Future agenda Initial Perspectives - complete set
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The world population is aging as life expectancies increase due to improvements in health, sanitation and lifestyle. This is fundamentally changing society as workforces become more age diverse and families have fewer children across more generations. However, cultures and social norms have not adapted to support longer lives. There is a need to strategically rethink how to utilize added decades of life through changes like increasing retirement ages and developing new models of flexible or part-time work for older individuals. Tapping into older populations' knowledge and skills could benefit societies and economies while also providing individuals with meaningful engagement and improved well-being.
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Future agenda Initial Perspectives - complete set
- 1. 1 The world’s leading open foresight programmeInitial Perspectives
- 2. Copyright © 2015 Future Agenda www.futureagenda.org Edited by Tim Jones and Caroline Dewing All images sourced from iStockphoto All rights reserved. Permission should be sought from the copyright owner before any part of this publication is reproduced, stored in a retrieval system, or transmitted by any other means. Agreement will normally be given provided that the source is acknowledged. The copyright owner does not accept any responsibility whatsoever, in negligence or otherwise, for any loss or damage arising from the possession or use of this publication whether in terms of correctness, completeness or otherwise.The application, therefore, by the user of the contents of this publication or any part thereof, is solely at the user’s own risk.The copyright owner furthermore expressly states that any opinions given in this document are the opinions of the individual authors which are not necessarily supported by the views of their employers or the copyright owner. Future Agenda - Initial Perspectives by Future Agenda is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License. A CIP Catalogue record for this books is available from the British Library ISBN 978-0-9932554-1-0 Printed in the UK
- 3. 31 Contents Ageing Laura Carstensen 6 Cities Harry Rich 14 Company Paige Morrow 20 Connectivity Hossein Moiin 28 Data Stephan Shakespeare 36 Education Sugata Mitra 44 Energy Jeremy Bentham 48 Food Prof. Wayne Bryden 54 Government Cherly Chung 60 Health Dr. Devi Shetty 68 Learning Tim Gifford 74 Loyalty Christopher Evans 80 Payments Mastercard 88 Privacy Stephen Deadman 96 Resources Professor Suzanne Benn 108 Transport Glenn Lyons 114 Travel Richard Hammond 120 Water Daniel Lambert and Michael O’Neill 126 Wealth Prof. Julio J. Prado, PhD. 134 Work Andrew Curry 140 About Future Agenda 148 Introduction 5 Aging Cities Commerce Connectivity Data Education Energy Food Government Loyalty Privacy Resources Transport Travel Water Wealth Work Health Learning Aging Cities Commerce Connectivity Data Education Energy Food Government Loyalty Privacy Resources Transport Travel Water Wealth Work Health Learning Aging Cities Commerce Connectivity Data Education Energy Food Government Loyalty Privacy Resources Transport Travel Water Wealth Work Health Learning Aging Cities Commerce Connectivity Data Education Energy Food Government Loyalty Privacy Resources Transport Travel Water Wealth Work Health Learning Aging Cities Commerce Connectivity Data Education Energy Food Government Loyalty Privacy Resources Transport Travel Water Wealth Work Health Learning Aging Cities Commerce Connectivity Data Education Energy Food Government Loyalty Privacy Resources Transport Travel Water Wealth Work Health Learning Aging Cities Commerce Connectivity Data Education Energy Food Government Loyalty Privacy Resources Transport Travel Water Wealth Work Health Learning Aging Cities Commerce Connectivity Data Education Energy Food Government Loyalty Privacy Resources Transport Travel Water Wealth Work Health Learning Energy Food Government Loyalty Privacy Resources Transport Travel Water Wealth Work Health Learning Energy Food Government Loyalty Privacy Resources Transport Travel Water Wealth Work Health Learning Aging Cities Commerce Connectivity Data Education Energy Food Government Loyalty Privacy Resources Transport Travel Water Wealth Work Health Learning Aging Cities Commerce Connectivity Data Education Energy Food Government Loyalty Privacy Resources Transport Travel Water Wealth Work Health Learning Aging Cities Commerce Connectivity Data Education Energy Food Government Loyalty Privacy Resources Transport Travel Water Wealth Work Health Learning Energy Food Government Loyalty Privacy Resources Transport Travel Water Wealth Work Health Learning Energy Food Government Loyalty Privacy Resources Transport Travel Water Wealth Work Health Learning Energy Food Government Loyalty Privacy Resources Transport Travel Water Wealth Work Health Learning Energy Food Government Loyalty Privacy Resources Transport Travel Water Wealth Work Health Learning Energy Food Government Loyalty Privacy Resources Transport Travel Water Wealth Work Health Learning Aging Cities Commerce Connectivity Data Education Energy Food Government Loyalty Privacy Resources Transport Travel Water Wealth Work Health Learning Aging Cities Commerce Connectivity Data Education Energy Food Government Loyalty Privacy Resources Transport Travel Water Wealth Work Health Learning
- 5. 5 futureagenda.org 1 We live in a world that is facing extraordinary challenges. Population growth, climate change, resource constraints and global epidemics are seldom far from the news headlines. Indeed such are the challenges it seems clear that the major issues facing our planet are of a magnitude that no one institution or organization can address on its own. They require the pooling and sharing of knowledge across disciplines and across continents. Future Agenda was created to give all organisations, large or small, the opportunity to access insights that will help them decide on future strategy. Its aim is to identify ways in which systems will function, consumers will behave and governments will regulate over the next decade. This booklet is the beginning of the 2015 discussions offering a series of twenty provocations, written by global experts from industry and academia. These identify the key concerns for the next ten years. Examples include a focus on the future of food, health, data and travel. Each provocation will be debated and challenged around the world over the next six months so that a richer picture of the issue will emerge which will help shape our understanding of the future. The opinions expressed in this document are not ours but those of independent experts whose views we respect even if we don’t always agree with them. I thank them for their wholehearted support. They have important things to say that should be of interest to anyone who wants to build a better, more sustainable future for us all. FutureAgenda2.0 is the worlds largest global open foresight programme and is therefore all about engaging with others to create a better understanding of how to address key issues. We encourage you to get involved and welcome your opinion either via online debate or directly through workshop attendance and interviews. The ambition is to use the resulting insights to drive positive change so the results will be published both in print and online and will be available for use by any organisation or individual under a creative commons license. Tim Jones Programme Director Introduction
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- 7. 7 futureagenda.org The Future of Ageing Aging Cities Commerce Connectivity Data Education Energy Food Government Loyalty Privacy Resources Transport Travel Water Wealth Work Health Learning 1 Laura Carstensen - Fairleigh S. Dickinson Jr. Professor in Public Policy, Professor of Psychology, Director, Stanford Center on Longevity. The Future of Ageing Advances in science and technology coupled with large-scale changes in health practices involving improved sanitation, water purification, and a host of lifestyle changes have led to dramatic increases in longevity in developed nations around the world. On a global scale, life expectancies in developed regions are continuing to rise in the 21st century and, although most people assume that there are biological limits on life span, so far there is little evidence that we are approaching them.1 Because fertility declined across the same years that life expectancies increased, the distribution of age in the global population changed irrevocably. The once-universal pyramid shapes of age distributions of populations in the western world, with many young ones at the bottom narrowing to tiny peaks at the tops, are being rectangularized, reflecting the fact that most people, not just an exceptional few, are living into old age. To the extent that the importance of aging societies is recognized at all, anxiety is the typical response. Terms like “grey tsunami” imply that larger numbers of older citizens will become a drain on societies. Concern is warranted. The demographic changes underway are fundamentally altering virtually all aspects of life as we know it. Workforces are becoming older and more age diversified than ever in history. Families are having fewer children, yet four and five generations are alive at the same time. Education has come to predict well-being and even length of life, yet is unevenly distributed, creating heightened disparities across socioeconomic strata accentuating old age outcomes between rich and poor. Lifespan Limits On a global scale, life expectancies in developed regions are continuing to rise in the 21st century and, although most people assume that there are biological limits on life span, so far there is little evidence that we are approaching them. Age Diversified Workforces The demographic changes underway are fundamentally altering virtually all aspects of life as we know it. Workforces are becoming older and more age diversified than ever in history. The Global ChallengeAging Cities Commerce Connectivity Data Education Energy Food Government Loyalty Privacy Resources Transport Travel Water Wealth Work Health Learning Options and PossibilitesAging Cities Commerce Connectivity Data Education Energy Food Government Loyalty Privacy Resources Transport Travel Water Wealth Work Health Learning Culture Shift The culture that guides people through life today is a culture that evolved around shorter lives. The urgent challenge now is to create cultures that support people through ten and more decades of life. To date, however, the concern has been largely misplaced, with the emphasis on aging as opposed to an emphasis on the cultures that surrounds very long lives. By culture, we are referring to the crucible that holds science, technology, and large scale behavioral practices and social norms. We maintain that the more serious problems concern antiquated social norms and the lack of cultural supports for people 50 and older, such as medical treatments for common diseases of old age and technologies and services that allow people to age in place, and social norms that encourage life-long participation in communities, families and workplaces.The culture that guides people through life today is a culture that evolved around shorter lives.The urgent challenge
