article interesting but not surprising. You and I have talked at length about childhood now lasting up to 30 years of age. If that is correct, and I think it is, generation ‘Y’ is just now starting to grow up. They should be about 10 years behind us in maturity, seasoning or whatever you want to call it, and they are. If you compare their lives at 30 to ours at 20, you would get a clearer picture. They are doing fine, they will start careers and families later and live longer and have good careers well into the 90’s(?!) Meanwhile their parents, who must accept part of the blame for this long childhood, will help them to finance their first house after they get married, after all, the parents want grand kids to spoil.

“I have been observing this for about 10 years now. The real problem is that girls get it, they are doing just fine. It is the boys who are being left behind in a state of never-ending childhood. Many of them will not make it out of this childhood. Many girls in their 40’s, secure in their careers, owners of a nice house, etc., realize the boy hasn’t grown up and kick the bum out. This to me is the more serious problem.”

Again, there’s a lot of truth in this – childhood has been extended, and young women do “get it” faster than young men. But there’s still more to it than this; there truly is less opportunity now than there was 30, or even 10 years ago.

Next, a response from Malcolm, an English friend of mine, and one of the world’s leading highway design and traffic safety engineers (now retired). He offered a lengthy, thoughtful, and somewhat acerbic response:

“Wow. Who would have believed it. A history graduate who cannot get work. Did he not think of the usefulness of his degree before he went into it? Yes, he has learnt a potentially useful language, but most Chinese want to learn his language as English is the lingua franca of the modern world. … It seems that in Canada, as here in the UK and in much of (mainly southern) Europe, going to University is seen to be the educational way forward no matter how useless the outturn degree is. Greece and Spain have economic problems and 50% unemployment in the 18-25 age group. Italy is similar. France is slightly less. We too [in the U.K.] have around 20% unemployment levels in that age group following a series of Governments who seem to think people must be educated to degree standards rather than encouraging people to leave school at an earlier age and do a more practical training programme. In contrast Germany and Switzerland where apprenticeships and technical training still predominates have young person unemployment in single figures and booming economies in a partially bankrupt world. Does this not spell out a lesson. Using technology and our communications networks, high tech ‘nerdy’ jobs can easily be exported off-shore to India, China, etc, but if you need a plumber or a decorator, need your auto serviced, or an electrician, need your life-support computer repaired, your roads or airports built or fixed you need local people with manual skills, not just brain power. Education priorities need to be rethought and young people given more modest, but achievable, targets in life to aim for.”

Malcolm makes an excellent point: beyond the satisfaction of intellectual curiosity, presumably one spends tens of thousands of dollars on post-secondary education with a career objective in mind. North American society seems to be encouraging young people to go to college and university as if a degree or diploma is, in itself, a guarantee of a career, when it’s absolutely clear that this is not the case. And meanwhile, many of the skilled trades have difficulty attracting young people.

Finally, a very insightful posted response comes from Al Slinkard, who says:

“I grew up in an isolated mountain valley in the [1930s] and 40s and things were pretty desperate in those days also. I left to go to college in 1948, never to return. In my 3rd year I worked 40 hours/week in two part-time jobs and carried a full load of classes. It was a struggle, but with a summer job, I was able to earn all of my school expenses. The very high tuition and living expenses today make this prohibitive today.

“My conclusion: Today’s secondary school students do face a very difficult future, worse than what the poorest of us faced during the Great Depression!”

Additional Thoughts

This topic is more nuanced and has more texture than Chris or I been able to portray. I know, from my own research, that there are very real cultural differences between the different generations, and am keenly aware that there’s a great danger in making broad generalizations about large groups of people – in this case, an entire generation.

I’ve heard stories from friends about the “slacker” mentality of young people today, and suspect that these are more than just anecdotal. Yet, I also know that such anecdotes don’t tell all of the story. I know that GenYs and Millennials work in ways that are different from the Boomers, which doesn’t make them less effective, but often leads to disapproval from the Boomers just because they’re different. And I know that people now in their 20s and early 30s started out with a sense of entitlement that almost certainly came from their Boomer parents pampering of them. In that, they aren’t very different from the Boomers themselves when they were in the same age brackets. But the biggest difference is not in attitude or work ethic, but in the world.

How the Working World Is Changing

That the world of work has changed, there is no doubt. That it will change further is also beyond question. The bigger question is: How will it change?

What we have experienced over the past 40 years is domestic employment being crushed between two different forces: foreign competition and domestic automation.

The foreign competition has been widely discussed, and is widely acknowledged. It has attracted the large majority of the attention, often leading to calls for protection for domestic industries. Fundamentally, what has happened is that the emergence of the global economy, which got a huge boost with the advent of floating exchange rates in 1973, has led to a global labor market as well. As a result, workers here are in direct competition with workers everywhere else, including in China, India, Vietnam, and so on. But when workers here provide fundamentally the same work as workers elsewhere, but at a much high wage rate, they will lose the competition to workers elsewhere.

I remember 20 years ago hearing a union leader, during a strike at GM, saying that he wasn’t going to allow their jobs to be exported somewhere else, just because workers abroad could do them at a fraction of the cost. This is a hopeless attitude, and the history of GM has shown its foolishness and shortsightedness.

But what has drawn less attention, yet will be of greater importance in the future is the rise of automation, computer intelligences, and robots. (See the March 29, 2012 blog “Six Things to Know About the Robots in Your Future”) Computers are getting smarter and more competent at an ever-wider range of tasks formerly done by humans, and so automation will rapidly eat its way up the food chain. This will increase productivity and lower the cost of goods and services, thereby producing a net increase in the standard of living – but only for those who can stay employed. Automation will also displace more and more people from existing jobs, and make it even harder for young people like Chris Ritchie to find a way into worthwhile careers, regardless of their training and background.

What Can We Do About This? What Happens Next?

We know from countries like Spain and Italy that youth unemployment can reach 50%, which will exact a terrible toll on the future of these countries. And we also know that it’s harder for displaced older workers to find new employment, and earn enough to prepare for their retirements.

But if we’re going to face ever-greater pressures from automation in the future, and that’s going to displace an ever-rising percentage of workers, what kind of a future do we have, as individuals, as an economy, and as a society? And what can we do about it?

First, let’s deal with the bad news. We are facing a potential economic and social crisis because of these trends. If people can’t find work, then they can’t make a living. If there are enough people like that, then it creates a tinderbox of social unrest. And, left unchecked, it can lead to a society of aristocrats and peons – wealthy owners and the unemployed poor – that is a straight-line extrapolation of the protests against the so-called 1% and the 99%. Indeed, I suspect that a good chunk of why the lower and middle classes have lagged economically while the top 10% of income earners, and especially the top 1%, have prospered mightily is due to these two forces of foreign competition, and domestic automation. This is recipe for civil unrest, even civil war.

But is there anything we can do about this?

First, I doubt very much we can stop it. The technology genie is out of the bottle, and short of a global catastrophe, I don’t see any way of putting it back. If one country, even America itself, were to start reserving jobs for humans, and banning automation, all that would mean would be that it would become less and less competitive, and lose more and more industries to countries that embraced higher productivity and automation.

So the future will belong to those who can rely on the most human of virtues in the workplace. These include creativity and innovation, teamwork, empathy, excellent customer service, entrepreneurship, clever insights, and unexpected leaps of genius. And, as my friend Malcolm said above, there will be more emphasis on local services, even (or especially) manual labor. Fewer and fewer people will collect a paycheck from an employer. Many more of us will work for ourselves, and be responsible for our own careers and advancement.

I’ve been preaching this particular gospel for more than 20 years, both in my public presentations, in my blogs, and in a column I’ve written for an education magazine, and I believe it more strongly than I did when I hung out my shingle as a futurist and strategic planner in 1989. That doesn’t mean it’s going to be an easy future. Quite the contrary. Anything that’s easy will be done by computer or robot. Humans will do the hard work, involving skull sweat, insight, art, and creativity. We won’t necessarily work as hard physically, but in terms of thought, it will be a much more difficult future.

