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AI versus Humans – The Salient Issue of Our Time
Having solved the problems of global consciousness, the coming internet, redesigning capitalism and the 2020 US Election (ha ha!), we now turn to the most salient technology of our times – artificial intelligence (AI). The heart of this issue focuses on the relationship between AI and humans. A good example is TechCast’s study on “AI and Future Work.” We found that the threat of mass unemployment due to automation is likely to be resolved by pioneering a new frontier of “creative work” that can’t be done by intelligent machines.
Let’s start by defining AI in terms of the human tasks it is capable of automating potentially. The figure “Structure of Consciousness” shows the hierarchy of different tasks or functions performed by human consciousness, or human intelligence (HI). As noted in the figure, the arrow indicates how AI is automating progressively the lower-order tasks, forcing humans to focus on the realm of higher-order tasks.
This raises the big question – “How much of HI is likely to be automated, and how much will humans continue to do? To get a handle on this profound issue, we frame the problem in terms of the following 15 functions that roughly comprise HI.
1. Perception Sensory experience and awareness through touch, sight, sound, smell, taste.
2. Memory Information encoded, stored, and retrieved for future action.
3. Learning Knowledge or skill acquired by instruction or study.
4. Knowledge Understanding of a science, art, or technique for some purpose.
5. Decision A determination arrived at after consideration.
6. Emotion Mental reaction (anger, fear, etc.) experienced as strong feeling.
7. Empathy Experiencing vicariously the thoughts and emotions of others.
8. Purpose An object or end chosen to be attained.
9. Will Ability to desire, choose, consent to some action.
10. Values Things we think to be of relative worth, utility, or importance.
11. Beliefs Some idea that is considered true or held as opinion.
12 Imagination Novel sensations and ideas gained without input of the senses.
13. Intuition Attaining knowledge without rational thought and inference.
14. Peak Experience Altered state of consciousness characterized by euphoria.
15. Vision Guiding thought, concept, or object formed by the imagination.
Some of this is being done by machines now. For instance, see this example showing that a third generation of AI is coming that goes beyond deep learning to simulate human empathy. In this example, an avatar listens to a soldier talk of his PTSD experiences and coaches him into resolution of the trauma. Obviously, the applications could be huge, from automated psychotherapy to teaching to virtual sex. So we don’t wish to dismiss the prospects for advanced AI.
But we do want to explore the limits of AI. How far up this hierarchy of human thought can AI proceed? And, even if AI can simulate some aspect of human consciousness, what does that mean really? Would it be the same as what people do? Or would it be just a false replica? A rough approximation? A feeble substitute for the real thing? These are difficult and profound questions that bear on the future relationship between AI and HI. Let’s see what we can learn.
When speaking on this topic, we often ask audiences if they think there is a substantial difference between AI an HI. A few brave individuals usually say “No, there is no difference,” but the vast majority (90% or more) insist there is a substantial difference. They may not be able to put their finger on it, but it seems intuitively obvious to most people that humans are unique. Of course, we could be proven wrong as AI matures. That is the nature of this great experiment now underway as science advances. This little TechCast study is our attempt to anticipate the outcome.
After getting your thoughts on framing this issue in Round Two, you will be asked to look over the definitions of each function and estimate if AI will be able to do it in the next few decades without human input. (Yes or No). The results should give us a sound grasp of the profile of artificial intelligence (AI) versus human intelligence (HI). These 15 functions may not define the full range of human consciousness perfectly, but they will serve the rough purpose of this study.
Round Two — Invitation to Help Frame This Study
For the second round of the study, we now invite you to make sure this issue is framed in the most useful way possible. Are important functions missing? Are these defined accurately? Is the problem posed effectively? Should we pose other questions? What else is on your mind?
Please send your best thinking to Halal@GWU.edu. We will use your ideas to improve this study and post them in the next edition of TechCast Research.
Thanks for your support. The TechCast Team
A recognized architect and urban design professional, Nir Buras is among a handful of architects and planners that have both classical knowledge and the experience in large, complex projects. He visited 100 cities to write the book.
