Tag: scenarios

Who Will Do Well After the Global Commodities Glut?

FORESIGHT

Global commodity markets are beginning to turn around, but the industry leaders could be changing. For the last three years, the global economy has been severely impacted by the oversupply of commodities and dramatic price drops. The large multinational producers have been desperately trying to survive, and if they’re fortunate position themselves strategically for the long, slow recoveries. For commodity producers with money now is the best time to negotiate future commodity-extraction agreements. Countries with low-cost reserves to license will likely have to change their terms to attract new foreign investment. Chinese producers will likely become the new global leaders in many key commodity markets. Anti-trade/anti-foreigner sentiments have been increasing around the world, and these will influence where multinationals go. With the growth of developing-country multinational producers, the trend toward increased transparency of large government commodity agreements could reverse, and corruption levels could worsen. Multinationals from developed countries will be somewhat less active and this will reduce the influence of their countries’ foreign offices around the world.

RECENT SIGNALS OF CHANGE

While commodity cycles and their effects on multinational producers and developing countries are normal, the scale of changes in the down cycles and the reversal of so many large fortunes are catching much of the world by surprise. It appears most commodity markets have passed their worst moments and are now recovering, albeit very slowly: the new cycles are beginning.

  • Many commodity supply leaders—companies with the best-paid management talent—are in serious financial trouble. Why did they get the timing of so many large capital investments wrong? Why were they expanding supply capacity after many years of demand growth, right before the crash?
    • Severe commodity downswings can occur almost overnight. Exports of copper to China in 2015 were half of what they were in 2012, when copper demand was at its peak. In 2015 the equity shares of the large Anglo-Swiss miner and trader Glencore, who has been very active in copper, fell to a sixth of what their value was in 2011.
    • The Spanish renewable energy firm Abengoa SA is struggling to avoid what could be Spain’s largest-ever corporate bankruptcy. It announced in August 2016 that its latest action was to sell five of its US ethanol plants for $357 million.
    • Petrobras is implementing a divestment plan to sell $15 billion in assets to help pay off the company’s very high debt load of $126 billion. In the spring and summer of 2016, Petrobras sold stakes in Argentina and Chile subsidiaries, a large offshore oil field to Norway’s Statoil, and petrochemical unites to Mexico’s Alpek.
  • The global economic slowdown and global commodities slump is also severely impacting an array of large services and equipment supply companies.
    • The mega ocean shippers like the Danish Maersk Line, Dutch Hapag-Lloyd, and China Bulk Shipping have 30% more capacity in the water than cargo. UK marine data provider Vessels Value says that in the five years through 2015, ship owners ordered an average of 1,450 ships annually. This year through July orders fell to 292 vessels. It will take several years before the surplus capacity is scrapped and demand for shipping increases enough. Maersk recently announced it was replacing its chief executive and was looking at splitting the company up.
    • The Union Pacific railroad in the United States suffered an 11% decline in total freight volume in the first half of 2016. Coal volume was down 21%.
    • Samsung C& T, Samsung’s construction arm, has lost at least $700 million in the Roy Hill iron-ore mine in Australia in the last two years. Unfortunately in 2013 before commodity prices began falling, Samsung C& T agreed to take the risk for cost overruns, while committing to an aggressive timeline for when the iron-ore exports would begin.
    • In July 2016, oilfield services companies Hallliburton and Schlumberger announced another round of layoffs of 5,000 employees and 8,000 employees, respectively.
    • Both GE and Honeywell reported in July 2016 disappointing overall financial results because of weak sales of equipment into the energy sector.
  • Emerging-market economies are suffering. Many African countries are in serious turmoil because of the fall in commodity prices and some lessening of support by China, Africa’s biggest trading partner.
    • As of July 2016, 97.1% of Angola’s exports and 92.2% of Nigeria’s were petroleum; about 45% of Angola’s gross domestic product and 35% of Nigeria’s have come from the petroleum sector.
