Andrew Curry writes:

Just before Christmas, The Futures Company re-published a report which it wrote (as The Henley Centre) a decade ago, for the British government’s Cabinet Office, on understanding best practice in strategic futures work. It’s stood up well over the last ten years, because it focusses on organisational context and culture and on principles, rather than on methods. We were able to republish the work, which has been in the public domain, because of the generous copyright provisions of the UK’s Open Government Licence, which makes most Creative Commons licences look positively restrictive.

The report was based on an extensive benchmarking study, together with a literature review and a range of expert interviews. Without trying to summarise the whole thing here, one section has a set of methodological guidelines which are worth capturing:

• Ensure there is clarity about the resource requirements of the work
• Ensure that the process is inclusive
• Ensure that people understand and trust the processes being used
• Understand the limitations as well as the opportunities afforded by strategic futures thinking (there is no magic bullet)
• Understand that the process will take time to deliver benefits to the organisation

The full report, published as part of our Future Perspectives thought leadership series, can be downloaded from the website (free, but registration required).

Henry Tucker writes:

The Futures Company has recently released the latest edition of Global MONITOR, our large scale syndicated future-focused Insights Programme. Global MONITOR’s analysis is underpinned by a survey of 27,000 respondents in 21 markets, and its research underpins much of thinking about social, cultural, and consumer change. Over the next few weeks we’ll be running a series of blog posts on themes from this research.

One of the most important themes of Global MONITOR 2011 is about consumer volatility. Three years into the financial crisis, those in richer nations have experienced long periods of austerity, unprecedented since the last World War. Eleswhere, pressures of growth are causing their own problems, from pollution to poisoning, in the case of China’s food scandals. This has made consumers feel both vulnerable and vigilant. And some of the data are striking:

• 42% agree that they ‘usually buy the cheapest product available’
• 51% of consumers, globally, agree that they are making more of an effort to buy less than they did before.
• 62% agree that ‘the world feels like an increasingly hostile and uncertain place’ (a high level of agreement for such a strongly worded question).

These tensions are expressing themselves culturally as well as economically. In most markets, the proportion of those agreeing with the statement ““I appreciate the influence other cultures have on our way of life in this country” has fallen quite sharply over the past two years. People are drawing in.

What we’re seeing as a result is that consumers are becoming as self-reliant as they can, reducing their exposure to an uncertain world wherever possible. Of course, ‘self-reliance’ conjures images of people storing clean water and tinned food in their cellars, but the emerging trend is, instead, about networked reliance. People use social connections, both to find new information, to look for deals, and to lean on each other for support. As they do so, their expectations of what business should be doing for society have become sharper. The proportion agreeing that “Companies have a responsibility to help support the society in which they operate” has seen a significant jump year on year in many markets. It’s another layer of complexity that many businesses could do without in tough times. But get it wrong and consumers will punish you for it.

The picture at the top is from Global MONITOR, and shows people’s perceptions of how their countries are doing and also how they are doing.

Global MONITOR is an innovative, strategic, future-focused Global Insights programme for clients and agencies. It identifies the key dynamics shaping the world and the consumer marketplace, as well as potential implications for your clients’ businesses. If you want to know more about Global MONITOR, please call Simon Kaplan in the United States, or Deniz Erdem in Europe.

#1: Seeing through uncertainty

Alex Steer writes: Thinking back a decade, you have to pinch yourself. In 2001, when internet penetration ran at 10% or less even in advanced markets, online social networks barely existed. Today, they are the most widely-used online services, with membership of the largest networks reaching well into the hundreds of millions. Today Facebook has around 720 million members, and China’s Tencent QQ instant messaging network over 600 million – figures that are likely to be out of date if you read this more than a few weeks in the future. In the US, Facebook alone accounted for almost 9% of all website use in 2010, overtaking Google as the most-visited site.

If it’s been a dynamic decade for online social networking, it’s also been a disruptive one. The rise of networking giants such as Facebook and Twitter can seem inevitable in hindsight, but in practice there’s been a rapid turnover of winners and losers. MySpace, which at its peak claimed membership by one in four Americans, was sold by News Corporation in June 2011 for a fraction of the price it paid, its active user base collapsing. For those who look at Facebook in the 2010s and see nothing but runaway growth, MySpace should be a reminder that present scale is no guarantee of future success.

For businesses, brands, and marketers, this can feel like unstable ground. How do we know which networks will be around and thriving in a couple of year’s time, let alone ten? How do we decide how best to design services or communications in an unpredictable environment? And, in trying to back the right horse, how do we know whose advice to take?

There’s no shortage of advice on ‘doing social’, even if much of it is contradictory. But it’s wrong to think that the social networking category is defined only by Facebook or Twitter. The category is broad and often ill-defined even by experts – but at its heart a social network is any online service that lets users interact and form social connections. The choices which users make when they are online are a better guide to how usage and behaviour might change than the technology.

