Episode 144 - Drivers To Tomorrow
Published February 10, 2015
SPECIAL GUEST: Paul Higgins (Emergent Futures). Speculation about the future is something that everybody does from time to time. But futurists make their careers on it. In this episode, we're joined by futurist Paul Higgins from Melbourne, Australia, to take a look at some of the big factors driving us forward into tomorrow. Recorded 2/8/2015.
You can download the episode here.
Mike & Matt's Recommended Reading:
Emergent Futures site
Profile of Paul Higgins on Emergent Futures
Emergent Futures Tumblr blog (short-form)
Paul's Blog (WordPress, long-form)
Paul on Twitter
More coming soon...
Alpha: Welcome to another episode of Robot Overlordz, episode #144. On the show, we take a look at how society is changing, everything from pop culture reviews to political commentary, technology trends to social norms, all in under 30 minutes, every Tuesday and Thursday.
Mike Johnston: I’m Mike Johnston.
Matt Bolton: And I’m Matt Bolton.
MJ: And joining us tonight of this episode of Robot Overlordz is Paul Higgins from Emergent Futures. Paul, thanks for joining us.
Paul Higgins: Thanks. Good morning, or good afternoon, whichever time zone you’re in.
MJ: Just to start, could you tell us a little bit about your background. You’re based in Melbourne, right?
PH: Yeah, I’m based in Melbourne, Australia and I have a bit of a weird background for a futurist in that I started life as a dairy cattle veterinarian.
MJ: How’d you end up as a futurist?
PH: Yeah, it’s a weird sort of path. Well, I ended up getting more involved in agribusiness consulting after working in practice for a number of years, and so I gradually drifted across into more business strategy and those sort of things as part of that process. Then in ‘97, I did a year-long leadership program which is available here in Melbourne for emerging community leaders. Following that, I was persuaded to go into a Masters degree at Swinburne in strategic foresight, which is the first year such a program had been offered here in Australia, and I was on my way.
MJ: Fantastic. What are some of the big trends that you see coming in the future? Anything that’s unique to Australia or are you focused more on just general trends?
PH: Well, more about general rather than anything else. I guess we don’t tend to talk in trends and such, more about drivers and big changes rather than trends because we believe that one of the big things that causes people to trip up in this area is trends break and they’re all historical, and therefore you should think about big factors rather than trends. So, if I had to pick out the ones that we think are going to be important across the next decade, certainly developments in artificial intelligence and robotics, as far as the job market is concerned. One that’s not really a trend but that is out there right now given what we’re seeing in Europe, etc. is just ongoing economic uncertainty rather than a trend, so continuing ups and downs in those areas. Driverless cars is one that we think, in the longer term, not necessarily in the next five years, is one that we think will have a huge impact on societies and also the supply chains and the whole range of a lot of businesses--public transport, car manufacturers, etc. Demographic change in relation to particularly China, Russia, Japan, those sort of places; but also the rise of Africa in terms of demographics. The other big one I think would be bitcoins, though not necessarily bitcoins itself but the underlying software that powers bitcoin and the effect it can have on society in terms of payment systems and trust.
MJ: You’re talking about the Blockchain?
PH: Yeah, the Blockchain, in terms of what it’s capable of doing rather than the currency itself. So, what the potential is for programmable money essentially rather than just bitcoin itself.
MJ: I think one of the themes that certainly carries across some of those drivers that you mentioned would be just how fast technology is changing and that impact of automation and robotics. You mentioned driverless cars--it seems like that is moving really, really quickly already. Has Australia done much to prepare for that or is that a big topic of conversation there?
PH: No, it’s not really a big topic of conversation. My view is that the technology is going to outpace the process of implementation because of the changes that are required across the whole country, including insurance and road systems and mappy and a whole range of other things. So no, there hasn’t been a great deal about it going on. I have been talking to clients in relation to, say, counsel and urban planning--”If these things are happening in ten years time, what do you do about that now?” But there hasn’t been a really big conversation here about what that looks like.
MJ: I think it’s really just started here in the US, and Matt and I were talking the other day about how the other day I saw some figure about the most common job in the United States being truck driver.
MB: Yes, I forget what the percentages were but if driverless cars become popular or become common, the amount of people who would be out of work is staggering really.
PH: I think the implementation pathway is likely to be among those major routes and trucking and things like that, as well as public transport because of the mapping requirement. So, I think the early implementation will be around those areas and the longer term is about a complete autonomous system.