Nir Buras is an architect and planner based in Washington, DC, with over 30 years of specialized experience in large, complex, and sensitive projects, strategic planning, architecture and transportation design, as well as teaching and lecturing. Projects include East Side Access at Grand Central Terminal, New York; International Terminal D, Dallas-Fort-Worth; the Washington DC Dulles Metro line; work on the US Capitol and the Senate and House Office Buildings in Washington.
Buras learned his first lesson in urbanism while planning in the Negev Desert in Israel – that modernist planning didn’t work. Mid-career he had the opportunity to study “why things look the way they do,” and while writing a PhD on modernism, he came out a classicist. Engaged in numerous projects since then, he has researched first-hand how architecture impacts urban planning.
Working in the 2000s on large urban projects, Buras’s breakthrough came in 2005 when he directed the Anacostia Plan at the open studio of the Washington Mid Atlantic Chapter of the Institute of Classical Architecture and Arts which he founded. After ten years of applying in practice what he learned, he now presents the urban design and planning method of Classic Planning with the hope of reintroducing beauty to cities.
Dr. Nir Buras brings to the table diverse expertise in civic, aviation, rail, and commercial architecture and planning. Buras has the proven ability to quickly analyze key project issues, develop strategies to grow designs, and to work well within institutional, stakeholder and industry dynamics. His goal is to continue serving the cities of the world by helping their residents to understand better their cities and to help them overcome the challenges of the 21st Century by helping them develop consensual, 100-year classic plans.
Dr. John Freedman is a retired physician and lifelong polymath with a broad range of experience worldwide. He is a graduate of Brown University and Yale Medical School, and former President of Medical Exchange International, a non-profit charity. He is a Global Studies Scholar & Lecturer who has been a featured speaker at numerous symposia as well as a guest lecturer for many educational travel programs including National Geographic Expeditions, Smithsonian Journeys and several luxury cruise lines. His analytic work and presentations take an interdisciplinary approach drawing from history, geography, anthropology, the sciences, and current affairs in order to better understand lessons of the past, dynamics of the present, and probabilities of the future.
Forecasting the 2020 US Presidential Election
TechCast now moves to the next most popular topic rated by our readers – Will Trump or Biden win the coming election? Yes, this is controversial and fraught with heated emotion. But so too were our recent studies of the MegaCrisis, Global Consciousness, The Coming Internet and Redesigning Capitalism.
We choose to forecast this event in the same objective manner because it is among the most significant events of our time. It is an existential moment. The outcome will determine America’s experiment in Democracy, our lives, the future of our children, and even the world as a whole.
Using our method of collective intelligence, this blog outlines below the Pros and Cons for both candidates, and it asks you to comment on needed changes in this background information. Our next blog will publish an updated background analysis and invite readers to estimate the probability of a Trump or Biden win. We could possibly carry this further by updating our forecast in a few weeks to see trends leading to the election. If we receive a flood of objections to this study, all bets are off. TechCast aims to serve its readers.
Background Information on the 2020 Election
Pros and Cons On Donald Trump
Pro: Large and solid political base. Somewhere between 30-40% of Americans support Trump, and some 90% of Republicans are devout believers.
Pro: Electoral college advantage. The disproportionate weight of scarcely populated states strongly favors Trump. Nate Silver, a successful political forecaster, thinks it will take Biden at least a 5% lead in the popular vote to overcome this advantage.
Pro: Rated best on economy. Despite statistics showing no difference between Obama’s 8 years of economic growth and Trump’s 4 years, many continue to believe Trump is better at stimulating economic growth.
Pro: Could exploit chaos in the election. Trump is a master at taking advantage of the chaos he foments, and more is likely to come.
Pro: Voter suppression, foreign disinformation, etc. may help. Cutting back capabilities of the Postal Service, discouraging mail in ballots, restricted voter rules, disinformation from Russia, etc. could all give Trump an edge.
Con: Disliked by large segments of society. Rather obvious.
Con: Poor performance. Data on economic growth, presidential ratings, the Federal deficit and other indicators show that Trump’s performance is poor. (See our TechCast Study) Roughly 75% of the public thinks the Nation is “On the wrong track,” a telling sign of presidential failure.
