Dr Keith Suter
STRATEGIC THINKING AND LEADERSHIP
FOR THE FUTURE OF LOCAL GOVERNMENT:
WHY THIS IS NECESSARY IN TIMES OF CHANGE
THINKING ABOUT THE FUTURE
1.The Importance of Perception
(i)we see what we are prepared to see
we see what our emotions have sensitized us to see
(ii)“facts” don’t necessarily win argumentseg current issue of climate change
(iii)logic alone doesn’t change emotions – but if the perception changes, then emotions change egalcohol-fuelled violence has changed Sydney’s views towards the need for greater regulation of alcohol outlets
(iv)beware of “epistemic communities”: to whom do you speak? (eg the US “sub-prime” crisis): value of this type of conference: it broadens one’s horizons
2.The Three Ways of Thinking About the Future
(i)prediction (“Moore’s Law” eg December 2006 “Deep Fritz” beat world chess champion Vladimir Kramnik; back in December 2002 he had held it to a draw but in four years it got a lot smarter); now a computer is smarter at go than any human
(ii)preferred futures: building a bridge back from the future eg 1962 JFK pledge to put a man on the moon
(iii)possible: scenario planning: importance of paradigms/ worldviews (role of paradigms: Nokia and texting)
PREDICTION
3.The Value of Prediction
- many predictions are a waste of time (such as the forecasts made by economists)
- General Eisenhower: plans are often a waste of time but the planning process (making sure that everyone is on the same page) is very important
4.Digital Disruption
- Prime Minister Malcolm Turnbull often speaks about “digital disruption” (and he amassed a fortune out of being an early investor in Information Technology)
- digital disruption and the story of Encyclopaedia Britannica[1]
- established in Scotland in 1768 and “generally regarded as the world’s most comprehensive and authoritative encyclopedia”
- in recent decades the publishing company failed to monitor the rise of online reference works and ran into financial problems (English language Wikipedia appeared a year after the Harvard Business School book was published)
- as at 2016 the company no longer prints a hard copy version; there is some online material and the company (using its well-established brand) also publishes other educational material
- Evans and Wurster identify these lessons for all businesses:
(i)“the most venerable can prove the most vulnerable” [note the speed of the collapse]
(ii)“a strong corporate culture can blind business leaders to events that do not fit into their collective mental framework” [just because the organization is a vital part of today’s community, there is no guarantee it will still be needed tomorrow]
(iii)even if executives do fully grasp the impact of new technologies, they may be at a competitive disadvantage because they are “saddled with legacy assets”
5.Moore’s Law and the Information Revolution
- Gordon Moore of Intel: April 19 1965 prediction: power of computers will double every 18 months-2 years; price of computers will halve every 18 months-2 years
. “sequentially”: 1, 2, 3.....30
. “exponentially”: 1, 2, 4, 8, 16 (in 30 steps: 1 billion)
(i) yes: the Internet is revolutionary – but not utopian; it does disrupt our lives but not necessarily always for the better
(ii) be aware that the Internet was not designed for all the functions we are now using it for (education, banking, commerce, entertainment etc); it may be vulnerable to disruption (hacking)
(iii)we have often been blind-sided by change for example newspapers carried stories of IT changes but newspaper boards themselves failed to ask: “What does all this mean for our newspaper business model?”
(iv)what are the health implications of being “connected” all the time? Workers are always on “call”; sleep patterns are disturbed; “multi-tasking” may be reducing a person’s power of concentration
(v)is the rise of the “click and flick” generation creating a risk through a lack of concentration?
(vi)how will “robots” be incorporated into daily life? Robots need not be the Hollywood machine type eg a teddy bear to monitor a resident’s health and remind them to take their medication
(vii)what is the scope for improved research/ medical breakthroughs eg cure for dementia/ implants for humans eg new eyes: from mainframe computers to portable to mobile to embedded
(viii)remember: software eats the world
6.The Next Stage: 3D Printing (Additive Manufacturing)
- machines that print (eg plastic toys) one layer at time
- owing to the method of construction, there is no waste: only the material that is needed gets used
- the end of shopping? The 3D printer will manufacture for you at home (recall that servants were replaced by the washing machine and Hoover)
- photographers no longer need Kodak for colour photographs; since 1838 3.5 trillion photographs have been taken (now at 10 per cent per year); more photos are now taken every two minutes (on 2.5 billion cameras) than were taken in all the 19th century;but Kodak itself is broke
7.Loss of Jobs
- rise of the “gig economy”
- for the first time in history we are now losing jobs faster than we can create them (not all the jobs have gone to Asia; some have been taken over by robots)
- robots work 24/7; never take annual leave or sick leave; have no ego and no personality squabbles – but they don’t “consume” many goods or services, either: where will the consumer demand come from?
