Trends are not enough

AMY WEBB: So if my 80-year-old father-in-law is no longer going to Google on a Google phone to search for things, I think that tells us that the world is changing. There’s also the fact that OpenAI, at this stage, is accumulating debt to a degree I don’t think any of us have ever seen before.

JEFF BERMAN: I don’t know about you, but the world is changing so fast. From AI to global politics and beyond, it can feel impossible to keep up. But futurist Amy Webb says merely following trends is not enough. It’s insufficient to stay atop whatever is just around the corner. What matters now is understanding something much more complex, something she calls convergences.

WEBB: So the result of a convergence is something that is net new, that hasn’t existed before. They’re also the kind of things that leaders just miss. They miss them because they are distracted by the shiny. And by the time they realize that this shift has happened, it’s typically too late.

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BERMAN: This is Masters of Scale. I’m Jeff Berman, your host. This week on the show: Amy Webb. She’s an author, a futurist, and CEO of the Future Today Strategy Group. She’s also a bit of a rock star at SXSW. But last week, for the first time in nearly 20 years, she didn’t release a new trends report. In fact, she held a funeral for it, Grim Reaper’s cloak and all. It’s a bold act of creative destruction. Let’s find out why she did it.

Amy Webb, welcome back to Masters of Scale.

WEBB: Thank you. That was my favorite show that I did last year. Was that last year? I don’t even remember.

Copy LinkWhy Amy Webb is no longer publishing a trends report

BERMAN: I think it was last year. It feels like last year. Time is a flat circle now. Podcast hosts are not supposed to have favorites, Amy, but I have to confess, I’m really thrilled to have you back. And I’m especially excited to have you back because, for nearly two decades, you have published a trends report that you have decided to no longer continue publishing.

WEBB: That’s right. We have killed our baby, as it were. You want me to tell you why?

BERMAN: I want to hear why.

WEBB: Everybody who’s probably listening to this is either a leader or on track to be a leader in some kind of organization. And undoubtedly, you have noticed that sometimes organizations stay on the same path when it’s pretty clear that that path is going nowhere and the world around them is changing. And what they need to do is either adapt to that change or reinvent for that change, because that change is inevitable. There were so many fundamental changes happening that it seemed inevitable that those changes would coalesce and form new things. And it reminded me of Joseph Schumpeter. Then I found this book, which I read. It’s actually part two of a much bigger tome. It’s Can Capitalism Survive? It was written in the ’40s, so it’s heavy. But the third chapter is called “The Process of Creative Destruction.” Basically, what he describes is that through this convergence of different forces, typically technology-focused but others as well, the old structures are destroyed and something new emerges and exists in their place.

That is always happening in some way, but it’s really intensified over the past few years. In our case, as an organization, it just did not make sense to continue publishing a gigantic static report. And honestly, last year was sort of a grand finale. We published a 1,000-page report. We knew at that point that that was going to be the last one, because the world is changing so fast that as soon as a static report is published, it’s basically not relevant anymore. So we killed it, and we are replacing it with something else. We’re still tracking trends, but as we’ve been telling people forever, these trends alone are not enough. And it was time for us to take the brave step of destroying the thing that we’re probably most famous for and start fresh.

I’ve said for years and years, the trends alone aren’t enough. And if you follow just that in a vacuum and don’t think about how economics plays a role, geopolitics, misinformation, people’s thoughts and hopes and whatever, if you don’t take all of those other things into consideration, you’re watching the evolution of a technology that is divorced from how that technology shows up in the world. The heart and soul—

BERMAN: Which is sort of a common problem in Silicon Valley.

WEBB: Well, yeah, 100 percent. But you know what, Jeff? That’s a really great point, because this explains why, if you go back in time to the original crop of location-based social media apps, so that would’ve been Foursquare, Gowalla, Scvngr, everybody got the trend wrong. The trend was not cool badges and people checking in. That wasn’t the trend. The trend was location-based services baked into mobile and social networks. And this is the whole point. People get sidetracked by what’s trendy, and they don’t track the stuff that matters. The stuff that matters is convergences.

Copy LinkLooking past trends to spot the convergences that matter

BERMAN: Can I just pause you, Amy? What do you mean by a convergence?

