The future is becoming more complex for two highly related reasons. The amount of information is growing, and so is the number of connections across which information is flowing. Information is like water; it can be dammed up and diverted, but it has a relentless capacity to follow the path of least resistance. More connections open up more channels. More channels generate less predictability about where the information will flow and this, in turn, creates uncertainty. It also generates volatility — large uncertain swings in circumstances. How can you secure durability in such an environment?
Emulate What Lasts
Bookstore shelves and management journals are filled with stories of organizations built to last. But within a blink of an eye many of these supposedly durable organizations stumble, then tumble down. Today, the lifespan of a major American corporation is about 50 years. For the 10-year period ending in 2013, the "replacement rate" for Fortune 1,000 companies was about 70 percent. Among the tumbles are several "good to great" organizations. Surely there are stories whose characters and wisdom have a longer lineage. If the key is to embrace lessons that have stood the test of time, then it makes sense to emulate organizations that also have stood the test of time. The organizations that have lasted the longest are cities, churches and universities.
Cities are held together by utility borne of proximity. Ideas, commerce and culture quicken in the closer confines of a city. And out of an inherent, perhaps instinctual, sense of tribe and territory has sprung a willingness to defend the city as well as offspring city states and nation states.
Ideas hold the power to unify and lift. The Catholic Church was built around the power of a few enduring ideas including forgiveness, redemption and resurrection. It shares with the other major religions a lasting ethic often described as The Golden Rule.
Universities, many of which sprang from churches, adhere to ideas as well, including the idea that the furtherance of knowledge is a virtue unto itself. Supportive of this is the ethic of academic freedom.
Cities, churches and universities have many things in common. Perhaps most notable is their ability to pursue with greater efficiency the purpose at the core of their utility. The purposes of a city are commerce and culture. The purpose of a church is faith. The purpose of a university is learning. Proximity drives the efficiency of the interaction that keeps purpose alive. At the heart of every durable organization must be an enduring sense of purpose, and the organization must continuously evolve to realize its purpose as efficiently as possible within shifting circumstances.
See the Big Flows
To be durable, organizations need to see the whole picture. This requires looking at things from multiple perspectives. One of the reasons we frequently miss the avalanches of the future is because it's easy to get lost in the snowstorms of the present. Astronauts and satellites have picked up patterns impossible for earthbound cartographers to see, such as the swath of desert that extends from northwest Africa nearly all the way to Beijing. On the ground, the smoke from soft coal in China looks like a local phenomenon, but get enough elevation and you see that its plume flows across national and international lines.
Also apparent from space are the grids that have formed in the Amazon along Brazilian Road 364 as ranchers, farmers, loggers and settlers have poured into the region. From 1970 to 1995, the population in this area grew from 110,000 to 1.4 million. Indeed, to identify the presence of people, you only have to look for the straight lines and right angles that mark the earth. These are the visible patterns of humanity.
With enough elevation, it's possible to see strong currents shaping the future including these:
Changing demographics lead to profound challenges and profound opportunities. In the United States, the baby boom represents a demographic phenomenon that has repeatedly shaken old assumptions. As the bubble moved its way through society, it fueled an explosion in public schools, skyrocketing tuitions, chaotic run-ups in real estate values, and a long-winded bull market in stocks and other investments. In health care, the baby boom helped to drive up costs. But the aging of the population is not wholly attributable to the boomers. Just as important are declines in mortality and fertility, which will cause the population to stay aged even after the boomers are no longer around. The one demographic trend that overshadows the rest is the decline in mortality. At ground level, we remain seemingly insensitive to the fact that we are, according to an article in The New York Times Magazine by John Tierney, "living through the greatest miracle in the history of our species — the doubling of life expectancy since the Industrial Revolution."
Technology remakes the world. For centuries, trade winds determined where seaports grew, but then steamships made it possible for any city with a harbor to become a port. Before the telegraph, all communication moved at the pace of a horse. The railroads remade America, then Dwight Eisenhower remade the railroads by spearheading the construction of interstates, turned the automobile into a practical option for cross-country travel and launched the suburbs. Residents of inland cities once could take comfort in knowing that they could not be attacked from the sea. The airplane changed all of that.
Information creates, dislocates and destroys. It is true that information is power. But information has busted out and escaped from its keepers. It is being democratized. And in this democratization lies the decline of the old information power brokers.
The professional classes that built their prestige and incomes on exclusive information franchises are being washed away. Health care long has been characterized by scant information on results and price. As a consequence, consumers have been ill-equipped to judge value, the most basic prerequisite for establishing and maintaining a competitive marketplace. That's changing now. And quickly. As information floods into health care, it will erode the power of traditional institutions and franchises.
