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A New Way to Plan for the Future

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From the Proceedings of the 47th Hawaii International Conference on System Sciences (2007). Building on state-of-the-art techniques for forecasting future developments in technology, business, economics, and other areas of human endeavor, we describe a novel methodology for adaptive contingency planning at the strategic initiative level. Complementing normal business planning that uses a schedule based on predictions tied to dates in the future, we use a new kind of early warning signal called a signpost to trigger the execution of corresponding new recommended actions.

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A New Way to Plan for the Future

  1. 1. A New Way to Plan for the Future Ray Strong Joseph Ryan Doug McDavid IBM Research IBM Research IBM Global Services Ying Leung Ruoyi Zhou Eric Strauss IBM Research IBM Research IBM Global Services John Bosma Tony Sabbadini David Jarvis IBM Research UC Berkeley IBM Global Services Sonia Sachs Peter Bishop Cody Clark IBM Research University of Houston IBM Global Services Abstract Building on state-of-the-art techniques for forecasting future developments in technology, business, economics, and other areas of human endeavor, we describe a novel methodology for adaptive contingency planning at the strategic initiative level. Complementing normal business planning that uses a schedule based on predictions tied to dates in the future, we use a new kind of early warning signal called a signpost to trigger the execution of corresponding new recommended actions. 1. Introduction A signpost is a recognizable potential future event that signals a change of importance to an enterprise. The specificity of signpost events makes it possible to generate contingency plans and to perform cost- benefit analyses so that the contingency plans are comparable with and prioritizable against current business plans, allowing for a smooth integration of new plans with old. The result is a set of missions or initiatives tied to the occurrence of recognizable events rather than a rigid time schedule. This restructuring of strategy allows for better timing of actions to market conditions, enables advance planning for disruptive change, provides a systematic way to identify and monitor new business opportunities, and turns threats into opportunities. The traditional technology roadmap approach to planning consists of extrapolating current trends and exploring the likelihood of meeting current challenges. This approach is appropriate for business planning for a three to five year horizon, within which the plans are based on the expected course of technology progress. To accommodate a longer time horizon or to better prepare for the unexpected, we use the signpost approach, which includes a brainstorming technique focused on the deep future, followed by backcasting toward the near future but outside the box of extrapolation of current trends. Concurrent with backcasting, we systematically explore current technology landscapes, using information mining techniques on data sources including patents, publications, and other unstructured information sources. Coordinated interaction between scenario based backcasting and technology landscapes generates candidate potential future signpost events. In this paper we focus on the idea generation, evaluation, and analysis techniques that lead to the identification of signposts. Signpost Forecasting Method Capabilities and significance for point of view Idea and vision area generation and evaluation Scenarios Technology Landscapes Candidate signposts Ecosystem and Cost-benefit analysis Figure 1: Activity structure of the signpost forecasting method. 1.1. Background Since the early 1970s, the foresight community has developed a wide variety of forecasting techniques to supplement traditional methods [1, 21, 39, 40, 41]. Note that traditional methods can be useful in understanding major trends and even in predicting Proceedings of the 40th Hawaii International Conference on System Sciences - 2007 1©1530-1605/07 $20.00 2007 IEEE Proceedings of the 40th Annual Hawaii International Conference on System Sciences (HICSS'07) 0-7695-2755-8/07 $20.00 © 2007
  2. 2. long range outcomes at the macroeconomic level. Our focus is on more specialized techniques that employ microeconomic analysis for strategic planning. The modern techniques range from formal manipulation of data to intuitive analysis. Formal methods include statistical modeling, causal modeling, analogy method, trend extrapolation (including “s-curve” analysis [42, 43, 44]), and the Theory of Inventive Problem Solving (TRIZ) [5]. Well known examples of intuitive methods include consensus, Delphi, and Scenario Planning. Each involves analyzing expert input to arrive at a shared vision of one or more potential futures. The consensus method (or “panel of experts”) has been used successfully by the U.S. Department of Defense. The Delphi Procedure, developed at the Rand Corporation, is an