Global Trends 2030 Released by NIC

Every four or five years, the US National Intelligence Council (NIC) publishes a Global Trends report. And now Global Trends 2030 has just been released. A short (5-page) briefing can be found here. The longer (160-page) report can be downloaded in pdf, iPad and Kindle formats here.

The executive summary describes the NIC’s goals for this massive effort:

“This report is intended to stimulate thinking about the rapid and vast geopolitical changes characterizing the world today and possible global trajectories during the next 15-20 years. As with the NIC’s previous Global Trends reports, we do not seek to predict the future—which would be an impossible feat—but instead provide a framework for thinking about possible futures and their implications.”

Since the mid-1990s I’ve studied these Global Trends reports carefully, using them to ground myself about changes I see in the economy, the legal industry, and my personal investment options. Below are my very quick Cliffs Notes on this latest report.

 

Global Megatrends

The global megatrends (relative certainties) presented and discussed in the 2030 report include:

Individual empowerment

·         Rapidly expanding middle class (for the first time, most of world’s population aren’t in poverty)

·         Life expectancy increases rapidly, with deaths from communicable diseases dropping more than 40%

·         Religious, ethnic and national identities are strengthened

·         More technological breakthroughs in information, communication, manufacturing, healthcare, warcraft are great levelers for good and evil

·         Individuals and states experience greater stress levels

Diffusion of power

·         Asia surpasses North America and Europe in global economic power

·         Power/impact of Europe, Japan and Russia lessens

·         No global hegemonic political power remains – regional conflicts and regional partnerships are both possible

Demographic patterns

·         World population becomes increasingly urbanized (from 50% to 60%), and urban construction explodes

·         Economic growth may decline in demographically aging countries

·         Youthful countries are politically unstable (the “demographic arc of instability”)

·         Global migration and immigration increases

Food, water, energy nexus

·         Huge increases in demand for food (35%), water (40%) and energy (50%)

·         Addressing demands for each of these commodities is linked to supply and demand for the others

·         Severe weather patterns intensify – wet areas get wetter, dry areas get drier

Critical Game Changers

The report posits six critical variables whose trajectories are far less certain and are subject to control by state and non-state actors:

1.    Crisis-prone global economy - Will divergences and increased volatility result in more global breakdown? Or will the development of multiple growth centers lead to increased resiliency?

2.    Governance gap - Will current forms of governance and international institutions be able to adapt fast enough to harness and channel change instead of being overwhelmed by it?

3.    Potential for increased conflict - Will rapid changes and shifts in power lead to conflicts?

4.    Wider scope of regional instability - Will regional instability, especially in the Middle East and South Asia, spill over and create global insecurity?

5.    Impact of new technologies - Will technological breakthroughs occur in time to solve the problems caused by rapid urbanization, strain on natural resources, and climate change?

6.    Role of the United States - Will the US, as the leading actor on the world stage and with its new energy independence, be able to reinvent the international system, carving out potential new roles in an expanded world order?

Four Alternative Worlds / Scenarios

Like the preceding global trends reports, the 2030 report includes four different global 15-to-20-year scenarios for use by organizations that engage in scenario planning. The four Alternative Worlds posited are:

1.    Stalled Engines – In the most plausible worst-case scenario, the risks of interstate conflict increase. A pandemic hits, the US draws inward, and globalization stalls.

2.    Fusion – In the most plausible best-case outcome, China and the US collaborate on a range of issues, leading to broader global cooperation.

3.    Gini-Out-of-the-Bottle – Inequalities explode as some countries become big winners and others fail. Inequalities within countries increase social tensions. Without completely disengaging, the US is no longer the “global policeman.”

4.    Nonstate World – Driven by new technologies, nonstate actors take the lead in confronting global challenges.

What's Next?

 

I know how full the days (and nights) of law firm CI professionals can be. However, I hope you will find time to explore this new report. I also hope some of you will comment about it. I’ll soon be posting more here about 16 disruptive technologies, 8 possible black swan events, and other topics discussed in the Global Trends 2030 report.

 

Director’s Cut – Four Law Firm Scenarios

The scenario planning workshop provided by Outward Insights and Ann Lee Gibson Consulting to senior marketers at the 2009 LMA annual meeting got strong interest and good reviews.

Given law firms' growing interest in scenario planning, I have posted on my Web site the four detailed possible futures we designed for use during the workshop.

Even if you aren’t ready to do full-on scenario planning, do yourself a favor and read these four possible futures in which your law firm might soon be operating. Some are outrageous, some are grim. Each might (or might not) come to pass.

Then consider:

1. What actions and positions should your firm take today to succeed in each of these possible futures?
2. Which actions / positions, taken now, would predicate your firm’s success in the majority of these scenarios?
3. What early warnings would signal when / if each of these possible future were coming true?
4. What other actions / positions should you take ASAP when it looks like one of these scenarios is coming true?

