Is there any enterprise so human, and so doomed, as the quest to determine the future? Entrepreneur, author, and TED talk presenter Margaret Heffernan looks back on the complex history of forecasting and explains why it is so often wrong—and why we so often fall for it. As Heffernan chronicles the tales of early economic forecasters, including Irving Fisher, Roger Babson, and Warren Persons, she shows how their personal belief systems influenced their theories and how miserably they failed in predicting the Great Depression. In fact, no forecast system can reveal “immutable scientific truths,” she writes, because all of them “are incomplete, ideological, and self-interested.” Even so, people desperately seek ways to peer into the future, causing them to accept as fact predictions that no one has any way of knowing will come true.
Heffernan is particularly troubled by a claim from researchers at the Oxford Martin School that 47 percent of U.S. jobs will disappear to automation by 2035. That statistic has been accepted by many high-level players, she notes, from Bill Gates to attendees at the World Economic Forum. But in fact, few predictions are accurate past a timeline of 150 days, according to teams of forecasters participating in a tournament called the Good Judgment Project. As new technology enables us to gather more and more data, we have become more certain that we know what’s coming next, but that’s a fallacy, she says. “Ineradicable uncertainty remains inherent to human life.” (Avid Reader Press, US$30)
In a world of rapid and destructive innovation, there’s one unconventional way to make sure a business thrives. Burn it down and rebuild from the ashes—or, at least, conduct brainstorming and strategy sessions that metaphorically accomplish the same thing. Three INSEAD professors—Ian C. Woodward, V. “Paddy” Padmanabhan, and Sameer Hasija—join author and consultant Ram Charan to provide the details of their Phoenix Encounter Method. In the three-part exercise, leaders first lay the groundwork for change by confronting old mindsets, scanning for new threats, and developing an awareness of new possibilities. Then they step onto the battlefield by simulating a massively destructive strike on the organization, whether through new technologies or new products, and by conducting fierce debates to identify counterattacks. Finally, they develop a breakthrough blueprint that charts a new course.
“Disruption can come from any direction and at any time,” according to Woodward, Padmanabhan, Hasija, and Charan. “It can come as a direct attack from a longtime competitor. It can sneak in at the bottom of your market with an inferior product or niche product that seems barely worth your notice. It can come from the kid working in his garage next door, or it can come from overseas.” But leaders can defend against disruption if they first imagine what kind of threats would bring them down. In fact, the authors write, “You are absolutely your own best enemy.” (McGraw Hill, US$28)
“Companies have repeatedly found success by complementing operational excellence with a relentless focus on customers,” according to Marco Bertini of ESADE Business School and Oded Koenigsberg of London Business School. “This mix has marked the rise of modern commerce since the start of the Industrial Revolution.” However, most companies have used this focus to improve the products they want customers to buy; they have given less thought to how customers derive value from products and how customers would actually prefer to acquire them. But advances in technology have changed the equation. Not only can companies increasingly track customer preferences and behavior, customers can determine how well the products they choose are living up to expectations.
At the same time, new revenue models such as subscription services and sharing platforms are allowing customers to purchase outcomes rather than products. Do they want new cars, or do they simply want reliable transportation? If customers are buying the service instead of the product, they have less invested in the purchase, and they can quickly change to new providers if the product is unsatisfactory. This new paradigm makes companies more accountable for what they sell and forces them to strip away the attributes that customers simply don’t want. “Revenue models anchored on the ownership of a product or service are patently inferior,” write Bertini and Koenigsberg. “In the world of lean exchanges between organizations and customers, money flows to proof, not promises.” (The MIT Press, US$29.95)
The history of globalization is on display in this compelling and comprehensive tour of international commerce. Marc Levinson, former editor of The Economist, begins with a summary of early international trade more than a thousand years ago, when ideas and diseases crossed borders almost as frequently as physical goods. He then traces the stages of the First, Second, and Third Globalization waves, which were powered by new technologies, enabled by advances in transportation, and disrupted by world wars.
He believes globalization has mostly been good for the world, not only creating immense wealth, but also inhibiting international conflict. However, it has come with serious consequences, such as environmental degradation. He believes we’re now in the era of the Fourth Globalization, which is marked by a lower demand for physical products, a greater interest in services and ideas, and a rise in small-scale manufacturing as opposed to mass production. “All these developments were underway well before China announced its Made in China 2025 plan in 2015, the British voted to leave the European Union in 2016, and the United States distanced itself from multilateral trade agreements in 2017,” he writes. The coronavirus pandemic has merely underscored “the urgency of a shift that was already underway.” He believes the framework for this new stage of globalization is still being set, but says that “building it is likely to prove far more difficult than demolishing the structures of the past.” (Princeton University Press, US$26.95)