iterative process for forecast convergence, based on input from a number of stakeholders [5, 6]. Both the consensus and Delphi methods seek forecast unity, rather than a more comprehensive coverage of multiple potential futures. Christenson introduced a mix of formal and intuitive methods in 1997, focusing attention on the role of disruptive technologies in enterprise failure [45]. In a subsequent book he supplied techniques for discovering and analyzing threats to enterprise survival that we find useful in looking for signposts [46]. Very recently W. Chan Kim has suggested specific techniques for generating disruptive business opportunities [47]. Each of these approaches uses microeconomic data to analyze a current situation and fit it into a known paradigm. Each is useful in our pursuit of better strategic planning; and each can be usefully complemented by our signpost approach. Scenario Planning explores multiple potential futures rather than a single “most likely” future. These explorations are framed in narratives (called scenarios) designed to influence key decision makers [1]. Scenario Planning was used by Royal Dutch/Shell in the 1970s to prepare for severe changes in the global oil industry [3,4]. It consists of two key activities: (1) identify the most important uncertainties -- view these uncertainties as ranges on dimensions -- prioritize the dimensions for significance to the client; and (2) construct narrative scenarios for each of the four quadrants generated from the top two dimensions. Of the two activities, the first requires the most work and is least understood. Our methods also play dimensions against each other. Each of the quadrants of a four quadrant scenario planning scheme is a vision area (see section 1.2). We prioritize vision areas rather than dimensions (uncertainties). We also have other ways of generating vision areas. 1.2. Preliminary definitions We begin with a series of definitions that serve to make certain vague concepts precise and to frame our system so that it can be distinguished from and compared to the prior art. We will use English words (including state, aspect, idea, vision area, event, and signpost) as precise technical terms (occurring within the knowledge system we are constructing), their normal English meanings serving as mnemonics. To indicate technical usage, these terms will appear in boldface where they are defined, either by context or by more formal definition. Within our working model of reality, we postulate a set of states, partially ordered by historical precedence. The set of these states includes a unique present state, past states (preceding the present state), and potential future states (that the present state precedes), as well as states incomparable with the present state (cf. [7, 8]). States are composed of measurable characteristics called aspects. (The term “state” is analogous to the term “vector” in a high dimension vector space where the dimensions correspond to aspects. We will elaborate on this metaphor; but it is only a metaphor to aid communication of the concepts and should not be mistaken for the model itself.) An idea is a description of some aspect or aspects of a state (analogous to a geometric object in a vector space). We say an idea is realized in a state when the idea describes aspects of that state. Note that an idea may be realized in many states. A future idea is an idea describing at least one aspect of a future state that is different from that of the present state. A vision area is a cluster of future ideas from the same future state. A vision area may be partially or totally realized in many states; but all the ideas of a vision area must be realized in at least one state. (Vision areas are analogous to non-empty intersections of geometric objects.) An event is a change in some aspect. Each event has a resulting idea. A potential future event is an event with a future idea as its resulting idea. For each event, there is at least one before state and one after state such that the resulting idea is realized in the after state but not in the before state. A signpost is a recognizable potential future event that signals a significant change. By “recognizable” we mean that reasonable people would agree on whether the event has happened or not. We say “signals” because the signpost may embody the significant change or it may only predict or enable it. See section 1.3 for a definition of significant. Proceedings of the 40th Hawaii International Conference on System Sciences - 2007 2 Proceedings of the 40th Annual Hawaii International Conference on System Sciences (HICSS'07) 0-7695-2755-8/07 $20.00 © 2007