Ironically, if we can adapt – and above all this means massive changes to our education system – all of this seemly bad news could become amazingly good news. With automation doing the grunt work, and a rising percentage of people doing the things that make us uniquely human, we could face a future that previous generations would never have believed possible – and would have envied.

The key is whether we’re going to flop down in despair, or whether we will choose to rise to the challenge.

© Copyright, IF Research, May 2012.

I don’t often give my blog over to guests, but this essay gave me pause. I commissioned Chris Ritchie to research certain aspects of social developments, and what you’re about to read was part of his report. I asked him if I could publish this, and this is the result.

Chris is in his early 30s, has a degree in history, is proficient in Mandarin, having taught in China for a year, and has done various kinds of research for me about the future, mostly relating to social media. He has a bright, capable, analytical mind, and a warm, engaging manner. He’s also a bit of nerd, which is seen as being somewhat of an advantage in today’s market. Yet despite all this, he still can’t find permanent employment in our society. He’s not alone, and that, in itself, should give us pause. Worse, I suspect that everyone who reads his essay will immediately recognize young people of their own acquaintance in similar situations. In my mind, this is an extremely dangerous portent for our society, and our economy.

If someone is asked to talk about ‘their generation,’ they will invariably take their own experiences, plus those of people they know, and try to fit them into a broader context. In essence that’s what I’m about to do. And based on what I see, the prospects for my generation are poor indeed.

‘My’ generation is commonly called Generation Y, though there is a tad of overlap with ‘Gen X’. In any case, we are the children of the early Boomers, and we are now in our mid-twenties to early thirties, people who grew up principally in the 80’s and 90’s. We are now out of college & university (for the most part), and into the work force (at least in theory).

The first observation I would make about my generation is about Nostalgia, with a capital “N”. I think every modern generation has its share of nostalgia. What I think marks my generation is how early and readily nostalgia emerged as a guiding theme in our entertainment, and in how we talk. We should, in theory, be entering into the most productive period of our lives, the generative era, youth in the past, our time to shine. And yet we spend so much time thinking about our youth. Everything that was popular or interesting to us on the schoolyard in the 80’s and 90’s is back, remade and repackaged, complete with remakes and re-imaginings, and stuff pulled from the ether. Is there new entertainment and new media? Yes, definitely, but I am astonished to realize the number of movies, TV series, and so forth that harken back to my not-so-distant youth. Many of the most prominent shows on the internet, and the most prominent themes, have to do with this Nostalgia.

The other purpose of the Internet

There is a joke that the internet is for pornography and complaining about movies. Yet to me, I think you can add ‘obsessing about your childhood’ to that list. One of the most popular of the ‘New Media’ sites, as one example, is front-lined by ‘The Nostalgia Critic’ who entertainingly reviews movies from our childhood and discusses how they ‘hold up’. Plenty of other comedy is rooted in appeals back to common touchstones, which mostly seem to dwell in our childhood.

This could suggest that Hollywood and others are merely out of ideas, recycling whatever they can get their hands on. I think, though, that it also suggests that my generation as a whole feels more inclined to look back rather than forward. I think this is as if someone has told us “Your parents got to the party before you and ate all the good stuff. Here’s your half-eaten bowl of potato chips, go sit on the couch if you want, but they’ve already got the remote and decided what to watch.” Our parents – the Boomers – have occupied our future, and aren’t leaving.

This is a sentiment that summarizes much of how people around my age feel when confronting the world. I can readily recall from the recession of the 90’s onward being told how I was part of the first generation that would be worse off than their parents were. Whether this is a self-fulfilling prophecy or not, there is no denying that it is in many ways true. The sentiment of that truth is near universal in the people I know.

Our parents’ lifestyle is beyond our reach

The ‘lifestyle’ established as normal in the 50’s and 60’s, the lifestyle portrayed in so many TV sitcoms, or for that matter the lifestyle that I experienced as a child seems not just impossibly beyond my grasp, but just simply impossible. I was too late to the party, and now the idea of getting any job right out of university, let alone a good job, is laughable. The idea of entering into a career or profession, and being there for decades, is equally so. I think I know one person from among my peers who has a pension plan, and she is a public servant. By the time they were my age, both of my parents had been in their respective careers for 6 or 7 years, they were having their first child, and they had purchased a century-old farmhouse out in the country. I have accomplished none of these things, and neither have the vast majority of my peers.

And the problem is not just one of income. No one of my generation that I know owns a house. Even those who are full-time professionals find the cost far too steep. I know many of my peers have gone back to live with their parents, sometimes taking their own children, Boomer grandchildren, with them, making this hard economic choice because they have no financial alternatives.

My parents were, until their recent retirement, teachers. I have several friends of my age who have completed teachers’ college. None of them have jobs in teaching. One of them moved to England in hope of getting some employment experience, and yet still scrambles just to get on the supply teacher lists, while working at a bar part-time.

What once would have been hard luck stories are now just the everyday tales of my generation. With one or two exceptions, everyone who went to university, trade-school, or college didn’t end up in their profession of choice. Most have been through several career changes. Many, even at thirty, are still trying to develop careers. The exceptions of my acquaintance include precisely one nurse and one professional welder.

In some ways our lives are better than our parents at this time, but in plenty of other ways, they feel so much worse, and all of this is, I think, connected. So it might not be surprising if the other trait I would call typical of people my age is political cynicism. Even those who are conservative are deeply cynical about the political processes. That’s important. I’m not talking here about ‘Oh all politicians are liars’. That’s certainly said enough. No, what I’m talking about here is basically ‘Involvement never changes anything, so there’s no point in getting involved’. No matter how real or unreal that statement is, the sentiment is rife.

I see more political activity at a local level than I do in broad political involvement. It’s no secret people my age don’t vote nearly as often as older people do. People my age simply don’t participate in politics as much as past generations did. I had heard that the major political parties have all extended the age ranges of their ‘youth’ wings, and I can’t help but feel part of the reason is that there are simply fewer ‘youth’ in them to begin with.

Those of us without conservative values have seemingly existed in a world of near perpetual siege. Certainly there have been amazing advances made in the world of social justice, yet everything past generations fought for seems under attack. Healthcare, pensions, social security and more are all under siege. I grew up through recession, through TINA (There is No Alternative), through successive governments in which promises of just maintaining the status quo seemed out of reach. Hardly anywhere do I see political vision, only smaller and smaller versions of our future. I think part of what catapulted Obama to the presidency in America was that his message during the 2008 campaign seemed to resonate with people. It seemed to offer a greater vision of what could be, something that has been missing from politics for the entirety of my life. That narrative of change appealed to people my age, who seem desperately desirous of it, yet convinced that it will never happen.

Not – yet – without hope

Mine was the first generation to truly ‘have’ the internet. It will be the last that remembers a world without e-mail, the World Wide Web, and social media. I recall the fall of the Berlin wall only vaguely, and the Cold War only in the most basic of ways. Most of us are now tied to our phones, our iPads, and our computers in general, though we can remember an age when we weren’t. We live in a world that seems a whole lot less secure, in terms of the basics of life, than that of our parents.

I won’t say – yet – that my generation sees our future without hope. I will say that many of us have no sense of how we are going to get by, and greater aspirations seem completely beyond reach. We look up to the tower where our parents sit, hectoring us to at least try to climb, but find that there’s no longer a ladder available to make that possible.

Is there a bleak future ahead for us? Yes, and that is depressing.

Richard here. I would add that while it’s depressing for Chris and his peers, it’s also dangerous for our collective future, for the plight of this generation eats at the foundation of our economy. I will return to this topic in later blogs. Meanwhile, my thanks to Chris for his insights.