WEBB: A convergence results when you’ve got multiple different trends, or a trend colliding with something bigger than the sum of its parts. So it’s the trend plus government intervention, a war somewhere, all of these other things. And that results in a fundamental shift that transforms potentially the technology itself, usually not, but also markets, behaviors. It transforms industries in a way that no single trend could do on its own. So those trends are little building blocks. The convergences are what result. They redistribute power, they rewrite rules, they collapse markets, they start markets, they are kingmakers. In a way, they are the fundamental representation of creative destruction.

BERMAN: What’s a convergence that you’re focused on?

WEBB: The one that’s going to be immediately recognizable and felt is the post-search internet. So I think everybody at this stage knows that Google is not the only game in town anymore when you’re looking for information. Can I sidebar for just a second? Because my—

BERMAN: Sidebar.

WEBB: My father-in-law is driving me crazy.

BERMAN: Yes. What’s he doing?

WEBB: First of all, let me say this: I have the greatest father-in-law ever. He is in his 80s, and I love the fact that he embraces new and emerging technology. However, the man has an Android, one of the Pixel phones, and ChatGPT has become his new best friend. He doesn’t search anything anymore. So if my 80-year-old father-in-law is no longer going to Google on a Google phone to search for things, I think that tells us that the world is changing.

BERMAN: What changes it from a trend to a convergence?

WEBB: So the result of a convergence is something that is net new, that hasn’t existed before. And these are the kinds of things that will take shape over time. They’re long-horizon, but they’re also the kind of things that leaders just miss. They miss them because they are distracted by the shiny. And by the time they realize that the shift has happened, it’s typically too late.

Copy LinkWhy business model innovation cannot be an afterthought

BERMAN: They’re both distracted by the shiny and they’re captive to old business models, right?

WEBB: That’s right.

BERMAN: If you make so much money — Blockbuster, Netflix is a paradigmatic example here.

WEBB: Wait, can I double-click on that business model?

BERMAN: Yeah, please.

WEBB: So you just said something that I want to make sure everybody heard: the business model. In so many companies that we deal with, the innovation happens over here, and people come up with cool ideas. They do their TAMs, their SOMs, here’s what the market’s going to look like. And then, as a complete afterthought, comes the business model innovation. Honestly, we’ve got CEOs, we’ve got leaders coming to us saying, “Help us figure out where our next billion-dollar bet is.” That’s real, by the way, billion with a B. “And where do we put our chips on the table?” And you can’t pivot every five seconds, and you can’t adopt every cool new thing that comes along. But if you are so rigid in your thinking, you’re going to bleed the talent that you should want to keep, and they’re going to go elsewhere.

BERMAN: Amy, past is prologue. We look to history for examples of lessons, both what to do and what not to do. Is there an example from corporate history where a company either saw convergence coming and evolved its business as a consequence, or didn’t, that is a good lesson here?

WEBB: I’ve got a great example for you, and it is a news organization in Norway called Schibsted. So it’s OK if you’ve never heard of it. It is one of the largest and most profitable, to this day, news organizations, and it is because they saw a convergence coming and were able to take action on it in the right amount of time.

So this was back in the ’90s. Newspapers up until that point, pre-internet, had a business model based on subscriptions and advertisements. Ads overwhelmingly were what funded those news organizations, not subscriptions. So they see the internet starting to launch, they see commercial applications, and Schibsted did the one thing that every other news organization did not. They said, “We think this ad model is probably not going to survive. Let’s start figuring out what business models, what distribution, what a world looks like where we don’t just rely on print ads, and we figure out a way to make what we’re doing work in this new internet age.” And it’s not a story that most people outside of Scandinavia have ever heard of, but inside Scandinavia, it’s a famous story.

In fact, Harvard was interested and published a whole case study about it, which anybody can access online. So that’s an example of asking, where is the world going? In that case, the world was going toward this new convergence of information and media and technology becoming the internet. Where will value be created? There’ll be some new business model and some new form of advertising, something or another that’s going to migrate there. How will we participate? We’re going to keep doing right now what we already know how to do, but we’re going to build before everybody else. We’re going to design, build, test, and ultimately deploy a digital ad system. It was the first. So I think that’s a great example of seeing that creative destruction and taking action on it in the right amount of time.