    • An interesting rivalry is developing among China, India, and Japan for relationships with African countries. India and Japan are suspicious of China’s presence and leverage on the continent and they are taking steps to improve their individual positions.
  • Social unrest is increasing in many countries because of the poor economic conditions brought on by the depressed commodity markets.
    • Since the Peruvian president Mr. Humala took office in 2011, 53 people have been killed and close to 1,500 injured in social conflicts in the country, mostly related to commodity-extraction industries.
    • In Nigeria, rebels and unhappy habitants in the Niger Delta are physically attacking oil facilities and crippling the Nigerian government that desperately needs the revenue of oil exports. Their attacks have cut production by 700,000 barrels per day since 2015.
    • In today’s environment, fair elections in Africa’s democracies are difficult to hold as presidents try to cling to power. In Uganda, Congo-Brazzaville, and Burundi the presidents all won flawed elections with the opposition being violently confronted. In Zambia, the loser of the recent election is disputing the result, after a contentious election run up.
  • In a severe downturn, the lowest-cost producers take advantage of their positions as much as possible. They want to keep their operations as busy as they can, not require any worker layoffs or reduced wages, drive competitors out of business or get them to close high-cost plants, and if the opportunities are right, purchase high-quality businesses from companies desperate to sell.
    • In the world steel industry with global oversupply, China, the world’s number one steel producer, has been producing steel at a record pace. China’s first-half exports are up 9% year to year. At the same time, US Steel Corp is unprofitable, cutting thousands of jobs, and idling plants. Germany’s Thyssen-Krupp AG has held talks with Tata Steel of India and others to merge various operations to strengthen themselves. Caparo Industries out of London declared bankruptcy in 2015 for 16 of its 20 businesses.
    • Saudi Arabian Oil (Aramco) is planning an initial public offering to sell as much as 5% of the company for an estimated $100 billion in the next three years.
    • Norway’s Statoil is cutting back its planned capital spending on the giant Johan Sverdrup offshore field to approximately $30 billion from approximately $38 billion so the field remains profitable even when oil prices are low. Statoil continued to push ahead with the project two years ago even after prices had fallen because the field will contribute approximately 40% of the country’s total crude output in the 2020s.
  • In this period of industry restructuring, the international investments of Chinese companies are very important, for the first time in 200 years.
    • Chinese firms have executed about $160 billion foreign takeover deals in the first seven months of 2016, more than any full year on record.
    • In August 2016 a US panel approved state-owned ChemChina’s planned purchase of Syngenta, which supplies about one-fifth of the world’s pesticides and about 10% of soybean seeds to US farmers. If the purchase is ultimately approved by the US and EU governments, it will be China’s biggest-ever overseas deal.
    • State-run State Grid Corp. of China, the world’s largest electricity provider by revenue with $312 billion, is pursuing a takeover of CPFL Energia SA, the Brazilian electric company, for $13 billion. This might be China’s biggest investment in Brazil.
    • On August 30, 2016, Zhongwang, one of China’s biggest aluminum producers, agreed to buy US-based Aleris Corp. for $1.1 billion. Aleris makes rolled aluminum for the aerospace, automotive, and construction industries. The US military is a client for its armored vehicles. There is a glut of steel, aluminum, and other metals in the world largely caused by an oversupply by Chinese producers. Metal exports from China are facing new tariffs and other barriers around the world.
  • As of the summer of 2016, it appears energy and materials commodity prices hit bottom in 2015 and are slowly recovering. The commodity fuel (energy) index of indexmundi.com is up approximately 45% since the beginning of 2016, although it’s still 23% down from the highs of a year earlier. Noticeably, private equity firms are beginning again to invest in oil opportunities. The metals price index of indexmundi.com is up 10% for the year, but still down 15% from a year ago.
  • For the last twenty-five years, the international activities of multinational corporations have been growing rapidly and transforming the global economy. Multinational affiliate sales as a share of world GDP more than doubled from close to 25 percent in 1990 to more than 50 percent in 2014, according to the UNCTAD, World Investment Report (2015).