© Copyright, Christopher W. Ritchie, April 2012.

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We grew up with robots. There was Rosie the Robot from the Jetsons, the “I, Robot” science fiction series from Isaac Asimov (which later became a movie with Will Smith), the model B9 robot from the “Lost in Space” television series, R2D2 and C3PO from the Star Wars space operas, and the Terminator from the governor’s mansion in California. In the real world, there were robots in car factories, which were big, bulky pieces of machinery bolted to the floor that moved pieces of cars into place, welded seams, and painted car bodies. More recently, we’ve had cute little toys that roll around holding trays on which you can place drinks or snacks, replicas of R2D2 that were either remote control operated or voice-activated, and Roomba and Scooba floor-cleaning robots. And because the real-world robots seemed to fall far short of the fictional robots, and because we’ve been disappointed by real robots for decades we’ve concluded that robots will always be fictional, and will always be disappointing. (For instance, I have a wind up robot in my office that walks and shots sparks, but sadly, refuses to exterminate the people I don’t like.)

Accordingly, we’re about to be surprised, for real robots and their non-physical counterparts, computer intelligences, are about to enter our lives in a very real way. And initially at least, our reactions to them are likely to be that they are either creepy, or infuriating. Let’s start with the ways in which we are likely to encounter robots and computer intelligences, and then let me move on to where the evolution of robots is headed.

Not the Kind of Robots We Expect

First of all, the kinds of robots we expect are not the ones we will first experience. All of the robots described above are essentially humanoid robots – robots that stand (or move) on two legs, have two arms, and are formed more or less in the shape of a human being. (And yes, I know that Rosie the Robot rolled on one small wheel. Please don’t interrupt when I’m generalizing.)

If you look at the robots that are already emerging into the real world, they generally are not humanoid in appearance, but have a form that suits their function. Bomb disposal robots aren’t pretty. They have a camera mounted on a frame with gripping appliances of some kind, and caterpillar tracks that allow them to move over broken terrain. Exoskeletons are wearable robots that are being developed both for military purposes to increase a soldier’s strength and stamina, and to assist people who are weak or have some kind of disability, such as paraplegics. They typically strap on your back, around your shoulders, and onto your legs, sense what movements you’re trying to make, and then echo and amplify them. Roomba and Scooba, which I mentioned earlier, look like oversized hockey pucks, and scoot around the floor to do their cleaning.

So much for today’s robots. Let’s look at what’s in development.

You’ve probably seen television clips about self-driving cars, like the ones Google has been testing. It’s sort-of a robot in that for the moment it needs sensors and other equipment attached to the car so it can tell what’s going on around it, and control the car. Eventually, such equipment will be integrated into the car, at which point I guess you could consider the car to be a robot.

There are robot fish that swim with the same kinds of motions that fish use, flicking the after parts of their bodies back and forth. There are quadrupeds that look like headless mules, dogs, or cheetahs that are under development for the military. The headless mule (called “BigDog”) is being developed to carry up to 300 pounds of equipment for foot soldiers. The cheetah can be armed, perhaps with a bomb, and might run into enemy territory to attack a target that’s difficult to reach from the air. There are automated flying drones, already in use by the military, that can fly, and attack objects in the air or on the ground, with or without human guidance. And there are robots that are being designed in the form of insects.

Robot Swarms

This last group is actually quite important, because many of the applications will be for swarms of small robots. These might be released in the aftermath of a tornado or an earthquake, for instance, to crawl around and look for people trapped in buildings. Flying insect robots could canvas an area, looking for a lost child, or, in military applications, be sent into enemy territory to send information about enemy troop locations. Moreover, swarming robots could create an intelligent network that provided a comprehensive view of what’s going on in a given area – and the military won’t be the only application. Shopping malls might deploy them to look for shoplifters, lost children, or other kinds of trouble. Or they could be deployed in order to identify shoppers who had been there before. The shops where such shoppers had made earlier purchases might use that information to text them an offer to tempt them to return. In a home, robot insects could continually (and imperceptibly) roam around, looking for things that needed to be cleaned or repaired. A team of chipmunk-sized robots might scurry out to clean up, pick up, or tidy up your home when you’re not in the room, or at night, when you’re asleep. In the homes of elderly people, networked robots could track their movements, and trigger a call for help if something goes wrong, if they fall or need assistance in some way.

Of course, it need not be something creepy that acts as a guardian for an elderly parent. It will also be possible to make robots that look like a cat, for instance, and act like a cuddly, intelligent friend. Such robots could become companions, potentially providing conversation, doing things around the house that might be difficult for the elderly parent to do themselves, sending reassuring messages to worried children, and helping to manage things like banking or buying things in cyberspace. Early, very rudimentary version of this kind of robot, in the form of a soft, plush, moving seal that makes soothing noises, are already in use quite successfully in Japan as companions for elderly people, especially those who benefit from warm physical contact. In short, robots have enormous potential in military, civil, industrial, health care, and home applications. The key issues are going to be, first, the level of intelligence, and then, cost. Or it might be the other way around: cost first, and then intelligence.

We may eventually move towards the humanoid robots of fiction, but such robots will take time to make it into the home because they are going to be very expensive, starting off being as expensive as a high-end luxury car. It will only be over time, perhaps 20 years or so, that they will become affordable household appliances. So because of cost, robots are more likely to appear in military, industrial, and health care applications before they appear in the home in large numbers. But make no mistake: robots will come to the home, and become the next big, household durable purchase, which is why so many of the car companies and other industrial organizations are investing billions of dollars in them. And this motivation is pushing the pace of development in a kind of competitive frenzy.

But for robots to fill these niches, in and out of the home, they are going to have to get a lot smarter, and that’s where computer intelligence comes in.

Computer Intelligences

We’ve already seen, and to some extent, experienced computer intelligences, and so far, we mostly don’t like them. Phone and cable companies, as well as airlines, have been using them for some time now as the front-end of their “customer service” operations under the mistaken impression that frustrating and infuriating customers is a good way to keep personnel costs low, thereby increasing efficiency. As I’ve written elsewhere, this truly does achieve efficiency – if you’re objective is to efficiently alienate your customer base. Yet, they’ve become so widespread in these industries that customers are stymied; there’s nowhere else to go if you’re dealing with these kinds of oligopolistic industries. (Of course, this opens the door for aggressive, new competitors to steal customers by offering real customer service, but that’s a different subject for another time.)

The so-so news about such computerized customer service agents (CCSAs) is that they are going to keep getting better and better. This means that they will be more flexible, better suited to understanding what you really want, and better suited at making sure you don’t get an iota more than the bean counters in their companies have decreed that you should have. Getting to a human being, who can exercise judgment and make allowances for unusual circumstances, is going to get progressively more difficult as CCSAs become smarter.

There is, though, better news as well: computer intelligences will start working for us as well as against us, and there are two high-visibility examples already on the scene: Watson, and Siri.

Watson

Watson is a computer intelligence created by IBM. It came to prominence when IBM arranged for it to play the television game show, Jeopardy!, against the two most successful human players and mopped the floor with them. Jeopardy! was chosen as a field test of Watson’s capability to understand human speech, perform requested research, and deliver answers quickly. IBM didn’t create Watson for the purpose of winning game shows, though. That was merely a way for them to find out how successful their work had been in understanding the nuances, innuendos, puns, and idiosyncrasies of natural human speech, and because of Jeopardy!’s use of convoluted language, it served as an excellent field test.

