Eric Garland

1. Eric Garland Make Your Strategic Planning Ready for the Future NATIONAL CONFERENCE! February 27, 2007

2. “The closer you are to a position of responsibility, the further away the future can seem” -Erik Peterson Center for Strategic International Studies

3. What is futurism? • What is it? • Scanning long-term shifts in society and technology and picking up threats and opportunities while there is still time to transform our organizations • Taking an organized rational approach to a universe of change • Why do executives practice this? • Invented as reaction to advent of nuclear technology • What value does it bring? • Gives a broader view of our industries • Challenges our assumptions • Provides early warning, innovative ideas • Offers a sense of our role in history

4. What Does Future Intelligence Look Like? I know I need to study the future to make good strategy… …but it’s got to be actionable.

5. The Tragic Case of the Record Industry Reckless teens, dangerous new technologies, and helpless record executives

6. Meet Brianna LaHara Sued Sept. 3, 2003 by the Record Industry Association of America for around $150,000 per illegally downloaded song New Yorker Honor student Music lover

7. Could we have anticipated this? 2003 Sales plummeting Terrible PR New business models

8. Vermont almost secedes 1991 Gulf War I Warsaw Pact ends Apartheid ends Rodney King Magic Johnson HIV+

9. Tim Berners-Lee outlines vision for the “World Wide Web,” based on an idea he came up with at CERN in 1980. Sen. Al Gore (D-TN) holds hearings for the “National High-Performance Computer Technology Act,” adding $1 billion in federal support for “The Internet.” Compact discs, a digital music medium, surpass tape cassettes for the first time. 1991

10. What could you have told management in 1991? There are a number of ways this digital thing could turn out. Not all good. Surely we haven’t got that much to worry about.

11. You never make strategic plans alone…the future is always peeking in

12. Steps to adding the future to strategic planning • Systems thinking • Trend analysis • Forecast assessment • Implications generation • Scenario generation • Communications

13. Systemic view of the music industry Artist development Competing Forms of Entertainment Markets & Channels Consumer tastes Distribution

14. Key trends: • Computers becoming consumer driven, more interconnected • Processing, memory and connectivity increasing every year • Music itself has become digital – CDs are now the biggest selling medium

15. Major implications • Within the next 5 -15 years, music will become a digital good • At the same time, digital communication between computers will go from just laboratories big companies to our homes. • Record companies must prepare for a digital model of music in which music transcends the physical medium and becomes a virtual, cyber-service.

16. Scenario #1: “Music is free” Implications • Rapid drop in sales • Artists angry over our inability to protect their royalties • Radio stations shut down “Hey man, I made you a ‘mix disk’ on my PC. It’s my 3000 favorite songs!”

17. Scenario #2: “Digi-tunes” Implications • Moving away from retail outlet of distribution • Could be high number of digital retailers – lower barrier to entry • Record companies need vastly improved computer infrastructure “I don’t feel like going to the mall. Let’s use the computer to have the record company just send the “tune file.”

18. Scenario #3: “First All Digital Band” “Hey man, let’s go to the CyberBombers show! No, I don’t have a record by them. Their music is only available on the computer system.” Implications • Our marketing methods may become obsolete • Smaller record labels could compete with giants • Word of mouth could become more important than mass media

19. Scenario #4: “On defense” Implications • Falling sales • Terrible public relations move • Kids look to video games for entertainment “You there! Stop using those new computer technologies! We’re suing your for breaching intellectual property laws”

20. Maybe record companies wouldn’t have ended up suing their customers… It won’t change tomorrow, but we should think about these transitions now! Wow, let’s embrace this change! Great strategic thinking!

21. Today 1 – 5 yrs. 5 – 15 years Hire new people • Plan for loss of talented workforce? • Upcoming restrictive enviro legislation? • Emergence of “world-class” Asian industries? • Aging populations • Global climate change • Disruptive technologies • Globalization Launch new business Form partnership A future intelligence system

22. What next? • Demand intelligence • Establish a system to feed you trends and what they mean • Generate ideas • Get your teams to create and collect ideas about threats and opportunities • Make the case for change • When a shift is on the horizon, communicate what, how, when and why throughout the organization • Take a risk • It’s showtime – invest, create, launch, merge, and do something ahead of the competition

23. In stores: Amazon, Borders, B&N Kids of all ages love it. Peter Drucker meets Mario Puzo Tastes great, yet less filling

24. Thanks for having me! Eric GarlandCompetitive Futures1317 F St. NW Suite 920Washington, DC 20004(202)508-1496www.competitivefutures.com