  3. 3. 1.3. Point of view Key to our process of exploring the future is a point of view from which we can at least estimate a measure of significance, the measure being applicable to all ideas, vision areas, events, etc. The point of view can be an enterprise (e.g. a member of the S&P 500 or a government agency like NASA), an industry (e.g. aerospace), or an endeavor (e.g. the exploration of the solar system). The point of view must be specific enough to have a set of missions and ways of evaluating mission success (e.g. profit), as well as a set of capabilities defined at the strategic initiative level (e.g. perform exploratory research in a specified discipline, initiate a development project to build a specified product, deploy a specified technology, or acquire a new capability). From this point of view we measure the significance of an event by the quantitative change in the expected value of success of a mission that results from the event or from some event embodying a capability enabled by the event. When we use significant as a binary attribute, we mean exhibiting significance above an implicit threshold. A goal is a future idea that is both significant and desirable to the point of view. A strategic initiative is an action within the capabilities of the point of view and intended to realize a goal. Figure 2: Operators obtained by analysis of the point of view. The analysis of a point of view is part of a practice called Business Architecture [9]. 2. Idea generation Our idea generation process uses many other processes described in Section 1.1. Our specific process is iterative and accumulative brainstorming. We poll several groups sequentially, using seed ideas output from the previous process. The groups include research scientists, engineers, business strategists, and futurists. We use both synchronous (face-to-face) and asynchronous (email) brainstorming. 2.1. The business planning horizon Having observed many repetitions of the indicated experiment, we propose the following limiting principle of idea generation: Working Hypothesis 1: When asked to speculate on the future, subject matter experts tend to respond with ideas that are likely to be realized within the business planning horizon of three to five years. In other words subject matter experts are typically, and for the most part, conservative in their forecasts. They suggest ideas for which realization efforts are already underway or which embody overcoming a known challenge that limits an observed trend. There is good reason for this conformity: most missions have lifetimes within this horizon and most decision makers will only be measured for and take responsibility for effects accomplished within the horizon. However, extrapolation of current trends and focus on current challenges leaves a gap in planning that has had serious negative consequences in the past. This gap includes planning for effects beyond the five year time horizon and planning for the unexpected (low probability events that could happen at any time or never). The goal of our idea generation method is to generate a substantial number of significant ideas that lie outside the business planning horizon. Point of View Analysis Capabilities Cost estimator Menu of capabilities Capability + Goal Cost estimate Significance estimator Idea, vision area, or goal Significance estimate 2.2. Partitioning the future by visibility rather than time In order to encourage brainstorming outside the business planning horizon, we suggest that participants measure the visibility of future ideas, vision areas, and states along a spectrum from the near future (ideas that we expect to be realized soon because we understand both the desirability or inevitability of their realization and one or more feasible alternative methods for their realization), to the intermediate Ideas classified by visibility Near future Increased use of solar and wind energy for small-scale electrical power generation Intermediate future Efficient biosystems for converting organic waste to electrical power Deep future Access to electrical power anywhere on Earth Proceedings of the 40th Hawaii International Conference on System Sciences - 2007 3 Proceedings of the 40th Annual Hawaii International Conference on System Sciences (HICSS'07) 0-7695-2755-8/07 $20.00 © 2007
  4. 4. future (desirable ideas outside the near future but with alternative realization methods that are incomplete), to the deep future (ideas with no known alternative realization that are possible but may never be realized). By visibility we mean the above described relationship between an idea or vision area and current knowledge. There is only a tenuous correlation between time and this visibility dimension; but there seems to be a stronger psychological correlation. Working Hypothesis 2: Asking subject matter experts for ideas “one hundred or two hundred years out” will increase the brainstorming yield of intermediate and deep future ideas. 2.3. Some ideas are too good to be useful When we work with brainstorming participants, we encourage all ideas, especially deep future ideas that have a “wild and crazy” quality. Our purpose in generating deep future ideas is not to focus undue attention on futures that may never materialize, but rather to move from the deep future back toward the present in a sequence of operations designed to bring us to near future ideas that we use to cover the unexpected and unpredictable with strategic contingency planning. But the operations we use do not work well if the idea exhibits any of the following characteristics: (1) omniscience, (2) omnipotence, or (3) omnipresence. In general, good science fiction ideas are desired, fantasy ideas are not. But we prefer to err by including fantasy at this stage as long as it does not contain any of the three “omnis” above. 