For this reason, to help think about social online behaviour, we have identified six Pivot Points – points of tension based on the choices people make when they engage online, and the conflicts they experience – that will shape the future of social networks. These decision points – around scale, privacy, specificity, pervasiveness, utility and worldview – can help businesses and brands anticipate the future in a category they cannot predict. On this blog, over the course of this week, we will be exploring these.

This is the first of four posts by Alex Steer introducing our latest analysis of the future of social networks. The second post, on ‘the social life of social networks’, will run tomorrow. The word cloud at the top of this post was generated by Talent Genius and is used with thanks.

Eleanor Cooksey writes:

“I’ve found the cost of living has gone up substantially and it has had a huge impact on my life. I am not buying luxuries as often and I will change the way I deal with my finances.”

This sobering quote comes from a Scottish man we spoke to as part of our fifth in-depth review of how UK consumers are responding to the current economic situation. In our breakfast briefing held in London last week to launch this review, we highlighted four themes which describe the current environment:

1. The New Normal is firmly embedded: Reflecting the broader economic uncertainty, individuals feel the outlook is gloomy: 25% feel the UK economy is going very badly these days, an increase of 10% compared to when the survey was last carried out six months ago. People are even less optimistic about their personal financial situation with almost half thinking they will be worse off over the next 12 months. The message is clear: no one expects things to go back to how they were and we are learning how to cope.
2. Rising prices are hurting:Though inflation has recently dropped a fraction, our data showed levels of anxiety about rising prices similar to those seen in 2008. Many of the people we spoke to were highly sensitive to these changes, whether this was about an increase in the cost of petrol or bell peppers.
3. Savvy shopping matters to consumers: 43% of consumers have had to dip into savings to make ends meet and they are trying hard to make their money going further. Deals and special offers are still very much part of this, but consumers are doing more than that: they are giving serious thought to what they really need and what they really don’t. One lady in Staines realised she didn’t have to spend £70 every six weeks at the hairdresser and could use a £3.50 home dye kit instead. However, she wasn’t going to cut back on her expensive make-up and perfume.
4. It’s a constant struggle to stay on top of things: In our last survey, we identified three groups who represent the various responses to the current financial downturn, and this time round, ‘All Hands on Deck’ were the only group which had increased in size. Though people in this group feel the struggle to make ends meet most acutely, making the most of your budget is relevant to everyone, even for the relatively unaffected ‘Plain Sailing’ group. All want to feel they can loosen their belt without losing it.

I’ll finish with a quote from a young woman in Sheffield which sums up the dilemma the New Normal presents for some:
“I could lose my job tomorrow, so I should plan to protect myself against that – but then again, I could lose my job tomorrow…so why not live for the moment?”.

There are limited places available for a repeat of this breakfast briefing on 12^th May. To find out more please contact Karen Kidson.

Rebecca Nash writes:

We’re only a week away from our Government 2020 event – which we’re running jointly with Oxford Economics – so we’ve been putting the final touches to a new set of scenarios about the future of Britain’s political landscape.

The scenarios have been developed by our internal Knowledge Venturing team on the future of the public sector, and we’ve built them up by identifying the drivers of change of government, public finance, and public service, and also by conducting a range of interviews with experts in different parts of the world (New Zealand, Sweden, the UK, China, Latin America, and the US).

I’m not going to give away the scenarios here – they’ll be unveiled on Wednesday – but having gone through a pretty robust development process, they seem to add a dimension to our Feeling The Pinch research (here and here) which suggests that the experience of the financial crisis and economic downturn could lead to deep changes in political and social attitudes.

Oxford Economics, through its thought leadership team, will be offering an assessment of the economic impact of the spending plans in the government’s Comprehensive Spending Review, and also adding an extra economic dimension to our understanding of the scenarios. The panel is looking feisty as well: David Muir, previously an adviser at No. 10; Dominique Lazanski of the Taxpayers’ Alliance, Anne McCrossan of Visceral Business, and Nick Temple, of the School for Social Entrepreneurs. We look forward to seeing you there.

Andrew Curry writes:

It’s hard to add to the volume of commentary that has followed Wednesday’s Comprehensive Spending Review, but there are relevant observations from some of The Futures Company’s recent research. It is somewhere between a gamble and a large-scale economic experiment, as pundits observed almost immediately, largely regressive (opens pdf), and despite the denials it will increase inequality (from the current  historically high levels). If I was the government I’d be most concerned about the likely rise in unemployment, currently nudging the 2.5m mark, and with the government’s own estimates suggesting that 500,000 public sector workers could lose their jobs as a result of the public spending cuts. If the rush of private investment anticipated by some business leaders does not materialise, unemployment could quickly climb through the 3 million mark, which seems to have been the threshold of popular discontent in recent British history (if we think back to the early eighties and again to the early 90s).