- 8. 8 now is to create cultures that support people through ten and more decades of life. Although predictions about the future are always perilous, we can comfortably predict that life will change and can change such that longer lives improve quality of life at all ages. Unfortunately to date we have been decidedly uncreative about ways to use added years of life.These years have been tacitly tacked on to the end of life, with old age the only stage in life that has gotten longer. Rather than move forward by happenstance, we need strategic thinking about how to best use added decades of life. Helping individuals and nations visualize, plan and prepare is essential in order to ensure that longer lives are high quality. Changing the nature, timing and duration of work will be key. Individuals and societies must effectively finance very long lives and so far we are doing a poor job. Life expectancy at age 65 for the world’s population increased by roughly fifty percent from the 1950s to the present time, while the average age of retirement has remained relatively constant.2 Between now and 2030, the number of people in developed countries over the “conventional” retirement age of 65 will increase by more than thirty percent.At the same time, the size of the conventional working-age population in developed countries is projected to decline by four percent.To the extent that nothing changes, the ratio of the working-age population to retirees will steadily decrease in the foreseeable future. Of course, these projections are based on the assumption that people continue to retire at relatively young ages. One obvious, although surprisingly ignored, way to address the challenges posed by the declining number and share of working-age population is to expand the workforce by increasing the workforce participation of older workers and, in some countries, women. Increasingly, research findings suggest that this is feasible.A substantial majority of people 60 to 70 years of age report that they are physically able to work.A 2014 paper published in the Journal of Gerontology found that 85% of Americans aged 65-69 report no health-based limitations on paid work or housework.3 Similar trends are evident in Europe.4 To be sure, the numbers of disabled individuals has, and will continue to, increase in aging societies and it is extremely important to have policies that support people who cannot work. We maintain that the generosity of disability insurance should increase, yet we must recognize that chronological age is a poor predictor of the ability to work. Even at very advanced ages, substantial numbers of people are sufficiently healthy to contribute to workplaces. Societies that find ways to tap older peoples’ contributions will benefit greatly. Although the idea of longer working lives often meets resistance, evidence for the benefits of work to individuals is growing. Arguably, the most obvious reason to work longer is the financial benefit. For many, retirement at age 65 is economically infeasible. In the words of Stanford economist John Shoven,“the reality is that few workers can fund a 30 year retirement with a 40 year career”.5 Neither can societies. In recent years, it is becoming clear that remaining active and engaged in work is also associated with physical, socioemotional, and cognitive benefits. Studies of healthy aging suggest that older adults who are engaged have lower mortality rates, are less likely to experience various physical and mental illnesses, and are more likely to have a strong sense of identity and well-being.6 Working longer also has protective effects against cognitive decline,7 ostensibly by providing a mentally engaging environment where workers can “use it” so they don’t “lose it.” Research suggests that both paid and unpaid work are associated with enhanced well-being, delayed disability, decreased mortality risk, and onset of fewer diseases and associated functional impairments.8,9,10,11 New models of working longer can relieve some of the pressure to save large sums of money for extended periods of leisure. Importantly, working longer can mean working differently. Many workers would be happy to exchange decades-long retirements in old age for four day work weeks, regular time off for sabbaticals, retraining, and part-time work when children are young as well as at advanced ages as people fade into retirement. Looking Ahead Rather than move forward by happenstance, we need strategic thinking about how to best use added decades of life. Helping individuals and nations visualize, plan and prepare is essential in order to ensure that longer lives are high quality. Societal Benefit 85% of Americans aged 65- 69 report no health-based limitations on paid work or housework. Similar trends are evident in Europe… Societies that find ways to tap older peoples’ contributions will benefit greatly. Infeasible Retirement For many, retirement at age 65 is economically infeasible. In the words of Stanford economist John Shoven,“the reality is that few workers can fund a 30 year retirement with a 40 year career”. Neither can societies. The Future of Ageing
- 9. 9 Proposed Way ForwardAging Cities Commerce Connectivity Data Education Energy Food Government Loyalty Privacy Resources Transport Travel Water Wealth Work Health Learning From a societal perspective, there is a pressing need to make use of the human capital represented in older people. General knowledge and expertise increase with age, as do emotional stability and the motivation to invest in important activities. If appropriately utilized, older populations can benefit national and global economies. Yet the clarion call to workers today is about saving for increasingly long retirements, instead of actively planning to work longer. In the US, the responsibility for saving has shifted to the individual, reflecting the move from defined benefit plans to defined contribution plans. Unfortunately, the change has resulted in considerable under- saving for retirements. In a 2014 Retirement Confidence Survey, only 64% of all workers age 25 and older reported that they and their spouse had saved at all for retirement, a decrease from 75% in 2009.12 Overall, 60% of workers report that they have less than $25,000 in total savings and investments, with over one third reporting less than $1,000 in total savings.13 If appropriate steps are not taken, there could be catastrophic economic implications to both individuals and societies, as low retirement savings could lead to major strains on economies. For those who have inadequate retirement savings, the most obvious solution is to work longer. This approach may hold benefits that extend beyond income to include better physical health and cognitive functioning. One major potential barrier, however, is that employers remain ambivalent about older workers. Currently, most employers’ view older workers as expensive and sometimes less productive than younger workers. Research findings increasingly suggest that the latter reflects stereotypes more than evidence. The productivity of workers tends to increase with age. This is especially true for knowledge workers, yet blue collar workers also can retain (and perhaps increase) productivity.14 One study that measured the performance of more than 400 McDonald’s restaurants across the UK found that restaurants that employed mixed-age workforces, including workers age 60 and above, delivered an average increase of twenty percent in customer satisfaction levels compared to less age diverse workforces.15 Moreover, there is a net benefit of intergenerational teams on workplace productivity, including a broader range of skills and experience across the workforce, increased mentorship opportunities and skills transfer, a reduction in turnover, and increased staff morale.16,17 Companies that adapt to older workers’ needs using cost-efficient measures such as flexible work arrangements, workplace modifications, and on-the-job training can benefit from age diversity in the workforce.18 BMW’s older worker production line at Dingolfing is an example of how thoughtful design of blue-collar workplaces can support high levels of productivity in older workers. The company collaborated with its older production workers to tailor one of its most labor intensive manufacturing lines to an average worker age of 47. The resultant line reached its production goals with defect rate and worker absenteeism meeting or exceeding the levels achieved by “younger” lines.19 The cost of older workers is a real issue for employers. By leveraging older workers as source of human capital, employers can better manage their talent, facilitate knowledge transfer to younger workers, and help older workers slowly phase into retirement. Offering bridge jobs or flexible work arrangements such as flex hours and part-time work will allow employers to retain the expertise of older workers while reducing costs.20,21 The Future of Ageing Working Longer For those who have inadequate retirement savings, the most obvious solution is to work longer... One major potential barrier, however, is that employers remain ambivalent about older workers. Cost of Older Workers The cost of older workers is a real issue for employers. By leveraging older workers as source of human capital, employers can better manage their talent, facilitate knowledge transfer to younger workers, and help older workers slowly phase into retirement. Offering bridge jobs or flexible work arrangements such as flex hours and part-time work will allow employers to retain the expertise of older workers while reducing costs