MJ: Would you say, looking at it, that Western societies in general really haven’t thought about the impact of all those people that currently do those jobs suddenly not having that job and how they would retrain them? I’ve joked about how you’re not really going to instantly train a truck driver to be a Java programmer, for example. I think you mentioned it a little bit when you talked about drivers, the impact on the economy and jobs--it seems to me like that’s going to be a really big problem socially, trying to adjust people that are in some of these jobs, like truck drivers for example, and get them into other fields once these jobs go away.
PH: There’s a wider social issue beyond that. When we talk to clients around some of this stuff, we’re saying that we don’t know whether a huge number of jobs are going to be eliminated. I think certainly some are--those taxi drivers, Uber drivers, and truck drivers would be ones I would be certain of. But there’s a speed of change. This is dangerous territory for futurists because if you go back to the luddites and the cotton mills and all this sort of stuff, people have been saying for hundreds of years that our technology is going to destroy our jobs and that we’ll be out of work. I have a view that I don’t quite know now but I think there is a significantly plausible scenario that says over the next ten to twenty years that we’re going to eliminate more jobs than we replace. If that’s the case, then apart from the sectoral issues, so truck drivers and figuring out how to re-skill those people, there’s a big question for me about if we have an overall structural problem of increasing levels of unemployment and underemployment that might occur because of these technological changes. That leads into a whole range of issues across politics and economics.
MJ: I noticed in your Futurist Paul blog that you talked about intuition being the patterns you pick up from the past, whereas things like insight are looking at things that haven’t happened yet or that come out of nowhere. Does that affect how you approach futurism and predicting some of these drivers?
PH: Well, we try and avoid prediction as such because basically all of the research work we’ve seen shows that it doesn’t work. If we take artificial intelligence and robotics and its possible effect on structural unemployment in the economy, what we’re saying to clients is “We actually don’t know the answer to that, but it has to be on your scanning horizon and thinking about it.” So, you need to have an ongoing monitoring about it for two reasons: (1) there are opportunities inside organizations for significantly improving the efficiency of their systems and the costs involved, (2) if you’re involved in a local economy, a government, large companies, etc., when these changes start happening, you need to be aware of them, you need to start thinking about them more deeply. That’s the way we try and approach these things, is there’s various plausible scenarios forward, so start thinking about those things now and what they might mean for your organization, your business model, your country, whatever that may be, rather than predicting an individual point or single future.
MJ: What kind of reception do you typically get from clients? Are they prepared to think about these things or are they more resistant to it?
PH: It varies. In our business, we have a metric of rejecting about 30% of client approaches. We have four questions we ask clients to determine whether we’re happy to work with them in that context, and one of those is are they really willing to stretch their thinking. So, we reached a happy place where we could actually eliminate those clients who really don’t want to think deeply about this sort of stuff.
MB: Do you see any trends or anything in Australia that’s different from anywhere else in the world, things that are happening there that aren’t happening in other places?
PH: Not particularly. We live in such a global world these days that there’s not a lot that is different. There are a couple of things which I think are important from the point of view of what’s going to happen globally that are different in Australia though. The image overseas of Australia is this sort of outback country, Crocodile Dundee-type…
MB: I’ve been there twice, I know that’s not true.
PH: I know, but there are a lot of people that think that way. If you look at the UN statistics, we’re the most urbanized country on the planet. You’re thinking a lot of trends globally about urbanization, so people moving into cities and all this sort of stuff--some of those things have already happened here, we’re already sort of highly urbanized and we essentially live primarily on the coast or a few large inland cities, so that’s already happened. The other things are the difference--which really applies in terms of most of the European countries or the US, etc.--is the difference between a more developed economy and those that aren’t. So, if you look at parts of China, you look at Africa in particular, and South America, there’s big differences there. But the differences that are happening in Australia aren’t unique to Australia because of the global nature of those things.
MJ: You mentioned the trend of demography in your drivers, and China and Africa coming more into the world economy. Are you also including with that the industrialized world and how populations are kind of getting older, people are having less children in those more developed economies?
