FUTURE TRENDS IN BUSINESS

EPISODE #258 TRANSCRIPT

trust the experts?

Predictions for the future have always been problematic. When experts give their view about the future direction of their industry, we tend to listen and take note. They'd know, right!? They're closest to the action. But often it's this very proximity and expertise that makes the prediction unreliable. Maybe they're just too close to the action--they can't see the forest from the trees.

We're going to talk about the fallacy of expert opinions later so, let's just park that one for a minute.

It's always good fun though to look back at some of the more outlandish predictions that have been made over the years. Hindsight is a wonderful thing, but a few of these past predictions really give us a giggle.

One of my favorite predictions comes in the quote from a Decca Records executive in 1962, after Decca decided not to sign The Beatles to their record label. He said, "We don't like their sound, and guitar music is on the way out."

Another one of my favorites is the 1946 quote from Darryl Zanuck, the Hollywood movie producer who said, "Television won't last, because people are going to get tired of staring at a plywood box every night."

Until COVID, the most fun predictions had come out of the computer industry. No one could have predicted how quickly things would change… apart from perhaps Gordon Moore. In one of the rare accurate predictions, Moore said, "The number of processors on a microchip will double every two years, and the price of a computer will come down." That prediction was incredibly accurate, year in and year out for decades, and was only broken fairly recently.

But of course not everyone is quite so insightful. In 1943, Thomas Watson, the chairman of IBM, said, "I think there is a world market for maybe five computers."

In 1967, a Wall Street Journal article predicted that “By the year 2000 there will be 200,000 computers in America.”

And as late as 1977, the founder of Digital Equipment Corporation said, "There is absolutely no reason for any individual to have a computer in his home."

All a bit of fun, right!? But imagine if we'd listened to the predictions in 2020 and 2021 that told us the office is a thing of the past--an outdated construct that would never come back, now that we've proven we can work just as effectively from home.

Now that the initial hype has passed, companies are much more circumspect about hybrid work. Some offsite work is useful and beneficial for everyone, but there's a need for people to be in the office for all sorts of good reasons (I mentioned some of these in a previous episode, so feel free to hold my predictive feet to the flames by listening to it. It's Ep.218: Is Working From Home Working?)

What I pointed out then, is that you can't optimize collaboration, build networks, solve problems, manage talent, and align the culture from your kitchen bench.

And, I don't know about you, but I have more than enough evidence now to say, without fear of contradiction, that video conferencing is a very poor substitute for a face-to-face conversation. So no, the office won't disappear. It's very much alive and well, if not slightly altered in our perception of the role it plays.

ARE THE ROBOTS COMING FOR US?

Just in the last six months or so, AI has taken center stage as the most likely disruptor of everything we know, and everything we believe. There's no doubt that it's going to have major implications for society at large, beginning with the widespread replacement of many jobs--not within a 10 to 20 year timeframe, but within the next two to three years.

To the extent you can believe the predictions, it's pretty scary stuff. I've been doing some light research lately just around the edges of the issue, but I think there's good reason for us to take pause, rather than launching headlong into the exponential evolution of AI engines.

If you want the cliff notes, have a listen to an interview from Steven Bartlett's Diary of A CEO podcast. He interviewed Mo Gawdat, the former chief business officer of Google X. Gawdat is pretty certain that the AI disruption is going to hit us like a freight train sometime within the next two to five years. Bear in mind though, he is actually an expert in AI.

A recent article in The Economist asked the question, what are the chances of an AI apocalypse? This gave a brighter prognosis for the coming wave of disruption. The article looks at the difference between predictions that are made by “experts” in a particular field, as opposed to what they call “superforecasters”.

The Economist took the predictions of subject matter experts in nuclear war, bioweapons, AI and extinction itself, and compared them against the predictions of the superforecasters, who are general purpose prognosticators with a record for making accurate predictions on all sorts of topics, from election results to the outbreak of wars.

Superforecasters have typically been a lot more accurate with their predictions when compared to domain experts. It's good to know this when it comes to AI, because the superforecasters aren't anywhere near as concerned as the experts.