IBM developed a highly capable computer research system that could (mostly) understand human speech in order to work as an assistant to humans performing tasks that required assessment of large amounts of data, and the ability to quantify a large number of variables in a quantitative manner, neither of which humans do very well. The first application IBM had in mind for Watson was to work with doctors in performing complicated and difficult diagnoses. There is so much research published in the field of medicine that doctors have a hard time keeping up, whereas a smart computer can scan through massive amounts of data and come up with relevant information that it can then deliver to a human to help them make a more informed assessment. And the human body is such a complicated machine, with so many systems running simultaneously, and so many things that can go wrong, that weighing the probabilities of a range of different possibilities is far easier for a machine than it is for a human. In this way, human judgment can be augmented and supported by a computer assistant that “gets” what the human is trying to do.

Needless to say, Watson is not yet available to individuals to solve their problems. This will change over time, much as computer operating systems used to be expensive pieces of software that were only operated by highly trained specialists, but are now used quite casually by consumers through their desktop and laptop computers, smartphones, televisions, and automobiles. So computer assistants that can research and help individuals weigh alternatives, and solve problems will eventually become commonplace.

Siri

A first, tentative step in this direction is the Siri software installed by Apple on their iPhone 4S in 2011. Siri is a quantum leap beyond the menu-driven CCSAs used by phone companies, and although it is currently listed as being a beta version, will get better and better fairly quickly as all Siri requests are actually filtered through Apple’s computers. As such, the company can build up a knowledge base of what consumers are likely to ask, how they tend to ask for it, and where there are problems that make Siri respond inappropriately, or unsatisafactorily. Such a knowledge base builds up incredibly quickly as more and more consumers use Siri, and as Apple software engineers devise ways of improving the quality of Siri’s responses. (For more on Siri, see an earlier blog here.)

It’s tough to gauge how quickly we will see robots and computer intelligences emerge (or intrude, depending on your point of view) into our lives, not because the technology is hard to forecast, but because it’s very difficult  to anticipate how consumers will react and interact with these new technologies. Moreover, it’s not possible to ask consumers what they want with a piece of technology they’ve never experienced, because they have no idea whether they’ll like it or not. My favorite example comes from my own background.

I was part of a group that bid (unsuccessfully) for one of the very first cellphone licenses (I wrote the science fiction section of the application, about the future developments and applications of the technology.) One of our financial backers wanted to know if there was a viable business in this new technology, so we commissioned a consumer survey to see how many people would be interested enough in having a “telephone in their pocket” to pay good money for it. The survey came back with good news: there was, indeed, a viable business as somewhere between 7-8% of adults would be interested in having one of these cellphones, which was enough to construct a successful business plan, and convince the backers to invest.

In retrospect, this seems silly; our projections of 7-8% penetration were off by a factor of 10; today somewhere well in excess of 80% of adults have cellphones. But consumers had nothing to compare this new technology with, and therefore had no idea if they wanted it or not.

The Remarkable Mr. Jobs and Tomorrow’s World

This is where someone like Steve Jobs was so remarkable. He was able to envision where technology could take us, and then divine what consumers would eventually want before they had ever even considered it! This is a rare talent, and one, unfortunately, that I have in only limited amounts (or else I’d be far richer than I currently am).

But we can come to a number of conclusions:

First, there are robots and computer intelligences in your future.

Second, they won’t initially fit with the images of robots with which we grew up.

Third, consumers will use them in unexpected ways, leading to new applications and stretching the technology in remarkable directions.

Fourth, they will force decisions on us that we may really not like. For instance, eventually cars driven by robots will be shown to be safer than cars driven by humans. Will insurers and governments eventually force us to use computer intelligences to monitor, override, or even manage our driving to make us safer – and literally take the controls from our hands?

Fifth, these changes will affect us directly and personally, both in how we run our lives, and even in how we manage our bodies and minds. Smart computers will monitor and augment our body’s natural physical defenses and abilities, while enhancing our intellectual abilities as well. And this means that the so-called “digital divide”, between those who can afford new technologies and those who can’t, will widen at an ever-accelerating rate.

And finally, these changes will cause ripples far beyond just plopping Rosie the Robot into our households, much as the development of a robust communications system capable of surviving a thermonuclear strike (which we now call the Internet) wound up changing our lives, businesses, occupations, and even friendships. The changes arising from robots and computer intelligences will come in the workplace, in our social structures, in the way our businesses run, in the jobs available for the young and the unemployed, in the way our health care system works, in how our governments function, and in how we relate to each other. And that is a much, much bigger and more important topic than any cute or technical discussion about the future of robots.

© Copyright, IF Research, March 2012.

We are standing at the edge of the next revolution, one that will shake the foundations of the corporate world. It will both create and destroy jobs, and build and decimate organizations, and at speeds that will catch people – and organizations – by surprise. The winners will be those who foresee what’s ahead, think clearly about how to take advantage of these emerging trends, and act decisively. We are witnessing the end of “business as usual” in any sense of the phrase.

In the corporate world, we tend to think of innovation as a corporate process. It typically involves a team looking for improved ways of doing things the organization already does, then implementing them to increase the corporation’s profitability, or competitive advantage, or both.

Yet, one long-term trend is clear, undisturbed, and will be markedly disruptive: power is devolving from large organizations to individuals and small groups.

Power Devolving Away From Large Organizations

Computers used to be the preserve of the large organizations that could afford to build or buy them, and had the technical specialists to program them. Today, they’re ubiquitous, and anyone who wants one has one or more, whether they’re desktop machines, laptops, netbooks, tablet computers, or smartphones.

The creation and distribution of moving pictures used to be the preserve of television networks and movie studios. Today, anyone with a digital camera, a piece of movie-editing software like iMovie or Movie Maker, and an Internet connection can create, edit, and post a video on YouTube for the world to see.

Likewise, creating and selling software used to be the preserve of large corporations like IBM, Microsoft, and Apple. Now (thanks to Apple), almost anyone can create an “app” and sell it online, whether through iTunes or one of its competitors.

Textbooks used to be a pricey, captive market, dominated by organizations like Pearson or Houghton Mifflin. Now anyone can write a textbook, publish it, either as a print-on-demand hard copy, or electronically. Indeed, Apple (again) has made a suite of textbook-creating tools available to make the process even easier (with the appropriate toll paid to Apple, of course).

My point is that power is devolving from organizations with lots of resources down to individuals as the tools that IT makes available become more widespread, more powerful, and progressively cheaper, following the exponential progression described by Moore’s Law (“Computers will double in speed, and halve in price, every 18 months”).

The Next Stage of Devolution

We are now about to see the next stage in this power-to-the-people evolution, and it will strike at the heart of traditional industry.

There are two primary kinds of “products”: tangible and intangible. Intangible products include services, but also things like software. I’ve already talked about the new market for apps that has revolutionized the software business. This doesn’t mean that enterprise software will become an app, but it does mean that more and more things will be doable by more and more people without needing to have a large organization’s resources. We don’t need to create shrink-wrapped boxes of software, and develop a distribution system in order to capitalize on our developments. You can be a high school nerd and create an app that captures peoples’ imaginations, plus 99¢ from their pockets, and make money that way.

Or you can be a large corporation, like Apple or Google, that creates the marketplace that allows the high school nerd to do this, and collect a toll for each unit downloaded. It’s not a matter of large or small; both models work.

What’s being violently reshaped, in this example, is the older market of writing software, burning it to disks, printing instruction manuals, mass producing it all, putting it in shrink-wrapped boxes, shipping it to computer stores, and hoping it sells.

The Rise of “Personal Manufacturing”

Now, though, tangible products are about to go through the same process with the introduction of 3D printers. Such printers have been in development since Charles Hull produced the first one in 1984 using stereolithography techniques, which he named and later patented. Today there are several different techniques for 3D printing, but the important part about it is that now someone can go from having an idea to manufacturing a product without having a factory. Indeed, another name for 3D printing is “personal manufacturing,” and according to The Economist newsmagazine, “Three-dimensional printing makes it as cheap to create single items as it is to produce thousands and thus undermines economies of scale. It may have as profound an impact on the world as the coming of the factory did.”

