Coz Tourists Are Money - No Future Part 2
The Futurism Industries Explored
The previous post discussed different forms of futurism. Dave Karpf writes about his own views on futurism informed by his research on WIRED magazine in the 90s and current public discussions about the future. He also divides the market into 4 segments - only his ones are Pundits, Professionals, Cassandras, and SF writers. I’ll talk about the fourth (along with the Charlie Strosser article he links to) in the next post and unpack Jacob Wright’s comments in another. Now I get why Dave has made this division; it feels to me like one of style or genre. I want to explore it a little differently - in terms of industry group. All the players (with one exception) are only selling futures work to sell something else.
One map that will guide us as we explore this morass of tomorrows is the Innovation Adoption Lifecycle (IAL) - originally developed by studying Iowa corn farmers (among others). Everett Rogers Diffusions of Innovation book came out in 1962. A few years later the Clinton Corn Processing Company of Clinton, Iowa began producing high-fructose corn syrup (HFCS). HFCS is a highly-processed product of the industrial age, cheap, offering a hefty and addictive calorific boost, added to other things to make them tastier, otherwise nutritionally empty. How could it possibly relate to futurism?
IAL provides a simple model of how an innovation ripples through a community:
Innovators are those who come up with new ideas. There are a small number of them and they are often a bit weird. They are less concerned whether something works than whether it is new and cool.
Early adopters want an edge over their neighbours / competitors. They steal things from the innovators but they are very interested in making sure that they work. It has to be cool AND useful.
Early Majority are normcore. They are typically seen as high status leaders. They want to maintain that position. They steal from the early adopters. Things need to work easily.
The Late Majority are even normier. They are conservative. They want everyone else to have ironed out all the bugs before they pick something up. They steal from the Early Majority.
Laggards laggard. They accept something when they have no other choice. They steal from the Late Majority.
Geoffrey Moore used this framework in his twin classics Crossing The Chasm and Inside The Tornado. Technology strategy classics that are - ironically and annoyingly - available only in hardcopy in Australia. If you work in tech and you haven’t read both of these then I will judge you harshly.
Commercial futurists are trying to sell some kind of innovation and they often specialize in servicing one segment of the IAL - which we’ll cover in more detail as we look at the different industries.
Consultants
Consultants want to sell you their advice and the big firms are split into Strategy and Operational. The strategy houses are known collectively as MBB (McKinsey, Bain, BCG). Traditionally these advise CEOs and Boards on strategy. But as we shall see, these firms have to grow to survive so they have increasingly looked at moving into operational work. Meanwhile the Operational firms are the Big 4 (PwC, Deloitte, E&Y, KPMG) and Accenture with the consulting arms of Old Tech companies (e.g. IBM) and the Indian outsourcers (Wipro, TCS) nipping at their heels. Operational consulting exploded in the 80s and 90s with huge ERP implementation projects. These firms will mostly do whatever you pay them to do and they must also grow to survive.
Why? Well, when you join these businesses as a grad fresh out of university, they offer you a Faustian bargain: work yourself senseless for 10-15 years and make partner. As a partner, you earn a ton of money, you hobnob with the great and good, and you get heaps of social cache. For ambitious and conventional people, the path is as clear and as hard, and the destination is as glittering, as diamond. But for this model to work, the firms must be able to make new partners - which means that unless they rely on natural attrition (and who wants to stop being a partner when it’s as sweet as HFCS) - they need to grow.
While they will sell anything to anyone, it is firms that sit in the Early and Late Majority of the IAL that have the money to buy their services. Consulting firms tend to mirror the risk and innovation appetites of their clients. A big part of the role of large consulting firms is to steal ideas identify best practice from Early Adopters and sell them to the Early Majority and then sell them again to the Late Majority.
To make all this stuff exciting, they need Thought Leadership. Most Thought Leadership demonstrates little thinking and will only be “leading” if that means “the same as everybody else” - and that’s not because the consultants are stupid. Their clients are inherently conservative, they don’t want that edgey stuff. They want a spoonful of HFCS to help the medicine go down. A report titled Payments in 2030 with some nice diagrams and some inspirational photography might get you $3m of systems integration work - especially if the client is worried about getting left behind. Foresight is very much the lipstick on the consulting pig.
Now I am stereotyping massively - #notallconsultants. Small firms play different roles in the ecosystem. But the futures work that consultants do is driven by what their clients will pay for. And as we’ve established in the previous post, most executives who buy this work are not interested in the future. I’ve spent most time on this because this is the industry I know best.
Ad Agencies
There are six big marketing conglomerates - WPP, Omnicom, Publicis, Interpublic, Dentsu, and Havas. Each of these beasts is made up many sub-brands formed through aggressive acquisitions strategies. And they have not been left to themselves in this market either - the Big 4 and Accenture are buying up marketing firms like it is Ad Agency Black Friday. While these businesses cover many aspects of marketing (media buying, research), at their core is advertising. Unlike consulting - where partners get to be partners by selling - ad agencies typically split their functions into Creative and Account Management. The Account Managers get the clients drunk manage the client relationship and the creatives are failed artists make the ads. There are also Strategists and Planners whose job is to talk to those responsible for marketing strategy at the client. This latter ad agency group have a problem - there often aren’t people responsible for marketing strategy at the client. The CMO has to contribute to sales in the short term and the easiest way to do that is to pump out some ads. Coincidentally CMOs have the shortest tenure of all C-Suite roles.