Copy LinkProgrammable biology and the next wave of transformation

BERMAN: What are some of the other key convergences that you’re pointing out in this new report?

WEBB: So this is going to sound weird: programmable biology. The components that make up this convergence are everything from artificial intelligence to something called generative biology.

BERMAN: What’s generative biology?

WEBB: So you know what gen AI is?

BERMAN: Yes.

WEBB: So imagine that you wanted to create a new enzyme instead of a new cool picture or something. Biology has become editable, writable, readable, which means that we can design anything in the physical world in a way that we’ve never been able to before. The first thing that people usually think about is, “Oh, cool. We’ll have different medication.” But actually, it goes beyond drugs. If we could literally program biology to be responsive, that fundamentally shifts not just medicine, but also the entire built environment, how we put things together, what construction looks like, what concrete looks like. It also changes agriculture fundamentally. It helps address climate change issues. It helps address supply chain issues. It means a different approach to energy. It also means absolutely terrifying, lethal bioweapons that can be produced by people who maybe wouldn’t have had the tools before.

BERMAN: We both have Maryland ties. I grew up there. You live in Baltimore, if I remember correctly.

WEBB: Half the week.

BERMAN: Half the week?

WEBB: Yeah.

Copy LinkAmy Webb’s advice to local governments

BERMAN: Governor Wes Moore picks up the phone and calls you and says, “Amy, I hear about these convergences. As governor of a beloved state, which convergence should I be thinking about?”

WEBB: I would love for him to call me. I’ve got some thoughts on the great state of Maryland. I think this works for the state of Maryland, but also everybody else. So you probably have heard about China’s surveillance state. I used to live in China. There’s something called a social credit score system. Everybody’s very much watched. The jury’s out on how people feel about being surveilled in the way that they are, but it is very much a top-down process. So it’s decided at the highest level of government, and then it trickles down and cascades and is deployed and enforced. That’s an example of a sort of centralized Orwellian reality that people are living in.

What people don’t recognize is that the same thing exists here, in Maryland, in the United States, in the West. The difference is it wasn’t built by a single government. It’s a corporate panopticon. So if you’re not familiar with the term panopticon, I think it was a 17th-century concept for a prison design in France. The idea was everybody could be watched all the time. There was a central guard tower, and the design was such that you could see all of the wings of the prison from the center spot, right?

There is a way to do that top-down, so having a physical structure. And I think China has built that physical structure that is imbued with really powerful technology. There’s a version of that that exists, but instead of that central column, imagine it being a billion sensors in every single place around that prison, where everybody is constantly being watched all the time, but not by one entity, by millions of different entities. This is our reality. There is a corporate panopticon, and we are all being ambiently surveilled all of the time.

Now, most of the time, you have no idea that’s happening. And I would say a lot of the time it provides wonderful benefits that range from loyalty points at your grocery store to spam filters or whatever else it might be. But the reality is, we don’t know how or why decisions are being made. What we are giving up for the convenience of banking, of working, of socializing, that’s what is making all of this possible. So again, as with every one of these convergences, they’re not good or bad. They’re not apocalyptic or utopian. They just are. It’s a new phenomenon, and we have to name the phenomenon because we have to engage now with it. And again, this is something that has existed, just not at the scale that it does today.

BERMAN: Still ahead, more with futurist Amy Webb on how leaders need to evolve their mindset to keep up with the pace of change.

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Copy Link“China’s going to leapfrog us”

To your point, it’s neither necessarily utopian nor dystopian. Given that it is, in and of itself, not necessarily bad or good, and given that we are seeing, as starkly as at any point in recent human history, certainly since Milton Friedman, that profit motive is driving everything, it is return for shareholders. Stakeholders are largely being ignored if they’re not actually shareholders. What does this mean for how corporations are run and governed in our country?

WEBB: That’s a great question. I feel like Winners Take All — did you read that book? What was that, like—

BERMAN: Yeah, a classic.

WEBB: It was long enough ago that it drove a conversation about stakeholder versus shareholder responsibility and was a different way to approach profit. And I feel like that drove a lot of conversations for a long time.

