Crystal Balls 2015

At the beginning of a new year many people enjoy making predictions about what will happen during that year. This includes “futurologists” who make “scientific” analyses of political, economic and sociological trends, and it also includes somewhat “less scientific” experts such as astrologists, soothsayers, palm-readers and crystal-ball gazers.
To speak about the future it does take balls, not necessarily crystal balls… It takes courage to make forecasts and predictions which might eventually be totally wrong and leave the authors of such forecasts looking pretty stupid.
I will now join these people who have enough balls to make forecasts, and share with you my own predictions for the next five years. This is what I see when I look into my private crystal balls and tune them to 2015.
Europe
The European Union will continue to advance, hesitantly, towards further integration. There will be moves to align fiscal policies, pensions and other economic issues. They will be accomplished through extensive discussions and much haggling, and this will continue to annoy the Americans (most of all) and everyone who would prefer to see a more clear-cut, decisive process. The cultural diversity of Europe will drive the lengthy discussions, the difficulty in quickly reaching a conclusion. At the same time, the need to create regional unity in terms of economic and political issues, while maintaining diversity in terms of culture, is what will ultimately determine what happens.
Slowly the world will understand that globalization (and European regionalization) is desirable and inevitable in terms of economic issues (such as regional currencies) and political structure (such as empowered regional parliaments). This, however, does not mean cultural integration. Culture moves in the opposite direction, towards greater diversity.
Most analysts fail to realize that culture issues are separate from economic issues. This is why Europe will continue to integrate economically and politically, but will continue to diversify and devolve from a cultural point of view. Europe will have eventually (perhaps 50 years from now) a unified economy, unified legislation, unified structures. Yet it will be more culturally diverse than ever and people will strongly identify with their local “grass roots”, while feeling “European” at the same time. To feel “European” includes that feeling of identity with your local roots, it includes the rich cultural diversity which is a characteristic of Europe. European identity and local identities are not mutually exclusive concepts.
Globalization
This paradox, between centralization and unification of economic and political mechanisms, while culture values become more diversified and decentralized, has been previously spotted by Alvin Toffler, in the 70’s, when he debunked the Orwellian myth of mass production leading to loss of diversity. As pointed out in “Future Shock” and “The Third Wave”, new technologies mean that companies can mass-produce with increasing personalization. Customers can order products according to highly individualized specifications. Rather than buying your Ford Model T only in black, modern consumers can choose from a rainbow of colours and also customize everything about the cars they wish to buy, from what kind of motor to what type of cup-holders they prefer. The beauty of modern production techniques is that you are not restricted to three choices of tennis shoe models: there are thousands of possible choices and you can create your own unique model.
As Sumantra Ghoshal pointed out in the 90’s, global companies will need to excel simultaneously in three different axis: global efficiency, regional responsiveness, and innovation. The same forces described in his “Ghoshal Mattrix” are at play regarding globalization (and European regionalization). To gain efficiency, economic mechanisms such as sharing a common currency, bringing down trade barriers, allowing for free movement of labour across borders, aligning fiscal policies and retirement policies, will need to be put in place. This will continue to happen, first in Europe, and then in other parts of the world. Global unity will eventually happen, not five years from now, but perhaps a hundred years from now.
At the same time, global responsiveness will increase, driving a different set of issues in the opposite direction, towards decentralization and individuation. This will be about culture, values, personalization, identity. Local culture differences will become stronger, and so will the sense of personal identity, and identification with idiosyncratic groups, which might actually not be “local”, but will be groups that share specific values though they might be geographically dispersed.
The paradox will be made possible through innovation, the third axis. Technology will make viable the coexistence of global efficiency and local responsiveness. Innovations in communication, connectivity, production, will make many things possible: the personalization of education, the production of customized consumer goods, the polling of opinions, voting on specific issues (not only at elections). We are barely beginning to experience the benefits of this customization trend.
The rise and fall of nation-states
In this process, the concept of “nation-states” will gradually change and become much weaker than it has been in the 20th Century, when it had its peak. Already in the beginning of the 21st Century we can see that-nation states are decreasing in power. When you think about it, nation-states are a fairly recent and short-lived concept. They were invented in the 19th Century and reached their peak less than 200 years later, in the late 20th Century, declining afterwards.
By 2015 it will be increasingly clear that nation-states have been caught in the middle of a “scissors” process: centralization of economics and political structures on one hand and decentralization of culture and identification in the other. The paradox will continue to be stretched.
In politics the paradox will be quite evident. On one hand, there will be increased centralization through the formation of regional blocs such as the European Union. The driver behind that will be the economic issues and a wish to avoid armed conflict. At the same time, new forms of political representation will drive democracy towards greater decentralization. Local representation will gain strength and there will be greater empowerment of local institutions and local control of budget issues wherever that makes economical sense. Scale will still drive certain issues towards centralization (such as building highways and high speed trains), while whenever possible, local residents will decide on local issues (such as parking regulations and noise levels).