What’s more, there’s an open source movement in product design, just as there is with software like FoxFire or OpenOffice. This means if you want to produce a wrench or some other tool you don’t have, for instance, or a new blender for your kitchen, you can download the plans for it into your 3D printer, and produce one. If the plans are open source, then you only pay for the cost of materials, plus the amortized cost of your printer.

But beyond that, if you have an idea for an invention, and can design it, again using some of the open source software available right now, then you can produce it yourself, and at a price that’s competitive with a mass production run from a big manufacturer. You can compete with the big boys without having all the money they have invested in tools and people. And the Internet can help you market your products without the marketing and salespeople they employ.

Most such designs will be amateurish, and probably pretty lousy. But some won’t, and the percentage of good stuff will rise consistently as more tools become available, more people become familiar with them, and competition pushes people to design stuff that gets better all the time. Moreover, someone who is talented at this can be nimble a hell of a lot more easily than a large organization, especially if she can compete at the same level of cost as a mass market producer.

The Limitations of Personal Innovation

Of course, there are limitations. I don’t think Joe Blow, working in his garage, is a threat to Boeing, because no matter how clever he is, he can’t produce a 787 Dreamliner. Nor will he be able to compete with Intel on the next computer chip. There are issues of scale that relate to the size of the final product, the complexity of design, and the capital required to produce even one passenger airplane or one microprocessor that make it impossible for any individual, no matter how talented, to compete with Boeing or Intel.

But how about the supply chain Boeing uses? Will it be possible for an engineer, working on his or her own, to create a better instrument for the cockpit than an established instrument maker? And what might that do to Boeing’s suppliers? And how will that affect Boeing? It’s an interesting question, and one that we won’t know the answer to for some time.

All of which brings me to my original point: innovation itself is about to undergo a massive revolution. More and more of the things that used to require a large corporate structure will be doable by individuals or small teams of people, and they will be immediately competitive with large corporations. Meanwhile, facilitators of such individuals or teams may also spring up and create new tools and new means of distribution that they can cash in on, much as Apple has with iTunes. This might be marketing services, after-sales support, warranty services, or even just selling the cartridge refills for the 3D printers themselves. Indeed, if you think of the high-profile organizations that have shot to prominence over the past 10-20 years, they are mostly facilitators that provide the means for individuals to shine: Apple, Google, Facebook, Twitter, and so on.

A Truly Rude Awakening

My point is not that big is bad, and small is beautiful. My point is that the corporate world is about to be shaken up in ways that most organizations are not even considering. And those organizations that continue to plod along, pursuing business as usual, are about to experience a truly rude awakening. And no pun intended, but what’s more is the Moore’s Law as I stated it earlier is wrong because it’s too conservative. Not only is the rate of change accelerating, but the rate of acceleration is increasing. This means that even those organizations that are coping with today’s changes are going to be caught by surprise by the extent of the changes ahead of us.

What I am recommending to my clients is that this is a time in history that calls for radical thinking and re-thinking, practicing extended foresight, performing serious environmental scanning of the trends already in place and those developing, and dedicated brainstorming to consider how you want to be positioned for the next 10 years.

The innovation revolution is gathering speed. Don’t get caught looking.

© Copyright, IF Research, March 2012.

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The following article was part of a presentation made to the California Farm Bureau Federation in December of 2011.

The looming shortage of freshwater is not unique to farmers here – it’s rapidly going global. Many farmers will choose to see the problems ahead with water as a crisis, but it could, instead, become a significant opportunity if they play it properly. Let’s start with the fundamentals of the emerging crisis.

There’s no shortage of water on Earth: three-quarters of the Earth’s surface is covered with it. However only 2½% of Earth’s water is fresh water, and most of that is not where it’s needed, or available when it’s needed. In fact, of that 2½%, more than 2% is frozen, mostly locked up in the Arctic regions (for the moment). That leaves less than ½ of 1% of usable freshwater, the vast majority of it is contained in aquifers. Unfortunately, many aquifers are largely non-renewable resources, being, in effect, fossil water laid down over periods of hundreds, thousands, or millions of years, but which we are depleting in periods of decades. When they run dry, problems will multiply very quickly.

Now, given where we are right now, there are seven major factors contributing to coming water shortages, and they will have differing levels of effects on farmers:

• Population growth here at home will produce modest, but steadily increasing pressure on supplies. Meanwhile, population growth elsewhere, especially in places like India and other developing countries, will be a major source of freshwater difficulties. By the third quarter of this century, it’s estimated that there will be another 3 billion human beings, all of whom will need water. Yet, short of technological breakthroughs (which will come, but not cheaply, and not soon), there are no major new sources of water available.

• Increases in the standard of living will be largely neutral here (unfortunately), but another major cause of stress on water sources in the developing world.

• Agricultural intensification (especially using irrigation in dry areas) will moderately increase water shortages here, but again will be a big cause of water shortages elsewhere as almost 70% of the world’s water is used in agriculture.

• Urbanization will be one of the major causes of shortages of water everywhere as rapidly growing cities ratchet up the demand for an increasing share of static or dwindling water supplies.

• Pollution will be pretty well neutral here, which means it’s not going to get much worse even if it doesn’t get much better as we’ve already done most of our polluting. The same isn’t true in the developing world, where farmers are looking to increase yields by using more fertilizers, and the run-off will contaminate water sources and aquifers.

• Depletion of aquifers (fossil water), which can destroy an aquifer, or at least reduce its long-term capacity, will be a major issue here and everywhere else, particularly as much of the damage to aquifers comes as the levels get low. Worse, predictable as aquifer depletion may be, virtually no government, agency, or voting public ever thinks that the aquifer they’ve exploited for years will ever run dry – until it does. They are then caught by surprise, and completely unprepared. This is one of the most surprising things about the coming water shortages – there should be no surprise at all, but there inevitably is.

• Climate change (which changes where and when water is available) will also be a major issue. While people can argue over whether humanity’s at fault for climate change or not, there’s very little real argument left about whether climate is changing, and farmers are among the first to notice and feel the changes. Moreover, the changes that do occur are more likely to be negative than positive.
For these, and other reasons, the shortage of water is going to force itself on global consciousness. You’ve all probably heard water referred to as “the new oil”, but I say that vastly underestimates the problem. There are substitutes for oil, but there is no substitute for water. Water shortages are going to be felt to varying degrees, but at a rapidly increasing rate all over the world, and are going to affect what farmers can grow, where industries can flourish, and how fast economies can expand.

Likewise, you’ve all heard about carbon neutrality, now you’re going to start hearing about water neutrality. For example, Coke & Pepsi were required by the Indian government to put 1 liter of water back for every liter they withdrew from community sources. If you think about what they sell, you realize how difficult this was for them to accomplish this – but they did. So water neutrality and steadily improving water management is something you should be thinking about, even if you’re already ahead of everyone else on this issue, as water continues to grow scarcer.

Meanwhile, political conflicts are going to continue to grow between user groups (e.g., farmers vs. cities), states (Texas vs. New Mexico, for example) and national governments (especially the U.S. vs. Canada and Mexico). Perhaps the two coming conflicts that will get most attention here are the conflicts between cities and farmers, which are going to get steadily worse, and the conflict between water-rich Canada and water-seeking America.

Yet, while farmers here think they know about water scarcity, I think we’re just scratching the surface on this problem, and they would be well advised to look at ways of increasing their water productivity. As water scarcity becomes a worldwide issue, more and more attention will be focused on it, and its perceived value will continue to rise. This will cause more people, groups, and political bodies to try to grab more control over it. It will also attract attention from financial players, like sovereign funds and pension funds, who will start buying water sources to control and toll, which will further escalate the conflicts.