Our recent wave of Feeling the Pinch research, which we blogged about earlier this week, also gives us a useful picture of public perspectives on the economy. The research was done in September, and 75% thought the economy was going ‘badly’ or ‘very badly’ – down from 85% in November last year. 39% thought they’d be worse off in 12 months time, and 10% better off – both figures almost unchanged since last year.

The groups who were more anxious about the economic prospects (“Choppy Waters” and “All hands on deck”) were similar to each other (and fairly different from the “Plain Sailing” group). They were likely to have a mortgage, or be renting; they were more likely to have dependent children; and they were likely to be working rather than retired. They are also much more likely to have been affected by debt, and have already changed their spending habits as a result of the recession. These are groups whose attitudes could change quite sharply if people they know start losing their jobs. And there are some clues here as to why the child benefits caused such a sharp public response.

The other relevant analysis was by our public sector team, which produced a short paper, “The Effectiveness Agenda”  after the election on how to improve public outcomes in an environment of austerity. We believed that savings could be found in public expenditure, but not the fabled ‘efficiency savings’ which critics always talk about. Instead, there were savings to be found from ‘effectiveness’, which involves looking at the desired public outcomes in a holistic way, and probably across departments. The Total Place agenda is a good example of this at a local level. Nationally, Kenneth Clarke’s plan to reduce the number of short-term jail sentences improves social and public outcomes while reducing expenditure hugely (although cutting the budget of the National Offender Management Scheme at the same time is not particularly holistic). But such thinking needs some time for reflection – and some leadership.

There are still a few places available at our next Feeling The Pinch breakfast seminar on November 9th; if you’re interested in attending, please contact Karen Kidson. The Effectiveness Agenda paper can be downloaded as a pdf from the link below; for more on this, speak to Andrew Curry or Alex Oliver. The icons at the top of the post were designed by Gus Newsam, of the Futures Company’s design team. They are © The Futures Company, 2010.

The Futures Company Effectiveness Agenda 2010 [downloads as pdf]

Joe Ballantyne writes

We’re experiencing a fundamental shift in the global economy, as wealth moves from West to East. As Asia and the Middle East assert themselves as the brightest prospects on the global landscape, in some ways we’re witnessing a return to the 16^th–19^th centuries, when the Chinese and Indian economies dominated world trade.

The scale of the shift is huge. In 1950, America was responsible for 27 per cent of the world’s GDP. China accounted for just 4.5 per cent and India, 4.2 per cent. Fast-forward to 2050 and the picture will look very different: forecasters say China will then be about to become the biggest economy in the world.

This economic shift, and the large implications for European businesses, was the subject of a recent report, Looking East, produced by The Futures Company for HSBC. The report included extensive analysis of the main drivers of change affecting the global economy to 2020, as well as a number of in-depth interviews with experts and businesspeople in a number of European countries.

It can seem as though this story is now a familiar one. But the research uncovered some striking findings, some of which go against the grain of popular conceptions about the rise of Asia. I was most struck, as we wrote the report, by these three:

• The ‘global financial crisis’ isn’t really global at all – it’s a manifestation of a longer term economic realignment. While Western economies stagnated through 2009-10, Asian economies are increasingly “decoupled” from the US, and have increasingly influential trade partners in other parts of the world – notably Africa and south America. China and India have continued to expand rapidly while Japan and several European economies have slipped into near-depression.

• Asia is no longer just a source of low cost labour – it’s increasingly a source of high value innovation. The model whereby the West does the research, development and design and the East took care of production is anachronistic. Lines have been blurred – as a result of a huge investment in education, countries like India and China are world leaders in areas such as software design and green technologies, and their multinationals are reshaping industries such as energy, steel and car making.

• There’s more than one way of running a successful economy. It’s easy to assume that the Washington consensus – open borders, economic liberalization, and free movement of capital, privatization – is the only way to run a successful economy. But these are largely a legacy of the ’80s, and an alternative model of ‘state capitalism’ developing in emerging economies. Companies are encouraged to exploit global capital markets and seek new opportunities abroad but are directed by the state and help to manage the domestic economy. This is most obvious in strategically important national industries: for example, 75% of the globally available crude oil reserves are in government hands. But it is also manifest in other industries: China Mobile, the world’s biggest telecommunications company, is listed on the NYSE, but controlled by a holding company owned by the government. In India, the central government has hundreds of state-run enterprises in diverse industries. Sitting behind the state capitalist model – in Russia and the Middle East as well as Asia – is the sovereign wealth fund, which invests globally for the benefit of the people but is managed and controlled by the state. These funds are increasingly active investors in the West.

The report – Looking East – was widely covered by (among others) the Financial Times, Wall Street Journal and Business Week and can be downloaded online (opens pdf), free of charge.The picture at the top of this post is from the China Digital Times, and is used with thanks.

