![Neil Crofts](https://holoschange.com/wp-content/uploads/2021/09/Crofts-Family-93-300x300.jpg)
Neil Crofts
Co-founder
Holos Change Ltd
Co-founder
Holos Change Ltd
I’ve been in the predictions game long enough for things I talked about 10 years ago to be coming true.
Every year, I’ve updated the slides and adjusted the narrative of my Megatrends Keynote Session to accommodate the disruptions.
And what did I miss?
If an organisation wants an even higher performing executive team capable of leading the business more effectively and / or leading transformational change, there are a number of common attributes regardless of the vision, values or culture of the organisation:
Renewables will continue to get cheaper – developments in solar and wind, and innovation in generation and storage solutions, will make it impossible to justify investing in anything else for electricity production. Pricing models will have to change as oversupply becomes a real issue at times of peak solar or wind, which will discourage further investment. As I write this, the UK is generating 35% from wind and 25% from solar. Companies, and even homeowners, will want to have their own generation and storage to ensure continuity of supply – especially in Europe and North America as ageing infrastructure becomes less reliable.
In India, and especially Africa, infrastructure will leapfrog the fossil fuel stage and go directly to renewables and storage – just as they leapfrogged wired phone systems and went directly to mobile. Fossil fuel demand will peak, and prices will remain volatile as exporters try to work out whether to restrict supply to maximise profit per barrel or flood supply to maximise revenue. Despite the incessant anti EV propaganda, Chinese brands, falling prices, increasing performance, and improving infrastructure mean that EV’s will be dominant in cars and vans by 2034 and will have a slice of the truck market as well.
Hydrogen, biofuels, and synthetic fuels will develop, but for specialist areas like aviation, shipping, and classic cars because of cost and availability of feedstock, respectively. One interesting area of synthetic fuels will be using carbon extraction by direct air capture – if the price of the technology can fall low enough, and the renewable power is cheap enough, the feedstock is effectively unlimited. As battery technology, and especially kilowatt per kilogram, improves, even electric aviation will start to be significant – there are already plenty of experiments with electric light aircraft and planned prototypes for electric short-haul passenger planes.
The energy transition disrupts businesses involved in fossil fuel-based energy and transport. The challenge for public companies is that investors may prefer companies to simply milk the remaining profits from fossil fuel businesses until renewable shares begin to show a more consistent performance as climate legislation and the energy transition bite. This goes both for oil companies and vehicle manufacturers. Where do you put your money?
Leadership in fossil companies has a choice between managed decline or sustained success. If they choose the latter, they will need to go all in with a vision for a post-fossil fuel future. They will need to invest heavily in leadership development, culture, and hardware to optimise the conventional business so that it can pay for the transformation and deliver the transformation at the same time. The best time to start was 10 years ago. The second-best time to start is now.
Digital, AI, and robotics will develop at an extraordinary pace. C-3PO could be a reality within 10 years. Multifunction robots are already working in factories and distribution centres for Mercedes, Amazon, and Tesla. As machine learning and large language models accelerate, the functionality of robots will develop extremely quickly. Single-function domestic and commercial robots have been around for a while, cutting grass and vacuuming in the home, checking in-flight passengers, checking out shoppers, and assembling cars, for example. Relatively cheap multifunction “retail” robots will not be far behind. Fully self-driving cars, flying robot taxis, robot cargo ships, and planes are all possible, but legislation may limit their functionality in some locations at first. It will be technically possible to summon land or aerial transport to collect you and drop you off—whether any of this is socially desirable is another matter. Robots or migrants will mitigate the growing aged dependency ratios in the global North and South to maintain productivity levels—countries will have to decide which they prefer, but robots will be cheaper in the end. As robots take over more and more jobs (driving, factory, and bureaucratic jobs, for example), countries will have to reinvent education to prepare students for the kind of roles that robots are less good at. Countries may also have to find ways to tax the robots and pay the citizens to avoid mass poverty.
Digital affects just about every organisation. The key is to create an agile organisation where trust and psychological safety are high so that everyone feels safe to experiment, collaborate, not know the answer, and be creative, so they can adapt and thrive in this new environment before it overtakes them. Leadership needs to role-model that culture reliably—even, and especially, when things are hard and when things go wrong. The whole organisation needs to collaborate to articulate their digital vision for each part of the business and to make it happen. Digital can no longer be perceived as something that the IT department does to the rest of the business. It is a fully integrated collaboration with IT.
Historically, most businesses regard their business model as sacrosanct, and any creativity around the business model is therefore seen as a sort of heresy. In the digital/AI age, businesses need the kind of leadership that is willing to adapt their business model, invest in the skills of their workforce, including up-skilling and re-skilling, and have the bandwidth and ability to evaluate emerging technologies and decide what to invest in and what to avoid.
What skills and technologies would you “bet” on in the age of AI as a bank, a law firm, a retailer, or a travel company, for example?
