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Point of View

Predicting the future

Pieter Fourie, Head of Global Equities 


Specialist consultants, known as futurists, are helping organisations understand how technological changes will shape the world of tomorrow.
Just a few years ago, driverless cars were the stuff of sci-fi movies. Yet today autonomous vehicles are a reality and the automotive industry is on the brink of revolutionary changes that present both threats and opportunities.
With technology changing rapidly, it can be hard to predict what industries and markets will look like in 10 or even five years’ time. To help them plan ahead, many larger companies call on the expertise of futurists or futurologists.
These experts’ visions of possible futures are taken very seriously across the world to help investors decide where to put their money, to give businesses an idea of how their markets might change and to assist governments in making sure their policies are effective in the long term.
The Centre for Future Studies, for example, has gained international recognition for its innovative contributions to future thinking. It has a client list including the UK’s Department for Business, Energy & Industrial Strategy, technology company IBM, retailer Asda, Santander in the financial services sector and the BBC.
Dr Frank Shaw, who founded the consultancy, says: “We start by understanding what it is our client organisation is seeking to achieve. We discuss what they need to know at a particular point in the future and then we work back to the present to look at what we need to know to achieve that vision.”
He adds: “On occasions we prevent the future from happening. That’s in the sense that an organisation could be heading in a strategic direction that, if they were to continue along that pathway, would take them over the cliff. What we do through our creation of various scenarios is to reroute them and, therefore, their worst fear doesn’t materialise.”

Seeing the trends and exploring possible scenarios

David Wood is Principal at futurist consultancy Delta Wisdom and Chair of London Futurists. He says: “We firstly help organisations see trends. Then, the second part of our work is scenario analysis – exploring how those trends might evolve and what might happen if they intersect. Technological advances are the most important drivers of change, but we also track changing views and ideas around the world. Of course, quite often it’s new technology that gives rise to those social changes too.”
He continues: “People I talk to are often left with a mixture of excitement at the potential of these trends and apprehension because they fear being trampled by new competitors. We talk to organisations about their existing strengths and weaknesses and help them understand how some of the future scenarios harbour opportunities to thrive.
“But aside from trying to get better foresight of the future, the key message is the importance of agility: an awareness that whatever the organisation has done in the past or is doing today, just doing the same isn’t going to be good enough, it needs to be able to pivot quite regularly as the situation changes.”
Consulting futurist, and board member of the global Association of Professional Futurists, Nick Price agrees: “Looking to the future is not just about possibilities but also creating agility in your management team. Let’s take, for example, Credit Suisse’s recent research paper looking at globalisation. It says there are three possible futures: globalisation continuing as it’s going today, multi-polar globalisation or globalisation collapse. Agility is about thinking how an organisation would be successful in each one of those scenarios.”
He continues: “A study by A.T. Kearney called The State of Strategy Today talked to 500 global executives and found there’s increased interest in the use of scenario and foresight planning, and experts like futurists.”

Artificial intelligence could change everything

When it comes to opinions on what technology could have the biggest potential impact on our horizon, many futurists will list artificial intelligence (AI) as their top choice. Wood says: “We’ve been talking since the 1950s about devices or machines that learn for themselves rather than having to be told what to do, but things are really coming together now.
iStock-626999908.jpg“Take translation, for example. People would previously have to hardwire specialist knowledge like irregular verbs into software in the form of complicated formulae and algorithms. Nowadays, the software scans existing parallel texts, say the Dutch and English translations of Harry Potter, and it works out the key linguistic rules itself.”
He goes on: “In the next 10 years I see lots of changes in this field – particularly because there’s potentially so much money to be made. Google is now calling itself an AI company, and Microsoft, IBM, Facebook and Apple are all investing in AI.
“And potentially every kind of job that humans presently do will change because the nature of AI is so general. Some of us foresee a revolution around mid-century in which software isn’t just better than humans in particular specialist fields but is better than human reasoning in every field. In that case, unaided humans will no longer be the smartest beings on the planet.”
Price is fascinated by the possibilities, and unexpected consequences, of blockchain (see page 34) – the digital technology behind bitcoin that is being developed to create a supposedly hard-to-corrupt global record of various transactions. “The potential is still emerging and we don’t quite know how it will manifest itself yet. In the end, it’s social acceptance and usability that determines the success of new technologies. The ‘next big thing’, whatever it is, has to be human-centric to be a success.”
Shaw says: “Technology in all its forms is going to be a disruptive influence, and create opportunities that would be considered almost sci-fi today. Whether it’s AI, robotics, medical sciences, continuing sophistication in communications or autonomous vehicles in our transportation systems, there will be significant impact in the next decade.”

Managing portfolios in a changing world

Pieter Fourie, Head of Global Equities at Sanlam, says: “The nature of our job means that prediction is a necessary evil to some extent. We need to be conscious of general trends and we make it our business to know the companies that we invest in really well.”
Some of them are developing new technologies that could be real game-changers, he explains. “For example, we invest in a leading search engine company partly because it allocates some of its capital to high-risk ventures that help to keep it at the forefront of future tech trends, such as artificial intelligence or space travel. And we invest in the medical technology sector because we know companies are constantly innovating.”
But positioning portfolios to benefit from emerging opportunities goes beyond simply looking at new technologies and spans economic and societal changes, says Pieter. He points to the potential of emerging markets like Indonesia, a country that’s predicted to be the fifth biggest global economy by 2050. He says: “What does that mean for our clients’ portfolios? Are the companies we invest in positioned to take advantage of this growing consumer market?”
But he warns there are dangers in relying on predicted trends that are yet to materialise.
He explains: “As an investor, what you want to do is invest in a manner consistent with long-term secular growth trends.” Key to Sanlam’s strategy is a “value-based approach to a spread of assets” – in other words, selecting stocks that it believes the market has undervalued.
An example of this, he says, is Oracle, which has had a relatively low stock value compared with technology rivals like Adobe or Microsoft because it has been slow to adapt from an upfront software sales model to the subscription model that’s grown in popularity with cloud computing. Modernisation has now seen the company’s cloud software revenue increase dramatically.

Investing involves risk and the value of investments and the income from them may fall as well as rise and are not guaranteed. Investors may not get back the original amount invested.