2.4. Succinctness succeeds We seed brainstorming with very succinct examples (ten words or fewer). Our idea generation goal allows for plenty of ambiguity, we just need enough of the idea to allow imagination to supply visibility. Even if those who deal with the idea misunderstand the original intent, the results will likely be more useful ideas. In this sense typos and misspellings can yield more unexpected ideas. 3. Evaluation For quantitative (numeric) evaluations by groups, we could use a Delphi [6] approach; but this is often time consuming overkill. One approach used by some program committees to provide a quick first approximation evaluation of submissions involves a quantitative vote weighted by a self-evaluation quantitative vote. We ask each evaluator to make a quick educated guess of some measure of goodness on a 5 point scale and also to make a similar guess at how expert the evaluator is to evaluate the specific item (on a similar 5 point scale). If the scales are oriented properly, the normalized product of the votes makes a good estimator for the vote that would be produced by a slower consensus process. Each idea is evaluated for significance. We pose the question, “from the relevant point of view, how significant would the realization of this idea be?” At this stage, we expect wide variability in the answers, unless we are participating in a consensus generating process. Results are treated as very rough and not expected to be very robust. Each idea is evaluated for visibility (See section 2.2). Training evaluators to make visibility distinctions appears to be easy and the results are fairly robust. Each idea is characterized by free form tags generated by the evaluators [10]. We use a seed collection of tags but encourage the individual coining of new one or two word tags. 4. Vision Areas We cluster ideas into vision areas. The goal is to bring compatible, related ideas together to be treated as one object of analysis. The cluster must be represented by one succinct theme (again, preferably ten words or fewer). Methods for clustering include use of the significance and visibility measures generated during evaluation; but the key clustering technique is based on the use of the free form tags described above (cf. [11]). Average evaluations of the constituent ideas may be used as an initial evaluation of the vision area, according to criteria of significance and visibility. The ideas making up a vision area are also clustered around our estimate of their visibility. 4.1. Exploring vision areas by scenario We explore the implications of a vision area using several standard futurist techniques including the futures wheel [12]. Implications are often presented using the technique of narrative scenario. We produce fictional descriptions written in the form of magazine articles depicting lives of humans who play roles that exist because of the imagined future state. The humans reflect on the impact on enterprises in which they have a part. As part of the scenario process, we examine developments in domains ranging from politics through economics to technology that might contribute to the realization of the vision area. The analysis of alternatives is further decomposed into individual applications and individual technology Proceedings of the 40th Hawaii International Conference on System Sciences - 2007 4 Proceedings of the 40th Annual Hawaii International Conference on System Sciences (HICSS'07) 0-7695-2755-8/07 $20.00 © 2007
  5. 5. areas. The scenarist conducts literature research on any related current applications and technology areas, ascertaining measures of progress and current goals where they are available. The scenarist also delivers these initial scenario studies to a technology landscape specialist for further systematic analysis of the current relevant state. While the scenarios themselves constitute a valuable exploration of the future, the purpose of this scenario research is the generation of candidate signposts. Consider the example from section 2 of an intermediate future idea: Efficient biosystems for converting organic waste to electrical power. We combined this idea with many others to form a vision area with the theme, local electrical power generation. The expanded idea of this theme is that electrical power is generated locally without the use of long distance transmission lines or fuel pipelines. Note that neither the theme nor the idea is a candidate signpost. Neither has the precision to be a recognizable potential future event. How would one recognize whether the event had happened? Biosystems exist today for converting organic waste to hydrogen or methane gas. And we know how to generate electricity by burning such gasses. What event would be both recognizable and a signal that significant progress had been made in this area? We