Con: Vulnerable on pandemic and resulting economic collapse. By almost all indicators, the US response to the coronavirus has been the worst in the world, even eclipsing Brazil.
Pros and Cons on Joseph Biden
Pro: Favored by Alan Lichtman forecast. Prof. Lichtman at American University has developed a system that accurately predicts presidential elections for the past century. His system gives the election to Biden, but only narrowly.
Pro: Rated best on all other issues. Apart from the economy, Biden is thought to be better at managing other political issues.
Pro: Solid reputation and experience. Biden has made mistakes, but he has an impeccable reputation and a lifetime of experience at government.
Pro: Black voters determined to remove Trump. Black athletes, celebrities and ordinary citizens are infuriated by racial injustice and other Trump flaws, and they show fierce determination to mobilize their large constituency against his reelection.
Pro: Shift to progressive values underway The pandemic, economic collapse, racial injustice, climate change and other crises have spurred a worldwide shift in global consciousness that favors progressive change.
Con: Looks old. Biden may be fit for his age, but he appears old at times and often slurs when speaking.
Invitation to Comment on Background Data
NEW BACKGROUND INFORMATION Please look over the background analysis above and send any needed changes to Halal@GWU.edu. You may want to add a Pro or Con item, suggest revisions to existing items, question items, or anything else needed to make this analysis more accurate.
No rants please. Try to focus on helping us frame this forecast with all relevant information that could shape the election.
We are grateful for your participation. Results will be presented in our next blog for Round Two.
Defining the TechCast Mission
The TechCast Team and I feel a need to explore possible changes in the TechCast mission. We are particularly concerned about the possible conflict between TechCast and its founder – Bill Halal. For instance, what are the new TechCast goals exactly? Is it appropriate to continue calling the newsletter “Bill’s Blog”?
TechCast led the field for 20 years by providing authoritative forecasts spanning the entire environment for decision makers. We published reports covering all aspects of roughly 50 emerging technologies, 30 social trends, 25 wild cards and endless other studies. This huge task required a dozen editors, other staff, marketing, legal fees and all the other costs of running a small corporation. Although It was a struggle, TechCast earned almost $ 1 million over this time, largely used to cover costs and invested in the company.
But the enormous demands, insufficient capital and intensifying competition made it hard to survive, so we transitioned into this 2nd generation system. TechCast still provides forecasts, but we have yielded the need to cover everything and instead focus on breakthroughs – like our recent string of studies noted above. By doing less, I think we have been able to do more.
Now TechCast is now a lean operation incorporated into my professional site (www.BillHalal.com) able to study strategic issues that count. Our primary goal is to make TechCast an “invisible college” for all those interested in strategic foresight. We aim to study the most significant issues on the horizon, distribute our knowledge widely, encourage collaboration on interesting ideas, assist our members in their own work, and anything else that advances strategic foresight for a changing world. The TechCast Project is returning to its academic roots.
Our modest needs are covered by consulting, speaking and other projects. The TechCast vision is to develop capabilities as a business incubator in strategic foresight. In the last few months, we partnered with Angus Hooke on a book that uses the work of several TechCast experts. We helped Claire Nelson and Hassan Rashidi launch their Engineering and Society project, collaborated with Jess Garretson, CEO of The Cognis Group, and are now planning an Executive Webinar led by Amy Fletcher and others. TechCast welcomes your creative ideas, suggested projects, articles and any other ways we can work together.
The newsletter is our primary news vehicle, and it has been branded as “Bill’s Blog” to draw on the founder’s reputation, provide interest and to keep it personal. We now wonder if a more business-like name that is more inclusive would be best – TechCast News, etc. ?
Invitation to Comment on TechCast Mission
Kindly look over the above analysis and send your suggestions to Halal@GWU.edu.
Mission Do you like this TechCast mission? See a problem? Suggest something else? Have a proposal to consider?
Newsletter Name Should our newsletter continue to be called “Bill’s Blog”? Do you prefer “TechCast News”? Can you suggest other names?
Comments will be published in the next newsletter along with our analysis.