The experts (and this of course would include people like Mo Gawdat), predict that by the end of the century there is a 12% chance of an AI-caused catastrophe and a 3% chance of an AI-caused extinction event. That is a huge number, and I'm kind of glad I won't be around to see that one play out!

But the more accurate superforecasters are nowhere near as concerned. Their view is that there's only around a 2% chance of an AI-caused catastrophe and a 0.4% chance of an AI-caused extinction event by the end of the century. Still a big number, but it makes me feel a whole lot better.

In fact, the superforecasters believe that there's a much higher probability of a nuclear catastrophe than an AI-driven catastrophe, to the extent that that provides any comfort. AI is definitely coming, and we have no real concept of how it's going to disrupt business. But we can't really do anything else at this stage other than watch and wait.

MY THOUGHTS ON THE FIVE FUTURE TRENDS

The five future trends article that I want to look at only gives a passing mention to AI. Why? Because it was published in September last year (2022). That's not even a year ago, but it was a couple of months before ChatGPT was first released. Isn't it incredible how quickly things can change in the world of technological innovation?

1. The first trend is restructuring companies for efficiency.

This is driven by two major factors: One is the supply chain and market disruption that we experienced during and after the COVID pandemic, and the other is the continuing decline of productivity that we’re witnessing in most economies at present.

I'm not going to go into the productivity decline, as I talked about it in detail just a few weeks ago in Ep. 255: Building a Better Mousetrap.

I think this trend is real and it's something that's going to face many of us.

When you think about how to improve efficiency, there are going to be some structural considerations. For example, should I merge with another company? Should I divest an unprofitable business unit, and so on? And there will be some value chain considerations--what do I need to do in-house as opposed to having a specialist supplier in the mix?

There will no doubt be some personal considerations--do the people I currently have working for me have the ability to lead the business forward in this new, more complex paradigm?

No matter where you are, I suspect that at least one of these factors is going to touch you, and you'll need to make some relatively big decisions in the coming one to three years. So obviously these questions need to be considered at both the strategic and tactical levels.

2. The second trend is a shift to skills-based hiring.

This is an emerging trend to hire less graduates and more people who have demonstrated skills. It emphasizes track record over potential. The implication, of course, being that pathways to employment are trending more towards experience.

Very few business leaders believe that university graduates are actually coming out with job-ready skills–tell me when to look shocked–this has always been the case.

As much as we'd like to think that higher education institutions adapt and turn out job-ready graduates, I don't think it's in their nature… and I'm not sure that this should change. 

Universities have always been tasked with providing the theoretical foundation for a career in your chosen discipline. They're perhaps less about telling you what to think about and more about how to think. 

But, there's certainly an observable shift to vocational learning. In the US, there's a huge push from the current government to forgive student loans, and it will also be providing significant funding for other pathways to education and qualification without a four-year college degree.

In my view, though, the extent to which this can actually alter the way the markets move and employers think is going to be extremely limited. It's more likely that the skills won't be determined by supply side remedies. They'll be determined on the demand side.

How this pans out with the specter of AI and other disruptions is anybody's guess. As a result, I'm not calling skills-based hiring a big future trend.

3. The third cited trend is the mobility of talent.

This seems to be more about access to talent than people actually moving freely around the globe. The trend of being able to work for companies in places other than their head office is an obvious outcome of the pandemic.

As the author points out, quite rightly, the physical movement of labor will be constrained by higher trade tariffs and tighter border controls. The weakening embrace of globalization, which had started well before COVID hit, is going to offset this trend.

Globalization relies on the seamless flow across borders of four critical elements: capital, trade, labor, and intellectual property. When we think about this, very few people were ever genuinely mobile.

I want to let you in on a little gem from one of my great mentors, Ray Weekes. He once remarked that there are two types of people: somewheres and anywheres.

Somewheres aren't mobile. They grow up, live, and work within close proximity to where they were born. They rely on their extended families and communities, and the jobs that exist in and around that community.