look for measures of such progress in the scientific literature; but we also look to economic activity to indicate indirectly the presence of such progress. A measure of efficiency that is likely to be significant from most points of view is commercial applicability. So we could consider as a candidate signpost the first commercial availability of biosystems for converting organic waste to a flammable gas. The potential future event would be public advertising of such a biosystem. However, commercial availability might not signal practicality: the systems might be provided for scientific experimentation rather than for commercial use. One way to insure more significance is to choose as a signpost a crossing of trend measures. For example, consider the following. Candidate Signpost 1: first commercial availability of a biosystem for converting organic waste to methane at a steady state cost below that of natural gas at the well-head. The process of iterating between scenario exploration and technology landscape exploration generates new ideas that tend to cluster into vision areas in precursor future states, closer to the present. 4.2. Backcasting and precursor vision areas We analyze how the vision area might be realized by identifying interesting precursor vision areas for further analysis. This technique is called backcasting [13]. The analysis of precursors proceeds recursively, with iterative exploration of scenarios and technology landscapes at each precursor. Example Power Deep future Ubiquitous electrical power Intermediate future Locally generated electrical power Near future Environmentally sound fuel cells Consider, as another example, the deep future vision area of the (weather-like) prediction of coordinated human action. From a cluster of deep future ideas about predicting actions ranging from the behavior of equity markets to terrorist attacks, we move to a vision of widely deployed urban sensors and the prediction of riots. As we move into the near future, we consider the use of wireless networks of smart sensors that only transmit when they recognize patterns of interest, but learn new patterns of interest from feedback. Example Prediction Deep future Prediction of coordinated human action Intermediate future Prediction of urban riots Near future Wireless networks of smart sensors We identified widespread networks of sensors as a potential contributor of the data needed to predict coordinated human action. Backcasting from the deep future vision area, we arrived at an intermediate future vision area: prediction of riots from wireless sensor data. Ideation Out of box brainstorming Ideas Visibility, significance, and tag based clusteringIdeas Vision areas and goals Scenario and backcasting exploration Vision areas and goals Scenario reports and technology areas Candidate signposts Figure 3: Foresight operators used in our novel signpost approach. Proceedings of the 40th Hawaii International Conference on System Sciences - 2007 5 Proceedings of the 40th Annual Hawaii International Conference on System Sciences (HICSS'07) 0-7695-2755-8/07 $20.00 © 2007
  6. 6. Working Hypothesis 3: Backcasting into the near future from the intermediate and deep future produces significant ideas that are outside the set of expected ideas. We summarize the material covered so far in sections 2 through 4 in figure 3. 4.3. Exploring technology landscapes We consult subject matter experts to identify the most promising alternative combinations of technology that could be used to realize the vision area. We use state of the art text analytics tools to study present state invention and patent trends in these technologies. Examination of the current patent trends often gives clues to the potential realization of even deep future vision areas. A technology landscape is a report, typically accompanied by a graphic visualization, elaborating the trends ascertainable from decomposition of the investigated technology area into a finer grained taxonomy. In addition to patent activity trends, the technology landscape also represents our analysis of the classes of the decomposition with respect to other dimensions. Our educated guesses are reviewed and approved by subject matter experts. Figure 4: Example technology landscape for sensors In the vision area of prediction via sensors, we have the following signpost candidate. Candidate Signpost 2: Public report of a sensor network and data analysis system used in an experimental deployment to predict the incidence, severity, and course of riots in an urban area prone to unrest. We include visibility estimation in technology analysis because technology landscape generation informs, corrects, and refines our evaluations of visibility. Note that we need visibility estimation at almost every step of the ideation process. Likewise, we use scenario exploration to suggest where to produce technology landscapes, and we use technology landscapes to suggest new scenarios. Technology Analysis Visibility estimator Idea, vision area, or signpost Near future Intermediate future Deep future Trend analyzer Technology