  • Many commodity producers are reluctant to start new ventures today, even to secure low-cost reserves. Governments facing years of economic difficulties are struggling with how much effort should they apply to save existing ventures (and the jobs), mitigate the impacts of the closed or canceled ventures, and change the incentives to attract new multinational and local investments.
    • Exxon Mobil is not continuing its involvement in a venture to build a new LNG export terminal in Alaska. The project is not forecast to be very competitive in the world. Just a year ago, the Alaska state government paid $65 million for TransCanada Corp.’s 25% share in the overall project that was expected to cost between $45 billion and $65 billion. BP and ConocoPhillips, other shareholders in the venture, are also expressing concerns about the project.
    • An article in the Wall Street Journal on August 31, 2016 about commodity mining in Indonesia highlighted the recent mining asset sales by Newmont Mining Corp. and BHP to local companies and the significant decrease in total mining exploration spending in the country since 2012. In 2012, spending on mining exploration in Indonesia was approximately $450 million and in 2015 it was about $100 million. These changes stem from the heavier government regulations of mining operations and restrictions to foreign investment that Indonesia implemented several years ago when the commodity markets were strong.
  • At a time of a global oversupply of hydrocarbon products, China is reshaping its energy supply and demand mix.
    • China Petroleum & Chemical, or Sinopec, is attempting to double domestic natural gas production in the next five years in order to reduce coal usage in the country and reduce China’s need for imported liquefied natural gas—that many investors around the world were counting on. Sinopec is counting on rapidly expanding natural gas production from shale reserves.
    • US coal exports to China have recently shrunk to almost nothing. They were almost 6 million short tons in 2011, 10 million tons in 2013, and about 300 thousand todate in 2016. Out of seven West Coast export terminals proposed in the past five years, none has opened.
  • In developed countries, wind and solar renewables are really changing the energy supply mix. Will this momentum change with lower hydrocarbon prices?
    • A key signal is that wind and solar renewables are becoming a significant energy source in Texas, the center of the US oil and gas industry. In 2001, renewables (wind, solar, and hydro) accounted for 2% of Texas energy; in 2016 they will account for 16%. One night this past Winter, nearly 50% of the power flowing into the state grid came from wind turbines in the state. Federal subsidies for renewables have been a big factor, but equally big have been the falling costs of solar and wind technology. Besides plentiful hydrocarbon resources, Texas also is rich in wind and sun.
  • While closing or selling high-cost operations, some producers are looking toward technology to help them dramatically reduce their costs. But they need a relatively strong financial balance sheet to do.
    • Shale 2.0. The technology of shale oil production is rapidly advancing despite current cost constraints. Over the last five years, production well productivity has risen more than 400%, 40% in the last year. BP PLC is pushing hard into fracking in the United States to increase its oil and gas, attempting to leverage its capabilities to apply new technologies at large scale.
    • Risk-averse large mining conglomerates, like Rio Tinto and BHP Billiton, are investing heavily in automation technologies to help them go to more remote places, dig deeper, and move minerals and metals to the market faster, including very large motorized conveyor-belt systems; supercomputers, drones with fancy remote sensors, and software for building three-dimensional maps of a mine in real time; driverless trucks and trains; and autonomous drilling systems.
    • Mining companies are investing in technology to reduce the costs of producing titanium dioxide and to make this material suitable for 3-D printing. Powdered forms of materials like titanium dioxide are melted layer by layer with a laser to create 3-D objects. The value of the global 3-D printing market is expected to grow to about $6 billion in 2016, up from about $1 billion in 2010.
  • New environmental risks from commodity operations are coming to light.
    • Recent figures indicate that around a third of the annual methane emissions in the United States can be traced to the natural gas industry. While methane doesn’t remain in the atmosphere as long as carbon dioxide (12 years compared to 500 years), it is about 25 times more potent as a cause of global warming. The Environmental Defense Fund, an American NGO that often works with industry, estimates 2-2.5% of the gas flowing trough the supply chain leaks out.