William E. Halal, PhD
The TechCast Project
George Washington University
Peter Fingar, independent analyst, internationally acclaimed author, management advisor, former college professor and CIO, has been providing leadership at the intersection of business and technology for over 50 years. Peter is widely known for helping to launch business process management (BPM) with his book, Business Process Management: The Third Wave. He has taught graduate and undergraduate computing studies in the U.S. and abroad, and held management, technical, consulting and advisory positions with GTE Data Services, American Software and Computer Services, Saudi Aramco, EC Cubed (for clients including GE TPN, American Express, Master Card and GE Capital), Noor Advanced Technologies in Egypt, the University of Tampa, the Technical Resource Connection division of Perot Systems and IBM Global Services. He is a sought-after keynote speaker and his latest of 26 books include: Cognitive Computing, and The Cognitive Internet of Everything (short book with 50 descriptive graphics) to bring understanding to your non-tech colleagues.
Redesigning Capitalism – Final Results
The Coming Collaborative/Democratic Enterprise
Do not despair over the dismal state of the world today. The collective intelligence of 36 people who have participated in this study expect a new model of Democratic Enterprise to enter the business mainstream over the next several years with a highly positive societal impact. It could prove to be the beginning of a new American Renaissance.
Here’s a quick summary of the proposition being studied, more fully described at the end of this blog. The coronavirus pandemic, economic depression, the threat of climate change and other crises signal that business must go beyond making money to “internalize” these societal problems — or the world faces disaster. Building on the Business Roundtable announcement and other background data, this study forecasts the likelihood that the mainstream of business in modern nations will serve the interests of all stakeholders over the next several years.
This study started in our blog of August 1 when Redesigning Capitalism was rated as having greatest interest among 14 different topics. The blog of August 15 drew on comments from 12 contributors to flesh out our background analysis, and it also called for estimates of Probability and Societal Impact.
We are now pleased to present results from 24 of this blog’s readers below:
These results are striking. A sample of 24 is more than sufficient to reach sound conclusions, especially considering the sophisticated people who contributed, many of whom are TechCast Experts:
Margarite Abe, Jonathan Kolber, Jose Cordeiro, Peter King, Jess Garretson, Jacques Malan, Dale Deacon, Dennis Bushnell, Peter Bishop, Nicolas Cordes , Aharon Hauptman, Julio Milan, Andrew Micone, Linda Smith, Amy Fletcher, Fadi Bayoud, Lew Miller, Xin Wu Lin, Owen Davies, Tom Tao, Jerry Glenn, Carlos Scheel, Chris Garlick. We are grateful.
It is hard to imagine a more positive outcome. When considering the “mode” (highest number of responses), our contributors estimate a 70% probability that “the mainstream of business in industrialized nations (30% adoption level) shifts to collaboration with workers, customers, governments, environmentalists and other stakeholders over the next several years.” On Societal Impact, they rate “the impact this would have on society as a whole” at +7 on a scale running from -10 (Catastrophic) to +10 (Excellent). Using averages would drop these numbers a bit.
This impressive data, along with comments that follow, make a strong case for expecting an historic transformation of business consciousness over the next few years. The number of corporations involving stakeholders in major policy decisions is likely to grow from today’s small leading edge into the mainstream of business, both in the US and industrialized nations abroad. There remains confusion and doubts, as noted in the comments that follow. But if business leaders can seize the opportunities for transformative change, the economic world could enter a bold new economic era that solves major social problems as well as producing financial gains. It is even reasonable to think this would constitute a revolution in thought on political economy. In time, we may stop thinking in terms of “capitalism” altogether and embrace the emerging form of “democratic enterprise.”
Leaders in business, government and other institutions should start to seriously plan this transformation by engaging stakeholders, devising metrics to evaluate stakeholder contributions and benefits and collaborating to resolve strategic problems that add value to be shared by the entire enterprise.
TechCast is thinking of starting an Executive Webinar to help business leaders adapt to this revolutionary change. We welcome any suggestions and help in planning this venture.