landscape Technology area Candidate signpost Figure 5: Operators resulting from the analysis of relevant technology 5. Covering the relevant potential futures with signposts The work of obtaining and reviewing a technology landscape provides a more precise focus for further scenario exploration. In the process of this analysis, the scenarist identifies candidate signposts and analyzes their implications, using the same methods used for the implications of vision areas, and providing material that will be used in signpost evaluation. Voltage & Current Sensor Technology Landscape Key: Time to production 0 < 2 2 to 5 5 to 10 Grow Shrink Key: Change over last 12 months *Qualitative Estimates Innovation Innovation Results Sustainable Low Mid High Significance Maturity Radar Vibration, Pressure, Weight Optical Image Fluid & Flow Magnetic Thermal Gas & Fuel Acoustic & Sonar Speed & Motion Position & Location Recall the vision area of wireless networks of smart sensors. This vision area would seem to be independent of the vision area of local electrical power generation. Purposely examining the overlap between these apparently unrelated vision areas above, we discovered a particular application area involving wireless sensors that harvest from their environment the electrical power required to transmit their reports. There are already examples of patents in this area. We have found that such areas of overlap are a good source for candidate signposts for similar reasons to those associated with scenario planning techniques. As a result we estimate that the number of candidate signposts identified by our methods will be proportional to the square of the number of top level (i.e. before backcasting) vision areas chosen for investigation. Note that candidate signposts can range over any domain and cross multiple domains, from scientific breakthroughs to economic, political, or social changes. The form will usually involve publication of an announcement and will be precise enough to allow Proceedings of the 40th Hawaii International Conference on System Sciences - 2007 6 Proceedings of the 40th Annual Hawaii International Conference on System Sciences (HICSS'07) 0-7695-2755-8/07 $20.00 © 2007
  7. 7. easy decision about whether such an announcement corresponds to the potential future event specified. 5.1 Generating signposts that signal business model shifts. Any major revenue stream for our point of view represents a place to look for signposts that signal threats. Working Hypothesis 4: Threats to revenue streams are sources of significant signposts. In this section we discuss how our techniques might have been applied to assist a major producer and distributor of photographic film, Eastman Kodak Company. Imagine that our work for Kodak™ had begun in 1990. At this time, it is reasonable to suppose that our brainstorming would have resulted in vision areas including digital photography and e-commerce. We can also assume that the idea of consumer digital (non-film based) photography would have been viewed as a potential threat to film revenue. Digital video photography had existed for some time, with at least one analyst attributing the first digital still camera to Kodak™ in 1976 [14]. Nobody knew which specific technologies would provide the components for consumer digital photography (battery, memory, image sensors, viewer, and connectivity with personal computers). But consumer digital photography was clearly a near future idea. [29] Applying our focus on threats to established revenue streams, we would have looked for indications that consumer digital photography would supplant consumer film-based photography. This process would have generated three signposts of high significance to Kodak. Retrospective Signpost 1: Worldwide more than 100,000 in annual sales of digital cameras (occurred in 1995) [32] Recommended Action: Prepare plan for restructuring company to shift from film to digital photography Estimated Cost: $5M Goal: Strategic reorganization and culture transformation plan (cf. [15]). Retrospective Signpost 2: Commercial consumer digital camera reported better than 35 mm film quality for 3"x5" color print (hasn't occurred yet) Recommended Action: Research new business models anticipating cost reduction in digital cameras Estimated Cost: $5M Goal: new initiatives in digital and related areas of photography Retrospective Signpost 3: Kodak consumer photographic film consumption declines (year over year) while number of digital cameras shipped increases (occurred in 2001) Recommended Action: Restructure company to shift from film to digital Estimated Cost: $5B Goal: Revenue no longer dependent on consumer photographic film consumption within 2 years As late as 2000, Kodak spokesman, Paul Allen, told Reuters, “The real question is what is the rate at which digital may begin to erode sales of convention film? We don't see that happening for some time to come ….” [25]. In 2004, three years after the occurrence of Retrospective Signpost 3, Kodak announce a four year plan to reorganize the company, changing it from a film company to a photography