Walker Smith writes:

A ‘new normal’ is emerging among consumers in the wake of the financial crisis and the recession:  ‘considered consumption’. This trend, which we noted last year, has now been reaffirmed by our latest Global MONITOR survey, which has just been released. One of the consequences is that the focus on price which was so strong immediately following the financial crisis has started to weaken.

Two data points stand out. The first is that 53% of consumers – taking a global average across all 20 countries – agree that ‘price is more important to me than brand names’ (down from 59% in 2009). The second is that 39% agree that ‘it’s best to buy famous brand names because you can rely on their quality’ (up from 34% in 2009).

Although these changes are small, they are notable. It can be easy to lose sight of the fact that consumers who are still tightening their belts also want the reassurance of name-brand quality.

And while there’s been a lot of talk about consumer frugality, what’s actually happening is that they’re practising prioritization. Consumers will stand up for the things that matter to them. But brands need to play their part as well. One of the other trends tracked by Global MONITOR is about interest in brands that practice social responsibility or deliver innovative wellness benefits. That’s been climbing, albeit slowly, over the past three years.

Global MONITOR is The Futures Company’s syndicated insights service. It encompasses an annual quantitative global survey of more than 27,000 consumers in 20 countries; the Global Energies, our consumer trends framework; and Global Streetscapes, our interactive database, continually refreshed, of consumer and brand behaviour. For more information, please contact Jennifer Childs in London or Simon Kaplan in the United States.

J Walker Smith and David Bersoff write:

We’ve just had a piece published in Admap where we argue that the challenge of context is the biggest challenge facing marketing – and until it’s addressed, everything else is a waste of time.  Research at Columbia University  illustrates why. In a web-based experiment respondents were asked to listen to and rate unknown songs by unknown bands, then given the opportunity to download as many as they liked. One group of respondents made download choices independently. The other group of respondents made download choices after first being told, in different ways, choices made by previous respondents. The influence of others turned out to be far more important than the individual’s own opinions.

The implications? As the Columbia team noted in their summary, most studies “view the individual as the relevant unit of analysis”. But “when individual decisions are subject to social influence, markets do not simply aggregate pre-existing individual preferences”. In other words, when context is missing, the research results are wrong. Both marketing, and marketing research, will have to change to keep up.

Fragmenting technologies, and fragmented markets, have disaggregated the audience for marketing, and the mass market has splintered. But we’re still using models that were developed when mass media was dominant. Now that people are ever more deeply embedded in narrowly drawn networks of information and influences, contextual reference points play a bigger role in moulding choices. People are surrounding themselves with input they have chosen. The result: people get more of exactly what they want, but are closed off to other ideas.

What this changes for marketers is that they must actively manage both ads and the context for ads, and managing context becomes a primary consideration, not a secondary one. In turn, this calls for an attribution-based marketing model, not to displace persuasion, but to nest it in the bigger picture, like Russian dolls inside one another. Attribution works by shifting how people think of themselves, rather than how people think of brands.

Attribution-based marketing aims to make people attend to alternative aspects of themselves. When people see themselves in new ways, they adopt new reference points for calibrating their opinions, and then behave in ways consistent with their new sense of self. Persuasion must still get the brand message right; attribution sets the context within which a brand message can succeed. The implication for research is that it needs to understand its users’ reference points as well as their opinions. It doesn’t do this well at the moment. It’s a big challenge, and also a huge opportunity.

Andrew Curry writes:

We’ve just published our latest report on the post-recession consumer,  and the headlines are that although people are still concerned about the state of the economy, and are behaving cautiously as a result, there is less panic about the economic outlook than was shown in our previous research. But this is partly because people have changed their behaviour – the UK savings rate is now 8% (it was close to zero for most of the last decade, and even negative in 2008). As Futures Company Director Fran Walton said at the client launch, “People are building a buffer for what might lay ahead for them.”

A couple of insights from particular sectors are striking. The first is that people seem to have changed their grocery shopping behaviour – the proportion agreeing that ‘I am shopping at several shops to get the best prices, rather than doing one big shop at the supermarket’ increased from 22% to 36% between January 2009 and November, when the field research was done for the latest report. And there’s evidence that people are looking to spend less when they go out. There’s a more detailed summary of the data in WARC (subscription required).

News of the client launch event turned up in an unlikely place – Claire Myerscough’s Media Week in Brand Republic. She works for News International, and this was her take on the research:

Learn that consumers are still less trusting, with 53% worried about the price of petrol and 43% planning to spend less over the next 12 months. The mood of uncertainty is in line with our research: things have improved since this time last year but we are not out of the woods yet.

The Reconstructed Consumer is available as a paid-for report. For more information please contact Jennifer Childs on 020 7966 1824.