Redesigning Capitalism – Round Two
Following up on our last blog on Redesigning Capitalism, this second round continues our process of online collective intelligence to flesh out the background analysis with comments from contributors. Results confirm our framing of the issue, and they also raise crucial questions answered below. We then invite readers to estimate the probability that Democratic Enterprise will enter the mainstream and its societal impact.
Below you will find trenchant responses from the following different voices:
Chris Garlick shows how the transportation industry is practicing stakeholder collaboration.
Carlos Scheel reminds us to include Nature and the Planet.
Dennis Bushnell claims Democratic Enterprise will emerge organically from market forces.
Linda Smith defends profit as the legitimate business goal.
Young-Jin Choi provides three requirements for “regulated human capitalism.”
Jonathan Kolber forecasts that a variety of corporate types will practice stakeholder collaboration.
Peter Bishop agrees with our analysis but questions our trends.
Margherita Abe estimates a 70% probability that democratic enterprise will arrive soon.
Peter King likes the idea but worries about it surviving creative destruction.
Jess Garretson explores the forces and needs of stakeholder capitalism.
Jacques Malan finds this a difficult but crucial topic, and breaks it down by stakeholders.
Julio Milan outlines the importance of moving to a “humanist economy.”
While our original analysis is confirmed largely, several critical issues are raised by these 12 contributors:
Corporate Transformation is Here
Almost all commentators agree that the rising threat of pandemics, climate change, income inequality and other social and environmental problems are so severe that business leaders are being forced to “internalize” these issues by transforming corporate structures. This movement is often called “Environmental, Social and Governance (ESG),” while our analysis shows it is more accurately thought of as “collaborative enterprise” or “democratic enterprise.”
Here is a sobering conclusion reached by the World Economic Forum:
“The bandwagon of stakeholder capitalism and sustainable finance is well and truly in train. As the future unfolds, those not already on it – authentically and materially – risk getting left behind.”
A Broader Form of Free Enterprise Would Be Historic
While some are concerned at the passing of “shareholder supremacy,” almost all contributors agree the required changes merely extend principles of markets, enterprise and competition into the social frontier. In short, there seems to be no call for fears of socialism because this is simply a broader form of free enterprise.
The emerging model of the “collaborative/democratic enterprise” changes the economic landscape by introducing democracy at the level of the organization. It is neither capitalism nor socialism but an unusually powerful concept that unifies both left and right. The practice serves social interests as well as shareholders, so it is no longer focuses primarily on profit — capitalism. It is led voluntarily by CEOs because it can be a competitive advantage, so it is not required by government — socialism.
At the national level, governments would collaborate with constituents to serve all interests, including green taxes to limit carbon use, laws that promote equality, rulings to disperse market concentrations, etc.
Progressive business leaders are embracing this idea in a constructive way that solves strategic problems to add value. In principle, a collaborative system could solve nagging social problems, provide shareholders greater returns at less risk, minimize government oversight, stave off global crises like climate change and turn business leaders into social heroes. Collectively, it would shift global consciousness from self-interest to collective interest — an historic revolution.
Confusion Could Distort Efforts
The greatest danger in this period of institutional change is confusion over terms and methods. For instance, some are fearful that serving social needs will diminish the ability of business to survive a competitive marketplace. This danger stems from the decades-long focus on the older concept of social responsibility, without the concurrent need for obligation to perform financially.
The many examples cited here show that a leading edge of innovative firms have survived the test of competition and thrived. The key is to focus on collaborative strategic problem-solving in order to serve all needs better. As noted in our analysis below, stakeholders are actually resources, much like capital, and the challenge is to integrate social resources into business operations. The theory holds that collaborative enterprise should be more effective economically as well as socially. To survive the test of market competition, any system will have to be more productive.
There are also dangers of getting bogged down in endless wrangling over “who gets what.” This will require charting a new frontier of management that resolves the political issues that are endemic to any organization. Business leaders will have to form working partnerships with all stakeholders that ensure both responsibilities and rewards are equitable for all parties.
There are probably lots of other distortions that we cannot yet imagine, including the obstacles noted below in our trend analysis. Fasten your seat belts because the next decade or two could prove a bumpy ride.