But there’s an upside, too: Those farmers that improve their water management practices can benefit from the water problems of other parts of the world through increased demand for the agricultural products they produce.

One of the big changes to come is that countries, like India, that were self-sufficient or even net exporters of food are becoming net importers simply because they don’t have enough water to grow what they need. This kind of importing of “virtual water” through crops will increase the opportunities for farmers who are proactive in learning how to manage water supplies even more carefully than they do now. I’m not suggesting this will be simple, but there are more water-efficient technologies out there that can help, like those from Israel, and forward-looking farmers should be actively seeking out new techniques, new technologies, and new, possibly GM crops that allow them to grow more with less water.

In summary, water shortages are inevitable, they are going to become increasingly high profile, and they offer real opportunities to those who can be proactive in managing supplies. You know that there will be problems with water, you know that agriculture is a big user of water, and you know that those who are prepared for a problem while their competitors are still struggling to catch up can prosper from difficulties.

So take the plunge – exploit the future of water.

© Copyright, IF Research, February 2012.

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The year ahead is going to be a tumultuous one, challenging in political, economic, and financial terms. Despite this, there are opportunities for those prepared to take advantage of them, because uncertain times mean that market share is up for grabs. And no, it’s not a coincidence that there are 12 trends for 2012. I discarded a bunch more, but it’s such a catchy title I couldn’t resist.

I’m going to approach these 12 trends with three objectives: What is important? Why is it important? And what does it mean to you?

And I’m going to start with the bad news, and end with the silver linings.

1)    Declining American influence – America’s absolute and relative influence in geopolitics, economics, finance, and the military is declining for a host of reasons: the rise of competing powers like China, India, Brazil, and others; the very expensive military adventures in Iraq and Afghanistan, which have sapped America’s willingness to engage in aggressive political and/or military action; the Arab Spring, which eliminated Middle Eastern strongmen like Mubarak who followed America’s political lead, and the continued stalemate over the fate of the Palestinians, means that America’s influence over this critical and unstable region is at or near an all-time low; the Great Recession, which has sapped America’s economic and financial clout; and the dysfunctional stand-off between Republicans and Democrats that has frequently led to policy paralysis.

The implications of this are a less stable, more dangerous world. America may have gone back and forth on whether it wanted to be the world’s policeman, even though it truly was the global cop, and it’s inability to fill that role now means that the world is a more dangerous place.

This sets the stage for sticky situations to emerge, such as the twin nuclear threats from a suddenly even less-stable North Korea, and the only slightly more stable and geopolitically ambitious theocracy in Iran. It also leaves more elbow room for the ever-ambitious China to expand its power and influence, notably in south Asia and the South China Sea. It also leaves critical global issues, like what to do about climate change, without essential leadership.

The implications of this is a world where there are more likely to be more, and more serious, geopolitical, financial, and economic crises, and greater uncertainty in virtually every aspect of life. Others may not always have agreed with American policies, but they will miss America’s steadying influence as it ebbs from their lives.

2)    Ho-hum! Just another financial crisis (European edition) – The daily drumbeat of scary headlines dealing with the financial crises in Europe have gradually deadened everyone’s awareness for how dangerous the situation truly is. In particular, Angela Merkel is juggling hand-grenades, and hoping that she won’t drop any, and that none of them will go off unexpectedly. Germany is the only European country with the potential to stop the rolling crises that are affecting Europe, and then only if Merkel acts in a timely basis. To do this, she must let Greece go bankrupt instead of propping it up, shore up the banks, notably German banks, that have bought far too many dodgy EU bonds in the past, allow the European Central Bank (ECB) to become a lender of last resort, with the ability to stop a run on European bonds, and halt the bond market attacks on other European countries, starting with Portugal and Ireland, but extending to the much bigger countries like Spain, Italy, and even France. But Germany doesn’t want to do these things, and German voters are adamant that they won’t subsidize what they see as the lazy, profligate lifestyles of southern Europeans. But if Germany doesn’t act, and in a timely fashion, it may lose the ability to act at all, and come under attack from the bond markets as well. Indeed, German bonds are no longer being bought with as much enthusiasm as they were even two months ago. If Germany doesn’t act soon, it may lose the ability to do so at all.

Remember what happened in the American financial markets in 2008? If Germany doesn’t act in time, we could see the same kind of thing happen in 2012, this time starting with a run on European government bonds. From there a run could spread to those banks – American as well as European – that hold too many of these bonds. And once such a run started, the most dangerous question of all would emerge: “Who’s next?” Investors, frightened by the panic, would look to sell any and every questionable credit, and their attention might turn to the various U.S. state and local governments, like Illinois, California, and Harrisburg, Pennsylvania, among many others, that are struggling with their finances.

The U.S. Federal Reserve has become the de facto lender of last resort to the entire developed world, and would undoubtedly step in and support the banks and markets with everything they had. But this time, remembering the callous, greedy ingratitude of last rescue of the banking industry, American voters and the American Congress would likely tell the banks to drop dead. It was a hard enough last time to get Congress to bail out the banks; this time I suspect it would be impossible, even though failing banks would take the global economy down with them. Moreover, the Fed doesn’t have anywhere near as many bullets today as they did in 2008, and Fed Chairman Bernanke already has some Republicans, notably Ron Paul, baying for his blood over the quantitative easing from the last crisis.

The danger here is frighteningly real, and even greater than the risks we faced in the panic of 2008. Yet, the steady drip of crisis headlines and last-minute rescues has left many people convinced that nothing will happen. If it does, it will catch people flat-footed, not because they didn’t know there was a crisis, but because they have been hearing about it for over two years now, and have tuned it out. We could muddle through, and probably will – but the risks are far higher than most people realize. It will be important to have thought out a Plan B to deal with the unthinkable, if it happens, one that prepares you and your finances for a bigger repeat of the 2008 panic. Again, it probably won’t happen – but it’s better to have a plan and not need it, than need a plan and not have it.

3)    Yes, China’s influence will continue to rise, but…  Napoleon famously said, “China is a sleeping giant. Let it sleep.” Well, China’s very much awake now, and throwing her weight around – although cautiously. If I were (God forbid) Emperor of China, I would require my minions to tread cautiously, to smile a lot at our trading partners and neighbors, and to make our gains slowly, one salami slice at a time, never appearing too greedy or overreaching. I would practice soft diplomacy, offering aid and comfort where I could do so cheaply, loudly proclaiming our respect for other countries’ internal policies, taking leadership positions in things, like climate change, where I knew I was going to have to make changes anyway, and generally trying to look like a good global citizen. I would act, in short, as if time were on my side, and I was going to be the next Big Thing.

And generally speaking, that is precisely what China is doing – except that every once in a while the mask slips, and the avarice and aggression shows, as with the boundary disputes with other countries, especially as related to the South “China” Sea, which China (the nation) seems to be trying to interpret literally as being a Chinese lake.

But China has an Achilles’ heel – several of them, in fact – and does not have (much) time on its side. Its biggest weakness is that it is aging faster than any other significant country on Earth. Because of its One Child policy, China’s population is expected to peak, and begin declining, sometime around 2020 – within the next 10 years. And its labor force is already in decline, even as the demands for higher wages push its cost structures higher.

Meanwhile, although there is a great deal of pride in China’s new affluence among the Chinese, that affluence is not evenly spread, and there is unrest among those who remain poor. Add to this the widespread corruption of Chinese officials at all levels, which often provokes revolts, like the one in Wukan, which leads to simmering dissatisfaction among many Chinese.

This will further be exacerbated by the fact that China’s factories are automating almost as quickly as those of the developed world, which threatens to slow the rate of job creation, productivity, and affluence markedly over the next 10 years. Yet, China dare not automate; to do so would mean a loss of competitiveness, which would produce even worse results as industries would move elsewhere.
So, with that in mind, what would I, as self-appointed Emperor of China, do? Worry about a future I couldn’t control, and for which I could not see a clear path forward. The next 10 years will mark the beginning of the end of China’s ascension, and if I were Emperor, I’d think about retiring to some warm, cushy haven before the revolution came. Chinese Spring, anyone?

