Interview by Tom Craren and Gene Zasadinski

Back to the Future is the name of a movie, but it also describes Andrew Zolli’s professional landscape. Zolli is a futurist, and—at least imaginatively—the future is where he spends most of his time. A century ago, the word futurist conjured up images of crystal balls, tarot cards, and Ouija boards. While modern-day prognosticators depend on other tools, all futurists—past and present—rely on the rare ability to predict drivers and trends with some degree of accuracy. As his clients affirm, Andrew Zolli has a generous measure of that ability. In our interview, he applies his gift of foresight to the world of business and to the world at large.

PwC: You are often referred to as a futurist. What does that term mean to you, and is that how you define yourself?

AZ: I actually prefer foresight researcher or global trends analyst. A lot of what I do is about looking at critical places—where you can see future trends emerging that are going to be definitive for the whole planet or for a culture or an industry—and then thinking through with senior leaders about how those trends might shape the global operating environment.

PwC: You refer to these as intersections.

AZ: That’s right. The big ones that I pay attention to are demographics, globalization, environmental issues, some global policy—especially global business issues—and emerging technologies. But the most fruitful terrain lies between those vertical areas of focus. For example, it’s not so much demographics as it is the effect of demographics on healthcare, public policy, or the environment. What I do is develop visions of the future that share key themes and that help senior leadership teams look just a little bit further out. Sometimes you should act on great opportunities while they’re still over the horizon.

PwC: So how should companies be engaging a foresight researcher like you, and how far out should they be looking?

AZ: First, companies should work with foresight researchers to perform what I like to call environmental scanning—that is, scanning within such defining driving areas as demographics, emerging technologies, and economics to get a sense of how those environments are unfolding. Companies should then develop scenarios that look specifically at how the individual data points in each one of those areas might unfold. I think organizations should do environmental scanning every year. And they might want to do scenarios every three to five years.

PwC: Can you describe a typical scenario-building process?

AZ: The process begins by identifying key uncertainties. For example, a current key uncertainty right now involves the American economy. Will it go into recession, and—more important—will it drag down the global economy in the process? Another key uncertainty is about the price of oil.
If you place just those fundamental macro drivers on a two-by-two grid, you can envision four different worlds that suggest a number of future policy implications. What you’re really after when you’re developing scenarios are data rich stories that are expressed in a number of ways. A scenario that draws on only the left hemisphere of the brain—the one that’s all charts and numbers—misses the nuances. The reality is, we’re not exclusively rational creatures. We’re semirational creatures who make decisions based on our emotions and our own experience. Our visions of the future need to reflect that.

PwC: You mentioned a number of powerful drivers. What should companies focus on in terms of some of the major trends that you see?

AZ: First of all, demographics are critical. Historically, the American population architecture has looked like a pyramid—with young people significantly outnumbering older people—but the baby boomers are creating a big bulge in the middle. Over the course of the next two decades, we’re going to see a new population structure emerge in the United States. Instead of a pyramid, that structure will resemble an hourglass, the two ends of which will represent the largest number of old and young people who have ever coexisted in our society’s history. This will result in some interesting paradoxes. Let’s take the workforce, for example. Many boomers soon will be retiring, but many will stay on the job. That creates a paradox for Generation Xers. Many will move up the management chain much sooner than their predecessors did. Others will get trapped behind a new glass ceiling created by boomers who won’t or can’t retire.

PwC: Beyond the workforce, what else will change?

AZ: I think we’ll also be seeing some very interesting changes in the structure of families. For instance, because of advances in healthcare, many people are outliving their incomes and in a
sense, moving back home to live with or close to their children.

Drivers and trends: Zolli looks ahead First, there are the fundamental long-term trends that you and I can’t do anything about, such as demographics. The second would be large structural forces like long-term climate change. The third would involve big global economic forces. But you also have to look at what we think of as the accidents and incidents. These are wild cards—low-probability but high-impact events, such as terrorist plots or, for that matter, breakthrough technology inventions

PwC: What’s the impact of this change?

AZ: When you change the family, you change the basic unit of consumption. For instance, who makes healthcare decisions? Who makes entertainment decisions? Everything is affected. Take product design, for example. Designing for three generations as opposed to two involves very different sets of issues.

PwC: You mentioned healthcare. These demographic changes must have a profound impact on the future structure of healthcare, right?

AZ: Of course, and I think it’s a combination of really complicated issues. You’ve got the general frame of the traditional healthcare system—as we understand it—pushing us toward new political circumstances. You’ve got the rise of network consumers acting in their own interests in healthcare for the first time. But most interesting will be the rise of healthcare innovations.