Invitation to Answer Survey Questions
We now invite readers to look over the comments below followed by the background analysis. Then kindly send your best estimates of the questions below to Halal@GWU.edu.
PROBABILITY Please estimate the probability that the mainstream of business in industrialized nations (30% adoption level) shifts to collaboration with workers, customers, governments, environmentalists and other stakeholders over the next several years. (from 0 to 100%)
SOCIETAL IMPACT Please estimate the impact this would have on society as a whole. (from -10 Catastrophic to +10 Excellent.)
COMMENTS What reasons guide you in making these estimates? Other comments?
We are grateful for your participation. Final results will be presented in our next blog for Round Three.
William E. Halal, PhD
The TechCast Project
George Washington University
I am grateful to the many people who responded to our request for rating topics:
The votes show that the winning topic is – Redesigning Capitalism.
Our initial framing of this study is shown below. Please note that our analysis on Redesigning Capitalism is simply Round 1 of what is likely to be three-round study. The trends below represent the type of trend analysis TechCast has pioneered for framing a topic. Our next blog will present a more complete analysis including comments from our readers, and it will also invite estimates to the questions posed. The third round will conclude with final results of the survey and conclusions.
It’s interesting to see this as a strategic version of “action research.” This type of “strategic action research” uses simple but effective collective intelligence to provide the best possible answers to tough strategic questions. More than just seeing the results, the transparent nature of our process allows readers to participate and to better understand the method as it unfolds.
I invite all readers to send any corrections, additions, comments, etc. on this background analysis to Halal@GWU.edu. Please also advise if you think we should pose other questions for the TechCast community to answer.
Thanks for your participation. Get ready to learn the likely form of the “New Capitalism” in the coming issues of Bill’s Blog.
The TechCast Project
George Washington University
Background Information on Redesigning Capitalism
The financial crisis of 2000 and 2008 and the 2020 pandemic raised serious doubts about the failings of capitalism. These economic collapses, climate change, gross inequality and other threats making up the “Global MegaCrisis” have shattered confidence in what Francis Fukuyama proclaimed as “The End of History” – the fall of communism and the triumph of capitalism and democracy.
A variety of voices think this could become a “collapse of capitalism,” roughly like the “collapse of communism,” and caused by the same inability to adapt to a changing world. Nobel economist Joseph Stiglitz wrote, “The 2008 financial collapse may be to markets what the Berlin Wall was to Communism.” Communism could not meet the complex demands of the Information Revolution, and now capitalism seems to be failing to adapt to the Global MegaCrisis.
In response, corporations are making the transition to a quasi-democratic form of business that focuses on forming collaborative partnerships with employees, customers, business partners, and the public as well as shareholders. The Business Roundtable’s announcement that firms should serve all stakeholders is truly historic. The New York Times called it a “watershed moment … that raises questions about the very nature of capitalism.” If done well, this broader form of business could go beyond social responsibility for doing good to become a competitive advantage.
To put this in perspective, consider the three models in the figure below. The profit-centered model is traditional, while corporate social responsibility (CSR) has tried to shift the focus to stakeholders over the past decades, without much success. The problem is that CSR is usually considered philanthropy and often ignores the need for profitability, making it the mirror opposite of the profit model.
In contrast, the “corporate community”, or “collaborative enterprise,” model goes beyond CSR to form a more productive system that benefits all interests. The key lies in making stakeholders working partners, rather than recipients of benefits.
The fact is that the social interests in any business – workers, customers, partners and the public – are roughly similar to the role of investors. All these groups invest resources, incur costs and gain benefits, much like shareholders. Any enterprise is basically a socio-economic system composed of key stakeholders that perform crucial functions. Focusing on only one function distorts the performance of the entire system. It makes as much sense to think of capital as the only goal as it would to say the brain, heart or lungs are the most important part of the human body. From a more realistic systems view, the need is to integrate all these resources into a workable whole. That is precisely what any good executive must accomplish to build a viable enterprise. Here’s how Bonville Power harnessed the knowledge of its stakeholders:
“We used to treat outsiders (labor unions, the public, regulators) as a nuisance. After working with them, our adversaries helped us find creative solutions to intractable problems. Public involvement is a must for today’s managers. Conflict is unavoidable; the only choice is whether to dodge it or harness it.”