So Ad Agency Strategists position themselves as futurists so they have something to talk about. While the discussion may be on blockchain, generative AI, or drones - what it mostly ends in is ads. At least it gives the corporate marketing team something to do other than buying Google Adwords and wondering why they studied for a degree to do this. The Ad Agency Futurist is a corporate entertainer. It helps to be charismatic, charming, and funny. Slick visuals and catchy taglines are all good. But here, the future is an ad for an ad.
Finance
All the various types of finance companies are basically selling their services either to investors (who give them money to make more money) or capital requirers (people who need money). The latter are easier to find as everybody wants a dollar. While the exchange of money happens now, this is an inherently future-oriented transaction. The investor requires their extra money in the future, the capital requirer will either need to pay back the debt or make good on the promise of the equity. And therefore the future is a source of risk and return.
This should mean that finance firms have a strong future orientation - and occasionally this is true. Insurance companies have been some of the loudest campaigners about climate change. Unfortunately they have been less effective in buying off politicians influencing the public than oil companies. However the securitization of everything by the financial services sector means that risks can be traded and spread - sometimes with catastrophic consequences. No one stays in one job for very long. And ultimately you want someone to buy the asset that you are selling or do the deal that will give you the % fee. So it is always sunny side up and everything is HFCS sweet. Damodaran here analyzes the analysts with his usual surgical precision. Analysts can get away with it because markets have grown on average over the last century.
Venture Capital (VC) is a special case in point. The 2010s saw vast sums of capital tsunami into Silicon Valley. Sure you need an investment thesis but when the money tsunami pushes you up, it’s easy to convince yourself that you are Kelly Slater. The 2-and-20 business model (an annual 2% management fee plus 20% of the profits from the investments) and the 8-10 year lifespan of a VC fund means that even if your bets are duds, you can still make a dollar. And VCs exist along the IAL (e.g. angel, seed, growth, late-stage, etc).
All that money in VC has been like all that HFCS in a soda. Or as Francis Ford Coppola said of the making of Apocalypse Now: “We had access to too much money, too much equipment, and little by little, we went insane…”
Technology
The final group who sell the future are technology companies. Now obviously the future they sell will be the one where their product solves all your problems and makes you happy. Therefore the ability to craft a story about the future is as critical to their success as having a good product (sometimes more so).
Who those stories are told to, what they are told to get, and therefore what is in them changes as a tech company moves across the IAL. At the Innovator stage, the story is all about disruption and newness and coolness. And the audience is likely both potential customers and investors. As a company moves along the IAL to the right, it will shift to effectiveness and then to reliability. There are a million scrappy startups at the Innovator stage. A lot of the Generative AI wave companies applying LLMs to actually do something are with the Early Adopter community. Apple do Early Majority well. Microsoft is the king of the Late Majority. Computer Associates has always been where software is put on life-support to drip feed to Laggards for money. When a company hits the Early Majority it will IPO as it has both a sufficiently large revenue base and a sufficiently bright growth story to generate a high valuation multiple.
Obviously the companies with the most money to tell their stories of the future are the large ones. Their stories need to be at once slightly challenging (otherwise you have no reason to buy) but ultimately reassuring (otherwise you have no reason to buy). Innovation without change is the ideal of these companies.
Sole Practitioners
And then there are the lone futurists brought in for corporate strategy awaydays. These people are (like the ad agency strategists) entertainers. Their job is give executives a break from the awayday’s endless internecine budgetary and political fights (which often amount to the same thing, money and power being two sides of the same debased coin). You need to be entertaining, tell arresting stories, sprinkle in the odd chart or two for “science”. Having a book, some media appearances, or perhaps an honorary university appointment gives you a patina of respectability. But in 99% of cases, everyone will clap politely and nothing will change. You are not there to show them the future. You are there to make the present bearable for a second. As stated previously: Everyone wants innovation, no one wants change. And this goes double for those in the Early and Late Majority that have the funds to pay for this stuff.
No Future
There are many groups I have left out here - esp. the Think Tanks that flood the public policy zone with s**t compete in the marketplace of ideas. I have focused on those who sell foresight to businesses as this is my primary area of experience. Let me be clear, while the above may come across as cynical, I do not think that people doing this are always bad and they are certainly not stupid. They are simply doing a job to earn a living. And if what they do makes us unhappy then we need to ask what are the real needs and interests that they serve and why do we let those needs and interests persist? The answers may be considerably less comforting that the HFCS fables of the futurists.
Just brilliant, as both critique and how-to-guide.
But when are you going to talk about “Shingy”?