If this sounds like something you, your law firm, or its practice groups should learn more about, give me a call. I’ll point you to more resources and try to answer your questions.

Four Possible Futures for Law Firm Scenario Planning Workshop

LMA'ers will be tweeting at #LMA during sessions of the upcoming 23rd LMA annual meeting at Gaylord Conference Center on the Potomac. Therefore, LMA has asked speakers to share some of their materials with those who will be following these tweets. Good idea! And so ...

On Wednesday morning, April 1, Bill Fiora (of Nixon Peabody), Ken Sawka (of Outward Insights), and I (Ann Lee Gibson Consulting) will lead a three-hour scenario planning workshop for senior legal marketers.

Below is a summary of four possible futures we have developed for participants' use during the session. Working in small groups, they will identify core and contingent strategies for success under different scenarios, identify early warnings to recognize when scenarios are "coming true," and challenge their own and others' assumptions and strategies.

Each of the following scenarios describes a possible future for the legal industry intersecting somewhere between two dimensions: (1) timing of economic recovery (early 2010 vs. 2011-12) and (2) legal services delivery models (aggregated vs. disaggregated). The scenarios are summarized below.

Note to workshop participants: You will receive and work with scenarios that are much more detailed than the following summaries.

Scenario #1 -- The Great Pretenders describes a world where economic recovery begins in early 2010, the earliest anyone now hopes for. Global M&A activity, one of the earliest indicators of the recovery, surges as market-leading companies and those with large cash reserves acquire competitors and suppliers weakened by the recession. The strong are eating the weak and getting even stronger.

In this world, law firm leaders feel they have made it through the tough times and look forward to life as they once knew it. The recession was tough, but it encouraged necessary discipline and weeded out the weak. 2010 promises to produce the most law firm mergers and acquisitions ever recorded.

Scenario #2 -- Shattered! describes a legal industry dramatically altered by a perfect storm of events that created a PR nightmare for BigLaw. In this possible future, the recession’s impacts on the legal industry pale in comparison to other events that also grabbed the public’s attention. Inside BigLaw, the survivors of the 2008-09 layoffs still suffer from depression and guilt. In 2009, a runaway bestseller and a summer HBO TV series set the stage for a Wall Street BigLaw disaster fueled by debauchery and hubris. One of America’s most respected law firms has been brought very low, rocking New York society and BigLaw to its core. Law firms may never be the same.

As a result, the legal industry is reversing its bigger-is-better trend. Dozens of start-up law firms, prospering mid-sized and regional firms, mega-networks of telecommuting lawyers, and new legal vendors leap into the breach. It’s possible the growing economic recovery will allow BigLaw to repair its embattled reputation and rule again, but one thing everybody understands is that for the first time in a long time BigLaw has many serious competitors.

Scenario #3 -- The Big Chill is a future where the hoped-for 2010 recovery has not appeared and does not seem imminent. All governments and economists now agree the recovery will not appear until 2011 or later. Federal stimulus plans have dramatically slowed home foreclosures, but failed to thaw banks’ lending practices. The only bright spot in the corporate legal services market comes from the huge corporate M&A deals being struck in pharma, transportation, real estate, and energy at enormous fire-sale prices.

Corporate legal clients have much smaller legal budgets, but still face an overwhelming burden of legal issues, including bankruptcy, financing, litigation, and regulatory changes. In response, all firms survive by cutting costs to the bone and learn to compete on price. The largest companies discover they have no energy to deal with scores of smaller firms. The exchange of large amounts of commodity work for law firms and the BigLaw promise of safety for corporations becomes the two-ingredient glue that keeps big companies with big law firms. It is a painful time, particularly for legal vendors. Competition becomes cut-throat, pitting firm against firm—and in a surprising twist, some firms against some clients.

Scenario #4 -- Davids vs. Goliaths sees corporate legal clients having a radically different response to the continuing economic deep freeze. In a world already full of risk, they see little extra risk in moving from one law firm to another. All relationships are up for grabs. Some clients cancel their convergence programs, turning to procurement agents or consultants to deliver the best combination of price and expertise on each matter.

The legal industry is rapidly disaggregating. The fiction that big firms could develop and benefit from economies of scale is now seen for the naked emperor it always was. In BigLaw, some of the biggest rainmakers decide they’d rather not share their pie, and form their own boutique firms. In fact, new firms of all kinds are sprouting up all over. Technology vendors reorganize to provide turnkey services and compete directly with firms. Many law firms outsource everything but their most core legal services. Clients are buying legal services directly from India and China. The only certainty is that this is a time for pragmatists, not purists. Everyone who hopes to survive this era is now brutally scrutinizing their beliefs, styles, processes, and goals.