We need to learn to keep pace with the future

In my blog last week, I supported Obama fast-tracking the Trans-Pacific Partnership, and I hope that he does it with decision and purpose. Thomas Friedman of The New York Times is of the same mind, although, while I see this an opportunity not only to improve global supply chain, but also to lay some rules on the way our exponentially evolving business world affects the environment, labour and public health, he doesn’t stop short of calling it a bulwark for “national security” against international anarchy.

The post-industrial world is here, but we’re still playing by rules that made sense in 1955. Meltdown is possible, but so is epiphany.

Megatrends

There are three megatrends driving the world across the inflection point between the industrial past and the new information-based economy already exploding beneath us. These are:

• Digitisation of commerce & community. This is the fun part. GAFA (also known as Google, Apple, Facebook and Amazon) bristle with innovation, excitement and cash. Each is disrupting traditional industries and democratising work. The pace is faster than governments can handle and the EU’s anti-trust play on Google is proof positive that we are still stupid enough to shoot ourselves in the foot. Digital is our saving grace – let’s try to understand and harness it now.
• Demographic turmoil & equilibration. This is the scary part. In Europe, it’s about migration across the Mediterranean. In Asia, it’s about new power rushing into the post-American vacuum. In America, it’s about Baltimore burning. Most of what we know in supply chain, business and the social contracts that bind us is based on a distinct North-South/East-West power imbalance that stretches all the way back to the 1500s. Global integration is complete, but people aren’t comfortable with their new relationships. Respect is the only path to peace and too few of us really know what that means yet.
• Resource constraints & innovation. This is the scariest part, but it is also the common cause that connects us and could usher in an economy of abundance. Sustainability is huge in supply chain because we naturally equate it with efficiency, which is in our blood. Unfortunately, politicised debate about climate science and such vital resources as water, land and even people is exacerbating what is ultimately a huge engineering challenge. We can solve it if we have enough time.

The race is on.

What we can do right now

A new survey of over 600 supply chain professionals around the world shows a remarkably clear picture of how we can take care of 10 billion people without breaking the planet. The top overall challenge going forward is energy, followed very closely by water.

In the case of energy, concerns centre on cost and solutions all include some degree of portfolio management techniques. In the case of water, the chief worry is scarcity and strategies all include re-use techniques. Across all resource questions, there is a common thread of long-time horizon planning approaches and strategic network modelling.

Tactically, many see a role for localising production nodes nearer to vital resources, as well as wider use of smart technologies for precision monitoring. Digitisation and demographic equilibration will contribute to solving our resource problem and, in the process, enable faster economic growth.

The link back to Friedman’s anarchy warning is that none of this is possible without the rule of law. Fast-tracking the Trans-Pacific Partnership is just one part of establishing standards of global trade that would work for everyone and for the long run. Our operations need to strive toward business models that are closed loop in terms of natural resources, but this will take time and teamwork.

Innovation to the rescue

Digital pioneers are building the platform for an economy based on ideas that will be dramatically cleaner per dollar of GDP than anything we’ve ever seen. This platform has the potential to spread opportunity to all and unleash massive human problem-solving genius.

Unfortunately, industrial era rules still in effect are creating a tragedy of the commons problem, where rational individual behaviour clashes with the best interests of the whole. The root problem is that our politics are short term and self-serving, which makes long-range investment difficult for business.

The TPP is just a start, but we’re running out of time and better get moving.