PLAUSIBLE DEVELOPMENTS IN THE NEXT FIVE YEARS

From my recent blog, Predicting Future Commodity Developments, I noted commodity markets act like complex social-physical environment systems: Most of the time the markets are relatively stable with modest increases and decreases in prices, demand changes, and supply changes around the world. But severe shocks or disturbances to the systems, such as from natural disasters and severe market disruptions can push the systems across their thresholds into different dynamics, often with unwelcome surprises. The recent large downward swings in commodity prices and demand may have pushed many commodity markets over their “stability” thresholds. We can expect in the upcoming few years more disruption and chaos, and new market dynamics to develop. Then a new “stable” market will be the norm. We should look for the signs of new market dynamics and understand them.

Chinese Companies

  • China companies will be the industrial leaders around the world in commodities. They will be the biggest, invest the most money, and generally be aggressive to capture the most market share.
  • The Chinese government will likely support Chinese companies moving abroad with various means of support to help them penetrate foreign markets and avoid trade and tariff costs.
  • In general, transparency of commercial transactions between governments and commodity producers will go down worldwide; corruption levels will increas

Producer and Country Restructurings and Bankruptcies

  • Restructuring of most of the commodity supply chains is not done, not by a long shot. Many operations/countries have just used up their cash and will have to borrow extensively to pay their bills.
  • Sovereign-wealth funds will continue to sell assets to cover national-government expenditures.
  • State-owned companies will continue to add large amounts of debt to pay for large projects that were already underway and to continue selling their high-priced reserves at a loss because prices haven’t recovered enough.
  • Some countries will stop paying on their international loans and require bailouts and restructuring plans from international monetary agencies like the International Monetary Fund
  • International loans for large commodity projects and developing countries will become more expensive.
  • US courts of law will be involved more often in the settlement of large disputes among governments, international companies operating in their countries, and NGOs representing local community interests.
  • EU authorities will attempt to impose a strong rule of law on multinational producers. A number of EU member countries will undermine EU actions to attract foreign investment to their countries and support local interests.

Developed Countries

  • Since many materials are strategic resources for a developed country, dealing with the changes in foreign ownership of commodity producers is a constant challenge because of the political firestorms that accompany them. In the future many cases will involve producers from China and Russia.
  • As the influence of the developed countries’ multinationals wanes, the influence of the developed-countries’ foreign offices/state departments will also wane. The connection points into the developing countries will be fewer.

Developing Countries

  • Many developing countries will reverse many of the foreign-ownership restrictions and contract, royalty, and tax limitations they imposed at the height of the commodity markets and offer new terms to attract foreign and domestic investment.
  • Some countries will try to maintain the tougher conditions on multinationals because of nationalist political pressures and local interests in controlling the country’s resources and spoils.

Aha Insight from the US Army: Strategy for Complex Environments

Strategy/policy approaches are often inadequate for figuring out what we should do because they ignore reality. The world is uncertain, but we try to plan based on what we believe is certain. We should be planning based on hypotheses that the world operates like a complex adaptive system, everything is always changing, and most things about the future are uncertain.

A complex adaptive system is a good model for how the real world operates. Like the real world a complex adaptive system is constantly changing, but not changing in a predictable, linear, incremental fashion. When faced with a real-world situation—a situation that is hard to describe because of poor-quality information, many interconnections, and many uncertainties—we can start with a framework for complex adaptive systems and apply a strategy/policy decision process that will enable us to make some sense of a complex, dynamic situation, understand the limits of that sense, and generate good strategies for the situation. And because we’re dealing with a dynamic system, we need a process that will accommodate the change that will be continuous and prepare us to respond to that change as necessary.

