FUTURE ENVIRONMENTAL SCANNING:

A CONTENT-RICH WEBINARThe Systems Thinking Approach

Founded in 1990 • Offices in over 20 Countries

WEBINAR MARCH 2011

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Future Environmental Scanning: A Content-Rich Webinar

Future External Environmental Scanning:SKEEPTIC

Socio-Demographics

Consumers/Clients Competition/Substitutes

Industry Economy

Technology Ecology

Political/Regulatory

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The Haines Centre: A Global Alliance of Master Consultants and Trainers

Founded 1990 - Offices In Over 25 Countries

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Who’s Steve Haines?

Founder & CEO: Haines Centre for Strategic Management®

Systems Thinking Press®

Founded in 1990—38 Offices—25+ Countries

STEVE is a:

“CEO—Entrepreneur—Global Strategist”and

“A Facilitator—Systems Thinker—Prolific Author” (16+ books)

A graduate of the US NAVAL Academy's Legendary Leadership Class of 1968

ASP Hall Of Fame-7th Selectee

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Who’s Gail Aller-Stead?

• Partner and Change Management Lead, located in Toronto, Canada

• Known as a:• Strategic architect • Culture and change steward• Operational executor

• Clients tell her they engage her services because she excels in designing and delivering the mechanisms they need to help them:• Define their desired direction and strategy – and then –• Implement and sustain their desired direction and strategy

• Graduate, Pepperdine University (MSOD)

• SMP Pioneer (Association for Strategic Planning)

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The New Normal

Complex Timesare

The New Normal

Are you An Architect of the Future

OrA Defender of Decline?

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The Focus Of This Webinar

The new normal of difficult and turbulent timesrequires

Future environmental scanning on a regular basis

We now have a complete re-orderingof

Global Economic Structures

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Polling: Do You Agree or Disagree?

STEP ONELook for the Icon of the person raising a hand on the bottom left panel ofyour screen.

STEP TWORead the given statement and choose the:• Green ‘’ if you agree• Red ‘x’ if you disagree.

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Agenda for Today’s Webinar

I. Overview and Introduction: Part II vs. Part I Differences

II. Future Environmental Scanning: Concepts, Quick Review from our

previous Webinar

III. Content-Richness: Specifics of Future Global Environmental Scanning

(Using SKEEPTIC as the New Standard—Not all slides are covered due to

time)

IV. Summary: Major Changes World-Wide contributing to this Complete Re-

ordering of Global Economic Structures

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Rates of Change

“If the rate of change on the outsideexceeds

the rate of change on the inside,the end is near.”

—Jack WelchFormer Chairman and CEO

General Electric Corporation

WHAT HAS HAPPENED IN THE WORLD IN JUST THE PAST YEAR?

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Shorter Term Global Changes Right Now

Look at recent Events:

• Middle East Revolutions—Tunisia, Egypt, Bahrain, LibyaWhat is different about each? Are they all the same?

• Nuclear Reactor Meltdowns• Earthquake and Tsunami• Gulf Oil Spill• New Zealand Earthquake Disaster• Volcano eruptions• Haiti Disaster• Floods in Pakistan, etc.

• Implications for Wall St., Oil Prices, Global Economy, Recession????

What are the implications for your organization as to:1. Re-Planning –Strategic Plan as a Living Breathing Document2. Scenario Planning

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Failure Of PlannedLarge-scale Organizational Changes

75% of AllMajor Change

Fails

Why?

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Lions, Gazelles, and

Strategic Actions

Every morning in Africa a gazelle wakes up.It knows it must outrun the fastest lion or it will be killed.

Every morning in Africa a lion wakes up.It knows it must run faster than the slowest gazelle or it will starve.

It doesn’t matter whether you’re a lion or a gazelle: When the sun comes up, you’d better be running -- around the globe!

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Sea Changes in Today’s World

Your Organization

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Industry DeconstructionAnd Construction

Customer - Consumer

Intermediaries/Brokers

Delivery Channels

Content - Provider

ClosingtheGap

ISP

Search * Key

Storefront Destruction“Go Direct”

DeconstructDeconstruct

DeconstructReconstruct

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Name This Country

Richest in the world? Largest military? Center of world business and finance? Strongest education system?World center of innovation and

invention? Currency the world standard of value? Highest standard of living?