company. There is much recent work [e.g. 45, 46, 47] that provides variants on our working hypotheses and suggest places to look for signposts. But, applying the best of this work would not have told Kodak, when to make the shift that was finally required of it. In 1990 we could not predict which year would be the turning point for digital photography; but we could suggest the immediate need to develop a plan for a strategic reorganization that could be executed contingent on a signpost. Our signpost occurred in 2001 [31]; but market analysts were criticizing Kodak’s lack of a cohesive plan for the future in 1997: “More troubling, though, Kodak gave no hint of a real strategy to compete …. The company has invested heavily in digital photography, but … assuming that the clout of that [Kodak™] brand will completely unseat any rival is irrational” [16]. "Kodak means film photography, not digital photography. The irony is that Kodak invented the first digital camera…. Yet the Kodak name locks the company into the past” [14]. Traditional Film-based Revenue vs. Digital Camera Shipments 0 1000 2000 3000 4000 5000 6000 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 year EK worldwide film revenue (million $) Worldwide digital camera (10,000) unit shipments Figure 6: EK consumer film revenue versus digital camera volume The proxy for film consumption in the figure above is Kodak™ consumer film revenue data. Kodak’s SEC filing in 2002 indicates a decline in volume in 2001 versus 2000 [30 through 36]. Proceedings of the 40th Hawaii International Conference on System Sciences - 2007 7 Proceedings of the 40th Annual Hawaii International Conference on System Sciences (HICSS'07) 0-7695-2755-8/07 $20.00 © 2007
  8. 8. Eastman Kodak (EK), S&P 500 Index (^GSPC) - Monthly Stock Price monthly stock price, end of day close, adjusted for dividends, splits - 1994-2003 0 50 100 150 200 250 300 350 1/3/1994 7/3/1994 1/3/1995 7/3/1995 1/3/1996 7/3/1996 1/3/1997 7/3/1997 1/3/1998 7/3/1998 1/3/1999 7/3/1999 1/3/2000 7/3/2000 1/3/2001 7/3/2001 1/3/2002 7/3/2002 1/3/2003 7/3/2003 Indexedat100inJan-94 Kodak S&P 500 Figure 7: EK versus S&P500 This chart compares EK with the S&P500. It seems likely that, if Kodak had presented a contingent plan for restructuring to market analysts in 1995, they would not have beaten the stock down so badly in the succeeding years [37, 38]. The techniques of [45, 46, 47] could tell Kodak how to shift but not when. 5.2 Generating signposts as endpoints of technology bridges. Working Hypothesis 5: A significant published breakthrough providing a new application for a technology will raise the probability of realizing other applications of the technology. [cf. 40] This means, that if we would like to use a technology for a particular application but there is very little work going in that direction, we should look to other more active research in the technology for signposts signaling an improved likelihood for our desired application. The breakthrough must be public and the technology must be narrowly enough defined so that some of the research investment attracted by a breakthrough will “spill over” into research that could result in realization of the desired application. One retrospective example is the use of excimer laser technology [17] as a bridge between semiconductor applications and medical surgery applications. Because of its short wavelength, an excimer laser can be used to selectively remove submicron surface materials. Results in semiconductor manufacturing triggered tremendous interest and investment in the application of excimer lasers in medical surgery, which led to today's LASIK for corneal surgery. Note the pattern of patent activity around the two application areas. US Patent Data 0 20 40 60 80 100 120 1976 1979 1982 1985 1988 1991 1994 1997 Time (Year) NumberofPatents Semiconductor App Medical App Figure 8: Excimer Laser Patents Retrospective Signpost 4: Peer reviewed publication describing successful excimer laser etching of a mask for use in semiconductor manufacturing [17] Retrospective Signpost 5: Peer reviewed publication describing a successful excimer laser surgery. [20] A future example along the same lines is metal- organic frameworks (MOFs) as the technology bridge between semiconductor applications and gas storage applications [28]. Neither application has yet been realized; but a breakthrough in one area would make the other more likely. Candidate Signpost 3: A published report of commercial application of an MOF in semiconductor manufacture. Candidate Signpost 4: A published report of a commercial application of an MOF to store a flammable gas. Another well known future example of a technology bridge among applications is the carbon nanotube [23]. Carbon nanotubes have extraordinary strength as well as unique electrical, thermal, and optical properties, making them candidates for a wide variety of applications [24]. Candidate Signpost 5: A process for separating metallic from semiconducting carbon nanotubes is announced in a peer reviewed publication. A breakthrough in separation technology for carbon nanotubes may allow production of transistors from carbon nanotubes. Candidate Signpost 6: Announced commercial availability of transistors built from carbon nanotube Candidate Signpost 7: Peer reviewed publication describing use of carbon nanotubes in a composite material. 6. Systematic cost-benefit analysis and prioritization Proceedings of the 40th Hawaii International Conference on System Sciences - 2007 8 Proceedings of the 40th Annual Hawaii International Conference on System Sciences (HICSS'07) 0-7695-2755-8/07 $20.00 © 2007