PH: Essentially three things, one is about that aging: particularly if you look at Russia, China, Japan--China because of the one child policy; Russia has significant problems on the horizon in terms of a significantly falling population, as does Japan. So, that’s one area. The second one is, going to Africa, that’s sort of the opposite of that pyramid, which is a significant cohort that is very young and huge population changes that are likely to occur--so both those demographic changes but also the longer term view about the rise of Africa as an economic powerhouse. The third one would be cultural changes, which I’m a little bit cynical of. There’s a lot of stuff around about millennials and leadership and younger people in developed countries wanting to work more for a purpose and wanting true leadership and all of that sort of thing. I think that’s probably true but I’m a bit cynical. If you do those sort of surveys, it’s a bit like asking people down the street if they love their mother or if they’ll support local farmers. They all go “Yes!” but when push comes to shove, they don’t necessarily behave that way. So, I think on some of those changes, the jury is still out as far as I’m concerned and people are getting a bit over-excited about that sort of move to purpose and value. One of the other big ones that I didn’t mention before is energy transformation. So, both in terms of a move to renewable energy but also a move, which is in parallel, to decentralized energy. In the developed world, we’ve lived in this system of coal-fired power plants, nuclear power plants, etc., being big suppliers to large areas. There’s lots of data now showing that we’re seeing significant cost falls around renewable energy, particularly around solar and wind, and that leads to a different system of energy because if you’ve got a decentralized energy network as opposed to a centralized one, it changes the whole nature of how that system works. Over the last two or three years, I’ve become more optimistic about how that energy transformation and reliance on fossil fuels might take place as opposed to being more disruptive and damaging to people in the economy.
MJ: You mentioned centralized industries that have provided that power in the past, do you see them taking steps to protect themselves against that move towards more decentralized sources? We’ve already seen a couple of battles in the US over certain energy companies that have either gone after getting laws passed that make installing those types of systems, like solar, prohibitively expensive or that somehow prevent you from hooking those up to your home electrical system that’s hooked up to the grid. Do you see that becoming a battle between the old centralized companies that have built up their power and the push towards that decentralization?
PH: I think that’s standard economic behavior. It’s the general behavior of the incumbents to fight for their position and to use regulations and politics and lobbying and donations to do that. That happens across all industries. I’m actually particularly interested in American politics and I think that that’s probably more rife in America than it is elsewhere because money is such a big issue in politics in America compared to, say, here in Australia. So yeah, that fight will continue. But we already have a system here in Australia of renewable energy targets and energy certificates and people feeding things back into the grid, and we’re seeing the change already. You’re seeing write-downs, particularly in Europe, of big power generating assets and those companies that own them already happen and we’re also seeing some of those companies moving with less cynicism now into renewable energy. What used to be a sort of a green-washing or “Here we are because we’re doing the right thing,” I think they’re actually seeing it now as a genuine economic change that they want to participate in.
MJ: Do you think that challenges a lot about how society operates, having those more green energy sources? When I think about it, the idea of having not necessarily unlimited energy but much more plentiful energy, it seems like that would change a lot of the way that people approach a number of things in society really.
PH: One company that used to be a client, they have renewable energy-generating systems in the country and, at the moment, when they feed that back into the grid, the actual payment they get relative to what they have to pay if they want to draw power out of the grid is a huge disparity. So, I think there will be a lot more evenness in terms of costs of power across society and I think that makes a difference to the viability of some businesses, particularly in regional areas, and will help regional economies.
MB: What trends are you seeing in Australia for renewable energy? Are you seeing more wind power, or solar, or a combination? In the United States, at this point I would just put it as it’s kind of a free for all. I don’t see any one overtaking the other one. Is there one that you’re seeing there that’s doing better? I know you guys get quite a bit of sunshine there, so I would think solar is doing well.
PH: I think solar is doing well, and part of the issue for that has been this sort of--I don’t know if they use this term in North America--but NIMBY: Not In My Back Yard. So, there’s been a backlash against wind energy here for the point of view of aesthetics and health issues, which, from all of the studies that have been done, seem to be real in my view. But there has been a significant reduction in the capacity to install wind energy for that reason. So, solar is going ahead pretty strongly. Part of the issue here in Australia has been if you look at it historically, government has subsidized solar installation for rooftops, etc. for the middle class. In my view, that was actually bad economic policy. The productivity commission here did a study that said the cost per ton was close to $1,000, so I don’t really like that subsidy model. But now that we’re seeing that the cost is falling so significantly, I think it becomes a much more viable pure economic play and, as you say, we have lots and lots of sunshine and there’s systems being installed here in Australia actually of solar power stations and such, so going to large scale installations beyond that rooftop system.
MB: Like I said, I’ve been to Australia. In the middle of the country, there’s really not much there, so there should be more than enough--I’ve drive from Brisbane to Adelaide and I know there’s nothing really there, so there should be enough room to put up some solar power and some wind energy infrastructure in the middle of the country.