New US Army Doctrine for Complex Environments

One very interesting approach put forth for achieving goals in a complex adaptive system is the proposed management doctrine of the US Army for designing and executing military operations in complex operational environments, like insurgency situations in Afghanistan and Iraq. The U.S. Army Capabilities Integration Center, Training and Doctrine Command, United States Army recently described that doctrine in Commander’s Appreciation and Campaign Design, Department of the Army TRADOC Pamphlet 525-5-500.

As outlined in the US Army’s pamphlet, complexity is significant to military commanders because it’s a basic characteristic of operational problems. The military defines an operational problem as a discrepancy between the state of affairs as it is and the state of affairs as it ought to be that compels military action to resolve that discrepancy. The complexity of operational problems ranges from tame, well-structured problems to those that are extremely complex and ill-structured. Unfortunately, most management doctrine today in the military—as well as in civil-government service and private corporations—is for well-structured problems hence the need for a different doctrine and the understanding for when to apply it.

Well-structured problems are controlled through technical reduction and a systematic method-based solution. They are easier to recognize and characterize. Most modern tactical doctrine of military services fits this mold, specifying the tasks, conditions, and standards for every task in warfare from tank gunnery to conducting a defense. The most structured problems often have just one correct solution, and success requires learning to perfect the established technique.

Medium-structured problems are more interactively complex, and while there is no single correct solution, personnel will agree on the structure of the problem, appropriate tasks, and the end state, but may disagree about how the general principles in doctrine are applied on a specific piece of terrain against a specific enemy. In a medium-structured problem, it is possible for a defense to succeed against one enemy commander yet fail against another under precisely the same circumstances. The difference between success and failure in this case is a function of interactive complexity, rather than a structural or technical difference between the two

In planning for a well- or medium-structured military situation, personnel will focus on the linear phenomena rather than the non-linear. They will focus on the practice of war, which is based upon professional consensus and is authoritatively prescribed in doctrine, rather than the art of war, which is based upon intuition and genius. Leader development processes are not designed to produce geniuses because geniuses are idiosyncratic. Instead, leader development processes are based on previous experience and practice and the linear phenomena that can be controlled and on whose structure personnel can agree.

Ill-structured (also called wicked) problems require a completely different orientation. Ill-structured problems are interactively complex, non-linear, and chaotic—and therefore the most challenging. Unlike well- or medium-structured problems, smart people will disagree about how to solve an ill-structured problem, what should be the end state, and whether the desired end state is even achievable.

A number of challenges need to be overcome to address an ill-structured problem.