Ideas move people. The temperature in Phoenix at noon is information. Marxism is an idea. An academic medical center and the German scientific model that gave rise to it are also ideas. Specialized care is an idea. So is holistic care. The Internet was an idea long before it was a reality. Information is the fuel thrown on the fire of ideas. Once they've been articulated and achieved a certain level of acceptance, ideas can bulldoze institutions and industries. And ideas do battle with one another. Socialism with capitalism. Centralization with decentralization. Big government with small government.
Some ideas transcend into ideals — things worthy of honor and deep commitment. People will die for ideas and ideals. And organizations will fight for them. A vision is essentially an idea about the future. It has power when it's able to reach back and move people in the present.
Limited resources determine destiny. Of all resources in recent history, few have proved as influential as oil. Wars have been fought over oil and nations built on it. It fueled the growth of the American auto industry and with it a lifestyle based on easy movement.
Oil made possible the rapid deployment of the most critical resource in health care — a highly educated labor force that includes physicians and nurses. The American labor force has been highly portable because affordable petroleum-powered transportation made it so. It doesn't take much altitude to see the shift of American manufacturing from the high labor costs in the north to the low labor costs of the south. Intellectual capital, like all capital, accumulates, serves as a catalyst for change and then disperses.
Economic forces wash over the human landscape and remake it. High compensation for specialists begets a surplus of specialists and shortages of primary care physicians. The law of supply and demand drives shortages and surpluses.
Disrupting the economic status quo is a time-proven method for redirecting cash flow. As George Gilder once put it, "In the past, capital equipment was costly and production complex and dominated by large firms. Bill Gates might have spent his life working his way up the chain of command at IBM or General Electric, thus avoiding an immense contribution to income inequality in America. Instead, he began a new company at a poverty-level entry income with capital goods costing a few thousand dollars."
Disasters reshape the world. When potato crops failed in Ireland, a wave of Irish immigrants left for America. They joined the lower strata of American society and began to work their way up. Their labor, like that of immigrants before them, often drove the machinery of American industry. They also supplied a strong contingent of the nursing staff in American hospitals.
War is so dislocating and disruptive that it is best put in the category of general calamities like the eruption of a volcano or the spread of a plague. Paradoxically, while war has devastated nations and industries, it also has made them. And every war has contributed to medical innovation.
When looking at a trend, say population growth, ask: How fast is the population growing? What is its velocity? Velocity generates momentum. Momentum carries things from their present location to a future one. This is as true for a demographic trend as it is for a thrown rock. If it is moving fast today, it will carry momentum and impact into the future.
Beyond momentum, there is volume — the size of the rock. Big rocks make big splashes. Big splashes often have broad and pervasive impacts. In assessing the future importance of a current within the flow of things, consider its combination of momentum and volume. Think of it as a formula: MV = future impact.
At the turn of this century, the volume of the elderly was still relatively small (around 12 percent), but it was poised to grow exponentially over the coming decades. This volume will be accompanied by fairly high momentum. An aging population will become a big rock and it will begin to move fast.
Look for convergences. Convergence is often the precursor to collisions. Collisions release energy. When trends collide, energy is released that exceeds that embedded in the trends independent of one another. This is true when demographics, technology, economics, information, ideas, resources and disasters collide. Big rocks moving fast make for big collisions and lots of energy. The energy of such collisions can be both destabilizing and liberating.
It's also important to look for potential points of inflection, i.e., those shifts, convergences and collisions that might be truly game changing. The emergence of digital photography represented such an inflection for Kodak and has led to the demise of the company. Kodak saw the new technology coming, but it failed to effectively judge the momentum and volume of the rock or the energy of the convergence of camera and computer technology. Instead, it doubled down on film and got left behind. There might be a similar inflection at work as currents converge to push patients and physicians out of the inpatient environment and into the outpatient environment.
Be Thoughtfully Engaged
In 1990, the investment icon Jim Rogers rode a motorcycle around the world. To better understand the true nature of the global marketplace, he engaged with it. He shared his experience in a best-selling book called Investment Biker. Rogers saw early what others had not even contemplated, including the rise of China. "To give you a sense of the economic entity coming into being, by the end of this decade, China's economy will be the third largest in the world … sometime in the first half of the 21st century. China will come to have the world's largest economy."