PH: That certainly has happened. You end up partly with the problem of transmission loss and those sort of things over long distance, and the infrastructure required; the infrastructure is built around the large scale plants plus where the people are primarily, so you have all those issues about changing a whole system, whereas a decentralized system works a little bit better. But there are certainly large scale ones being implemented.
MB: Do you think that’s the future? That pretty much everybody in Australia and everybody in the world having either a solar panel or some kind of windmill on their house?
PH: I think windmill on the house is probably not that viable, but it’s more likely to be a combination. So, fairly large solar installations where the issues of where that power is going to, transmission loss, infrastructure, etc. can produce a viable economic model, plus a decentralized one of people putting in their own system. I have a farm operation we looked at putting solar in a couple of times and we’re now in position of actually going into it as a straight economic proposition compared to where it was five years ago. So, we’re probably going to put that in place in the next eighteen months. There are people supplying leaseback systems to overcome some of the economical capital constraints. So, they’ll come and install the system and you pay them out of your power savings in the process.
MJ: For you as a futurist, when you look at some of these drivers and possibilities on the horizon, do you generally feel more optimistic than you have in the past, or about the same? The reason I ask is just looking around at the way society views the future around me personally, it seems like there’s a certain amount of pessimism in the air. Yet, when I read a lot from futurists and things like that, and certainly just in the technology community in general, it seems like there’s much more optimism than there is in general society. I’m curious as to where you fall on that spectrum and what you think about that disconnect.
PH: I probably sit in both camps. I’m fine with that F. Scott Fitzgerald quote about the mark of a first-rate mind is to hold two opposing ideas in your head and functional in the real world or something like that. On the pessimistic side, I would go with climate change because I’m very pessimistic about people’s capacity to globally address that problem and what it might mean to society. I’m quite pessimistic about the economic system and the economic uncertainty and the sort of things we’re seeing happening in Europe at the moment; people seeing things they never thought they would see in terms of deflation and interest rates, etc. I don’t think people quite know how to handle that. I’m pessimistic about the possible effects of robotics and artificial intelligence on the job market globally. I think there’s actually quite a rosy future at the end of that, but I think the transformation over twenty or thirty years could be quite nasty and dangerous. With the levels of economic inequality we’re seeing now, that recent Oxfam report saying that 1% of the world owns 50% of the assets, and in America 1% owns more than the bottom 90%--those sorts of things make me very negative. On the other hand, I think there’s a lot of things to be positive about in terms of our capacity to collaborate and our capacity to harness technology, but that has to be people-led rather than technology-led more than anything else.
MJ: As a futurist, what would you recommend to people that share some of your concerns about those negative possibilities. How would you recommend people try to have an impact on changing that?
PH: We’re in the middle of a political leadership spill here in Australia, which I just see online has been defeated, so the prime minister is still in place. But I’ve been actively involved actual politics for a while and friends of mine would say “Why are you doing that? That’s a lot of rubbish. They never change things,” etc. When I talk to those people more deeply about what they’re involved in, they’re still involved in politics but they have just narrowed it down to where they believe they can have an effect. So, they might be on their children’s parent-teacher association or they might be involved in the local football club or wherever it is they can make a difference. So, my first point I guess is people actually need to go out and try and make a difference. The tools we have in the modern world of collaborating, of communicating, of networks, of how to raise funds, etc.--look at Lawrence Lessig raising money in the political system in the US. We have tools we’ve never had before to make an impact. To give you an example on a personal front, I’ve been talking around the nonprofit sector for two or three years about the need to take more innovation and risk, and that they’re too conservative and too many board members are managing their own risks rather than the organizational risks. In the end, I went “Well, I’ve got to do something about this rather than just talking about it,” so I went and become a partner at Social Venture Partners that’s investing the partners’ money--so my money as well--in innovative and risk-taking startups and social enterprises here in Australia. It’s that sort of thing where if you’re worried about these things, just go and bloody do something about it. Don’t sit on the sidelines talking about it.
MB: Earlier you said that there was a lot of money in American politics, which I don’t think anybody would argue with. How does Australia treat that differently? How did you guys get away from that where we fail?