- 10. 10 Dire predictions that a “Grey Tsunami” will overwhelm economies with unproductive societies harken back to Thomas Malthus’ 1798 “Essay on the Principle of Population”. There, Malthus predicted that growing populations would outrun the food supply, leading to poverty and starvation. The prediction did not foresee the development of agricultural technologies that greatly increased food production. In the case of older populations, predictions about economic disaster change to discussions of economic growth if people remain productive into advanced ages. Rather than a problem, we may be experiencing one of the greatest opportunities ever in history to dramatically improve quality of life at all ages. The Bigger Opportunity In the case of older populations, predictions about economic disaster change to discussions of economic growth if people remain productive into advanced ages. Rather than a problem, we may be experiencing one of the greatest opportunities ever in history to dramatically improve quality of life at all ages. Impacts and ImplicationsAging Cities Commerce Connectivity Data Education Energy Food Government Loyalty Privacy Resources Transport Travel Water Wealth Work Health Learning 1 Oeppen, J. and J. W.Vaupel: Broken limits to life expectancy. Science 296, 1029-1031 (2002). 2 “Population Facts”, United Nations Department of Economic and Social Affairs, Population Division, December, 20-13 3 Lowsky, Olshansky, Bhattacharya, Goldman,“Heterogeneity in Healthy Aging”, J Gerontol A Biol Sci Med Sci first published online November 17, 2013 doi:10.1093/gerona/glt162 4 A. Börsch-Supan, Myths, Scientific Evidence and Economic Policy in an Aging World, J. Econ.Ageing, 1–2 (2013), pp. 3–15 5 Ford, John Patrick. 2014.“How to support a 30-year retirement.” San Diego Source. http://www.sddt.com/Commentary/article. cfm?SourceCode=20141106tza&Commentary_ID=12&_ t=How+to+support+a+30year+retirement#.VL6ykS6AyjI 6 Rowe, John W. and Robert L. Kahn. 1998. Successful Aging. New York: Pantheon; Cohen, Sheldon. 2004.“Social Relationship and Health.”American Psychologist 59:676-684. 7 Rohwedder, Susann and Robert J.Willis. 2010.“Mental Retirement.” Journal of Economic Perspectives. 24:119-138 8 Rohwedder, Susann, and Robert J.Willis. 2010.“Mental Retirement.” Journal of Economic Perspectives, 24(1): 119-38. 9 Carr DC, Komp K, editors.“Gerontology in the era of the third age: implications and next steps.” New York: Springer Publishers; 2011: 207-224 10 Morrow-Howell N, Hinterlong J, Rozario PA,Tang F.“Effects of volunteering on the well-being of older adults.” J Gerontol B Psychol Sci Soc Sci. 2003; 58B:S137–S145. Doi: 10.1093/geronb/58.3.S137 11 Matz-Costa C, Besen E, James JB, Pitt-Catsouphes M. “Differential impact of multiple levels of productive activity engagement on psychological well-being in middle and later life.”The Gerontologist. 2012. Doi: 10.1093/geront/gns148 12 Employee Benefit Research Institute. 2014.“2014 Retirement Confidence Survey.” http://www.ebri.org/pdf/ surveys/rcs/2014/RCS14.FS-6.Prep-Ret.Final.pdf 13 Ibid. 14 Burtless, G.(2013).The Impact of Population Aging and Delayed Retirement on Work-force Productivity.Tech. rep., Center for Retirement Research at Boston College. 15 Department for Work and Pensions (UK). 2011.“Employing Older Worker Case Studies.” https://www.gov.uk/government/ uploads/system/uploads/attachment_data/file/142752/ employing-older-workers-case-studies.pdf 16 Ilmakunnas et al.“Diversity at the workplace: Whom does it benefit?” Helsinki School of Economics. http://www. eale.nl/conference2009/Programme/PapersC/add102508_ wKXraqYSnk.pdf 17 Department for Work and Pensions (UK). 2013.“Employing an Older Workforce,An Employer’s Guide to Today’s Multi- generational Workforce. https://www.gov.uk/government/ uploads/system/uploads/attachment_data/file/142751/ emplying-older-workers.pdf 18 Brooks. 2014.“Productivity and Age.”Age UK. http://www.50plusworks.com/downloads/Age%20and%20 productivity%20briefing%20(March%202014).pdf 19 Loch, C.H, Sting, F.J, Bauer, N, & Mauermann, H. (2010). How BMW Is Defusing the Demographic Time Bomb. Harvard Business Review, 88(3), 99–102. Retrieved from http://hdl. handle.net/1765/20802 20 CIPD. 2012.“Managing a Healthy Ageing Workforce,A National Business Imperative.” http://www.cipd.co.uk/binaries/ managing-a-healthy-ageing-workforce-a-national-business- imperative_2012.pdf 21 Backes-Glenner & Veen. 2009.“The Impact of Aging and Age Diversity on Company Performance.” Institute for Strategy and Business Economics, University of Zurich. http://www.zora.uzh. ch/48541/1/Backes Gellner_The_impact_of_aging_and_ age_diversity_on_company_performance-V.pdf The Future of Ageing
- 11. 11 Fairleigh S. Dickinson Jr. Professor in Public Policy, Professor of Psychology, Director, Stanford Center on Longevity. Lead expert on the Future of Ageing Laura L. Carstensen is Professor of Psychology at Stanford University where she is the Fairleigh S. Dickinson Jr. Professor in Public Policy and founding director of the Stanford Center on Longevity. She is best known for socioemotional selectivity theory, a life-span theory of motivation. For more than twenty years her research has been supported by the National Institute on Aging and she was honored with a MERIT award in 2005. Her most current empirical research focuses on ways in which motivational changes influence cognitive processing. Dr. Carstensen is a fellow in the Association for Psychological Science, the American Psychological Association and the Gerontological Society of America. She has chaired two studies for the National Academy of Sciences, resulting in noted reports The Aging Mind and When I’m 64. She is a member of the MacArthur Foundation’s Research Network on an Aging Society and serves on the National Advisory Council on Aging to NIA. Carstensen has won numerous awards, including the Kleemeier Award, The Kalish Award for Innovative Research and the Distinguished Mentorship Award from the Gerontological Society of America, as well as the Master Mentor Award from the American Psychological Association. She was selected as a Guggenheim Fellow in 2003. In 2011, she authored A Long Bright Future: Happiness, Health, and Financial Security in an Age of Increased Longevity. Carstensen received her B.S. from the University of Rochester and her Ph.D. in Clinical Psychology from West Virginia University. She holds an honorary doctorate from the Katholieke Universiteit Leuven, Belgium. Lead Expert – Prof. Laura Carstensen The Future of Ageing
- 12. 12 Senior Research Scholar and Director, Mobility Division Lead expert on the Future of Ageing. Ken Smith is a Senior Research Scholar and Director of the Mobility Division at the Stanford Center on Longevity. He works closely with faculty colleagues to determine where Stanford expertise can best be used to drive change. Ken brings a broad background of over 20 years of management and engineering experience to his role, including positions in the computing, aerospace, and solar energy industries. He developed a special expertise in working closely with university faculty to develop projects while at Intel, where he was deeply involved in the creation and management of their network of university research labs. He serves on the Advisory Council for AgeTech West. Ken holds a B.S. in Mechanical Engineering from the University of Illinois with an M.S. from the University of Washington. Lead Expert – Ken Smith Dominika Jaworski - Social Science Research Assistant Lead expert on the Future of Ageing. Dominika Jaworski is part of the Stanford Center on Longevity’s Financial Security Team, which connects an array of academics, practitioners, employers, and policy-makers in an interdisciplinary effort to help employees and individuals have more financial security. She supports the translational research and project management needs of the Center. Prior to joining the Center, Dominika was part of a team at the Wharton School that developed a financial wellness and investing organization for Philadelphians. Dominika received an MS in Social Policy from the University of Pennsylvania and a BA in Political Science from McGill University. Lead Expert – Dominika Jaworski The Future of Ageing
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- 15. 15 Aging Cities Commerce Connectivity Data Education Energy Food Government Loyalty Privacy Resources Transport Travel Water Wealth Work Health Learning In 1800, less than two percent of the global population lived in cities. Today one out of every two people is a city dweller and by 2050 it’s likely that over 70% of people will live in a city. The growth of mega-cities in Africa, Asia and South America, and the rebirth of post-industrial cities in Europe and North America is creating a new wave of urbanisation. Such mass urbanisation requires a rethink about how we plan and design cities. If we want the cities of the future to be sustainable and healthy places for people to live, the city of 2025 will need to look radically different. Cities are the engines of the global economy: just 600 urban centres generate 80% of global GDP.Today, the economic power of cities is primarily found in the developed world with 20 percent of global GDP contributed by North American cities alone. However, this is changing and the trend is likely to accelerate. By 2025 the centre of growth will move to the emerging economies with cities in China, India and Latin America forming the largest city economies supplanting cities in Europe and North America from the list. Cities consume 75% of the world’s natural resources, and produce more than 60% of greenhouse gas emissions. As a result, while the economic power of cities continues to grow, they remain vulnerable to the by- products of their success. Rapid urbanisation is placing strains on the economic, environmental and social fabrics of cities. Challenges caused by a growing population such as traffic congestion, pollution and social tensions as well as diseases such as cancer, obesity and depression represent a growing challenge to policy makers. Climate change poses a new and worrying challenge for cities.Already 50% of cities are dealing with its effects, and nearly all are at risk. Over 90% of all urban areas are coastal, putting most cities on earth at risk of flooding from rising sea levels and powerful storms. Our cities are also home to a sizeable and increasing older population. By 2050 there will be two billion people aged over 60 worldwide, a 250% increase on today’s figures. Many of these people will live in cities. In developed countries, 80% of older people are expected to live in cities by 2050, while cities in developing countries will house a quarter of the older population. Japan has faced this population change earlier than many countries and faces an enormous challenge with extra pressure on public services and appropriate housing. With more than 30% of the Japanese population aged over 60 – far higher than any other country - Japanese architects and planners have taken a major role in adapting urban environments to support healthy ageing futureagenda.org The Future of Cities The Global Challenge Aging Cities Commerce Connectivity Data Education Energy Food Government Loyalty Privacy Resources Transport Travel Water Wealth Work Health Learning Harry Rich - Chief Executive, Royal Institute of British Architects The Future of Cities Mass Urbanisation Today one out of every two people is a city dweller and by 2050 it’s likely that over 70% of people will live in a city.The growth of mega- cities in Africa,Asia and South America, and the rebirth of post-industrial cities in Europe and North America is creating a new wave of urbanisation. Such mass urbanisation requires a rethink about how we plan and design cities. Consuming Cities Cities consume 75% of the world’s natural resources, and produce more than 60% of greenhouse gas emissions. As a result, while the economic power of cities continues to grow, they remain vulnerable to the by-products of their success. Floating Cities? Climate change poses a new and worrying challenge for cities.Already 50% of cities are dealing with its effects, and nearly all are at risk. Over 90% of all urban areas are coastal, putting most cities on earth at risk of flooding from rising sea levels and powerful storms.
- 16. 16 of populations. This experience will soon be of global interest - by 2050, there will be another 64 countries where over 60s represent over 30% of the population. This combination of environmental pressures, changing economic patterns and demographic change means that the cities of the future will need to be designed to operate differently. These challenges also present with them huge opportunities. With the right focus and resources, cities can become more sustainable - urban planning, design, technological and governance models could all facilitate this. Creative Hubs Globally, cities have a long history of fostering social and practical innovation. New technology has enabled cities to evolve and reinvent themselves, fostering a better quality of life for their inhabitants in the face of huge social, environmental and technological upheaval. Living Cities As technology becomes more sophisticated, new approaches can combine to create place-based design that addresses the health and environmental impacts of cities, improving public transport, and by making denser development and more compact spaces more appealing to potential residents… Technology can help plan growth in a more integrated way – addressing societal, environmental and design issues across a range of locations. Digital Engagement Cities are also starting to use digital platforms to better plan for the future and encourage public engagement in the future of their cities… Using new technology and big data to support strategic planning of a city can help improve public engagement with the process. Adapting forAgeing Populations In developed countries,80% of older people are expected to live in cities by 2050,while cities in developing countries will house a quarter of the older population.In Japan, architects and planners have taken a major role in adapting urban environments to support healthy ageing of populations. Globally, cities have a long history of fostering social and practical innovation. New technology has enabled cities to evolve and reinvent themselves, fostering a better quality of life for their inhabitants in the face of huge social, environmental and technological upheaval. An understanding of an area’s demographic, problems, capabilities and environmental constraints could play a key role in informing the design and planning of cities to enable as many people as possible to achieve a fulfilling, social and active life. The planning of cities has already been transformed and can go much further with the right resources in place. Pen and paper has long been supplanted in most cities by a wide range of electronic data devices, geographic information systems, satellite mapping and visualisation software. These offer urban planners and designers a deeper insight into human behaviour as well as a greater understanding of the physical attributes of sites, to inform design and how it is delivered. As the technology becomes more sophisticated, these new approaches can combine to create place-based design approaches that, for example, address the health and environmental impacts of cities by integrating routes which will make it more likely city residents walk and cycle as well improving public transport, making denser development and more compact spaces more appealing to potential residents. New approaches are also enabling architects and planners to better understand how cities impact their environments. Increasing the use of natural features helps reduce flooding by improving sustainable drainage, and prevents cities from overheating. Incorporating green infrastructure also helps to support mental wellbeing, thereby, also yielding savings in future health budgets. Technology can help plan growth in a more integrated way – addressing societal, environmental and design issues across a range of locations. Interesting examples can be seen in cities such as Rio de Janeiro which is pioneering new digital transport and governance systems, through a citywide operation centre that connects all the city’s 30 agencies, from transport to the emergency services. On a day-to- day basis, It helps officials from across the city collaborate on running public services more smoothly and efficiently. In the event of crisis, such as a collapsing building, the operation centre helps roll out a coordinated response. Transport systems can be shut down, emergency services mobilised and gas supplies can be cut off, while citizens can be informed of alternative routes via Twitter. Cities are also starting to use digital platforms to better plan for the future and encourage public engagement in the future of their cities. In Asia a number of emerging cities are working with partners to develop models for sustainable growth that learn from the current generation of cities. Developing these models further will be crucial to generate popular support if the city of 2025 is to benefit from new approaches. In the UK RIBA has explored the idea of a digitised planning system, using Options and Possibilities Aging Cities Commerce Connectivity Data Education Energy Food Government Loyalty Privacy Resources Transport Travel Water Wealth Work Health Learning The Future of Cities
- 17. 17 new technology and big data to support strategic planning of a city and help improve public engagement with the process. Public consultation software, online forums and social media are now increasingly used to capture public opinion to test ideas, evolve proposals and disseminate information. New approaches can also inform the way we design for an ageing population. Urban design can help older people live healthier and more socially active lives by creating more inclusive spaces. Their wellbeing can be enhanced by designing affordable, accessible, well-connected housing that connects with local amenities more directly. Understanding this group’s needs will increasingly become more important at the city-scale to help local authorities develop innovative housing that can bring out the most of older people but also impact on younger age groups in a very positive way. Designing inclusively for all generations is the way to create successful integrated communities. The planners and architects of tomorrow will have a range of tools available to them that their predecessors had likely never dreamed of. Predicting which of thwese developments will be truly transformative is an impossible science and will vary significantly from city to city. But exploring the potential implications and applications of a range of technologies will highlight the range of possibilities ahead of us - leaving us both prepared and in a position to better control the fate of cities. In order to do so successfully, it will be crucial to retain a focus on utilising technology as a means to anticipate and manage change within urban areas to create and maintain good quality sustainable environments. We will need measures at the national level to help enable new technology to play a role across boundaries. Globally, a strong cultural shift will be required – moving away from the model of business as usual to an approach that enables the economy to thrive within resource constraints. 2015 will be crucial to the future development trajectory of cities in 2025. In September, the United Nations is expected to agree a new set of Sustainable Development Goals which will define a new set of international development objectives, one area expected to be included is an objective to make cities more sustainable. In December, the Paris summit will attempt to finalise a new climate change agreement. Although the impact of the two global agreements will be crucial in ensuring future prosperity for cities, national, regional and local governments should seek anyway to develop smart city solutions to ensure cities can be future- proofed effectively. There will be no one size fits all or quick solutions to the complex interests and failings accumulated over centuries of development. Local governments will therefore be crucial in creating ambitious and proactive area-specific planning policies and programmes that integrate climate change, public health and ageing population priorities into planning policies and development to achieve a long-term approach. New Models and Measures We will need measures at the national level to help enable new technology to play a role across boundaries. Globally, a strong cultural shift will be required – moving away from the model of business as usual to an approach that enables the economy to thrive within resource constraints. Proposed Way Forward Aging Cities Commerce Connectivity Data Education Energy Food Government Loyalty Privacy Resources Transport Travel Water Wealth Work Health Learning The Future of Cities
- 18. 18 People-Powered Planning In an era where the public voice is becoming easier to access and harder to suppress, it will become increasingly hard to generate support for new initiatives without taking public views into account… City leaders, planners and designers will need to incorporate continuous feedback loops that provide information about a range of social, economic and environmental changes into their thinking to maintain public and political support. Lasting Design [We need] a shift toward a circular economy that is restorative, both naturally and technically. Buildings have to be built to anticipate future change, rather than using design standards based on existing conditions.improve performance. If a strong global commitment to sustainable development and tackling climate change is set in 2015, and bold leadership and new technology is fostered by national and local governments; the city could start to look completely different by 2025. Cities can become cleaner, greener, healthier and more pleasant places to live, while still driving economic growth and fostering innovation. This comes with a significant caveat. Creating new places proactively and with future changes in mind will require a culture shift within those who plan, build and design our cities. In planning, more multi-disciplinary thinking will need to be applied to urban development strategies and design, to ensure a variety of changes can be accounted for and addressed. Greater participation from the public will be required to gain a deeper insight into their needs and preferences. In an era where the public voice is becoming easier to access and harder to suppress, it will become increasingly hard to generate support for new initiatives without taking public views into account. The era when planners, architects and builders could create new cities from a blank canvas without heed to the social or environmental impacts is over. City leaders, planners and designers will need to incorporate continuous feedback loops that provide information about a range of social, economic and environmental changes into their thinking to maintain public and political support. Modelling and testing various approaches will be important to arrive at the optimal design or policy intervention. This will not only require new technologies to aid this process, but also a willingness among local and central governments to adopt longer- term development approaches, and to increase public participation in design and planning processes. In construction, this will necessitate a shift to a circular economy that is restorative, both naturally (e.g. one that replenishes fresh drinking water) and technically (e.g. building materials can be reused without polluting the environment). Buildings would also have to be built to anticipate future change, rather than using design standards based on existing conditions. History has taught us that the cities which fail to react to the changing world face decline. With the tools at their disposal today, cities have never been better equipped to rise to the challenge. Their success in 2025 and beyond will be determined by how well they do so. Impacts and Implications Aging Cities Commerce Connectivity Data Education Energy Food Government Loyalty Privacy Resources Transport Travel Water Wealth Work Health Learning The Future of Cities
- 19. 19 Chief Executive, Royal Institute of British Architects Lead expert on the Future of Cities. Harry Rich has been Chief Executive of the Royal Institute of British Architects since 2009. He was previously Chief Executive of Enterprise UK, increasing entrepreneurship in the UK, and Deputy Chief Executive at the Design Council. Harry has lead and developed businesses in industrial distribution, retailing and publishing. He has been a keynote speaker at business conferences around the world and trained as a commercial lawyer. Harry is a governor of the University for the Creative Arts, a Companion of the Chartered Management Institute, a member of the government’s Creative Industries Council and a Fellow of the Royal Society of Arts. He has been a non-executive director of the Advertising Standards Authority, a member of the international advisory board of the US-based Design Management Institute, served on the Press Complaint Commission’s Charter Compliance Panel and was a Justice of the Peace. Lead Expert – Harry Rich The Future of Cities
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- 21. 21 The Global Challenge Aging Cities Commerce Connectivity Data Education Energy Food Government Loyalty Privacy Resources Transport Travel Water Wealth Work Health Learning Aging Cities Commerce Connectivity Data Education Energy Food Government Loyalty Privacy Resources Transport Travel Water Wealth Work Health Learning Big business has become disconnected from the broader society within which it operates. A narrow focus on short-term returns has prevented businesses from investing in innovation to foster long-term sustainable growth. The common understanding of the purpose of publicly listed companies, particularly in Anglo-American markets, is that they exist to maximize shareholder value. Publicly listed companies are under tremendous pressure from activist shareholders, takeover threats, and general market dynamics to generate short-term value by spinning off parts of the company, buying back shares, and laying off staff. External pressure is compounded by executive compensation schemes that are heavily weighted towards stock options. In theory, incentive compensation systems should reduce agency costs so that managers will act in the interests of shareholders. In practice, they create perverse incentives to extract value from the company at the expense of customers, employees, organizational health, the community in which the business operates, and ultimately society as a whole. A number of unintended consequences result, including: • The failure of companies to adequately consider and respond to societal challenges, such as environmental damage and climate change, due to the perceived cost; • Erosion of trust between society and the corporate sector, including the role of corporations in shaping public policy, which in turn leads to a loss of trust in democratic processes; and • Firm mismanagement through stock manipulation, insider trading and tax evasion, with a number of associated firm-level and macroeconomic risks including treating employees as disposable; undermining investment, research and development; hollowing out whole organisations; turning executives into caricatures of self-interest and greed powered by narrowly focused remuneration schemes; focusing talent in the corporate world on systematically extracting value rather than creating it; stock price manipulation; and fueling market failure and economic crash. Inequality has greatly increased in the last twenty years, in part due to the failure to translate corporate profits into increased salaries across the firm. Even as worker productivity has continued to rise, real worker wages have essentially flat-lined. At the same time, executive compensation has markedly increased due to the afore-mentioned stock option schemes. Rising inequality within companies has in turn contributed to macro- level inequality that threatens to concentrate economic and political power in the hands of futureagenda.org Disconnected Business Big business has become disconnected from the broader society within which it operates. A narrow focus on short-term returns has prevented businesses from investing in innovation to foster long-term sustainable growth. Paige Morrow - Head of Brussels Operations, Frank Bold The Future of the Company The Future of the Company
- 22. 22 Options and Possibilities Aging Cities Commerce Connectivity Data Education Energy Food Government Loyalty Privacy Resources Transport Travel Water Wealth Work Health Learning a privileged few. The biggest questions we face go to the very core of business: what is the purpose of the corporation, and specifically of the large listed company with dispersed shareholders? Will the current model of large publicly listed companies survive the next decade, and if not, what will it be replaced by? Another question is about the alternatives to public companies, such as B-corporations, co-operatives, companies controlled by foundations, privately held companies, partnerships and family-owned businesses. Many of these alternatives have shown themselves to be capable substitutes for corporate bodies, but will they pick up momentum and drive the way forward? Will they eventually eclipse publicly listed companies? Research by the CFA Institute shows that global equity listings have declined by 17% between 1998 and the end of 2012, from 56,119 to 46,674. US stock exchanges were hardest hit, losing nearly 50% of their listings from their high of 9,253 in 1997. Europe has also seen a significant decline of 23% of its listed companies, while Asian exchanges have seen the least change with less than 5% lost. Given the sharp decline in number and longevity of public companies, it is unsurprising that many ask if a model of public limited company will survive the next decade. Perhaps the most pressing issue today for financial regulators is the question of how to address short-termism in the markets and its significant influence on the strategies of public companies. It is widely acknowledged that an excessive focus on quarterly returns fed into the 2008 crisis but opinions vary widely on the causes of and solutions to short-termism. What is the role of financial markets and investors in promoting responsible capitalism? Can we turn institutional investors into patient capital, willing to invest in innovative research that will yield returns in the long-term? And conversely, is it possible to limit short-term trading, or at least to reduce its impact on the governance of companies? Stewardship has become a central focus of regulators seeking to push markets to a long-term orientation. What do good stewardship and responsible investment look like in practice? Is it reasonable to expect institutional investors and corporate managers to serve as good stewards and act sustainability? Listing Companies The biggest questions we face go to the very core of business: what is the purpose of the corporation, and specifically of the large listed company with dispersed shareholders? Will the current model of large publicly listed companies survive the next decade, and if not, what will it be replaced by? Taking a Longer View Perhaps the most pressing issue today for financial regulators is the question of how to address short- termism in the markets and its significant influence on the strategies of public companies. Part of the Problem The effects of our failure to make capitalism inclusive will become apparent: we have a generation of young people with uncertain prospects and we face rising inequality with a rising share going to the wealthy even as our wages stagnate. The corporation will be increasingly associated with these problems due to its status as the place where much of the distribution of the benefits of capitalism take place. There is little that is guaranteed but change is certain. In the words of Lawrence Bloom, the co-founder of B.e Energy (a triple bottom line energy company), we are no longer in an age of change but in a change of age. The world faces three converging crises – economic, environmental and social – that require urgent and visionary action. Behind these crises are the failure of a worldview based on the single-minded pursuit of growth and the failure to work collaboratively to ensure that benefits are shared widely. In the next decade, we will certainly see the effects of our failure to proactively address challenges such as inequality, the regulation of financial markets and youth unemployment. The effects of our failure to make capitalism inclusive will become apparent: we have a generation of young people with uncertain prospects and we face rising inequality with a rising share going to the wealthy even as our wages stagnate. The corporation will be increasingly associated with these problems due to its status as the place where much of the distribution of the benefits of capitalism take place. We have already started to see the effects of climate change and business has started to sit up and take notice. How will we react and will we be able to turn the ship around? The answer to this question largely depends on the readiness of the corporate sector to The Future of the Company
- 23. 23 Proposed Way Forward Aging Cities Commerce Connectivity Data Education Energy Food Government Loyalty Privacy Resources Transport Travel Water Wealth Work Health Learning support progressive political solutions. It is becoming patently clear that exhausting the planet’s resources is not an option – a growing number of politicians and business leaders recognize we cannot burn our fossil fuel reserves without destroying the world as we know it. Not all is grim; in the next decade we will witness the continued rise of a new generation of leaders pushing for responsible business, broader recognition of the need for gender and racial diversity in boardrooms and C-suites, and the shift of power from the global north to south and from west to east. Companies from emerging economies will certainly take on a key role in the global economy. They will bring with them different models of governance which might be more able to respond to changing conditions, although they will also introduce new challenges. Finally, the line between public and private will continue to blur. There will be mounting pressure from civil society and the general public for sustainability in business and for corporations to take responsibility for the impacts generated by their value chains and off-shore operations. The reordering of transnational legal and political frameworks will offer us the opportunity to revision the respective roles of the State, the corporation and civil society. Concerted effort is needed to nudge the process in the direction of democracy and broad-based participation. On our current path, another crash of the financial markets is highly likely. We have not addressed the root causes of the 2008 crisis and momentum for a significant overhaul of the markets has slowed to a crawl. Will the erosion of trust in business caused by the cyclical boom-and-bust nature of markets have an impact on policy-making? It’s hard to say. The relative power of stakeholders within companies is similarly uncertain: will employees regain their voice? Will responsible investors play a more important role in influencing companies? There are several events that could occur at the world stage that would have a profound impact on the global economy: another global energy crisis, the eclipse of Western economies by emerging economies, and the dissolution of the European Union. The overarching uncertainties are whether we will see a rebalancing of power between different stakeholders, whether big business and key interested parties will lead or resist a rebalancing of influence, and how big a crisis is needed to jar us from our current trajectory. The risk is that entrenched interests that benefit from the current state of play will thwart reforms that threaten to limit their influence. The backlash against big corporations has already fostered interest in alternative business models that will continue to gain momentum over the next decade. There is not one perfect alternative to publicly listed companies but rather a plurality of legal structures that each have certain benefits and drawbacks, including privately held companies, partnerships, benefit corporations, cooperatives, and worker-owned enterprises. Major changes are on the way for company boards. Although problematic, the concept of stewardship has become the go-to response for regulators seeking to address short-termism in the markets, along with increasing shareholder rights. In theory, strengthening ‘shareholder democracy’ by giving shareholders additional powers such as a say-on-pay seems like a good way to encourage institutional investors like pensions and sovereign funds to steer companies in the right direction. In practice, however, it is unclear whether we can expect investors to take on this responsibility. Responsible Business The line between public and private will continue to blur. There will be mounting pressure from civil society and the general public for sustainability in business and for corporations to take responsibility for the impacts generated by their value chains and off-shore operations. The Future of the Company
- 24. 24 Board Diversity It may be that other stakeholders besides shareholders will take on an increasingly important role. Board level employee representation is well established in much of continental Europe and has started to receive some attention at the EU level. Board diversity is also a key topic now and will almost certainly be into the future. We may see reserved seats for women, visible minorities, and other traditionally under- represented groups. Integrated Reporting Integrated Reporting was devised less than a decade ago but has been picked up by an increasing number of companies who welcome the ability to tell a story about the whole picture of the company, which is often overlooked in quarterly reports. Thoughtful Policymaking Thoughtful policymaking is needed; indeed, perhaps the best we can do is to try to ‘nudge’ behaviour in the right direction and closely monitor the results, ever ready to react to changes. A slight variation on this would be to assign different powers to different classes of shares. It may be that other stakeholders besides shareholders will take on an increasingly important role. Board level employee representation is well established in much of continental Europe and has started to receive some attention at the EU level. Board diversity is also a key topic now and will almost certainly be into the future. We may see reserved seats for women, visible minorities, and other traditionally under- represented groups. The classic maxim says that what is measured is what matters. The traditional focus of firms on measuring and reporting on almost exclusively financial indicators is changing to look at a broader set of indicators. In the EU, the recently adopted Non-Financial Reporting Directive requires certain large European companies to disclose information about environmental matters, social and employee-related matters, respect for human rights, anti- corruption and bribery matters. Integrated Reporting (<IR>) was devised less than a decade ago but has been picked up by an increasing number of companies who welcome the ability to tell a story about the whole picture of the company, which is often overlooked in quarterly reports. Closely related is the question of how to share information about companies to potential investors and the public. There are several ideas out there for developing benchmarks and labeling standards to identify sustainable companies and financial products, similar to what has been done for Fair Trade products. There are two main ways to influence behaviour: sticks and carrots. Ideally, we will push companies to be pro-social through a combination of both regulatory policy and economic incentives. For example, there has been a lot of discussion in the context of climate change about introducing taxation of externalities, e.g. carbon taxes, as well as a carbon market. The EU has also considered proposals to impose a transaction tax on financial markets to reduce volatility and generate revenue, which has been used in other jurisdictions with inconclusive results. We may see requirements imposed to devote a certain percentage of revenue to CSR, as is being implemented in parts of Asia. The Benefit Corporation and similar models might be supported by governments, either by tax incentives or by preferential treatment in public procurement. Farsighted States may reform their company law to introduce mandatory elements of corporate purpose, such as, for example, the concept of making decisions with an aim to remaining within our planetary boundaries, and adjusting directors’ duties and responsibilities accordingly. These changes have the potential to have high impact because they could shift economic activity to a new model – and for that reason, they are unlikely to be implemented. Other debated regulatory reforms include caps on executive pay and/ or pegging executive pay to non-financial returns; changing the rules on the legal liability of multinational enterprises to allow parent companies to be held legally liable for the actions of their foreign subsidiaries; and restrictions on firms’ right to buy back their shares. Each of these reforms is potentially important but it is only when they are taken together that they have a chance to lead to system-wide changes to business conduct. In terms of incentives, almost any of the regulatory reforms discussed in the previous paragraph could be framed instead as an incentive with a bit of ingenuity. Additional ideas include introducing incentives for boards to change their composition or to balance the short-term financial interests of the company with long-term and/or non- financial interests. Thoughtful policymaking is needed; indeed, perhaps the best we can do is to try to ‘nudge’ behaviour in the right direction and closely monitor the results, ever ready to react to changes. The Future of the Company
- 25. 25 Impact and Implications Aging Cities Commerce Connectivity Data Education Energy Food Government Loyalty Privacy Resources Transport Travel Water Wealth Work Health Learning Tailored solutions will be needed to respond to the unique characteristics of each region. For example, the continental European, Chinese, Japanese and Anglo-American economics and business models are each very different. Germany is characterized by a small number (less than 700) publicly listed companies with worker representation on company boards, whereas mandatory board- level employee representation would be a controversial proposition in the UK or the US. The EU will be forced to confront and reconcile these types of discrepancies in the corporate governance models of its Member States as it asserts an increasingly active role in company law, which has traditionally been under the purview of national governments. Outside of the EU, we need to bring Asia, the Middle East and Africa into the discussion of sustainability, workers’ rights and human rights more generally. This will require thoughtful balancing of the local context with international standards. In the context of human rights, the UN Guiding Principles on Business and Human Rights outline the responsibilities of States to enforce the principles of international human rights law and of companies to respect those principles. But more work is needed to translate the framework into context- and industry-specific guidelines. It is in the implementation of general principles and the reconciliation of potentially contradictory rights that compromises will be most needed. If this process is successful, we may see a gradual reduction in inequality leading to less social unrest and less partisan politics. We may also see an increasingly prominent role for business in developing both soft and hard law in a transparent way, acting individually and in concert through more progressive collaborative initiatives than the current trade and industry associations that dominate policy circles in Brussels, Washington and London. We need a new vision for the role of business in society. Part of the reason why the focus on maximizing shareholder value and short-term profits has captured business for so long is due to the failure to create consensus around an alternative conception of the purpose of the corporation. A model of corporate governance narrowly focused on maximizing shareholder value in the short- term is unbalanced and self-destructive. The paradigm that will rise to replace the current one will need to have a more holistic understanding of profit as one indicator of the long-term health of the organization, amongst others. The profit-making motive will sit comfortably alongside a consideration of a broader responsibility to the interests of society. This new paradigm must be translated into the existing framework of incentives and regulations for corporate governance and accountability. It needs to be reflected in market mechanisms, in particular in the way that financial markets interact and influence companies. The role of shareholders in corporate governance will have to be rethought in order to protect their role in ensuring management accountability, whilst freeing companies from the imperative to maximise the stock price as at all costs. In order to achieve transparency and accountability, companies will need to provide an accurate accounting of their environmental and social impacts, through required disclosure and through increased pressure for meaningful information from consumers. Boards of directors will also need to revise their decision-making process to consider the effect of the company on the environment and society. Companies should be expected, encouraged and even required to develop long-term plans charting their way towards environmental and economic sustainability. It will be necessary to devise holistic measures for measuring corporate success in the long-term, reflecting their ability to create value in a responsible manner. These metrics should be reflected in incentives for corporate executives as well as for institutional investors. We need to consider whether the current level of public investment in research and development is sufficient and properly allocated to achieve transformative change. Public-private partnerships, while not without flaws, are one path to support and stimulate green growth. At some point, we will be forced to Measuring Success It will be necessary to devise holistic measures for measuring corporate success in the long-term, reflecting their ability to create value in a responsible manner. These metrics should be reflected in incentives for corporate executives as well as for institutional investors. The Future of the Company
- 26. 26 Acknowledging the Problem At some point, we will be forced to acknowledge that the current approach to governing companies is broken. Perhaps after the next financial crisis, but hopefully sooner. Certainly as we are forced to respond to climate change, which cannot be addressed by governments alone without the support and investment of business. acknowledge that the current approach to governing companies is broken. Perhaps after the next financial crisis, but hopefully sooner. Certainly as we are forced to respond to climate change, which cannot be addressed by governments alone without the support and investment of business. Head of Brussels Operations, Frank Bold Lead expert on the Future of the Company. Paige is the Head of Brussels Operations for the public interest law firm Frank Bold and is responsible for policy and public affairs in the areas of corporate governance, company law, and business and human rights. Previously she was a researcher at the Centre for the Study of Human Rights at the London School of Economics and Political Science examining the international regulation of investment and investment arbitration. Lead Expert – Paige Morrow The Future of the Company
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- 29. 29 futureagenda.org The Future of Connectivity Commerce Connectivity Data Education Government Loyalty Privacy Resources Water Wealth Work Health Learning Hossein Moiin - Executive Vice President and Chief Technology Officer, Nokia Networks Demand will continue to grow exponentially in the next decade: Demand for mobile broadband is closely related to the evolution of device and screen technologies, one of the fastest evolving areas in the Information and Communication Technology (ICT) industry. In 2011, the Retina display of an iPad already had nearly twice as many pixels to fill with content compared to a Full-HD television. New device form factors such as Google’s glasses, another hot topic introduced in 2012, continue to drive this evolution and ultimately only the human eye will set the limits for the amount of digital content that will be consumed by a mobile device. And these devices will not only consume content – ubiquitous integrated cameras with high resolution and frame rate are producing Exabytes of digital content to be distributed via networks. Options and Possibilites Aging Cities Commerce Connectivity Data Education Energy Food Government Loyalty Privacy Resources Transport Travel Water Wealth Work Health Learning The Global Challenge Aging Cities Commerce Connectivity Data Education Energy Food Government Loyalty Privacy Resources Transport Travel Water Wealth Work Health Learning Giga Growth By 2025 mobile networks need to support up to 1000 times more capacity, reduce latency to milliseconds, reinvent Telcos for the cloud and flatten the total energy consumption. Optimal Experience Demand will be driven by hundreds of thousands of data apps sharing the same network, each with its own requirements towards the network. Every user, human as well as machine, will expect the optimal experience from the network for its personalized set of applications. More Than The Eye Can See Ultimately only the human eye will set the limits for the amount of digital content that will be consumed by a mobile device. The telecoms industry not only faces a massive increase in data demand, it also needs to boost profitability and personalized experience at the same time. To meet this challenge by 2025 mobile networks need to support up to 1000 times more capacity, reduce latency to milliseconds, reinvent Telcos for the cloud and flatten the total energy consumption. One gigabyte per day equates to a 60-fold increase, or roughly a doubling of traffic per user every 18 months, compared to the average 500MB per user per month some mobile networks in mature markets are seeing today. This demand will be driven by hundreds of thousands of data apps sharing the same network, each with its own requirements towards the network. Every user, human as well as machine, will expect the optimal experience from the network for its personalized set of applications. Why do we believe demand for mobile broadband will grow to these dimensions? What will it mean for operators and their networks? And even more importantly, what are the vital capabilities and technologies we need to explore and develop in the next decade to make this happen? The Future of Connectivity
- 30. 30 Enabled by these powerful new devices, the app ecosystem continues to fuel demand for mobile data by continuously inventing new categories of applications that test the limits of the network. It started with mobile web browsing in 2007 and accounted for more than 50% of video traffic in 2012. And by 2020, people might demand mobile networks that allow them to broadcast live video feeds from their glasses to thousands of other users in real time. Many of the apps will be cloud based or rely on content stored in the cloud. IDC estimates in their digital universe study that by 2020 30% of all digital information will be stored in the cloud – and thus be accessed through networks. An even broader range of use cases for networks will develop as communication technologies and applications proliferate into all industries and billions of machines and objects get connected. They will go far beyond the classical examples of the smart grid or home automation. Just imagine the potential – but also the requirements – that remotely controlled unmanned vehicles would bring to mobile broadband networks. In summary, we believe that device evolution, cloud based application innovation and proliferation of communication technologies into all industries will ensure that the exponential growth in demand for mobile broadband we have seen in the last few years will continue in the next decade. Everything Connected By 2020, people might demand mobile networks that allow them to broadcast live video feeds from their glasses to thousands of other users in real time. Testing the Limits We need to find ways to radically push the capacity and data rates of mobile networks into new dimensions to handle this amount of data traffic. live video feeds from their glasses to thousands of other users in real time. Intelligent Networks Self-aware and intelligent networks will be able to understand their user’s needs and automatically act to deliver the best personalized experience. Shared Business Models To further reduce costs per GB, we need to share network resources through both within a single operator Having understood what drives demand we can define the requirements for future mobile networks: As stated earlier, one gigabyte of data traffic per user per day is about 60 times the average data traffic seen in mature mobile operator networks today. On top of this, the growth in mobile broadband penetration and the surge of connected objects will lead to around ten times more endpoints attached to mobile operator networks than today. To prepare for this, we need to find ways to radically push the capacity and data rates of mobile networks into new dimensions to handle this amount of data traffic. Yet, being able to deal with this traffic growth is just one aspect.An increasing number of real-time apps will test the performance of the networks.To support them with a good user experience we need to find ways to reduce the end-to-end latency imposed by the network to milliseconds.Tactile (touch/response) and machine-to-machine interactions in particular have low latency demands that can be as low as in the single digit milliseconds range. To ensure mobile broadband remains affordable even while supporting the capacity and real-time requirements described previously, we also need to radically reduce the network Total Cost of Ownership (TCO) per Gigabyte of traffic.We believe one important lever to address this will be to automate all tasks of network and service operation by teaching networks to be self- aware, self-adapting and intelligent.This will help to reduce CAPEX/IMPEX for network installation as well as OPEX for network and service management. In addition to lower TCO, self-aware and intelligent networks will be able to understand their user’s needs and automatically act to deliver the best personalized experience. To further reduce costs per GB, we need to share network resources both within a single operator network, as well as between operators. It will include physical infrastructure, software platforms, sites, spectrum assets or even the network as a whole. We must also find ways to increase the energy efficiency. In addition to their environmental impact the energy costs account today for up to 10% (in mature markets) and up to 50% (in emerging markets) of an operator’s network OPEX and they have been growing constantly in the last years. Proposed Way Forward Aging Cities Commerce Connectivity Data Education Energy Food Government Loyalty Privacy Resources Transport Travel Water Wealth Work Health Learning The Future of Connectivity
- 31. 31 5G Although the industry today has not defined what 5G will look like and the discussions about this are just starting, we believe that flexible spectrum usage, more base stations and high spectral efficiency will be key cornerstones. The most powerful way to deal with industry cost pressures will be to identify new revenue streams. Are end customers and termination fees really the sole revenue source for operators, or will technologies enable new business models that allow operators to better monetize all their assets? Ultimately we of course need to admit that due to the fast pace of change in the industry it is simply not possible to predict all requirements future networks will face. There will be many use cases that are simply not known today. To cope with this uncertainty, flexibility must be a key requirement as well. Impacts and Implications Aging Cities Commerce Connectivity Data Education Energy Food Government Loyalty Privacy Resources Transport Travel Water Wealth Work Health Learning More spectrum, high spectral efficiency and small cells will provide up to 1000 times more capacity in wireless access. In the world of wireless, Shannon’s law is the one fundamental rule that defines the physical limits for the amount of data that can be transferred across a single wireless link. It says that the capacity is determined by the available bandwidth and the signal to noise ratio – which in a cellular system typically is constrained by the interference. Therefore the first lever to increase the capacity will be to simply utilize more spectrum for mobile broadband. In total the entire spectrum demanded for mobile broadband amounts to more than 1,100 MHz and a large amount (about 500 MHz) of unlicensed spectrum at 2.4 GHz and 5 GHz can provide additional capacities for mobile data. Of course reaching an agreement on spectrum usage requires significant alignment efforts by the industry and is a rather time consuming process.Therefore it is also necessary to look at complementary approaches such as the Authorized Shared Access (ASA) licensing model, which allows fast and flexible sharing of underutilized spectrum that is currently assigned to other spectrum-holders such as broadcasters, public safety, defence or aeronautical. A key challenge associated with more spectrum is to enable base stations and devices to utilize this larger and a potentially fragmented spectrum. Here technologies such as intra- and inter-band Carrier Aggregation will be essential to make efficient use of a fragmented spectrum. The second lever for more capacity will be to address the interference part of Shannon’s equation.This can be achieved for example through beam forming techniques, which concentrate the transmit power into smaller spatial regions.A combination of multiple spatial paths through Coordinated Multipoint Transmissions (CoMP) can further increase the capacities available to individual users.We believe that with the sum of these techniques the spectral efficiency of the system can be increased by up to 10 times compared to HSPA today. Advanced technologies and more spectrum will help to grow capacity by upgrading existing macro sites for still some time. However, a point will be reached when macro upgrades reach their limits. By 2020 we believe mobile networks will consist of up to 10…100x more cells, forming a heterogeneous network of Macro, Micro, Pico and Femto cells. Part of this will also be non-cellular technologies such as Wi-Fi, which need to be seamlessly integrated with cellular technologies for an optimal user experience. Although the industry today has not defined what 5G will look like and the discussions about this are just starting, we believe that flexible spectrum usage, more base stations and high spectral efficiency will be key cornerstones. The capacity demand and multitude of deployment scenarios for heterogeneous radio access networks will make the mobile backhaul key to network evolution in the next decade.The backhaul requirements for future base stations will easily exceed the practical The Future of Connectivity
- 32. 32 limits of copper lines.Therefore from a pure technology perspective, fiber seems to be the solution of choice. It provides virtually unlimited bandwidth and can be used to connect macro cells in rural areas and some of the small cells in urban areas. However the high deployment costs will prevent dedicated fiber deployments just to connect base stations in many cases. Due to the number of deployment scenarios for small cells, from outdoor lamp post type installations to indoor, we believe a wide range of wireless backhaul options will coexist including microwave links and point to multipoint link, millimetre wave backhaul technologies. For many small cell deployment scenarios (e.g. for installations below rooftop level) a non-line-of-sight backhaul will be needed.The main options here are to either utilize wireless technologies in the spectrum below 7 GHz or to establish meshed topologies. Besides pure network capacity, the user experience for many data applications depends heavily on the end-to-end network latency. For example, users expect a full web page to be loaded in less than 1000ms. As loading web pages typically involves multiple requests to multiple servers, this can translate to network latency requirements lower than 50ms. Real-time voice and video communication requires network latencies below 100ms and advanced apps like cloud gaming, tactile touch/response applications or remotely controlled vehicles can push latency requirements down to even single digit milliseconds. The majority of mobile networks today show end-to-end latencies in the range of 200ms-500ms , mainly determined by slow and capacity limited radio access networks. Therefore the high bandwidth provided by future radio access technologies and the use of fast data processing and transmission will provide a major contribution to reduce the network latency. Due to the amount of data being transferred the user perceived latency can be much higher than the plain round-trip-time.Thinking of future ultra high resolution (UHD) real time video applications this clearly motivates the need for further technology evolution. Equally important is the real traffic load along the end-to-end path in the network.A high traffic load leads to queuing of packets, which significantly delays their delivery.When attempting to solve this, it is not efficient to just overprovision bandwidth in all network domains. Instead latency sensitive media traffic might take a different path through the network or receive preferred treatment over plain data transfers.This needs to be supported by continuously managing latency as a network quality parameter to identify and improve the bottlenecks. In return, low latency traffic could be charged at a premium, providing network operators with new monetization opportunities. One physical constraint for latency remainins: Distance and the speed of light.A user located in Europe accessing a server in the US will face a 50ms round-trip time due simply to the physical distance involved, no matter how fast and efficient the network is.As the speed of light is constant, the only way to improve this will be to reduce the distance between devices and the content and applications they are accessing. Many future applications such as cloud gaming depend on dynamically generated content that cannot be cached. Therefore the processing and storage for time critical services also needs to be moved closer to the edge of the network. The introduction of additional radio access technologies, multiple cell layers and diverse backhaul options will increase complexity and bears the risk that network OPEX will rise substantially.This is why the Self- Optimizing- Network (SON) is so important. SON not only increases operational efficiency, but also improves the network experience through higher network quality, better coverage, capacity and reliability. Extending the SON principles now to a heterogeneous network environment is a challenge and opportunity at the same time. Fortunately, big data analytics and artificial intelligence (AI) technologies have matured in recent years, mainly driven by the need to interpret the rapidly growing amount of digital data in the Internet.Applied to communication networks, they are a great foundation for analyzing Terabytes of raw network data Less Distance, More Speed One physical constraint for latency remains: Distance and the speed of light… As the speed of light is constant, the only way to improve this will be to reduce the distance between devices and the content and applications they are accessing. The Future of Connectivity
- 33. 33 Cognitive Network Ultimately we believe that both, big data analytics and AI technologies will help to evolve SON into what we call a “Cognitive Network”, one that is able to handle complex end- to-end optimization tasks autonomously and in real time. and to propose meaningful actions. In combination with AI technologies, actionable insights can be derived even in the case of incomplete data; for example machine- learning techniques can find patterns in large and noisy data sets. Knowledge representation schemes provide techniques for describing and storing the network’s knowledge base and reasoning techniques utilize this to propose decisions even with uncertain and incomplete information. Ultimately we believe that both, big data analytics and AI technologies will help to evolve SON into what we call a “Cognitive Network”, one that is able to handle complex end-to-end optimization tasks autonomously and in real time. Customer Experience Management (CEM) can provide insights that will enable operators to optimize the balance of customer experience, revenues and network utilization. Cognitive Networks will help to increase the automation of CEM enabling network performance metrics to be used to govern the insight/ action control loop, as well as experience and business metrics.This again increases the operational efficiency and at the same will be the prerequisite to deliver a truly personalized network experience for every single user. The big data analytics and AI technologies introduced with the Cognitive Networks will be the foundation for advanced customer experience metrics.The ability to deal with arbitrary amounts of data in real time will allow a much more detailed sensing of network conditions and the resulting user experience in real time. It also will be the foundation for large-scale correlations with other data sources such as demographics, location data, social network data, weather conditions and more.This will add a completely new dimension to user experience insights. Cloud technologies and being able to provide computing and storage resource on-demand have transformed the IT industry in the last years. Virtualization of computing and storage resources has enabled the sharing of resources and thus their overall efficiency. Virtual cloud resources can also be scaled up and down almost instantly in response to changing demand.This flexibility has created completely new business models. Instead of owning infrastructure or applications it is possible to obtain them on-demand from cloud service providers. So far this approach has mainly revolutionized IT datacenters.We believe that similar gains in efficiency and flexibility can be achieved when applying cloud technologies to Telco networks.Virtualization will allow decoupling of traditional vertically integrated network elements into hardware and software, creating network elements that consist just of applications on top of virtualized IT resources. The hardware will be standard IT hardware, hosted in datacentres and either owned by the network operator or sourced on-demand from third party cloud service providers.The network applications will run on top of these datacentres, leveraging the benefits of shared resources and flexible scaling. Also user plane network elements such as base stations will be subject to this paradigm shift. Over time, the migration of network elements in combination with software defined networking will transform today’s networks into a fully software defined infrastructure that is highly efficient and flexible at the same time. Efficient radio technologies, high utilization and network modernization will reduce the network energy consumption, another important cost factor for operators. Having the forecasted traffic growth in mind, reducing the network energy consumption must be a major objective.The focal point for improving network energy efficiency will be the radio access, which accounts for around 80% of all mobile network energy consumption. Ultimately the energy efficiency that can be achieved depends on the pace of network modernization. Efficiency gains materialize only when the new technologies are introduced into the live network. Determining the right pace for modernization requires careful balancing of CAPEX and OPEX. We believe that energy efficiency can beat the traffic growth - which makes keeping the network energy consumption at least flat a challenging - but achievable goal. The Future of Connectivity
- 34. 34 Conclusion Aging Cities Commerce Connectivity Data Education Energy Food Government Loyalty Privacy Resources Transport Travel Water Wealth Work Health Learning We believe that device evolution and application innovation will continue to drive the exponential growth in demand for personalized mobile broadband in the next decade. This demand and the associated usage profile define the key requirements for future mobile networks in terms of capacity, latency, automation, resource utilization and energy efficiency. For each of these requirements, we’ve shown an essential set of technologies that needs to be explored and developed in the next decade. This technology evolution leads to our vision of a fully software defined “liquid” network architecture - a network architecture that combines highest efficiency with flexibility and is the foundation to deliver the best experience to every mobile broadband user. Executive Vice President and Chief Technology Officer, Nokia Networks Lead expert on the Future of Connectivity. An inventor and technology visionary, Hossein leads long-term technology evolution and drives transformational innovations for the company. Having held several management positions in BT, T-Mobile and Sun Microsystems over the last 25 years and as an active adviser and board member of several technology start-ups, he brings in- depth technology expertise, customer focus and innovation to Networks. Hossein joined NSN in 2010. Lead Expert – Hossein Moiin The Future of Connectivity
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- 37. 37 futureagenda.org Connectivity Data Education Loyalty Privacy Resources Wealth Work Health Learning Stephan Shakespeare -CEO and Co-Founder of YouGov plc The Future of Data In the last ten years we have seen an explosion in the amount of structured data we produce through our everyday activities. All on-line activity, such as credit card payments, web searches and mobile phone calls, leaves a data exhaust, little puffs of evidence about our behaviour, what we do and how we think. This can now be stored, shared and analyzed, transforming it from meaningless numbers into life-changing tools. Like it or not, we live in a world where personal information can be accessed at the click of a key on a massive scale. Although there are myriad benefits (medicine, education and the allocation of resources are obvious areas), there are also significant risks.The threat of cyber warfare is a good example. There is no turning back, so what does this mean for society going ahead? I believe that in order to maximize the benefits and minimize the risks over the next ten years we will have to fundamentally change our behaviours, our structures and our businesses. Writing today, my real concern is that we haven’t yet got a clear understanding of the risks this new data-fuelled world brings and therefore even less about how to deal with them.That doesn’t mean we should over- react. Indeed the opposite: if we haven’t thought them through, we are more likely to over-react in some areas and under-prepare in others. We are obviously severely under- prepared against cyber-terrorism, as we see with the recent Sony debacle. As an example of over-reaction, look at concerns about health data, which, in the main, can be addressed through the judicial use of sandbox technologies and severe penalties for misuse. Surely it is counterintuitive to miss out on the enormous social benefit of sharing health data because we haven’t thought properly about how to deal with potential risks? How do we exploit data knowledge to positive effect and what are the key challenges going forward? The first big issue is how to keep the opportunities equal. I believe that all levels of society should benefit from the information data crunching can deliver. But just because the capability is there, it is not a guarantee that it will be shared unilaterally. Currently this is an area where new inequalities could grow, as well as existing equalities get worse. Data sharing and the science of getting value from data is obviously much more advanced in the advanced economies. It’s quite possible that these skills will be used to accelerate their own national well being, both commercial and social, leaving less technologically based societies behind. It would be wrong to assume that technology will be a leveler at all times.Yes, it has the potential, but the hope that it will have an equalizing effect is by no means assured. Data Inequalities I believe that all levels of society should benefit from the information data crunching can deliver. But just because the capability is there, it is not a guarantee that it will be shared unilaterally. Currently this is an area where new inequalities could grow, as well as existing equalities get worse. The Global Challenge Aging Cities Commerce Connectivity Data Education Energy Food Government Loyalty Privacy Resources Transport Travel Water Wealth Work Health Learning The Future of Data
- 38. 38 Options and Possibilities Aging Cities Commerce Connectivity Data Education Energy Food Government Loyalty Privacy Resources Transport Travel Water Wealth Work Health Learning There are obvious tensions between sharing, privacy and freedom. But we must be wary of erecting a virtual net curtain, hiding the voyeur and leaving the public vulnerable. Why shouldn’t youthful misdemeanors be left in the ether? I think they should. After all, we know that silly things sometimes happen – even to ourselves. The trick is for us all is to know and acknowledge what is public, and to act accordingly.Years ago, we lived in small communities. Our doors were unlocked and our neighbours knew our every move. It was considered normal. Our community is now global, but the principal remains the same. Some guidelines do need to be established if we are to maximize the social benefit of data; we must develop an agreement about what privacy really is in reality as well as in the virtual world.This will involve thinking afresh about the relationship between the citizen, governments, and corporations. Understanding data ownership will become a bigger issue than it already is today. Consumers and end users will want to own and control their personal data, but this seemingly straightforward statement grows more difficult to achieve with each passing day.There isn’t much information that we can easily say belongs to just one person. Consider two people having a chat in a café. The content belongs to both of them; the fact of their meeting belongs to all who observe it. If I have a contagious disease, we don’t consider that information my personal property. When a doctor takes your temperature, does that information belong to you, the doctor or the hospital? Data is useful to everyone, so we must get used to sharing particularly as more and more of our lives becomes digitised and new issues arise.The challenge is to develop our ethical and legal apparatus for this, establishing a set of agreed principals and regulatory framework that can act as the basis History is littered with evidence that shows how we consistently fail to identify the next big threat. The Greeks didn’t recognize the Trojan Horse; the Allies in the First World War weren’t initially concerned about aerial warfare. Similarly, I believe we are currently under-playing the potential impact of cyber-attack. As more control systems are connected to the web, more vulnerability will inevitably appear. Cyber-security, which involves protecting both data and people, is facing multiple threats; cybercrime and online industrial espionage are growing rapidly. Last year, for example, over 800 million records were lost, mainly through cyber attacks.A recent estimate by the think tank, Centre for Strategic and International Studies (CSIS), puts the annual global cost of digital crime and intellectual property theft at $445 billion—a sum roughly equivalent to the GDP of a smallish, rich European country such as Austria. Although the attacks on Target, eBay and Sony have recently raised the risk profile in boardrooms around the world, law enforcement authorities are only now grappling with the implications of a complex online threat that knows no national boundaries. Protection against hackers remains weak, and security software is continuously behind the curve.Wider concerns have been raised by revelations of mass surveillance by the state; a growing number of countries now see cyber space as a new stage for battle, and are actively recruiting hackers as cyber warriors. How to minimize this threat is key to all of our futures. Global Village Years ago we lived in small communities, our doors were unlocked and our neighbours knew our every move. It was considered normal. Our community is now global but the principal remains the same. Shared Information There isn’t much information that we can easily say belongs to just one person. After all if two people have a chat in a café the content belongs to both of them and the fact of their meeting belongs to all who observe it. Agreed Principles Data is useful to everyone so we must get used to sharing particularly as more and more of our lives becomes digitised and new issues arise. The challenge is to develop our ethical and legal apparatus for this, establishing a set of agreed principles and regulatory framework that can act as the basis. Data Protection Protection against hackers remains weak with security software continuously behind the curve. Wider concerns have been raised by revelations of mass surveillance by the state and a growing number of countries now see cyber space as a new stage for battle, recruiting hackers as cyber warriors. The way data will be optimized is changing. It is not enough to know single lines of information. Data must be connected and multi layered to be relevant. It means knowing not one thing or ten things or even 100 things about consumers but tens and hundreds of thousands of things. It is not big data but rather connected data – the confluence of big data and structured data – that matters. Furthermore, with the growth The Future of Data