The implications are for China to step up its attempts to increase power and influence, and throw its weight around even more actively before that power starts to wane, but as quietly as possible. Look for China to try to make this the China Decade, especially in finance, trade, and geopolitics, as it attempts to pull in as much as it can while it can.

4)    American Spring? Meanwhile, closer to home, while those on the political right like to dismiss the Occupy movement (e.g., Occupy Wall Street), the fact that the movement happened at all is the most significant part of it. Indeed, Time magazine made protestors its “Person of the Year”, and that’s not restricted to just the Arab countries. The Occupy movement and protests against cut-backs in many developed countries had many of the earmarks of the Arab Spring: protestors saying that their governments serve an elite clique and not the people; lots of people, especially young men, who cannot find work despite months or years of trying; and a belief that the political system is neither representative nor responsive. Just because winter has fallen, and the Occupy settlements have been disbanded does not mean that the dissatisfaction has gone away. And with increasingly dysfunctional government in America, the potential is there for a much stronger protest movement against the System, however that is defined. American Spring, perhaps? It sounds unlikely, but not as unlikely now as it did before, and it won’t be restricted to America for discontent will grow in all developed countries.

This is especially true as the boomers move towards retirement, only to find that their either don’t have the resources to retire and that no one is going to donate them, or that the civil servant pensions that they were promised are unaffordable.

The protest movements have only just begun, and they are going to be acrimonious, disruptive, and at times hijack the political process.

5)    Mixed signals for both weaker – and stronger – economic growth.  Europe and its prospects are dragging the global economy down. The uncertainty in Europe, combined with the painful budget cuts in Greece, Ireland, Portugal, Italy, Spain, and the United Kingdom, mean that Europe is now in recession and a drag on the global economy.

Meanwhile, China, which had been concerned about inflation, and hence was hiking interest rates in a bid to slow it, has now reversed itself, which I can only interpret as concern that growth will slow more than they want. That’s a potential positive, as it will add stimulus to the global economy.

Canada, which has to date seemed to skate above most of the problems of the rest of the developed world, now seems to be experiencing slower growth, with an unexpected jump in the unemployment rate, while its housing market is looking pricey, frothy, dangerous, and much like America’s prior to the collapse in 2008, especially in condo development in its major cities like Toronto, Vancouver, and Calgary. Moreover, its consumer debt levels are exceeding the levels of American consumers in 2007, and no less a figure than Mark Carney, the highly respected Governor of the Bank of Canada, has warned consumers and banks alike to cut back on consumer borrowing. Canada could be arriving late for the financial meltdown of 2008 – but if its consumers don’t mend their ways, they will get there.

And yet, America, which until 2008 was seen as the world’s engine of growth, seems to be picking up for no specific reason. Actually, this was almost inevitable because of the natural dynamism and entrepreneurship of the American economy. What has prevented America from rebounding earlier, or more strongly, has been the housing market, which is still in horrendous shape – but slowly improving.

So how will this balance out through 2012? Assuming that Europe doesn’t crash and burn, and drag everyone else down with it, and that Iran doesn’t precipitate a significant war in the Middle East, then America will continue to recover, its jobless rate will continue to decline (slowly), the world will lick its (economic) wounds, and things will slowly get better.

Accordingly, while I continue to counsel my clients to have a Plan B in their back pocket if things do go bad, my primary advice is the prepare now for better times ahead. There are problems – big problems – ahead, and the American election in 2012 is not going to help, but for 2012 we are likely to see an improving environment, and opportunities re-emerging for those with the courage to grasp them, as I outline in Trend #7 below.

6)    Climate change accelerates – and the consequences will multiply. The most significant and portentous climate news of 2011 was the discovery of methane gas bubbling up in the Arctic Ocean off the north coasts of both Siberia and Alaska. Methane is a far more potent greenhouse gas than carbon dioxide, and the melting of the Arctic ice cap, combined with the rise in the temperature of the Arctic Ocean, has started to release methane from the ocean floor. As well, as temperatures rise in the northern polar regions of Siberia, Alaska, and Canada, the permafrost melts, releasing even more methane into the atmosphere. The amounts of methane that could be released by both sea floor methyl hydrates and permafrost are staggeringly huge, and could dramatically accelerate the rate of climate change. If this trend continues, not only will the debate over climate change be over, but humanity will be forced to race to keep up with the potential changes.

As it happens, the vast majority of climate scientists – something approaching 95% – now agree that climate change is happening, and that humanity is at the very least a significant contributor to it. Since I speak to lots of different kinds of audiences, I can tell you that most groups now accept that climate change is happening, even those that have been among the most vocal doubters. The doubts they now raise are more along the lines of whether humanity is to blame. But from my point of view, it no longer matters: if your house is on fire, you don’t throw gasoline on the fire, regardless of how it started. That’s roughly the position we’re in now.

In 2012, we will get more information about the release of methane, and can only pray for good news. Meanwhile, brace yourself for more strange, and increasingly extreme weather. And because climate is a chaotic system (where chaos theory is a branch of mathematics), it is literally unpredictable. This means we can’t tell whether we will get floods or drought, hurricanes or tornados, or something else unforeseen. But it won’t be business as usual, either.

7)    Innovation as Steve Jobs’ legacy.  Jobs didn’t invent innovation, but he sure popularized it! Innovation has become a corporate religion in recent years, and with good reason: innovation can allow you to disrupt the marketplace, scoop up market share, increase profits, and win friends and influence people, just as Jobs and Apple have done. Yet, innovation is hard, especially because there’s a natural resistance to change and to the real risk-taking that innovation requires.

But if there is a theme for the corporate world in 2012, it is that now is the time to get serious about innovation. As an innovation specialist who runs seminars and workshops for corporate clients, I’m seeing this on a daily basis in genetic and medical research, agriculture, the automotive industry, the insurance industry and finance generally, plus just about every other sector of the economy. And technology itself embodies innovation. Indeed, the idea of a technological company not working hard at innovation seems like recipe for extinction. The world is changing rapidly, and there are lots of new opportunities – and disasters – out there. It’s raining soup, but if you just stand there, looking up in surprise, you’ll drown!

8)    Who dares, wins. Such is the motto of Britain’s fabled SAS – one of the world’s premier commando groups. But their motto applies equally to unsettled times. During such times, it’s easy and very, very tempting to hunker down, conserving cash, and wait for lazy, easy times to return. But study after study shows that companies that continue to market aggressively, and pursue research into new ideas, new products, and better results for their customers make far more inroads with modest expenditures during bad times than spending far more during good times, when everyone else is competing hard. Moreover, loyalty is won when times are bad, both among consumers, and among employees. And best of all, you can often accomplish a great deal with careful planning and foresight rather than lavish expenditures. This is where strategic planning comes to the fore. The time to be thoughtfully aggressive is when your competitors are playing turtle.

9)    The Red Invaders. The emergence of a Chinese middle class not only means upward pressure on food and fuel prices, it also means a vast invasion of Chinese tourists bearing money. For those countries and regions able to attract such tourists, it means a new source of revenue, and a big shot in the arm. And, as with all ethnic groups, it also means serving them the way they want to be served in terms of language, food, and customs. To the winner go the mega-spoils.

10) Haggling returns to North American retailing. Smart retailers are recognizing that it’s no longer enough to post a sign saying “10% off” to attract consumers, but that consumers are more demanding now, and are moving away from the traditional “no haggle” approach to buying. Moreover, haggling offers two additional benefits to consumers: it’s become somewhat of a game where they can enjoy the thrill of the hunt; and it offers bragging rights when talking with their friends. As a result, haggling has been emerging in two different ways, one passive, and the other active.