BERMAN: Well, Larry Fink wrote a celebrated piece about the importance of stakeholders. Winners Take All was 2018. Relatively recent.

WEBB: So almost 10 years ago.

BERMAN: Yeah.

WEBB: The pendulum has swung in a different direction now. And I don’t think that means that every board member, every leader writ large, is like, “Screw everybody else. We’re just in it to bump up share prices.” But the reality is that — before I say what I’m about to say, which is going to sound alarmist, let me preface this by saying I’m politically independent. I’ve done a lot of thinking over decades about the role that profit plays in our society. Also, like I said, I lived in China, I lived in Japan, and I think we have hit a moment in the United States where we have a form of capitalism that has gone almost to an extreme level. And I actually think this is potentially damaging companies.

So yes, there are societal implications and everything else, but I’m seeing smart leaders and pretty well-run companies making some of the dumbest decisions, really stupid decisions. And it’s either because they are desperately trying to improve the bottom line so they can juice their share price — this is part of what happened in the ’80s, the Jack Welch approach, and not just him but others — but this is different. This is making stupid, short-term structural decisions to get that margin to a point. In some companies we deal with, there are literally numbers, X percent. I’m not going to say what they are because anybody listening who’s in one of those companies will know who I’m talking about, but it doesn’t make any sense. It’s a made-up number, you know what I mean?

But what’s happening is it’s forcing everybody from leadership down to make decisions that are terrible, terrible for the company in the long term. Good in the short term, terrible in the long term, terrible for the community, terrible for society. The thing that I’m having such a hard time with right now is, we’re all in on AI. Just do all the R&D, come up with all the cool stuff, and it’ll be amazing. You know what China’s doing? China is saying, “We’re not going to worry about innovation right now. We are going to build infrastructure.” So by the time this show comes out, China probably will have announced its next five-year plan. And that next five-year plan is funding a 10-year process to literally take 1.4 billion people and not just get them online in a meaningful way, but get the entire society using AI, automation, and tools of the modern era, the entire country.

And that includes education. That includes everything. What are we doing in the United States? Nothing. Sorry, but we’re not. There are too many pockets around the country where people can’t get online. We’ve got too many problems with our education system. We have no plan. We did not have a plan in the previous administration, the administration before that, or this administration. There’s no plan for any of this. And the result is, we are giving the rest of the world free R&D. Think about how our companies are competing, Jeff. They’re not competing on scale. They’re competing on who’s got the coolest, shiniest stuff that we can market to get more people and investors and customers.

That is short-term thinking driven by this unhinged capitalism that, again, I think our structures are OK in the U.S. I just think we’ve taken them to these extreme proportions and not readjusted our priors. So what’s going to wind up happening is, 10 years from now, China’s going to leapfrog us. I’m sorry, but I’m happy to argue with anybody all day long about this. We are missing these structural components for success, and it’s very much a U.S. problem. It’s not just us.

BERMAN: And, Amy, we’re missing them in part because the incentives are misaligned, right?

WEBB: Yes.

BERMAN: You get what you measure, you get what you incentivize, and by and large, CEOs and boards are incentivized on a quarter-by-quarter basis and on maximizing returns.

WEBB: One hundred percent. And CEO tenure is very, very short. Now, part of that goes back to what I said at the very beginning about creative destruction. Too many CEOs stayed in their roles for too long, and boards were afraid to mess with what works. And so the same is true of our government. We’ve had too many people in their jobs for too long, and nobody made space for the next generation of people to come in.

So that is definitely part of it. But if you look at who a lot of the CEOs of companies are, not just publicly traded companies but generally, they’re CFOs. No hate for the finance people, but a chief financial officer represents stability to boards: “We’ll get the next couple of quarters OK.”

BERMAN: And it’s small-c conservatism.

WEBB: Correct.

BERMAN: They are, by nature, conservative people.

WEBB: That’s right. We need fresh people and young people who are interested in growth, not just for businesses, but for the place where we do the business, which is the country that we live in. And we are presenting zero reason for anybody to go into government, not politics, but to go into government at this point, which is a shame.