A democratic form of enterprise would spur cooperation throughout the social order, relieve government of burdensome oversight responsibility and reduce the risk of market volatility. Because business firms would be controlled by their stakeholders, they would “internalize” social impacts and reduce government regulations and bureaucracy. This would also reduce the risk of stock market drops, labor conflict, cutthroat competition, swings in consumer loyalty, unexpected regulatory change, and other disruptive factors.
These gains would come at the cost of overcoming the obstacles noted in the Cons below. Profit is an easily measured, traditional goal, so displacing it will meet resistance from many, primarily investors and Wall Street. A quasi-democratic organization can be messy and it requires political skills that many business leaders lack.
The transition to stakeholder collaboration will be difficult, therefore, it may take years, and there will always be some firms that remain profit-centered. But the coming of collaborative enterprise is well underway even now and it will transform economic systems.
It’s important to note that stakeholder collaboration in business is a special case of the Third Principle in our earlier formulation of Global Consciousness:
Principle 3. Collaborate With Stakeholders to Better Serve Collective Interests.
This more powerful and universal statement can be applied to all institutions. For business, it means serving social interests as well as economic goals. In government, it would carry democracy to the grassroots and better serve towns, cities and nations. It could also resolve the present conflict in healthcare between profit and multi-million dollar executive pay versus the welfare of patients and communities. Religious organizations, such as the Catholic Church, would then temper the hierarchical power of the priesthood with the influence of their members.
That’s what makes this study of such great value that you should want to consider it carefully and apply the concepts everywhere. This is a definitive analysis of the changing role of business, government and all other institutions.
Framing the Forecast
In 2018, the TechCast Global Brain Trust of experts estimated a roughly 30 percent probability of this historic change in the next decades. They also estimated a big positive impact, which highlights the great potential such a change could present.
Events have change so dramatically that we can now create a new estimate for 2020 and establish a trendline for this seminal change. Looking over the trends below, I would guess the probability will prove to be far higher, most likely over 50%.
Here’s how we frame the questions for this survey today :
“Please estimate the probability that the mainstream of business in industrialized nations shifts to collaboration with workers, customers, governments, and other stakeholders over the next several years.”
“Please estimate the impact this would have on society as a whole. (from -10 Catastrophic to +10 Excellent.”
I invite readers to improve on these two research questions, suggest others and provide any justifications.
PROS: TRENDS DRIVING THE NEW CAPITALISM
Progressive Business Is Going Democratic A robust leading edge of progressive business firms and practices have long thrived around the world: Johnson & Johnson, Nucor Steel, IKEA, the Mondragon in Spain, labor participation in Germany, self-management in France and Japanese corporations have practiced various forms of collaborative management for years. Studies by the consulting firm, McKinsey, conclude “shares of companies that connect effectively with all stakeholders outperform competitors by two percent per year on average.” Jack Welch, the former CEO of General Electric, acknowledged “Shareholder value is a result, not a strategy. Your main constituencies are your employees and customers.”
Institutional Investors Laurence D. Fink, founder and CEO of BlackRock, which holds US$6 trillion in investments, told 1000 of the world’s largest corporations: “Society is demanding that companies… serve a social purpose… every company must not only deliver financial performance, but also show how it makes a positive contribution to society.” While Jana Partners and CalSTRS, the California retirement system, issued a similar declaration: “… we believe the long-term health of society, our economy, and the company itself, are inextricably linked.” Jeffrey Sonnenfeld, a senior associate dean at the Yale School of Management, said. “It is huge for an institutional investor to take this position across its portfolio.‘‘ He said he’s seen “nothing like it.”
United Nations The UN Global Compact is an association of businesses committed to universally accepted principles in human rights, labor, environment, and anti-corruption. The association includes over 13,000 organizations from more than 145 countries currently.
