How can businesses plan for the disruptions and seismic shifts that could happen over the next 10 years – especially when innovations in science and technology are moving at breakneck speed?
During his keynote speech at the 2021 Guernsey Funds Forum, renowned global futurist, author, and CEO of Fast Future Rohit Talwar outlined how we can assess investment opportunities and prepare for what lies ahead. He shares his insights here.
We are probably going to see more innovation in the next decade than we have seen in the entire history of humanity, simply because developments in science and technology are coming together to create possibilities that many of us can’t even imagine today. What might be possible over the coming years when we have 1,000 or maybe even 10,000 times more computing power in our laptops than today and when artificial intelligence (AI) is doing most of the processing and an increasing amount of decision making in our organisations?
The crypto economy, the adoption of AI in fund management, and environmental, social, and governance (ESG) factors are all rapidly growing developments that financial sector businesses will have to plan for and deal with over the coming years.
When evaluating what is shaping the next few years and where we might put our focus in terms of assessing investment opportunities, it’s really important to think about three different horizons.
The first is to look at the next 12 months, and what we can do to make sure we are both efficient, and make sure our house is in order to be able to respond quickly to sudden changes – the pandemic and shift to home working are great examples of such developments.
The second horizon is the next one to three years and what might change the rules of the game in the sectors we operate in, and how we are going to respond with innovation in our products, processes, marketing, and customer experience.
The third is our long-term radar – what’s coming four to 10 years away? We can’t bring that technology or those solutions to market today because they don’t yet exist, but how do we put them on our radar? How do we evaluate how players in our sectors might respond and reinvent those markets and service offerings? What are some of the scenarios that could play out when the key social, economic, political factors shaping the future come together with science and technology? Using those scenarios we can assess how our businesses are gearing up today for the possibilities to come, and making sure we are sufficiently flexible, forward-looking, innovative enough to respond?
To ensure a robust capability to respond, typically, we should be thinking about at least the most upbeat, the most expected from where we stand today, and the worst case scenarios for how things might play out.
In the worst-case scenario, what are doing as businesses to prepare for a situation where, for example, we might see a 10%or more fall in GDP – as seen in the pandemic? None of us were prepared for the last one, but if we know that might be coming, we can organise ourselves in terms of product portfolios and business models.
The second is where we think we might evolve to from where we are now. There is a nervous level of optimism that, somehow, we’ll get through the next waves of economic turbulence – such as inflationary or deflationary cycles, downturns, and country collapses – before we get back onto a more reliable path to growth.
Although there are huge opportunities in every downturn, the majority of us are hoping for the most upbeat scenario where, over the next four to 10 years, globally we could see trillions of dollars going into innovation that leads to real growth, sectoral transformation, and the birth of entire new industries. The hope is that this could drive a repeat of the roaring ‘20s era that we saw after World War One, when there was an incredible wave of new ideas, creativity, and innovation that gave rise to mass production capabilities and the rapid growth or creation of major sectors such as automotive, film, and radio.
So this is not about picking our preferred one, it’s about having a plan in place so we can respond to any one of these scenarios and the possibilities that could emerge between the extremes. What would we invest in? What are our investing businesses doing to prepare for those different possibilities? And when we’re looking at potential investments, what questions are we exploring when assessing the strategies of target companies and sectors?
We’re in a really interesting space now, where most of us know how to do different dance steps for specific situations. We knew how to respond if prices changed in the marketplace, if a new competitor came in, or if there was a sudden change in the economy. But now we’re in an environment where all of that could be happening in parallel, coupled with shocks, shifts, and disruptive technology advances that we hadn’t thought about or prepared for. So we’re having to learn all sorts of new dance routines while we’re on the dance floor and don’t recognise the music. We can’t write a business plan a project roadmap for how to dance. We have to get on the dancefloor however unprepared that might feel. We have to trip over ourselves, tread on the people around us, learn how to dance to new music, and learn multiple dance routines as the music keeps changing.
When you look at those who are most successful at responding to what’s on the horizon, the key is that capacity to learn, be open to new ideas, and experiment. We can’t respond to change and create the future by finding excuses for why “that wouldn’t work here” or reasons for why we think it might fail without first understanding what the innovation is and what possibilities it offers. To paraphrase the author Graham Greene, there comes a time when we all have to open the door and the let future in.
