Corporate strategy is always focused on the realities of the future, yet when strategic planning sessions get underway, the mindsets are still mired in the past. A fundamental break with the past is required, as the most important lessons we can learn in the next decade are those that will come from the future. You cannot use an old map to find new land.
In order to put people in the right mindset, it is important to get a facilitator that will take you into the year 2008, and keep you there. In order to understand the future, in-depth knowledge of the trends shaping this future is invaluable. A number of trends will become stronger, and will come to dominate those that are prevalent in the current minded. A number of new paradigms will emerge, which will have a far bigger effect on business and society as they start to undermine the reigning paradigm. These trends, mindsets and paradigms can only be explained if the technological and societal trends upon which they build are thoroughly understood.
The first important change in mindset is the abundant bandwidth paradigm. The change of paradigm revolves around key abundances and scarcities. The computer era’s most abundant and cheapest resource (and thus the one you want to waste in order to conserve other, more precious resources) was processing power, or transistors on chips. Tomorrow’s key abundance, as the companies that spent billions in recent years laying currently unused fibre-optic cable are finding out, is bandwidth. In computers we wasted transistors to give everyone a computer, that is, unshared processing resources. In communications, the new mandate is to waste bandwidth to give everyone an unshared connection. The paradigm is simply of abundant bandwidth, available very cheaply to anyone who wants it.
This paradigm underscores the importance of three trends that have first emerged from within the societal arena. They are:
“ Trend 1: Power moves from the centre to the periphery, and
“ Trend 2: ‚Markets of one‛ become more important.
“ Trend 3: You will pay not to see advertisements.
The reason behind the importance of these trends is obvious. One of the most fundamental industries that will undergo change is the television industry. Advances in digital processing power (the familiar Moore’s law) would converge with a newer, less heralded, but even more heroic expansion of fiber optic networks to yield a “worldwide web of glass and light” with smart terminals at the edge. With vast gains in the viewer’s control over both timing and content, the longstanding top-down, master-slave, couch-potato culture would give way to a world of pullulating variety, choice, and intelligent interactivity.
In a world of abundant bandwidth, the following scenario becomes a real possibility.
It is the year 2010 and the newest episode of ‚Frasier & Son‛ has just been released in Los Angeles. You do not have to wait until 20:30 to watch what Frasier, Niles, Marty and Frederick is up to, you can watch it as soon it is downloaded on your home server, which incidentally happens in the blink of an eye. This functionality meant that central broadcasting networks are in dire straits as advertisers have left in droves because direct one-to-one marketing has proven a huge hit. Upper income viewers moved towards the IP based entertainment environment, promising interactive gaming and immediate access to series’ episodes and brand new movies. This left the old broadcasting networks with an expensive infrastructure that caters to those with old television technology, which meant that the cost per head grew, and the income diminished.
The empowered user can choose any content, totally independent of the networks that syndicated the content in the past. The user has total power, and choice. This simple example highlights the trend that power moves from the centre to the periphery.
The advertisements that are aired during ‚Frasier & Son‛ are aimed at you as an individual. Your profile is matched with the sponsors of the content. If you like hiking, the great outdoors and 4×4 adventures, then the ads will link to those interests. Your neighbour will watch the same episode whenever he wants to, and will be exposed to different advertisements. This is an ideal example of the power of One-to-One marketing, which advertisers will embrace due to its high response rate and lower cost. You can however decide not to watch any advertisements, which will mean that you have to pay to watch the episode, instead of it getting sponsored by the advertisers. You will therefore pay not to see advertisements, just as you do not pay to see advertisements on various shareware programs and 3G cellular phones. These examples provide backing for the trends mentioned above.
Trend 4: More and more products will disappear and become services
In the same way the answering machine has disappeared, the Video and DVD recorders will disappear. This function will either be taken over by your home server, or your entertainment service provider. You furthermore do not have to carry your computer with you anymore, as your information can be accessed from any device from your secure personal website. These services will be based on a subscription model, which will be one of the holy grails which service providers will try to grab in order to offset their loss of revenue on their network infrastructure.
The trends will play a fundamental role in the construction of new business models and on the choice between different strategies. It is therefore not just beneficial, but an absolute necessity in order to ‚live‛ in 2008 when you plan the future for your organisation.
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