- how will people be employed in the future? Where will they get their money?
- will the reduction in working hours mean more leisure time for people – or more boredom, depression and suicide?
PREFERRED
8.Blue Ocean Strategy (W Chan Kim and Renee Mauborgne)
- “blue ocean” is new market space
- “red ocean” is the contested market space (think of blood in the water from all the fighting); the blue ocean intention is not so much to beat the competition – as to make it irrelevant
- most strategy work has been done on competition-based red ocean strategies
- blue ocean Henry Ford (working in a field of 500 established car producers) invented the mass-produced, inexpensive automobiles (rather than contest the red ocean of expensive, elite automobiles) [Henry Ford: “If I had asked my customers what they wanted, they’d have said a faster horse”]
- authors shift the emphasis off “excellent” companies (which do not exist permanently) - to an evaluation of winning strategies
- other examples of Blue Ocean thinking:
i.Yellow Tail Australian wine (targeting Americans who don’t drink wine because they thought that there were not “sophisticated enough”)
ii.Cirque du Soleil, Canada: reinvention of the circus (eg no animals)
iii.Japan: fuel-efficient cars in the 1970s
iv.E-bay: online auctioning
v.Starbucks coffee as a low-cost luxury for high-end consumers
9.Blue Ocean Thinking
(i)Techniques:
- stop benchmarking the competition – the more you benchmark, the more you get to look like the competition
- don’t focus so much on the competition and instead look at the Blue Ocean horizon
- look to non-customers; they provide the most insights into how you can create new, uncontested opportunities
(ii)Ask Some Basic Questions
- which of the factors that the industry takes for granted should be eliminated?
- which factors should be reduced below the industry’s standard?
- which factors should be raised well above the industry’s standard?
- which factors should be created that the industry has never offered?
10.New Opportunities: The Experience Economy Joseph Pine and James Gilmore
- there is greater wealth in the world than ever before
- old era: three layers of economic activity: (i) commodities (ii) goods (iii) services
- people now have so much wealth that we need to find new ways of extracting money from them
- new era: four layers of economic activity: (i) commodities (ii) goods (iii) services (iv) experience
- experiences are memorable (rather than tangible)
- McDonald’s do not just sell fast food; they sell bright, clean, safe, family-friendly eating places suitable for socializing
- Starbucks sell more than coffee; they provide the “third” place (after “home” and “work”)
- wineries that now host music/ comedy festivals: “grape grazing”
- “experience” is unique to each person; “the best things in life are not things” eg book shops that sell coffee: what are they really selling: romance
- the first three levels are finite; the fourth is infinite because of the human appetite for amusement, excitement, learning, pleasure, spiritual fulfilment is infinite
11.The Tourist Industry
- 1973 ABC radio interview: “tourism won’t work here: Australia is too Bolshevik to be servile and too unionized to be efficient”
- swampy, mosquito-infested fishing villages south of Brisbane were reinvented as today’s “Gold Coast”[2]
- a whole new industry was invented for the Japanese market (before 1970 it was illegal for the Japanese to go overseas on holiday)
- largest source of foreign tourists: New Zealand (total population of 4m)
- imagine catering for 1.3bn Chinese
12.International Education
- education generally is part of the “sunrise” suite of service industries (in contrast with the “sunset” industries, such as automobile manufacturing)
- international education is vital for Australia’s economy: religious based education providers used to bring students to study in Australia, then after World War II came the Colombo Plan
- current change began in the early 1980s
- on a per capita basis, Australia now has more international students than any other western country
- it is Australia’s third largest export industry (number 1 in Victoria’s case)
- education is a growth industry as humankind mobilizes brainpower for the next great leap forward
POSSIBLE[3]
13.The Evolution of Scenario Planning as a Management Tool
- Pierre Wack at Shell: 1973 OPEC oil increase
- Clem Sunter: early 1980s: South Africa
14.The Technique of Scenario Planning
- decide on the basic “question”
- interview experts
- look for the two main drivers of change: STEEP: Social, Technological, Economic, Environmental, Political
- produce two or four scenarios (never three)
- discuss the draft scenarios with “remarkable people”/ “lateral popies”
- create indicators
- create contingency plans
- talk up the scenarios (strategic conversation)
15.The Future of Community Care in the Home in 2035
Keith Suter and Steve England The Future of Community Care in the Home in 2035: Four Scenarios, Sydney: Meals on Wheels, 2016
-NSW Meals on Wheels Association has commissioned a study on what “support in the home could look like in 2035”
- key factors: are client-directed care (funding going to clients to buy services, rather than going to providers to supply them), competitive price tendering, increased competition, population changes impacting both client expectations and volunteer capacity, and new technologies
- two main drivers of change are: the level of Government Expenditure and the level of Social Cohesion
Government Funding: To what extent will there be government funding for community care in the home?