PH: It was partly cultural. I read something a few days ago about how two republicans fighting for the nomination--not the actual election, but the nomination--spent more money than all the political parties spent on our last federal election in total. So, it’s that sort of disparity. We have constraints in terms of what people are allowed to donate and it has to be publicly declared. We don’t have your supreme court situation of companies or people with unlimited free speech and all those sort of things. So, it’s a whole range of issues there but it is creeping more and more into Australian politics as well. But the ratio, the volumes of money in the United States is just amazingly high. If I might just go back to that previous question about what people can do, or as a futurist, one of the things we talk to clients about is we encourage them and give them processes to actually start having these conversations, and have them from multiple perspectives. So, what we try and do is engage, particularly medium to large organizations, in “Why do your engineers have one view, whereas your accountants have another, whereas your clients have another, whereas your executive has another, whereas your board has another, and how do you have a really deep conversation about what’s going on around those sorts of things from all those multiple perspectives in order to think more about what these future changes might mean?” Because in my view, far too many people are focused down on purely just execution, execution, execution, and the world is moving faster and faster, and changing with more and more uncertainty. They need to start poking their heads up and thinking more about change than they have done in the past.
MJ: Did you have anything else that you wanted to make sure we include?
PH: The only other one I’d probably like to make some comment about, and I’m not experienced with this when it comes to North America, but the rise of alternative social enterprise models, because I think they’re going to become very important in the social sector but also the capitalist sector in the next few years. What we’re seeing here in Australia is that with the global financial crisis, in the nonprofit sector there was reduction in money available from governments, there was reduced returns in philanthropic trusts and there was reduced corporate sponsorship. So, the nonprofit sector saw this sort of wave from a perfect storm of reduced income and part of the solution that people saw was to move into social enterprise. “Why can’t we run more businesses, make more of our own money, etc. to replace some of that money and not put ourselves in the position of being so reliant on those other sectors in the future?” My view is that a lot of that has failed because people didn’t really have the skills to implement a proper social enterprise, which I would define as a business that is aimed at making money and having a social impact. For example, we have one here, a small organization in Melbourne called YGAP, and their attitude is “We’re going to run the best possible business we can, pay people full wages,” so none of this thing that happens in the nonprofit sector where you work in that sector and get paid less, so purely commercial ventures. “Then we’ll use the profits from those ventures to fund our social impact.” They’ve actually been very successful in that process. In my view, it actually beats out a competitive capitalist alternative. For example, they run a restaurant, which has only been open a year or so in Richmond, Australia, and their attitude is “We’re just going to be the best restaurant on the street, and then our business model beats the other restaurants because if we’re the best restaurant on the street, why wouldn’t you come and have your Christmas function here? You’ll have a great experience here, you’ll have it as good as anywhere else, but your money will go to making an impact on their social programs. If you’re a staff member, why wouldn’t you come and work for us? You’ll do good in the world and you’ll get paid as much as anywhere else and you’ll have the same career structure.” They’re saying to suppliers “We can actually help promote your brand to a whole group of people that will help you promote and market yourself in a whole different manner so that you can share some of those assets with us by reducing our import costs.” It’s with that sort of model that I believe in the future a significant part of the economy can beat out standard capitalist models. From a North American perspective, it’s actually capitalism in a different form--not socialism, as the republicans would think about some of these things.
MJ: It seems like there’s a lot of potential for that. Matt, what’s the name of that grocery store that you and Mark a lot, it’s super big, they don’t take credit cards but the employees own it?
MJ: Yeah. I think that’s somewhat along similar lines in that I think it’s employee-owned and they have a very definite social stance. It seems like with the internet and some of the transparency that it brings, that there would be a lot of room for success with something like that.
PH: I think the key issue for people in those is that they have to be absolute first-class business because in this sector I’ve seen a lot of papering over poor products or poor service “because we’re doing nice things.” In a world of transparency, that’s no longer on. But I think we’ll see significant rises in those models over the next five years--in the social impact sector; I wouldn’t use the word nonprofit because they’re not in the nonprofit sector as such. I think that will be one of the big changes in society in Australia anyway.
MJ: Using the example of Woodman’s, I know that everybody I know that has gone there raves about it, other than the few people that complain about them not taking credit cards.
PH: Well, maybe in the future they’ll take bitcoin and the cost will be much less.
MJ: You never know. Well, thanks so much for joining us Paul. It’s been a pleasure.
PH: I’ll look forward to hearing the final edited report.
MJ: Thanks again so much.
PH: Thanks very much guys.
MB: Thanks a lot.
A: That’s all for this episode of Robot Overlordz. You can find our show notes, including links from this episode, on our website at RobotOverlordz.FM. That’s it for this radio broadcasting. We would love to hear your thoughts on this episode in our forum, or you can review us on iTunes. We’re Robot Overlordz with a Z.
MJ: Thanks everyone for listening.