In order to formulate a long-term strategy — for business or otherwise — you must learn to anticipate the future.
We can visualize how the world will evolve by analyzing GDP and population growth patterns, environmental challenges, trend preferences, global demand/supply, structure changes within and across the industries, technological advancements, the Paris Climate Accord, etc.
Here in 2018, attempting to perceive how the world will be in 2030 and beyond isn’t an easy task, but if we consider the above and some other geopolitical, socio-economic, cultural and wild card factors, we can somewhat predict how they will affect our businesses or competiveness.
Perception about the future varies from person to person depending on their educational background, experience, knowledge and ability to see what’s behind the thick forest. For example, some of us believe that beyond 2030, structural changes in the auto and power industries will cause a diminishing role of fossil fuels (particularly oil and coal) and an increase in renewables and natural gas. This perception is based on factual changing ground realities like technological advancements, growing climate concerns, new government agreements, honoring the Paris Accord, etc.
More than three years ago, Andreas and I began writing on the technological advancements and structural changes in the auto industry to predict how penetration of electric vehicles will displace a sizable global oil demand in road transport sector, and how the speedy penetration of wind and solar energies will reduce the role of fossil fuels in global total primary energy mix from 86 percent in 2016 to less than 75 percent in 2040.
It wasn’t long before almost all the major car companies and several countries around the world decided to go electric/green. Peak oil was the talk of the town. All of a sudden, the top brass woke up and began cranking out new processes.
Bottom line: Some diligent companies have already added renewables to their portfolios and will stand out as the clear winners, while the others struggle to reconcile with reality.
A number of oil-producing countries are formulating strategies to diversify their highly oil-dependent economies away from oil. Even power companies like General Electric and Siemens are realizing renewables’ future and formulating strategies accordingly.
When attempting to shape future predictions, start with brainstorming sessions in which you analyze the present, and how the changing dynamic of the aforementioned factors might affect your future businesses. Identify challenges and think about how to convert them into opportunities.
What appears to be nonsense today often turns out to be tomorrow’s reality.
By Dr. Salman Ghouri for Oilprice.com