  • The first challenge is that at the root of the lack of consensus about how to solve an ill-structured problem is the difficulty in agreeing on the structure of the problem. Unlike medium structured problems, it is not clear what action to take, because the nature of the problem itself is not clear. There’s not even a definitive way to formulate an ill-structured problem. For an ill-structured problem, the information needed to understand the problem depends upon how one defines it. And the solution depends upon how one understands the problem, or how one answers the question: “What is causing this problem?” Ill-structured problems rarely have a single cause, and different stakeholders will see the relationships between the causes and their importance differently. Thus, understanding and formulation depend to some degree upon the perspective of the problem-solver rather than some objective truth. Thus an ill-structured problem cannot be known, but must be surrounded.
  • The second challenge in addressing an ill-structured problem is one cannot understand an ill-structured problem without proposing a solution. Understanding the problem and conceiving a solution are identical and simultaneous cognitive processes. For example, if one describes bankrupt commodity producers as the result of falling demand and lower commodity prices from a weak economy, our solution will be different than if we describe bankrupt commodity producers as the result of building too much supply capacity. The formulation of the problem points in the direction of a particular solution.
  • A third challenge is every ill-structured problem is essentially unique and novel. Historical analogies can provide useful insights for individual aspects of the larger problem, but the differences among even similar situations are profound and significant. The political goals at stake, the stakeholders involved, the cultural milieu, the histories, and other dynamics will all be novel and unique to a particular situation.
  • A fourth challenge is that ill-structured problems have no fixed set of potential solutions. Since each ill-structured problem is a one-of-a-kind situation, it requires a custom solution rather than a standard solution modified to fit circumstances. For well- and medium-structured problems, best practices offer standard templates for action, standard ways of doing things that have to be adapted to specific circumstances. There is no similar kit of generic solutions for ill-structured problems. The dynamics that make an operational problem unique also demand the design of a custom solution. Additionally, there is no way to prove that all solutions to an ill-structured problem have been identified and considered.
  • The fifth challenge is that solutions to ill-structured problems are better or worse, not right or wrong. There is no objective measure of success and different stakeholders may disagree about the quality of a solution. The suitability of a solution will depend upon how the individual stakeholders have formulated the problem and what constitutes success for them.
  • The sixth challenge is that ill-structured problems are interactively complex. Operational problems are socially complex because people have tremendous freedom of interaction. Since interactively complex problems are non-linear, a relatively minor action can create disproportionately large effects. The same action performed on the same problem at a later time may produce a different result. Interactive complexity makes it difficult to explain and predict cause and effect.
  • The seventh challenge is that every solution to an ill-structured problem is a ‘one-shot operation.’ Every attempted course of action has effects that create a new situation and cannot be undone. The consequences of direct action are effectively irreversible. Whenever actions are irreversible and the duration of their effects is long, every attempted action counts.
  • The eighth challenge is there is no immediate and no ultimate test of a solution to an ill-structured problem. The perceived quality of a solution to an ill-structured problem can change over time; yesterday’s solution might appear good today, but disastrous tomorrow as the unintended effects become clearer. Measurable results to a particular action may not appear for some time. This time lag complicates assessment enormously, because in the meantime the operational command may have executed other actions, which will make assessing cause and effect even more difficult.
  • The ninth challenge is that ill-structured problems have no ‘stopping rule’. It is impossible to say conclusively that such a problem has been solved in the sense that a student knows when she or he has solved a math problem. Work on an ill-structured problem will continue until strategic leaders judge the situation is “good enough,” or until stakeholder motivations, will, or resources have been diverted or exhausted.
  • The tenth challenge is that every ill-structured problem is a symptom of another problem. The causal explanation for a problem will determine the range of possible solutions. Yet, solving one problem often reveals another higher-level problem of which the original one was a symptom. The level at which an operational problem is solved depends upon the authority, confidence, and resources of a particular commander. One should not simply cure symptoms, but should rather strive to solve the problem at the highest possible level. However, if the problem is formulated at too high a level, the broader and more general it becomes and therefore the less likely it is to solve particular aspects of the specific problem.
  • The eleventh challenge is that the problem-solver has no right to be wrong. The writ of an operational commander and his staff is to improve the state of affairs as his superiors perceive it. Like others in senior positions of an organization, he is responsible for the consequences of the actions he generates.

Given these challenges facing military leaders, the process for confronting an ill-structured problem—for trying to have a healthy future in a complex adaptive system—has to be very different from how situations were generally approached in the past. The US Army pamphlet identifies several key features for a new approach:

  • Shared development of plausible scenarios. The task of defining the problem will require much more work and insight than before, and it’s not something that can be done top down by the commander. Instead, given the uncertainties and complexities of future situations, commanders must approach the problem with a holistic systems perspective using both bottom up and top down inputs. Ultimately, developing a shared understanding of the external environment situation is a critical success factor in defining the problem and quantitative models won’t be very useful. Instead, qualitative, heuristic approaches will be needed to create a shared understanding of the circumstances and possibilities. Based on my experience, a very good holistic approach for creating a shared understanding of the problem or challenge, and one that recognizes the problem or challenge is going to evolve over time with the actions of the participants and unfolding dynamics, is the scenario development process.
  • Shared strategy decision-making. Since each strategy and action solution will be a function of the shared understanding developed for the particular problem or challenge, a top-down developed solution probably wouldn’t work. The process for developing a solution should involve all the key stakeholders and utilize the scenarios.
  • Prepare for continuous change. Since a critical feature of insurgency conflicts is how rapidly the situation or problem changes over time, all participants are in an unrelenting struggle to learn and adapt rapidly, and they do. Over time the original shared understanding of a problem or challenge will no longer be valid and will need to be changed, resulting consequently in the need for an adjusted strategy and action plan. Organizations will need:
    • A continuous process of strategy, with abilities for ongoing monitoring, assessing, and making adjustments to the action plan;
    • Companies and squads closest to the action in the field need the responsibility and authority to conduct that process and make the adjustment decisions. The best information and awareness of the changing situation is in the field and there’s often not enough time for those in the field to brief those at the top and involve them in a process to develop a suitable response;
    • Individual squad members to be utility players more than specialists, able to play multiple roles as needed. New task responsibilities of the squads are assigned to those best suited to carrying them out. The activities of individuals will shift as required by the circumstances.

Implication for Policy and Strategy Development for Global Situations

If this Army doctrine makes sense for complex operational environments, then private corporations, local government agencies, and community planning committees should all use similar principles when developing strategy. But instead they employ processes that are linear and top down and don’t have a good chance of succeeding. They focus on the certainties rather than the uncertainties; they look at issues in isolation rather than being part of an interconnected environment; they forecast or assume one future rather than anticipate a range of plausible futures; they assume a best solution can be found; and they don’t plan for the inevitable change in the future after implementation begins.

First Blog Post: Global Futures Framework

My name is Bill Ralston. This is a blog of hypotheses about the future based on emerging trends and signals of change. After many assignments developing scenarios of the future for businesses and government agencies, I get to present my views on key forces shaping the globe. I will often focus on commodities—ranging from agricultural products, to minerals and metals, to oil and gas, to fresh water—that drive economic development of emerging economies and are a major factor in the politics, economics, changing physical environment, and social priorities of developed economies. Few appreciate how dynamic Mother Earth is and how extreme the shifts in supply capacity, commodities demand, and resultant money flows can be. Economists, government leaders, and business interests continually overlook commodities’ importance and are often surprised by the wrenching turns of the markets. They simply don’t have good mental models for how commodities markets operate in our complex world and can’t appreciate the range of plausible outcomes they could be facing in both the near- and long-term futures.

In my business life I worked at Brown & Root, SRI International, and Strategic Business Insights. I started off as an engineer, helping design and build oil and gas facilities around the world. I then consulted to energy companies and civil infrastructure operators on strategy, technology, and business issues; I moved into consulting on what businesses and government agencies should do about environmental, health, and safety issues; and eventually found a role where I could integrate all my experiences: I became a corporate futurist, helping management teams develop scenarios of the future for the major issues they were facing. Throughout all of this, I was learning about decision-making under uncertainty, risk management, models of complex environments, and making projections about the future.

In this blog, I want to develop a global futures framework that will enable better insights about challenges the world faces. I want to apply this framework to a host of emerging issues and identify future plausible outcomes that businesses, governments, and societies could face. My analysis template will be (i) hypothesis about future threat or opportunity, (ii) recent signals of change, (iii) plausible outcomes in the future, (iv) implications, and (v) what to watch for in the future.

Emerging issues that are on my agenda to address include ocean-development opportunities and risks; Latin America economic-growth prospects; opening up of the Arctic; commodities dependency of emerging economies; civil infrastructure needs; global agricultural supply; petroleum in the future; climate change policies; Africa and China; Russia and the United States: the world’s largest commodity suppliers; the importance of technology innovation in commodity industries; European-nation energy strategies, etc.

Thank you for reading.