Coop Movement The International Co-operative Alliance represents the global cooperative movement, with 284 organizations across 95 countries
B Corporations This group of firms focuses on solving social and environmental problems. Unlike traditional businesses, they meet comprehensive and transparent standards of social and environmental performance, institutionalize stakeholder interests, and build a collective voice through a unifying brand. Amy Prosenjak, a B corporation owner, said “Everybody has to win.”
Benefit Corporations The Benefit Corporation goes beyond the B corporation to make its status legal. California and another 26 American States recently enacted laws requiring Benefit Corporations to provide a “public benefit,” be governed to serve all stakeholders, assess social and economic performance annually, and to operate transparently.
Business for Social Responsibility This global network of 250+ companies, thought leaders, and stakeholders shares best practices.
Business Culture These concepts are now practiced among progressive companies and taught at business schools. Recent surveys show that only five percent of CEOs now say they are “mainly focused on profits and not distracted by social goals.” Other surveys show that more than 80 percent favor stakeholder collaboration.
Fortune 500 Over 80% of Fortune 500 companies now publish Corporate Social Responsibility reports, covering issues like governance, community and partnerships. The editor of Fortune said: “an ever-growing group of business leaders … are building efforts to address social problems … Companies are moving beyond fuzzy notions like sustainability and corporate citizenship to making meaningful social impact central to how they compete.”
Business Schools One of the most popular courses at the Harvard Business School is “Reimagining Capitalism.” Enrollment increased from 28 students when the course started seven years ago and now numbers 300 students each semester.
Public Attitudes A study by Deloitte finds that 60-80 percent of Millennials want to work for companies with a strong social purpose. A poll found that 51 percent of Americans age 18-29 do not support capitalism and only 42 percent think it is a good economic system.
CONS: OBSTACLES OPPOSING THE NEW CAPITALISM
The obstacles are enormous, of course. Change is hard, so bold leaders are needed to take on this difficult challenge.
Tradition Some countries have cultures that are committed to traditional forms of “capitalism” focused on profit and the rights of shareholders, and they are likely to resist the difficult changes that are involved.
Investor Rights Shareholders legally own a corporation, which tends to stress the central role of profit. In fact, shareholders can sue if not satisfied that management is doing everything within reason to maximize their profit. However, some corporations are learning to fight back and are in turn suing their shareholders.
Power of Wall Street The possibility of takeover has traditionally forced firms to focus on short-term gains to avoid losing capital as their stock drops under threat of being absorbed by another company. The collaborative enterprise offers the possibility of resolving this problem by having stock held by stakeholders who are interested in the long term.
Democracy is Messy Collaboration is more time-consuming and difficult than autocratic leadership, and it may fail. The intention may be good, and some firms may thrive, but there is a serious risk of wasted time, endless conflict, and rising costs with democratic processes.
New Generation of Leaders Needed Few present business leaders seem able to make this change. A new generation of executives less wedded to tradition may be required to spearhead the transition.
Requires Political Skill Forming working relationships is inherently a political act, so managers must adapt by developing political skills. This requires a more challenging form of “political” leadership and depends on stakeholders being receptive to partnering.
Be sure to tell your friends and associates to sign up for this blog at www.BillHalal.com.
William E. Halal, PhD
The TechCast Project
George Washington University
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What Are the Most Crucial Strategic Issues To Study?
A Survey of Readers’ Interests
Here are a few hot ideas that seem exciting:
2. Forecasting the Trump Presidency
6. State-of-the-Art in Strategic Foresight
7. Prospects for the Internet of Things (IoT)
This study would provide historical context on the “American Century” starting after WW II and the “British Century” before that. We could focus on how great powers have changed in the past, and what might happen in the future as America loses its hold on global dominance. We could forecast the rise of Asia and its strategic implications.
Please Tell Me What You Think
I really want to make Bill’s Blog a more interesting and useful source of strategic knowledge for our readers. Please take a few minutes to email me at Halal@GWU.edu with your top choices for topics to study. You can just send the numbers of topics you like (EG, No. 4,5,9, etc). I will do my best to analyze your responses and create a research agenda that will delight us all.
Be sure to tell your friends and associates to sign up for this blog at www.BillHalal.com.
William E. Halal, PhD
The TechCast Project
George Washington University