Social Cohesion: To what extent will there be some form of community spirit – or will people prefer to live individualistic lives? Will people want to work together to solve common problems or will they try to cope on their own?
(i)“Leave it to the Bureaucrats”: high Government Funding/ low Social Cohesion: the individualistic experiments such as Consumer Directed Care have failed and there has been a decline in not-for-profitorganisations such as Meals on Wheels, and so government is back providing welfare direct
- some of the indicators of this scenario emerging might include:
. failed experiments in client-directed care, particularly for older people, mean that government moves back into the direct provision of care in the home
. media “scandals” over clients who have exhausted their funding prematurely, thereby being reduced to poverty or having to place greater reliance on the family (where such exists)
. continuing pressure on attracting and retaining volunteers
. people are unwilling/ unable to serve on boards
. small, local not-for-profit services continue to close or amalgamate with other services to use some economies of scale to survive
. larger not-for-profit service providers and peak bodies become more entrepreneurial in an attempt to survive (some don’t and so disappear)
. there is an increase of “for-profit” service providers in the community care space for affluent clients
(ii)“Golden Era”: high Government Funding/ high Social Cohesion: the economy is going well and so there is adequate money for social welfare, and there is a flourishing non-governmental sector.
-indicators of this scenario emerging might include:
. an appetite for innovation; a greater willingness to give things a go; less fear of change
. changes in Australia’s national economic structure leading to economic expansion
. increased numbers of volunteers available to local community services, both for service provision and governance
. the flourishing economy results in an increased “feel good” mood within the general community and a greater optimism about the future
. government receiving electoral approval to increase taxes to fund community services and other welfare programs
. less “politics of anger” and resentment and a greater sense of community and wanting to assist others.
(iii)“Each Person is an Island”: low Government Expenditure/ low Social Cohesion: this foreshadows the end of organisations like Meals on Wheels despite the country’s increasing financial and social problems.
-indicators of this scenario emerging might include:
. continued national economic problems
. increased difficulty for not-for-profit boards to find and retain board members
. significant reductions in volunteers
. the loss of many local services such as Meals on Wheels
. the amalgamation of some services in an attempt to survive through economies of scale and effort
. increased elder abuse
. increased depression levels across the community
. increase number of “working poor”
. increased erosion of the tax base
. increased law and order issues
. increased development of “gated suburbs”
. increased push for the legalisation of voluntary euthanasia; the dilemma for caring organisations in how they handle the requests of people who wish to “die with dignity”
(iv).“Local Self-Reliance”: low Government Expenditure/ high Social Cohesion: as in wartime Britain (where Meals on Wheels began) there is not much government expenditure available but there is a grim determination among people of all ages to carry on assisting fellow members of the community
-indicators of this scenario emerging might include:
. increased service providers, particularly small, local organisations
. increased numbers of volunteers
. increased resources available for not-for-profit governance (websites,training)
. growth in bartering and local employment and trading services (LETS)
. increased mainstream support for “alternative” lifestyles
. increased local community activities such as community gardens and organic farmers’ markets
. government programmes to encourage volunteering
16.Where to From Here?
- create indicators
- create contingency plans
- talk up the scenarios (“strategic conversation”)
Keith Suter
1
[1]Philip Evan and Thomas WursterBlown to Bits: How the New Economics of Information Transforms Strategy, Boston: Harvard Business School Press, 2000, pp 1-7
[2]Joe HajduSamurai in the Surf: The Arrival of the Japanese on the Gold Coast in the 1980s, Canberra: Pandanus, 2005
[3] For more information see my third PhD: