
1. Blue-sky
computing
The hot topic in technology in the past few years
has been the emergence of “cloud
computing”. But what exactly is this new development and how will
it transform our lives?
There are two parts to understanding the
platform. The first is to do with processing power and data storage,
which have been moving away from individual computers into massive,
centralised datacentres. This is bringing industrial scale to
number-crunching – and is making it possible to unleash supercomputing
power on everyday tasks: analysing a city’s traffic patterns, for
example, to predict where jams will crop up.
The second part lies
in the billions of intelligent personal devices – think smart phones
and netbooks – capable of plugging into this centralised computing
resource via the internet. That means individuals (and not just
companies or governments) will be able to take advantage of these
information “clouds”.
So where does this lead us? Two broad
predictions spring to mind. One is that making so much information and
processing power available at very low cost will produce new
breakthroughs. Science, for instance, could be revolutionised, as
researchers gain access to previously unimaginable amounts of data and
develop ways to cross-refer between disciplines.
The second
prediction is that personal computing devices will become super smart as
they are able to draw on the intelligence of the “cloud”. Already,
Google is talking about adding instantaneous voice translation to its
phones.
The big changes represented by these computing shifts may
not be complete by the end of this decade – but they will be well under
way.
Richard Waters, San Francisco
bureau chief

2. Work longer,
work older
This decade will see older people working
longer. That’s not surprising. In addition to governments from Britain
to Greece raising the retirement age, low interest rates and the death
of defined benefit pensions mean many
people will not have enough money at age 65 to enjoy their sunset years.
They will be forced to work to make ends meet.
What I find
interesting – and what could change the face of business – is that they
may prefer to do that working for themselves. A recent study from
Standard Life suggests that one in six Britons aged 46-65 hopes to
embark on a new business venture rather than retire. This is seven times
the number of possible start-ups from their parents’ generation – and
could amount to a million new businesses in the UK.
Their
experience, wisdom and connections will be their secret weapons. But
they’re also likely to have more time and money to spare than current
entrepreneurs. The typical age today for someone to start his own
business is between 30 and 45. Inconveniently, this is also when you’re
likely to have young children and a mortgage. “Olderpreneurs”,
meanwhile, will often be close to seeing off these responsibilities – as
well as eager for ways to stay in touch with people from all
generations, as customers, partners, suppliers or perhaps staff.
I
predict many great companies will be started in the next few years. The
50-plus generation could well kick-start the recovery.
Luke Johnson writes an FT
column about entrepreneurs, and runs Risk Capital Partners, a
private equity firm

3. Information
does have a value
If there is one orthodoxy of the past
decade that the media industry has reason to curse, it was born when
Stewart Brand told the 1984 Hackers’ Conference that “information wants
to be free”.
People still disagree about what Brand actually
meant – and many of those credited with promoting the “free information”
idea have since disavowed it – but the phrase has given intellectual
cover to everything from music piracy to the notion that not paying for
news is an immutable culture of the internet.
Back when people
still talked about the “information superhighway”, they scoffed at the
idea of it being impeded by toll booths. Online advertising – new and
improved – was supposed to cover information owners’ bills. But just as
the gleaming freeways of the US’s postwar heyday are now potholed and
crumbling, the content free-for-all has eroded media companies’ business
models and risks overloading communication networks.
Now content
owners from magazine publishers to pay-television broadcasters are
wondering why they put all their trust in a single advertising revenue
stream.
It is time to revisit Brand’s full quote: “On the one
hand, information wants to be expensive, because it’s so valuable. The
right information in the right place just changes your life. On the
other hand, information wants to be free, because the cost of getting it
out is getting lower and lower all the time. So you have these two
fighting against each other.”
Too often in the century’s first
digital decade there was no fight at all, but now the
information-wants-to-be-expensive mantra is gaining the upper hand.
Publishers have pushed
Amazon.com to raise prices on eBooks, Apple’s “app economy” is
allowing even those with free websites to charge for applications for
iPods and iPads, and The
New York Times is following specialist titles such as the FT and
The Wall Street Journal in charging for news online.
To consumers
used to enjoying a free ride, this sounds ominous. On the other hand,
we’ve just spent a decade gorging ourselves on too much content of
little nutritional value. Expensive content may prove higher-fibre.
Indeed, the free-content movement distracted an industry from
considering which content is worth paying for. Focus more on the latter,
and there is a chance to improve on a dire decade.
To Brand’s
maxim, let’s try a new one for the coming decade: content wants to be
valuable.
Andrew Edgecliffe-Johnson, US
media editor
4. Greed isn’t as
good as we thought
Back in the 1980s, the economist Al
Rappaport captured the spirit of the times by devising a new goal for
the corporation: the maximisation of shareholder value. The measure of a
CEO’s achievement was the total return achieved for shareholders during
his tenure.
Bill Allen, Boeing’s legendary leader from 1945 to
1968, once described his company’s ethos like this: “To eat, breathe and
sleep the world of aeronautics.” By 1998, the CEO there saw it
differently: “We are going into a value based environment where unit
cost, return on investment, shareholder return are the measures by which
you’ll be judged,” said Phil Condit.
This was happening across
industries. Britain’s ICI offered a lofty description of its ideals in
1987: “ICI aims to be the world’s leading chemical company … [enhancing]
the wealth and well-being of our shareholders, our employees, our
customers and the communities which we serve and in which we operate.”
But, by 1995, the threat of a hostile bid galvanised the management, and
the company declared: “Our objective is to maximise value for our
shareholders by focusing on businesses where we have market leadership, a
technological edge and a world competitive cost base.”
And it
happened across borders, too. When John Reed and Sandy Weill,
Citigroup’s joint chief executives in the late 1990s, described the
purposes of the newly merged conglomerate’s objectives to a journalist,
Reed, the cerebral traditionalist banker, said: ‘The model I have is of a
global consumer company that really helps the middle-class with
something they haven’t been served well by historically. That’s my
vision. That’s my dream.” Weill, more attuned to the spirit of the
times, interrupted Reed. “My goal,” he said, “is to increase shareholder
value.”
It would all end in tears. Under Allen, Boeing came to
dominate the aircraft business; under Condit, the company not only lost
its market leadership to Airbus but was mired in scandal. The new
value-maximising ICI attempted to rearrange its portfolio of businesses,
but failed: its share price went into steady decline and a decade later
the company was no longer an independent entity. Weill pushed out Reed,
only to become the victim of a series of reputational problems that
later hit the company. By 2008, almost all the shareholder value in
Citigroup had been destroyed.
Enron, the paradigm of the new
corporate model, went spectacularly bust in 2001. In 2008, the collapse
of Lehman Bros,
a company intensely focused on profit, nearly brought down the global
financial system. These failures that bracketed the past decade have a
lesson for leaders in the next one: to focus single-mindedly on profit
is to risk losing the opportunity to make any profit at all.
John Kay,
columnist

5. Energy
sources get smarter
We’re already seeing some of the ways
energy sources will change in the next decade. Smart
meters, for example, which give consumers and utilities alike
detailed information about energy usage, are not only being backed by
Barack Obama, but are due to replace existing “dumb” meters in the UK
and Australia in the next few years.
That means you’ll soon be
able to see how much energy is being used in your home, and how much
money being spent, via a detailed, appliance-by-appliance break-down –
letting you adjust heating and lighting accordingly.
Smart
appliances, meanwhile, will communicate with the grid; so a clothes
dryer might shut off during peak, high-tariff hours, and on again when
energy gets cheaper. Utility companies themselves could chip in by
automatically turning down air conditioning a notch during times of peak
demand.
We’re also seeing the advantages of light-emitting diodes
as replacements for the old Edison-stlye incandescent bulbs (and the
newer energy-saving fluorescents). While incandescents generate heat to
produce light, LEDs create it from the movements of electrons on silicon
chips. The light is more natural, can change colour, can be more
precise and is instantly dimmable.
This decade will see cities
replace street lighting with LEDs that last longer (by years) and can
intelligently dim themselves when there is no traffic, reducing energy
use and light pollution. With 20 per cent of the world’s electricity
demand coming from lighting, LEDs’ ability to cut energy use by 75 per
cent could have a dramatic effect on CO2 emissions.
Energy sources
could also change, especially when it comes to small devices. Free
energy can be harvested from sources such as body heat or radio waves
from mobile-phone towers and wi-fi. Just rolling the trackball on a
BlackBerry-type device to scroll through e-mail will be enough to
generate power and boost battery life in the future.
Chris Nuttall, technology correspondent
6. Generation Xers come into their own
In
the late 1990s and early 2000s, the usual rules of workplace seniority
did not seem to apply to workers in their twenties and early thirties.
The dotcom boom was empowering this cohort of youngsters – sometimes
known as Generation X – to seize status and wealth with astounding
precocity. The dotcom bust exposed that trend as an illusion, forcing
the upstarts to serve their time in junior roles. An end to the
punishment is in sight, however. Now in their thirties and early
forties, many Xers should reach the apex of their power between 2010 and
2020, according to conventional wisdom that suggests white-collar
workers peak in their late forties and early fifties (the average FTSE
100 chief executive is 52).
What will this mean for corporate
life? Often viewed as ironic and detached, Gen X workers are not the
most obvious leaders. But according to Tamara Erickson, author of What’s
Next, Gen X?, this lack of ideology might be an asset in solving
modern challenges (it helps, she says, that they understand gender and
racial equality better than their elders). Will their relaxed attitude
also help them cope with workplace disappointment? It’s possible, after
all, that the baby boomers will hang on to power, keeping Gen X in a
Prince Charles-like holding pattern.
And then there are the
people nipping at Gen X’s heels. Enviably at ease with digital
technologies, members of Gen Y have little love for hierarchy. The
downturn has left many of these whippersnappers more whipped than
snappy. When – or if – they bounce back, their needs will complicate
life for Gen X during its final push up the greasy pole.
Adam Jones, senior companies reporter
7. Gain from the pain of failure
Failure
has always been a fundamental part of a market economy. When markets
work, they do so because new ideas are constantly being tried out. Most
fail. Those that succeed cause older ideas to fail instead. In the US,
about 10 per cent of businesses disappears each year. This is an awkward
insight – but trial and error could be starting to take its rightful
place as a business technique, rather than the dirty little secret of
capitalism.
There are some hopeful signs. Stefan Thomke of
Harvard Business School has argued that advances in computation have
made it possible to experiment on new products as a matter of course,
trying many things and expecting many failures. It is now easy, for
example, to experiment with changes in the layout of a website, showing
different configurations to different visitors and tracking results in
real time. Google, meanwhile, routinely launches new products with a
“beta” label on them. And academic superstars such as Steven Levitt,
co-author of Freakonomics, have been teaching executive courses
in business experimentation.
We are also starting to learn more
about the psychology of learning from mistakes. Richard Thaler, the
behavioural economist behind Nudge, coined the phrase “hedonic
editing” to describe our habit of lumping small losses together with
larger gains in order to mask the pain of the loss. Sugar-coating is
human, but it’s also a recipe for failing to learn from failure. Thaler,
with colleagues, even studied the behaviour of contestants on Deal
or No Deal. He discovered that people who had made unlucky choices
then started to take reckless risks, which often compounded the error.
It’s
hard to learn from failure if it briefly robs us of our judgment. As we
start to understand why trial and error is so painful a process, we may
be able to use it more constructively. The financial crisis has made us
aware that a system that cannot tolerate a bit of failure is a
dangerous one. The idea that an institution was “too big to fail” used
to sound reassuring. Not any more.
Tim Harford,
Undercover Economist
8. Do
more with less
The inevitable triumph of the Bric countries – Brazil,
Russia, India and China – has become almost a commonplace observation in
business. Even if a few too many exotic chickens are being counted
before they have hatched, the threat represented by these and other
emerging countries is changing the way established businesses in mature
markets think. There’s a wave of powerful new competitors on the horizon
who can price their goods and services at startlingly low levels.
Incumbents are going to have to get more efficient and increase their
productivity. That’s why you can expect to hear incantations of this
management mantra over the coming years: do more with less.
Nor is
it just competition from developing countries that has sparked the
idea. In the context of the debate over environmental sustainability,
companies will have quite literally to produce more while using less of
the planet’s finite resources.
And it is not just a private sector
story. Deeply indebted governments will also be seeking to squeeze
public sector workers. Politically, it is vital that essential public
services are maintained and even improved. And yet it is equally clear
that budgets are going to be cut. Serious attempts will be made to
square that circle.Is doing more with less an impossible task long term?
Not necessarily. Usually a better way of doing things can be found. New
technology usually makes new approaches possible. And human beings can
be very adaptable.
And yet it is clear, too, that an endless
demand that we produce more with less could prove damaging. It might
lead to a world of “permawork”, where our mobile gadgetry is not only
always on, but always being used. The quality of work produced under
these circumstances is unlikely to be uniformly high. The drive to
achieve more may prove self-defeating.
Stefan Stern,
management writer
9. Jump on
the hedge
Financial innovation has become a dirty phrase
lately because of the role of complex securities – packages of mortgages
and other liabilities – in the credit
crunch and ensuing financial crisis. But the dirty secret is that
if western economies are to recover properly, the funding will have to
come from the markets. And such will be the competition for cash that
some projects are likely to create fresh innovations to attract lenders.
One of those innovations is the risk transfer. A hot trade
before the crisis, it is already returning. Robert Shiller, professor of
economics at Yale, published a book in 2003 that proposed new financial
instruments for individuals that would enable them to lay off, or
“hedge”, the risks they run by trading contracts – a bit like how banks,
companies and fund managers traded credit derivatives in the past
decade. Worried, for example, that your chosen job track might not yield
the sort of mid-career salary you’d like in 10 years? Create a contract
in which you’re paid a certain sum if your income falls below a set
level.
Investors, Schiller promises, will be interested in making
bets on this sort of thing. Indeed, these markets are being created for
big organisations today. Take snowfall futures, designed so that cities
or companies get a pay-out if winter snowfall turns out to be worse
than expected. And just last month, a group of banks, pension funds and
insurers announced they were developing a new market for longevity
products – the risk that people live longer than expected.
Doesn’t
this seem a terrible idea, given where the trading of risk landed banks
in recent years? Schiller argues the credit crisis merely shows that
“much more work needs to be done to democratise finance. The crisis
occurred because the principles of financial risk management were not
being applied to the widest possible population.” Come one, come all –
companies, governments, citizens: roll up for some risky business.
Jennifer Hughes, senior markets correspondent

10. Deliver us
from shopping
Just as the arrival of self-service shelving
transformed the physical layout of shops in the past century, online
shopping will do so in this one. Already we’ve seen internet
shopping become a competitor to bricks-and-mortar stores. Now it
will reshape them.
At Wal-Mart, for instance, more than 40 per
cent of the online orders on the retailer’s website are sent for pick-up
at a local store, as customers seek to avoid the costs and timing
uncertainties of home delivery. In response, the retailer is testing
drive-through pick-up options and redesigning stores to include pick-up
counters at the front. In the UK, Tesco has similar arrangements (though
no drive-throughs yet).
Sears Holdings has taken things even
further at a pilot store outside Chicago called MyGofer, where
four-fifths of the floor space is backroom storage, and one-fifth open
to customers who can pick up pre-ordered items, or use computer
terminals to order what they want in store. Sound a lot like Argos?
Here’s the twist: Kmart is also trying to persuade other retailers to
use its stores as a central pick-up location for goods ordered online.
Retail industry analysts speculate that even the purely online Amazon
might eventually want to set up pick-up locations.
The web will
also change what’s on the shelves. A customer standing in a store and
armed with a smart phone can call up comparative prices from rivals –
unless the item in question is only available at that particular store.
So there will be more pressure on retailers to get selective deals with
leading brands – or to develop their own-label versions of everything.
Jonathan Birchall, US retail correspondent
What
other big ideas did we miss? Please let us have your views and thoughts
on the ideas or developments likely to shape the next 10 years by
e-mailing: ftweekendmagazine@ft.com
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