  9. 9. Our final deliverable is a report combining our analysis of the future with a business case for each recommended action. Traditional cost-benefit analyses assess the combined effect of positive and negative cash flows related to the action over a planning horizon. Cash flows, treated as deterministic quantities, are used to compute a net present value. Decision tree techniques factor in the uncertainty associated with the cash flows. Options based modeling takes into account the possibility of deferring some investment decisions, pending the outcome of initial activities [22]. We partition investments into a few main categories: basic scientific research in a specific field, integration of different, existing research results to develop a technology, or commercialization of a known technology. For each class of investment we collect historical data, by broad scientific discipline, generating an order of magnitude estimate by proxy. We compute a priority index as the logarithm of the benefit to cost ratio. The priority index takes on integer values, providing an apples-to-apples comparison framework across the entire set of plans and contingency plans. 7. Conclusion. We have described a set of methods for analyzing the future, comprising modular operators that encapsulate techniques from the disciplines of business architecture, information mining, and future studies. The heart of our method is our concept of a signpost that ties scenario exploration to strategic cost- benefit analysis to provide value to a point of view. We generate and cluster ideas into multiple vision areas. The vision areas are clustered by similarity that often, but not always, corresponds to a set of narrow ranges in dimensions of uncertainty, as in scenario planning [4]. However, ideas are also partitioned (clustered) according to visibility (near, intermediate, or deep future) . We use a fast consensus estimation process in place of a slower Delphi [6] process for evaluation of ideas. We weigh significance heavily in prioritizing the final resulting set of vision areas. We then choose the top priority vision areas in the intermediate or deep future for exploration, which includes both scenario envisioning and backcasting to create new vision areas. We monitor and prune the vision areas for significance. In each vision area we attempt to produce at least one and preferably several signposts. We produce many candidates and deliver only the highest priority signposts, where priorities are based on cost-benefit analyses of recommended actions and goals. Figure 9: Putting it all together Analyzing the Future Point of view Technology Ideation Network of contingent strategic initiatives: •Signpost event •Recommended action •Goal •Cost-benefit analysis •Priority 8.0 Future Work We are studying the effects of types of signpost events on relevant ecosystems in order to offer quantitative evidence for the correctness of some of our working hypotheses in this area. We would also like to be able to assign probabilities to predictions based on these effects. To that end, we have begun work on modeling such effects with multi-agent simulations (MAS). A multi-agent system model is a Monte Carlo simulation model created with multiple, heterogeneous, autonomous, bounded rational, decision-making entities that have states and rules of behavior, interact, engage in strategic behavior, and adapt over time [26,27]. Not tied to fitting logistic curves to data in order to extrapolate predicted time to reach a predicted state, our approach will be purposely microeconomic [40, cf. 42, 43, 44]. We will attempt to match configurations of MAS models with expected progressions of ideas in future states, beginning with a given signpost and ending with an associated goal. The studies will involve both retrospective analysis in which the model matches observation, and prospective studies in which we use such a validated model to predict some ideas about the likely future states to follow a signpost. We have also begun work on tools and techniques to make our ideation methods more efficient and productive. The tools will use facet based analysis, employing techniques like tagging to capture relationships between ideas and multiple overlapping categories that are not organized into a single taxonomy. Proceedings of the 40th Hawaii International Conference on System Sciences - 2007 9 Proceedings of the 40th Annual Hawaii International Conference on System Sciences (HICSS'07) 0-7695-2755-8/07 $20.00 © 2007
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