Predictable Surprises & Global Malaise A Short Story V. Michael Mavaddat Executive Vice President [email_address] 610-717-1000 x.112 January, 2009 Decision Strategies International | One West Elm Street, Suite 150, Conshohocken, PA 19428 | 610.717.1000 www.thinkdsi.com

Power of Scenario Thinking Scenarios developed in 1997 by a Federal agency about the future of the United States within the global context provide an intriguing demonstration of the power of scenario thinking if done with rigor.

Scenarios developed in 1997 by a Federal agency about the future of the United States within the global context provide an intriguing demonstration of the power of scenario thinking if done with rigor.

Scenarios written in 1997 about the future of the United States within the global context Scenarios by their nature are not meant to be precise in foretelling specific future events. Yet from time to time our client scenarios are actualized and validated with remarkable accuracy. In early 1997, a group of engineers, scientists, environmentalists, technologists, historians, government and private sector managers and planners joined forces to develop scenarios for the future of the US within the broader global geopolitical context. The group developed four scenarios spanning a twenty year time horizon 1997 to 2020.

Scenarios by their nature are not meant to be precise in foretelling specific future events. Yet from time to time our client scenarios are actualized and validated with remarkable accuracy.

In early 1997, a group of engineers, scientists, environmentalists, technologists, historians, government and private sector managers and planners joined forces to develop scenarios for the future of the US within the broader global geopolitical context. The group developed four scenarios spanning a twenty year time horizon 1997 to 2020.

We set out to answer the following questions about the future What will be the political philosophy of US Government (size, structure)? What will be the infrastructure requirements in 2020? What are the future national security needs? What challenges will the nation/world face? Who controls and/or influences funding of government agencies?

What will be the political philosophy of US Government (size, structure)?

What will be the infrastructure requirements in 2020?

What are the future national security needs?

What challenges will the nation/world face?

Who controls and/or influences funding of government agencies?

We developed four scenarios… 15 - Jan 2009

In 1997 the Post Industrial Renaissance scenario was deemed most likely to actualize over the next ten years Renaissance scenario of world prosperity, growth, and peace. No significant regional conflicts. International cooperation marked the global approach to resolving problems, and a newly-established international organization responded quickly to human and natural disasters. Concerns about “family values” in the United States generated a robust right-wing movement increasingly dominated by fundamentalists agitating for less government and more local control. The political climate spurred economic development, and the stock markets revealed investor faith in a strong economy. The Retirement Security Act successfully addressed problems posed by the growing number of retirees. Lower interest rates made borrowing more attractive. New laws to ensure the financial integrity of company financial practices resulted in millions of new stock investors. 15 - Jan 2009

Renaissance scenario of world prosperity, growth, and peace.

No significant regional conflicts.

International cooperation marked the global approach to resolving problems, and a newly-established international organization responded quickly to human and natural disasters.

Concerns about “family values” in the United States generated a robust right-wing movement increasingly dominated by fundamentalists agitating for less government and more local control.

The political climate spurred economic development, and the stock markets revealed investor faith in a strong economy.

The Retirement Security Act successfully addressed problems posed by the growing number of retirees.

Lower interest rates made borrowing more attractive.

New laws to ensure the financial integrity of company financial practices resulted in millions of new stock investors.

Events and Predictable Surprises Since 1997… 15 - Jan 2009

Rise of Islamic Jihadism 15 - Jan 2009

Twin Towers on 9/11/01 15 - Jan 2009

Streets of New York on 9/11/01 15 - Jan 2009

A Global War with New Frontiers 15 - Jan 2009

Ethnic Rivalries and Non-state Actors 15 - Jan 2009

Government Transformation & Consolidation 15 - Jan 2009

Old Conflicts and New Missions 15 - Jan 2009

Natural Disasters

Role and Influence of International Institutions 15 - Jan 2009

Financial Crisis of 2008

Bank Failures and Company Bailouts 15 - Jan 2009

Asset Price Deflation 15 - Jan 2009

Social Change! 15 - Jan 2009

Monitoring the Outside World Towards Armageddon Global Malaise Guns and Concrete Post-Industrial Renaissance 15 - Jan 2009

In 2009 -- Global Malaise Actualizes “ Several western governments had initiated tax cuts favorable to big business. This policy concentrated wealth and lowered income into government treasuries. Bank credit became ever tighter. Stocks and real estate prices fell sharply . Governments hungry for reelection panicked as asset [price] deflation gathered force . They attempted to counter the contraction with easy money. The United States Federal Reserve and other central banks, especially the Bank of Japan, bought up the bad debts of insolvent institutions, including some major banks and corporations. Central banks around the world become holding companies of insolvent institutions. They ended up owning many banks, a few insurance companies, and a great deal of real estate. . . . By 2008 the country was in recession . The middle class diminished as millions lost their life savings in the market crash. The poor grew desperate as many social programs such as energy support, housing, medical, and childcare was eliminated or reduced to token levels.” “ The Democrats won the 2012 president election, bringing the first minority to the office of Vice President . The election reflected continued voter demands for social reform.” From the text of Global Malaise scenario, 1997 15 - Jan 2009

“ Several western governments had initiated tax cuts favorable to big business. This policy concentrated wealth and lowered income into government treasuries. Bank credit became ever tighter. Stocks and real estate prices fell sharply . Governments hungry for reelection panicked as asset [price] deflation gathered force . They attempted to counter the contraction with easy money. The United States Federal Reserve and other central banks, especially the Bank of Japan, bought up the bad debts of insolvent institutions, including some major banks and corporations. Central banks around the world become holding companies of insolvent institutions. They ended up owning many banks, a few insurance companies, and a great deal of real estate. . . . By 2008 the country was in recession . The middle class diminished as millions lost their life savings in the market crash. The poor grew desperate as many social programs such as energy support, housing, medical, and childcare was eliminated or reduced to token levels.”

“ The Democrats won the 2012 president election, bringing the first minority to the office of Vice President . The election reflected continued voter demands for social reform.”

From the text of Global Malaise scenario, 1997

Scenarios and Monitoring – Tools for Navigating the Future Starting Point B C D 1997 2017-2020 A Scenario End Point Number of Possible Future Worlds Mid point 2009 Post industrial Renaissance Global Malaise Guns & Concrete Towards Armageddon 15 - Jan 2009

Monitoring & Acting on Weak Signals Are we listening? How are we interpreting and acting on weak signals? Are we dynamically adjusting our strategy? Is there a “system” in place to identify, interpret and adapt to weak signals? Are we anticipating, adapting, and acting to win? 15 - Jan 2009

Are we listening?

How are we interpreting and acting on weak signals?

Are we dynamically adjusting our strategy?

Is there a “system” in place to identify, interpret and adapt to weak signals?

Are we anticipating, adapting, and acting to win?

Aim and Objective of Planning © DSI 2009 “ Instead of trying to optimize tomorrow the trends of yesterday, planning should aim to exploit the new and different opportunities of tomorrow.” -- Peter Drucker

Facing the Challenge of Managing in Turbulent Times? We can help you! Contact Michael Mavaddat e-mail: [email_address]

We can help you!

Contact Michael Mavaddat

e-mail: [email_address]