Anywheres, on the other hand, are people who are infinitely mobile. They have the education, the means, and the confidence to go anywhere and to make that work.

I don't really think that we're all of a sudden going to see a swing in the number of people who are anywheres. Despite the increased opportunity to work remotely, it's going to mostly apply to people who were already anywheres.

Combine that with the demand-side requirements of a rapidly evolving workforce, and I don't think the mobility of talent will be materially greater than it's historically been.

4. Trend number four is the rise of work and the decline of employment.

I think this one is a really huge shift. When I think about my parents' generation, they basically got a job when they left school or university and worked there for the rest of their lives. If they made, I don't know, one or maybe two job changes, it would've been a really big deal, and it would have been the exception rather than the rule.

But even in my career, I worked for eight different companies--and I didn't bounce around that much. My average tenure was just under five years.

Now, we can expect that people coming into the workforce will have at least 15 different jobs during their careers. Combine that with the gig economy, and the push of many governments to make employment laws so unworkable for companies that do hire permanent staff? I think we'll definitely see an increasing trend towards hiring the skills you need, when you need them.

This is a further move away from everything being done in-house, and it's a really important trend to watch, because there's a range of considerations that should be given to any decision to outsource or insource a function.

For more on this, I've got some great episodes for you… Ep.95: The Joys of Outsourcing and Ep.221: Managing Supplier Relationships. Deciding where to do things, and how to find efficiencies without losing your focus on capability building and talent management is definitely going to be one of the big challenges for leaders in the coming years.

5. The final trend mentioned in the article is the central importance of digital skills.

Okay, this one's a no-brainer. I consider myself to be pretty literate in all things technology, but I'm still way out of my depth on a lot of things. When I look at the expertise that Em and Tash and our team in Sydney have--and they're not technology specialists--I realize how far behind the game I am.

The generations coming through will no doubt have higher-order technology skills built in, but with the pace of technological change and adoption, we are definitely going to see cracks appearing. The interesting thing is that, with an ageing population, it's going to be a decade or so before these technologically gifted people are calling the shots.

The general trend over history has been for technology to improve at a greater rate than humans can sensibly adopt it. I'm not sure what you think but, to me, technology is improving way faster than it used to. It's growing exponentially. So, I sense that our ability to methodically realize that potential is getting harder, not easier.

Who knows where this one's going? We know that the rate of technological advancement, not least of which is AI, will radically change the way our workforce is composed and therefore how we lead. But how's this ultimately going to play out? It's really anybody's guess.

THE FUNDAMENTAL THAT DOESN’T CHANGE…

Okay, that's a pretty good fly over the top of the trends that will shape our environment in coming years. We've looked at the likely impact of return to office and remote work. I touched on the AI disruption that's right on the horizon. And I looked at the business trends that have been identified as key considerations in the future world of work.

But let's remember one thing: leadership is leadership. No matter what the future holds, having the capability and confidence to lead your people strongly is going to be the foundation of your success.

 Your personal leadership capabilities: handling conflict, being resilient, mastering ambiguity and working at the right level are prerequisites for dealing with whatever the future throws at us.

So, focus on the basics--build your skills and knowledge. And if you only get good at one thing, get good at adapting. No matter what we think the future holds as we sit here today, the only thing we know for certain is that it's going to be different to that!

RESOURCES AND RELATED TOPICS:

• Ep #218: Is Working From Home Working - Listen Here

• Ep #255: Building a Better Mousetrap - Listen Here

• Ep #95: The Joys of Outsourcing - Listen Here

• Ep #221: Managing Supplier Relationships - Listen Here

• Diary of a CEO interview with Mo Gawdat - Listen Here

• Article from The Economist: What are the chances of an AI apocalypse? - Read Here

• Buy the NO BULLSH!T LEADERSHIP BOOK - Here

• Explore other podcast episodes - Here

• Take our FREE Level Up Leadership Challenge - Start Now

• Check out our 8-week online leadership program, Leadership Beyond the Theory - Learn More

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