Copy LinkThe value of “productive wandering”

BERMAN: Amy, some of what we’ve talked about, a lot of what we’ve talked about, sounds like science fiction. In fact, I reread 1984 last year. I’d forgotten that Orwell divided the world into three superpowers, exactly what you’re describing. I just finished rereading Fahrenheit 451 last week, or two weeks ago.

WEBB: Why are you doing this to yourself?

BERMAN: I don’t know. Honestly, I do know. I do it to help make sense of the world, and both fiction and nonfiction, in different ways, help me with that. And the amazing thing is Fahrenheit 451 was written in the early 1950s, and it envisions AirPods. It envisions AI-driven robotic police dogs. It’s extraordinarily prescient. Is there science fiction that you are turning to or that you have revisited where you’re going, “Gosh, that is really an incredible imagination of what’s coming”?

WEBB: So this is going to sound kind of crazy. I avoid science fiction. I have a hard time with a lot of science fiction because I see society being warned and then choosing to do the stupid thing anyway.

Now, that being said, there’s a lot of wonderful science fiction, and I do read it every now and then. I think the better question is, what’s happening with science fiction writers, and how are they able to imagine different futures? And the answer is productive wandering, letting your mind wander productively. And in order for that to happen, and for connections to be made, you have to come in with a lot of base knowledge, which means you have to ingest tons of different data. So the fact that you’re rereading those books, but you’re also ingesting other material, that’s actually great, because what that’s allowing you to do is make connections to what’s happening now and giving you perspective and a way of thinking about things.

So that is something I do. It is what my company does with everybody. Everybody who works with me is that kind of person. My concern with science fiction meeting reality, especially as it relates to AI, is that we’re creating a world in which we can’t allow our minds to get lost. It’s a little bit like GPS. People have forgotten how to orient themselves because we just follow the blue line. Same situation when it comes to ingesting data and thinking and sitting with that information and making those connections.

Copy LinkAmy’s words of caution for founders & executives today

BERMAN: What have we not talked about that we should have talked about?

WEBB: I think a lot about, if I was starting my company right now, what would I do differently and how would I operate differently? And the truth is, my entire job is thinking about the future, and I’m the least patient person you will ever meet. I get irritated that I can’t make change happen overnight, that things are happening too slowly, that we can’t get something done fast enough.

I was experimenting with machine learning tools literally 20 years ago and building my own janky systems to try to automate so I could go faster and do more. It’s not about the speed of getting things done. I want to accomplish more. And I cannot imagine what it would be like to be starting off now because the difference between 20 years ago and today is that 20 years ago, we didn’t have the tools of automation, not like we do now.

And today, everybody has all of these tools for automation. So all that’s going to do is exacerbate that feeling of, “Bigger, better deal. I should exit faster, we should be…” whatever. And that’s just not the way the world operates. It’s a mirage. If I can bring it back to convergences, this is partially why this report took a stupid number of human hours, and we are not selling it, we are giving it away for free. All of this analysis is much harder to do than trends. The reason is because we’re trying to get everybody to slow down. We’re all living through this collective moment of creative destruction, and we are tuning out at the very moment that we need to be tuning in and allowing ourselves to take a little bit of time to think through things.

I know that leaders of publicly traded companies are like, “Cool, but I’ve got a board meeting,” or, “I’ve got an investor day,” or whatever. And I know that people with start-ups are like, “Awesome, but we’re chasing whatever investment we can get right now.” The world is not actually moving as fast as you feel like it is. So I guess maybe the last thing that I would say is, you have to learn how to respond thoughtfully versus react in the moment. And that has never been more true than right now.

BERMAN: Thanks to Amy Webb for joining us. Her analysis of where we are headed is unparalleled and invaluable in its insights. In a moment where it feels nearly impossible to keep up, where the pace of change is head-spinning and dizzying, Amy Webb offers signal in the middle of so much noise. I come away from every conversation with Amy feeling more dialed in and more fired up for the future. I hope you do, too. Amy’s new convergence outlook from the Future Today Strategy Group is available for free online. We’ve put a link in the show notes. We hope you’ll check it out. I’m Jeff Berman. Thank you for listening.