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March 1, 2012

The Imperative of Looking Beyond the Immediate

“The future ain't what it used to be.” —Yogi Berra

As you know, I travel a lot and talk constantly with the men and women working at every level in our industry. Mainly and understandably their focus is on today and tomorrow. They are concerned with operating efficiencies and ensuring they are providing their customers with the most cost-efficient and valuable products and services possible.

All worthy—make that critical—objectives.

At the same time, it seems more obvious each day that if we are to thrive and prosper in a relentlessly changing business environment, we must be looking far beyond those immediate objectives. We must also be vigilant and mindful of the powerful and inevitable forces, megatrends if you will, that will be shaping our lives and financial futures.

Most, if not all, of you may be familiar with Moore's law, named after a co-founder of Intel, Gordon E. Moore, who described it in a 1965 paper. He observed that the number of components in integrated circuits doubled every two years. This same doubling of digital capability, at a minimum, every two years, continues today.

I would suggest that in these times there are equally rapid and muscular trends outside the digital world that will engulf us at the speeds predicted by Moore's law, and which we ignore at our peril. Some, such as demographics, globalization, political risk and resource constraints we already know of. Others are yet to be identified.

You are likely aware of megatrends that I am not. Make your own list. I only suggest that we must not allow the daily forces of running our businesses to keep us from the strategic studies, long-range planning and thoughtful reflection that will allow us to deal with a world that is changing under our feet. One of these major forces is surely demographics. We will have to adapt to both an aging population and a bulging young labor pool that is unemployed and underemployed. Retirement is not an option for an increasing percentage of older workers. At the same time, complaints abound about the high percentage of under-skilled, less-equipped, poorly educated young people applying for jobs these days.

Another of these mega forces is the digital-information technology complex that offers vast new capabilities from the factory floor to the executive suite. That said, developments in IT systems and security, social media, computer software and handheld devices of all kinds are moving faster than a jackrabbit made of mercury.

Globalization, another megatrend, has almost become a business cliché. And yet the interconnectedness of the planet and the economies of its nation states can shake the prospects of most any business to its core.

From globalization grows another megatrend that seemed unimaginable even a decade ago: doing business in a resource-constrained world. As our guest columnist Erik Peterson pointed out in the last issue of Forward , this is a development that promises to send tremors through global manufacturing from here on out. Countries that are not necessarily our friends now control vital raw materials. The quality of some of those materials is declining. Clean water is an endangered commodity in the Earth's most heavily populated countries and, as we know, in the American southwest.

The job now for each of us is to decide personally what we need to do to more fully understand and, more importantly, manage this wholly new world of variability and risk.