PwC: Can you give an example?

AZ: Yes. Take pharmacogenomics. The pharmacogenomics revolution is the intersection of drug targeting and genetics. For example, in today’s healthcare environment, if three people get sick, it’s very likely that within a certain set of parameters, they’ll each be given the same medicine—often in the same doses. Unfortunately, because of genetic factors, the same medicine that heals one does nothing for or kills the others. We’re only just beginning to understand the intersection between genetic triggers and medical effectiveness.

PwC: We’ve talked a lot about demographics. What else should companies look at?

AZ: Three things: First, there are the fundamental long-term trends that you and I can’t do anything about, such as demographics. The second would be large structural forces like long-term climate change. The third would involve big global economic forces. But you also have to look at what we think of as the accidents and incidents. These are wild cards—low-probability but high-impact events, such as terrorist plots or, for that matter, breakthrough technology inventions. Will understanding all of these things lead to perfectly accurate predictions all of the time? Of course not. It’s not so much that you turn to experts to give you all the answers all the time but that you develop a culture of constant investigation—constantly scanning the weak signals that are going to be definitive in the years to come.

PwC: Companies that are good at foresight also seem to be the best innovators. Is there a connection between foresight and innovation?

AZ: Yes. What we’ve discovered about organizations that are very good at becoming sustained innovators is that they share common characteristics. First, they spend a lot of time paying attention to weak signals as part of their culture, and they’re very good at identifying what they don’t know. Second, sustained innovators use a portfolio of five cognitive styles simultaneously. The first is the classic think-tank model: You take a group of experts, lock them in a closet, and hope you get a solution to your problem. Eighty-five percent of the time, you don’t. A second style of thinking and style of problem solving is about ethnography: sending people out into the field to see what people are doing. Using this method, about 70 percent of the time you get real but incremental innovation. The third style is what I call the play category, in which you put a problem through thousands of iterations until you either solve it or redefine it. The fourth one is about scenario planning, where you ask yourself what your organization would look like under a certain set of circumstances and then work backward from there. And finally, the fifth style involves leveraging the power of networks.

PwC: That explains innovation, but where does foresight fit in?

AZ: Foresight is a core cognitive skill—just like playing, having a think tank, doing ethnography, or building networks. It’s also a core leadership skill, and in my research, the organizations that have proved to be the best sustained innovators are also the best at foresight.

PwC: It must be incredibly difficult to embed these types of thinking into an organization.

AZ: It is. Thinking about the future and thinking about innovation are whole-brain exercises, and big companies typically are not whole-brain organizations. But in making decisions, leaders of whole-brain organizations draw on both rational—left brain—and intuitive—right brain—mental resources.

PwC: Should companies be taking this whole-brain approach to today’s hot-button issues like climate change and sustainability—especially in the US, which some perceive as being behind the rest of the world in its response to these areas?

AZ: Yes, but let’s separate the two issues. They’re related, but they’re not the same. Climate change is a critical, fundamental challenge for the planet. Sustainability is a business issue. The first thing to say about climate change is that it will continue to accelerate. There is a 30-year lag between when we put carbon and greenhouse gases into the atmosphere and when they have a measurable effect. So we’re dealing this year with 1978’s carbon, and that’s a real issue for us. Long before we have to deal with the full effects of climate change, we’ll have run out of oil. That’s an absolutely done deal. So we’re going to have to learn how to live in a postcarbon economy. The good news is that this is an opportunity for tremendous wealth creation. The green energy revolution is going to make the IT revolution look minuscule in comparison.

PwC: But what’s the bad news?

AZ: The bad news is that climate change is going to adversely affect poor countries much more than wealthy countries. Disease will spread faster, and catastrophic climate-related events will increase and disproportionately affect such areas as coastal Africa and coastal Asia.

PwC: What about sustainability?

AZ: There are two sides to sustainability. The first involves an eco-industrial revolution that we are in the midst of. We’ve had three waves of environmental thinking in the post–World War II period. In the 1960s and 1970s, we saw the rise of conservation—preserving parks and so on. This led in the 1980s and 1990s to a second great revolution: the sustainability revolution. But there’s a problem with sustainability. The markets do not uniformly reward sustainable behavior, so there aren’t efficient and consistent definitions. The third wave that we’re starting to see emerge is a postsustainability era where we’re using new technologies to look at the natural world as a library of engineering solutions. A great example of this is the lotus leaf. Even though lotus leaves grow in brown, brackish water, they never appear to be dirty. The leaf is covered with a special wax in a series of little bumps and ridges that prevent organic material from adhering to the surface. A group of German engineers used this property as the basis of a self-cleaning house paint. In other words, we’re starting to view the natural world as a library of latent applications and new approaches to solving business issues, resulting in a whole bunch of new technologies.