Ageing and declining populations in the global North and South will create dependency ratios and healthcare costs that are unsustainable with current approaches. Robots may mitigate some of this by taking on elderly care tasks, but this is far from certain. Despite government efforts, it is hard to see birth rates increasing. Low infant mortality rates and more educated women have consistently reduced birth rates over centuries. Digital communication also turns out to be a great contraceptive when it is the primary way we relate to other humans. Positive outcomes of ageing populations will be decreasing crime rates and a reduced likelihood of war, Ukraine/Russia notwithstanding. Also, a relatively smaller number of young people will be inheriting from a relatively large number of relatively wealthy parents in the global North and South. This could generate inflationary pressures or could be used by governments, by way of inheritance taxes, to make up for the loss of income tax from the smaller working population. The global middle, particularly India and later Africa, will become the dominant economies as innovation follows youth, and wealth follows innovation.
Demographic changes affect everyone and every organisation. To mitigate the effects, organisations need to be:
Indeed, organisations may need to redefine their whole employment model, as generations who accepted the sometimes Faustian employment pact hand over to a far more exacting cohort. The connected generation is far more aware of their personal values and value, have, or feel like they have, far more choice, and as a result, want more for their labours than simply to make someone else rich. They want purpose, flexibility, value, and influence in a whole different way to previous generations. Jobs that offer the chance to make a difference, flexibility of hours and location, good pay and incentives, and listen to their Gen Zs will have more choice in hiring.
In the past, it was possible for businesses and other organisations to be successful just by being reliable. If an organisation could reliably do what it said it would do, that was good enough. Today, because of these megatrends, organisations still need to be reliable, and they need to be able to transform themselves at the same time. This requires a combination of the skill of management (creating and maintaining reliability) and the skill of leadership (creating change). These are not different people but different skills deployed by the same individuals. For those of us who have enjoyed successful careers largely through the skill of management—this represents a large proportion of senior people in most of the larger organisations—deploying the skill of leadership is daunting. If leadership is the skill of creating change, then leadership is about doing stuff we have never done before and don’t know the outcome of, and taking other people on the journey with us. This requires us to make ourselves vulnerable to judgement and failure. Add in the fact that many organisations are not particularly psychologically safe, and it is easy to see why leadership is so often lacking and why transforming large organisations can be challenging. It is not because people don’t like change—we do like change as long as it is well-led. It is because people, and particularly senior people, are reluctant to make themselves vulnerable.
Previously, I have avoided attempting to predict geopolitics as it is too unpredictable. However, we are in such a pivotal time, and political leadership plays such a big role in our future, that I have to give it a go.
The idealism and interdependence of the post-war period in Europe, the US, and Japan have given way to a much more cynical and individualistic society that is ill-equipped to tackle the global challenges we have created for ourselves. We appear to consistently and almost wilfully elect, select, and promote political leaders who are not just incapable of interdependent global problem-solving but actively sabotage it. Demographics dictate that Russia’s and China’s moment of ascendancy will be short-lived as their populations shrink. Historically, wars are fought in times of an excess of young men; the Russian invasion of Ukraine is an outlier. Petro-states will struggle with falling oil revenues and find it difficult to replace the revenue to support populations that expanded with oil wealth. The smart ones (not the UK) invested in sovereign wealth funds that hedge their economies to an extent; the really smart one (Norway) invested in education as well and will be able to diversify more effectively. As the global North and South age, they will decline in political relevance. I suspect that India will be heading towards superpower status within 10 years.
However, all of this will be seriously affected by climate change. Especially heat, floods, and rising sea levels will make significant areas unliveable for parts of the year. Those with wealth may domicile in Dubai, but they will spend the summer somewhere cooler. Those without a choice will suffer, die, or migrate. Climate refugees will become a huge issue—but if handled well, they could save the economies of the global North.
Leadership is the big variable and the only possible solution to these challenges. To survive, we need leadership of a whole different calibre than most political leadership at the moment. We need leadership that is willing to tell the truth and is capable of uniting and inspiring with that truth rather than dividing and radicalising. At Holos, we call this Authentic Leadership – it is the only kind of leadership that delivers sustained success by enabling everyone to be the best version of themselves as much of the time as possible. This is the interdependent version that collaborates and sees community and personal gain as the same thing, rather than pursuing personal status.
One critical aspect of choosing the right leadership is that those likely to be the best leaders are less likely to put themselves forward. Those most likely to put themselves forward for political leadership, those most likely to fight their way to the top – especially in more aggressive political systems – are those with the greatest status needs. Those who see the world as existing to serve them, rather than the other way around.
To get great leadership, we need to put filters into the system at a national and global level that exclude self-oriented, status-driven people from standing for office.
Want to know how these megatrends will affect your organisation and how to prepare for sustained success? Reach out to us at hello@holoschange.com and let’s have a conversation.