Currencies
By 2015 the Euro will not crumble, rather it will become more robust. The Euro will co-exist with the American Dollar, the Chinese Yuan, and a few surviving “exotic currencies” struggling in different corners of the planet. Perhaps we will already have an international “basket of currencies” along the lines of what the Chinese proposed to the IMF in 2009. If not, at least we should be moving in that direction and away from the “currency wars” seen in 2010.
Geopolitics
When applied to geopolitics, the paradox of the Ghoshal Mattrix means that we will move from the polarization of the 20th Century (Allies versus Axis, US versus USSR, Capitalism versus Communism) towards multilateralism. By 2015 it will be clear that political and economic issues will be driven by the co-existence of major powers: Europe; the US and its closer allies; China and its closer allies; and a host of “non-aligned” countries such as Brazil, India, Indonesia and others.
It will be interesting to see the impact this will have on American and British diplomacy. Both these cultures are driven by a polarized vision of the world; it is to be expected that dealing with a multilateral world does not come naturally to them, but rather requires greater effort, compared to the Scandinavians and Dutch, for instance.
Democracy will continue to spread by 2015, driven by connectivity. Democracy will be increasingly fractioned into multiple groups, rather than polarized. It will be more nuanced, rather than “black and white”.
China will be more democratic than today, more democratic than it has ever been, but still quite different and unique in its culture and political-economic model, further annoying the “Western” media and analysts who would like to see it behave differently. It will continue to grow, perhaps not always at the fantastic rate seen in the past decade, but I don’t see China crashing economically, socially or politically.
There will greater democratization of other countries in Asia, Africa and Latin America. However, they will have each their own political model in tune with their cultures. This means, in most cases, very hierarchical structures, whether “right-leaning” or “left-oriented”. It also means multiple political parties in each country, rather than the “two-party model” favoured in the US and UK.
New models of democratic representation will emerge in the Middle East, in different parts of Africa, in Asia. They will challenge the known models being used in the US and in Europe, relying more heavily on NGOs and other forms of representation such as web-based social networks and mobile phone polling.
Business and Values
By 2012 the global economic recession will be over and recovery will be well on its way. Growth will continue from then on to 2015, driven by continuous demand in the “emerging” economies. Profitability and unemployment will be less of a problem, so companies will return their attention to “the war on talent”.
Talented people will put increasing pressure on global businesses to be socially and politically relevant. Companies who do not address these issues will have difficulty in hiring the best and brightest. That will also require managers to address issues about values, political stances and the balance between individual needs and corporate objectives.
People need meaning and a sense of belonging. In past centuries both were provided by religious and political institutions. Increasingly, they will need to be provided by employers, whether private or government-led institutions. As retirement ages are delayed, due to the collapse of pension funds, the generation gap will increase. It will be felt more intensely as the speed of change continues to test human limits to adaptation.
In 2015 “soft” issues such as having meaningful work, corporate social responsibility, sustainability, will all dominate corporate and individual agendas. New labels will replace the existing ones, but the essence of issues will remain the same. What used to be called “citizenship” will be represented by a new set of “buzz words”. Whatever the labels in fashion, the issues of meaning and belonging will be the most important ones, underlying all political discussions and determining the outcomes of the "war for talent" in the corporate world.
Connectivity
Connectivity extrapolated will raise new issues. Everyone will be able to talk to everyone, all the time.This will bring about the end of separations we’ve grown used to: the separation between “life” and “work”, so clear in many Northern Hemisphere cultures, will become blurred, as people remain connected to their work while commuting, while at home, while on holidays. And people will remain connected with their leisure activities while at work, frustrating corporate attempts to stop people from doing that. Most Southern Hemisphere cultures are better equipped to deal with this, since they already have less of a separation between work and leisure today.
Another separation that will fade pertains to geography: it’s easy today for people to ignore what is going on in Africa if they live in a different continent. As connectivity continues to increase, no one will be able to say “that is not my problem, I don’t live there”. Issues will come to you, wherever you are, whenever you are. We’ve had glimpses of that with live broadcasts from the Iraq invasion, from the protests in Cairo, and the conversations going on between all parties involved, through twitter and facebook. This changes the face of war and of social interaction. Would World War II have happened if people had then the connectivity they will have in 2015? Probably not.
Leading and managing people will be changed forever because of connectivity, both in the private sectors and in the public sectors. We should start thinking about this and preparing for it.
Before I bust my (crystal) balls, let me stop here for the time being. There is someone ringing at my door who I had not foreseen would come to see me today…