PwC: And what’s the other side of sustainability?

AZ: The other side is really about a cluster of business issues, chief of which is talent. Young people—those we label as Millennials—have an abundance of choices. They’re looking for meaning and purpose. They’re more likely than their seniors to say, “I’d rather have a meaningless job at a meaningful company than a meaningful job at a meaningless company.” Does that make sense?

PwC: Yes, it does.

AZ: And that is a deep psychographic and generational shift that’s propelling the green movement and the issues around sustainability. It’s also driving the brand inside the company. In today’s world, a company’s essence or brand is as important to the company’s employees as it is to the company’s customers and shareholders.

PwC: We mentioned earlier that climate change and sustainability are areas in which some feel the US needs to catch up. Are there other aspects of US competitiveness—or lack thereof—that companies should be keeping their eyes on?

AZ: You know, I think there’s something really important here. Some business leaders are worried about the decline of American preeminence in the world. I think the answer is a couple of different things. First of all, it’s going to happen. And it’s going to happen faster than I think a lot of people know. But this is simply a return to historical norms. In the year 1500, 75 percent of global GDP was generated by two countries: India and China. In search of more-efficient routes to that wealth, Europe discovered North and South America: resource-rich places that could be mined and could be absorbed and could be exploited. So you’ve got this 500-year delta of Western preeminence based on the compounding value of this enormous, extraordinary wealth reserve, and now we’re seeing the return to historical norms. While this will bring with it the inevitable decline of single currencies, it will also create a more multipolar planet.

PwC: So are you saying it’s likely that there won’t be superpowers at some point?

AZ: No. There will always be superpowers, but what will be most important over the next 20 years is the gentle, continuous expansion of what I call the dominant global superconduit.

PwC: What’s that?

AZ: If you look at a GDP-per-square- kilometer map of planet Earth—that is, a map showing where in the world all the money is—you’ll see a highway that runs over North America, over the Atlantic Ocean, over Europe, down to the Middle East, down through India, up through China and Japan, back up over the Pacific Ocean, and then back to North America. Almost 90 percent of all global transactions occur along that highway. The people situated on the highway are living well beyond the means of their local environments. They’re net importers from the rest of the world. Life in this superconduit is going to continue to be fast, consumptive, and deeply intermingled, and it’s going to continue for the foreseeable future.

PwC: Is that a good thing?

AZ: Not entirely. One problem is that every major period of massive global integration has ended in global war. So one of the big questions is, Can we shift from a unipolar or a bipolar to a multipolar world and avoid real conflict?

PwC: Can we?

AZ: There’s reason for hope. It used to be that two places that had large standing armies pointed at each other were not going to go to war. Then it was two places that both had significant densities of fast-food restaurants would not go to war. And now I think, arguably, the situation is that any two countries that exchange at least 15 petabytes of email a week are probably not going to go to war. The level of economic, cultural, and technological exchange between them is so great.

PwC: In 50 years, will the world be a better place?

AZ: I think so. We tend to envision the future as a blank slate, but that’s really not the case. In many ways, the future is now. Much about the world we currently live in—the good and the bad—will follow us into the future. If the past 50 years have taught us anything, it’s that with advances in technology and science, we can tilt that equation toward the good. So, yes, I’m quite optimistic about the future.

Connections

Understanding the future is all about understanding connections—even those that reach across centuries.

Only the most avid space shuttle enthusiasts may know that by federal mandate, the payload of the shuttle has to be able to fit on a railcar. Why? Under President Lyndon Johnson, the fledgling space program received a big boost, and it became necessary to be able to move large quantities of materials around the country quickly and efficiently.

But here’s where the connections come in. The size of a railcar is based on the width of its axles. Because vehicles occasionally have to intersect with railcars, the width of a railcar’s axles is defined by the size of the road—a size determined by the European standard.

Thousands of years ago, two Roman legionnaires walking down a road, side by side, defined the size of the roads in what would become Europe. So the means by which the material used for building the international space station was transported to the space shuttle is directly connected to a standard of measurement that goes back thousands of years.

In the same way, much of the world of the future will be predicated on standards being developed today. You could say that in almost everything we do—from designing cars to building skyscrapers—we are in fact measuring our future.—AZ