Rogers posed thoughtful questions: "What will be the effect of China's one-child-per-couple policy on its future? … In all of history, such an unnatural policy has never been tried … I ask myself if these children will be so spoiled and self-centered as to shift the Chinese personality … Will an entire nation of them strive even harder than today's hardworking Chinese? … Then I ask myself if parents and grandparents in such a country will send their only darlings to die in a war."
It takes a youthful and forceful mind to see things whole. To not be dragged into the muck and mire by the gravity of details. To look for "Yeah!" when you're being drowned out by "Yeah, buts." Most experts at the time regarded Rogers' predictions of an emerging Chinese economic juggernaut as delusional.
Organizations typically dedicate only a minuscule amount of time thinking and talking about the future. It's important to open up the space to really explore the future. Physicist David Bohm described such dialogue as revealing the "tacit infrastructure" of thought including assumptions otherwise taken for granted. It is important for organizations to own their own thinking. People own what they help to create.
"Anticipative shaping" seeks not only to discern the powerful currents of the future but also how those currents can be influenced.
Durable organizations influence the future by giving it a nudge in the present. They struggle to see and understand the powerful currents: their general direction, their powerand where they may converge and collide. They simulate convergence and collision. Slam trends together. Crash test them by asking, for example, what happens when the Internet collides with the elderly?
The best way to influence the present is to influence the future. By definition, there's no way to create the future without action in the present. And the best way to allocate and focus resources in the present is against some rational concept of the future.
Be Boldly Incremental
A popular conceptual device for thinking about the future is the sigmoid curve — an S-curve resting on its side. You start at the lowest end of the S-curve and begin to climb the front edge of what looks like a bell-shaped curve. You reach an apex and then begin your decline.
The S-curve is like a rock tossed from the present into the future. With skill, you can skip the rock. With the correct wrist, arm and body motion, you can launch it on a path of multiple sigmoid curves by translating energy into a trajectory that causes the rock to glance off the surface of the water. Instead of sinking, the rock rises into the air and bounces off the water's surface again and again. The wrong angle and too little velocity will yield a single, final splash. The rock gets to the future incrementally, one skip at a time. Durable organizations do the same thing. They evolve incrementally by making lots of small bets. When they need to move fast, they employ accelerated incrementalism. The challenge is to leverage the dynamics of the past and present into a sustained trajectory toward a desired future.
Stand in the Future
Nobody knows what the future holds. It is too tightly connected. Too subject to unintended consequences. Too complex. If you think you know, that's a problem for your organization and for you. It takes a degree of personal and organizational humility to not be trapped into "knowing." It's just as important to demand humility of advisers. What futurists offer up as predictions are usually only possibilities.
One response in a turbulent, uncertain environment is to batten down the hatches and ride the waves. Going with the flow may make sense in the short term. But the longer term always begs the question, "Where are we headed?" And "Wherever we end up," is hardly a sufficient response. A fundamental obligation of every leader is to discern and articulate a place worth going and then get people there.
The real power of vision is its ability to define a future that shapes the present. A vision involves imagining a place in the future, then reverse engineering by asking, "What must we do in the present to become our future?" As you undertake actions designed to realize your vision, the future starts to dictate the present. And the organization moves beyond reacting to the present to becoming the future. But this requires tenacious resolve.
Vision describes the apex of the S-curve. When an S-curve is ascendant, all the feedback is positive, "We are heading up!" No one's much interested in changing now. It's not until they're riding the curve down that they become willing to consider shifting focus and strategy. At that point though, the momentum has already dissipated. Two views of the future are doing battle now: the one that propelled the old curve and the one necessary to propel the next one. That means old ideas, structures and people must be challenged by new ideas, new structures and new people. Organizations can start to doubt their leaders when the old curve heads down even though a new curve may have begun its rise.
Charles Handy in his book Age of Paradox describes what too often happens to leaders unable to engage their organizations with a compelling future: "He had failed as a leader, not because he was wrong in sensing the need for a second curve, but because he had not managed to get them to share his understanding. Those who can do that at point A and not at point B are the leaders we all need." Shared understanding flourishes when bathed in clarity.
Above all else, a durable organization requires resolve and clarity. It is the job of a leader to stand resolved in the future, clearly and consistently articulating organizational aspirations that are themselves durable. Once one vision is realized, the leader steps forward into the future and stands astride the next; and so it goes, as the organization moves resolutely from one vision to the next, fulfilling its purpose along the way.
Dan Beckham is the president of The Beckham Company, a strategic consulting firm based in Bluffton, S.C. He is also a regular contributor to H&HN Daily.