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Name This Country

Answer: England in 1900!

What are the implications For the USA?For Europe?

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Why Future External Environmental

Scanning is Critical

“The future is shaped

by those who see the possibilities

before they become obvious”Singapore Straits Times

What Papers do you Scan Globally?

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The USA in 1908

Average life expectancy of 47 years 14 percent of homes had bathtubs 8 percent of homes had telephones 8,000 cars and 144 miles of paved roads Maximum speed limit in most cities of 10 mph Average wage of 22 cents per hour More than 95 percent of all births took place at

home……..

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Ninety percent of all doctors had no college education:Instead, they attended “medical schools”, many

condemned in the press and by government as ‘substandard’

Two of every 10 adults were illiterate Only 6 percent of all Americans graduated from

high school Sugar cost four cents a pound. Most women washed their hair only once a month,

using borax or egg yolks………

The USA in 1908

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The leading causes of death were:1. Pneumonia and influenza2. Heart Disease3. Tuberculosis4. Stroke5. Diarrhea

The American flag had 45 stars The population of Las Vegas, Nevada was only 30! Crossword puzzles, canned beer, and ice tea hadn’t

been invented yet 230 reported murders in the entire nation

Imagine the changes to the USA in 2108!

The USA in 1908

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Our “Truths” are Collapsing

"What does it take to win in a world where

Change is not only rapid

But accelerating,

Where ancient 'truths' collapse

with disconcerting regularity?"

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VUCA

The U.S. Armed Forces strategic training schools developed a

specific term to describe today’s world: VUCA

Volatile, Uncertain, Complex, and Ambiguous

This means that past events are not reliable indicators

for

what we can expect in the near future

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VUCA-Military View

Future External Environmental Scanning should look at:

1. Globalization

2. Resource Competition

3. Radical Ideologies

4. Weapons Proliferation

5. Natural Disasters

6. Climate Change

7. Rising New Global Powers

8. Overpopulation

9. Urbanization

10.Wars

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“Currently-Existing” Large-Scale Economies

“Industrialized”• EU (European Union)

• NAFTA

• Japan

• Singapore

• Australia

• ASEAN

“BRIC”:• Brazil

• Russia

• India

• China

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G-20 Economies

Argentina

Australia

Brazil

Canada

China

European Union

France

Germany

India

Indonesia

Italy

Japan

Mexico

Russia

Saudi Arabia

South Africa

South Korea

Turkey

United Kingdom

United States

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14 Emerging Economies

BEST• Bangladesh

• Egypt

• South Africa

• Turkey

Remember BEST, MVP, PICK, and NIC

MVP• Mexico

• Vietnam

• Philippines

NIC• Nigeria

• Indonesia

• Columbia

PICK• Pakistan

• Iran

• Chile

• (South) Korea

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Why Thinking Matters

How you Think

Is how you Plan . . .

Is how you Act . . .

And determines

The Results You Get in Work and Life!

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Future External Environmental Scanning

“Most people try to skate where the puck is. I try to skate to where the puck will be.”

- Wayne Gretzky

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Our Levels of Thinking

Problems that are created by our current level of thinking can't be solved by that same level of

thinking.

—Albert Einstein

So ...if today we generally use analytical thinking,we now need to use “Systems Thinking ”

to resolve our issues.

—Stephen G. Haines

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Get a higher and broader perspective

Take a Helicopter View of Life!

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Scan Your Future External Environment

The World Is Interconnected

“What will be changing in your future external

environmentthat may impact you?”

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The Value of Mental Models

Give people the conceptual tools,

the integrated frameworks, and the models they need

to organize their evidence, their experience, and their learnings

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Environmental Scan and Assessments

The Situation: There is no standard model for conducting future external environmental scanning

Best Practice: Use the acronym “SKEEPTIC” as the new standard for conducting future external environmental scans

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Step 1: SKEEPTIC

TODAY – IMPLICATIONS(Opportunities – Threats) SPONSOR

List 5-10 environmental trends and projections facing you over the life of your strategic plan

S Socio-Demographics (People/Society)

K Competition/Substitutes

E Economics

E Ecology

P Political / Regulatory

T Technical

I Industry / Supplier

C Customers/Citizens

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Step 2: SKEEPTIC

The second step in completing SKEEPTIC is to convert your data into useful, relevant information:

1. Identify the implications for each of the SKEEPTIC sections. In other words, ask yourself “So What?”

2. List the levels of probability and impact of those items of importance to your organization

SKEEPTIC Issue Probability Impact

1 Vendor Management M M

2 Shift in budgeting priorities of governments

H M

3 System reliability and uptime H H

4 Publishers are moving out of print-based

H L

5 Overlapping scopes of practice

H H

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Step 3: SKEEPTIC

PRO

BA

BIL

ITY

High

Medium

Low

Establish contingency plans. Act immediately if appropriate

High Risk. Immediate actions required2

High RiskImmediate actions required3,5

Acceptable Risk. No action now but review periodically & consider possible improvements

Establish contingency plans. Act immediately if appropriate1

High Risk Immediate actions required

Acceptable Risk. No action now but review periodically & consider possible improvements4

Acceptable Risk. No action now but review periodically & consider possible improvements

Establish contingency plans. Act immediately if appropriate

Low Medium High

IMPACT ON OUR ORGANIZATION

The third step in completing SKEEPTIC is to then plot these items on the matrix. Items 2,3,5 must be acted upon immediately. Items 1,4 are of lower priority.

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Is This More Like Today’s Reality?

Disruptive Technologies

TIME

Revenue

Profit

Customer

Products

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Disruptive Technologies

What are some disruptive technologies we’ve seen recently?

What are other disruptive technologies that might be coming in our future?

When should we start our thinking, our planning, our acting?

• Hybrid cars

• Internet

• Smart Phones

• DNA

• PCs

• Drone airplanes

• iPAD

• DVDs

• Human Genome

• Digital Revolution

• Wireless

• Carbon Fiber

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Topple Rate of Organizations

The Situation: As Thomas L. Friedman writes in The World is Flat , the lowering of trade barriers plus exponential advances in technology enable us to do business instantaneously with billions of people:-- across the planet and from anywhere on the planet --almost regardless of company size.

The Result: The “topple rate” (the frequency at which established organizations lose their market leadership positions) has doubled since the 1970’s

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Expect the Unexpected

Resilient, resourceful leaders expect the unexpected.

“What we anticipate seldom occurs, what we least expect generally happens.”

–Benjamin Disraeli, 19th Century British Prime Minister

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Which Levels do we Scan?

There are 8 Levels of Living Systems Should We Scan This Level?

8 Earth Yes7 Societies Yes6 Communities Yes5 Organizations Yes4 Departments, Functions, Project Teams Yes3 Individuals Yes2 Organs Yes – if Medical

Research1 Cells Yes – If Medical

Research

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Re-ordering of Global Structures

A Future External Environmental Scan by the Haines Centre for Strategic Management Global Partners

Socio-DemographicsS

K

1. Generational Shifts: Millennials, Boomers,Population Growth

2. Innovative employees, entrepreneurs in the emerging markets, Countries

3. Demands from Chinese employees, manufacturing going elsewhere

5. Innovation world-wide, globalization, shrinking world

6. Scarcity, polarization, fear, world-wide austerity

Competition-Substitutes

4. Females are 50%+ of USA workforce, women demanding recognition in other parts of the world

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Re-ordering of Global Structures

E

P

E Economics 7. Global economic system meltdown. Rebuilding? Speed?USA Deficits and Debt, “PIGS” in EU, death of Socialism?

8. Japan’s Economics: Where from here after crippling natural disasters and nuclear technology meltdown?

9. Countries/Federal/State/Local Deficits/bankruptcy/Unions?

• State Oil Companies (Top 12 world-wide )10. Wealth Transfer:

11. Green Economy, Growth. Germany leads, USA lags Climate Change? (Consume or generate wealth)

12. Terrorism Worldwide (Islamic Extremists)

14. War Potential – Hot Spots (Iran, Korea, Libya, Yemen, etc)

• Sovereign Wealth Funds—China’s world currency?