The passive form of haggling is to wait for sales. You can witness this almost anywhere when consumers see an item they like in a store, and ask if it’s on sale. When they’re told that it’s not, they turn up their noses, and say they’ll wait until it is. This might be described as “temporal haggling”, where the consumer is saying, “I’ll wait until you lower the price before I buy it. And if you don’t lower it enough, I won’t buy it.” Smart stores are responding in creative ways. Some salespeople say, “No, that’s not on sale, but it will be starting next week,” which amounts to a counter-offer. A smart consumer will reply by saying, “Can you put it aside for me until then?”, implicitly offering to buy it if they do. Some salespeople say no, others say “Sure.” The net result is that store and consumer have haggled over the price to agree on a sale/purchase. Yet the smart retailer actually has an advantage in this exchange: they get to name the sale price in temporal haggling.

By comparison, in active, more traditional haggling the consumer takes the initiative, saying something like “What’s your best price on this widget?” If the salesperson replies with the sticker price, the haggle is over and the consumer leaves. If the salesperson names a price, the consumer responds dismissively, and says, “I wouldn’t pay a nickel over $X for that”, and the salesperson can choose to respond or not. This is, as I say, traditional marketplace haggling.

If a retailer wants to capitalize on the re-emergence of haggling into the North American marketplace, they need to anticipate it, and come up with a range of responses. One might be to say, “We can’t discount this item today, but it is going on sale next week. Would you like to put a deposit on it to hold it until then?” The retailer regains the initiative this way, and moves towards a close. Or better still, the retailer should look for a way to add value rather than cut price by making a counter-offer like, “No, I’m sorry, we can’t discount that item. But we can offer you a 50% discount on a matching accessory if you buy it.”

Regardless of approach, though, retailers should be prepared to return to marketplace haggling, and have a range of responses ready to deal with it. Consumers, as always, should decide what they want, and what their bottom line is in getting it.

11) Health care magic blossoms. Putting aside the issue of cost, which concerns everyone, the ability of health care to solve problems is beginning to move at computer speeds, in part because IT is increasingly being used by doctors, nurses, hospitals – and patients – to manage health care, and in part because research is increasingly being done using smart, powerful computer tools to perform research and execute treatments. Among the changes in the immediate future of health care are:

• The rapidly rising ability to repair failing hearts and minds (or at least brains) and other organs with stem cells. Stem cell treatments are starting to move out of the laboratory and into the operating room, and 2012 will see hundreds of people receiving this kind of therapy.
• Similarly, 3D printers, which have been in development for roughly 20 years, are now good enough that they are starting to be used to create replacement organs from a patient’s own tissue. This will gradually move into mainstream medicine, with replacement hearts, livers, and kidneys being at the top of the list.
• Quadriplegics will increasingly be able to interact with the world through prosthetics controlled by thought alone, either through electrodes that interpret brain wave patterns, or implanted chips which interpret specific thought-impulses.
• Retinal implants are starting to emerge that can help blind people discern light, shapes, and some objects. The implication is that we may be able to help aging boomers improve their failing eyesight as they age – one of the biggest complaints of old age!
• Health care is increasingly falling into the hands of the patient – literally. Smartphones, which are fundamentally wearable computers with all the capabilities of what used to be called “supercomputers”, can now work with Bluetooth-enabled sensors to monitor various aspects of health, from the vigor of your workout, to the health of your heart, to the level of your blood sugar. This will lead to a revolution in health management, with consumers sometimes way out in front of practitioner.
• Likewise, as patients become more and more comfortable with researching medical conditions and treatments online; they are demanding an increasing role in their own diagnosis and treatment; becoming active, important advocates for fund-raising and acceptance of treatments; and blunt critics of health care practitioners through social media and word of mouth. Smart practitioners are accepting this trend and rolling with it. Old school practitioners are resisting, but may wind up steamrolled by it.
• Crowdsourcing of tough diagnoses, and novel solutions to the medical and financial problems of health care promise to open yet another front in the health care revolution. This follows on with the success of crowdsourcing in helping leading-edge research scientists in astronomy (galaxyzoo.org) and protein research (Foldit game softwear).
• Sequencing your genome gets cheap. Sequencing the first genome cost billions of dollars and took decades to perform (culminating in the Human Genome Project). Today it costs about $1,000 (although analysis costs significantly more). Within 10 years, it will cost $100, and analysis will cost about $500 more, and will provide you a complete run-down of where your vulnerabilities lie, and what you can do to forestall future health problems. For 2012, we will see incremental advances towards that goal, with major diseases identified, and a short list of things you do – and don’t – want to do or eat prescribed. This is the true beginning of personalized medicine, and it will revolutionize health care.

12) Technology accelerates in 2012. It’s hard to know what to leave out: electronic mind-reading? Glasses that emit sounds and smells to allow you to enhance social media? The proliferating tablets and smartphones with ever-more wondrous abilities? Here’s a partial list of things I think demonstrate trends that will become increasingly important:

• 3D printers – As well as making replacement organs, 3D printers are coming into the price range of consumers, and may mean that you can buy your own desktop factory. Need a replacement screw for a door? Make it yourself. Need to duplicate a key? Ditto. See a nifty device on TV? Download the plans and make it yourself. Of course, who knows what the ink cartridges will cost.
• Near-eye monitors – These look like glasses, but are computer monitors. They’re the lineal descendents of jet fighter heads-up displays, and will revolutionize the way we use computers, particularly smartphones, but have been hampered by high costs. Prices are starting to approach luxury consumer levels, so applications will start to appear in things like immersive gaming, personal entertainment theaters, medical imaging, and augmented reality.
• Augmented reality through your smartphone – Augmented reality is overlaying information on top of the view from your Mark 1 eyeball, much as Google Street View overlays the names of shops on a photo. You’ll be able to hold up your smartphone’s camera and have your phone overlay directions, stores, infrastructure views, or whatever else might be useful to you. This gets better when you can view the results in your near-eye monitors.
• Cloud computing explodes – Owning a computer is so 2010. Cloud computing is rapidly placing the resources of today’s supercomputers in your hands for pennies a minute. One researcher used one of the commercial clouds to try to break his password to a social media website by brute force, just to see if he could do it. Using the cloud and standard code-breaking techniques he did it in minutes, and it cost him 39¢. As the tools to harness this power get more powerful and easier to use, the potential of the cloud will be adapted by more and more users.
• Siri & copycats + babbling to your smartphone – Siri is an application of the iPhone 4S that allows you to speak to your iPhone and get it to do things for you. This might be setting a count-down timer, converting milliliters to fluid ounces, finding an address and directions from your present location, or looking up a phone number (all of which I’ve done). Apple is offering this technology as a beta version now, but every Siri request goes through Apple’s servers. This means the potential exists to assess what people want to do, and come up with solutions, improving the results really quickly, making personal avatars (also called PDAs, butlers, or assistants) much more valuable in short order. And that means everyone will rush into the field. This will lead to lots of really bad copycat applications, but ultimately a revolution in how we use technology.
• Biometric passwords – Our world is becoming so full of passwords that need to be foolproof (meaning our tendency to forget them) that biometric passwords are almost inevitable, and they are beginning to appear. They will be expensive at first, but gradually retina, fingerprint, voiceprint, and other means of making sure you are you will become cheap and commonplace, and then you will become your own password, no memory required.
• Robots – Everyday robots are here, but they are clunky, expensive, or just plain cute. That’s changing very quickly, and 2012 will see more and more of them appearing in more and more places. Typically these will be commercial settings, but health care is one place where robots make sense and will be used. Rosie the Robot won’t be washing your dishes this year, but she’s coming – if you’re willing to pony up the equivalent of the price of a luxury car.

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