Ecology

Political --Regulatory 13. Role of International Bodies,Transnational Corporations

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Re-ordering of Global Structures

P

TTechnology

16. Attack on Capitalism as “The Best”

18. Nano-technology everywhere—Techno Explosion

• Greed / Corruption

17. Technology e-business, mobility, e-games. Communications revolution continues

19. Internet Vulnerability, Cyber crime, cyber warfare

Political-Regulatory

• State Capitalism / Social Capitalism• Benevolent Dictators

• Jockeying for “Global Commons” dominance

15. Empires, government bureaucracy(crumbling infrastructure declining)

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Re-ordering of Global Structures

I

23. Middle East, Spread of Bottom-up revolutions. Four Freedom Desires, democracies??

22. Race for resources world-wide –commodity prices have increased (wheat, oil, food)

20. Innovations of emerging markets (vs. low cost supplier)

21. Emerging markets (BRIC plus now—many more countries and middle-class consumers)

Industry -Suppliers

C Customers -Citizens

Staying Ahead Of

Global Trends

Country By Country

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The Competitive Advantage of Nations

--With thanks to Michael Porter’s ideas

Since World War 11

1970’s-1980’s

1990's

2000

2004

2011

South America and Mexico—Ranching and Farming (Agriculture)

- Japan(Quality culture management and manufacturing systems)

- Mexico/Canada(NAFTA)

- China(Manufacturing)

- India(Back of House Support)

- ???

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What have we learned in the past 2,066 years?

"The budget should be balanced, the Treasury should be refilled, public debt should be reduced, the arrogance of officialdom should be tempered and controlled, and the assistance to foreign lands should be curtailed lest Rome become bankrupt. -Cicero – 55 BC

“Those who cannot remember the past are condemned to repeat it.”

- George Santayana

“People must again learn to work, instead of living on public assistance.”

-Cicero – 55 BC

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A snapshot of 2020

2020 will have 3 world superpowers USA China India

The next 2 superpowers beyond 2020 Brazil Indonesia

Middle East Arising (in what form?) The Greatest Transfer of Wealth in the History of the World Transferred $7 trillion in wealth through crude oil in past 20 years Saudi Aramco alone (the largest oil company in the world) transfers

$350 billion/year in profits to government (crude oil sales only) Think how much OPEC has received with Oil at $100 bbl?

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Emerging Global Markets

1. Chile, Argentina, & other members of Mercusor2. Brazil3. China4. Germany & EU5. India6. Indonesia7. Mexico and Central America8. Malaysia9. South & East Africa10.South Korea

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China

1. Manufacturing center for the world

2. Raw materials demands

3. Currency level—Currency becoming the world currency??

4. USA investments/Tied to our economy

5. Non English speaking generally

6. Local elections

7. Mekong River Dam-Environmentalists win

8. Taiwan issue

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India

1. India—3 Times the population & one-third the size of the USA

2. Political Elections—Still proceed with modernization—a human face

3. British Legacy: Rule of Law and Bureaucracy-

4. People: 2/3 still in poverty-rural India (First World-Third World)

5. Outsourcing: Software-Call Centers-Pharmaceuticals (Drs.)

6. People: English-International-Bright-Hard Working-USA trained

7. People: 250,000 engineering graduates a year (Education key)

8. People Demand: Retention issues-going to older people, not young

What is India’s place as a world leader in 30 years?

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The Middle East

1. Iraq and AFPAK Wars

2. Fundamentalism—Terrorism—Saudi Arabian impact

3. Dubai—Singapore of the Middle East

4. Gulf Coordination Council

5. Iran-Middle Class

6. OIS-54 Nations—Muslim Moderates-includes Arab League

7. Wars and Truces:

Pakistan-India Cricket Games

Kashmir Dispute

8. Israel-Palestinians

9. War in Libya now-what is different from others?Bahrain, Yemen, Tunesia, Kingdom of Saudi Arabia, Egypt, Jordan?

10. Military vs. Police too differences too

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Europe

1. EU Expansion in 2004 and 2007 to 25 members. “Growth pains”, especially migration flows of workers from new to old member states

2. Pressure on the Euro – bailouts to the PIGS (Portugal, Ireland, Greece, and Spain)

3. Turkey-Cyprus-Muslim and what’s considered “European”4. UK Concerns, Atlantic or Europe?5. NATO membership – What’s its mandate post-Cold War?

6. World Competitiveness??

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Ultimately….

What we think,or what we know,

or what we believeis, in the end,

of little consequence.The only consequence ...

...is what we do!

THANK YOU FOR YOUR PARTICIPATION

Steve Haines and Gail Aller-Stead