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What Comes Next


Frontier -- Forecast 2001

What Comes Next

What if you could predict today which industries are fated to flourish or fail in the 21st century? What if, a decade past, you could have imagined the impact of the Internet? And what if, five years ago, you had foreseen today's supertight labor market or soaring health-care costs? Then maybe you could hang out your shingle as a futurist and charge corporate clients or the federal government big bucks to help them prepare for the vagaries that lie ahead.

The World Future Society, a professional organization in Bethesda, Md., with more than 30,000 members and 100 local chapters, lists more than 1,400 future consultancies in its millennium-edition directory--and it's safe to say you won't find a psychic, astrologer, or tarot card reader among them. These professional consultants use the research techniques of social scientists and journalists, chew on the grist of popular culture, and tap their own fertile imaginations to analyze present and past conditions and imagine what the future may hold. Futurists have predicted everything from the popularity of beepers among teenagers to the boom in fish farming to the success of SUVs and the rise of Martha Stewart.

How can futurists claim to know what's ahead? For one thing, they delight in the information overload that everyone else scrambles to avoid. They scan hundreds of publications ranging from the general to the obscure, pick up on common themes and trends to help them speculate about the future, and develop strategic plans in response.

For example, in 1997, Kay Johnson, a futurist in Winston Salem, N.C., was tapped to lead her community's economic planning effort. The goal was to turn the city into a biotech capital, and to ready it for the New Economy. Her strategy: She launched a wide-scale investigation into the trends that would make a difference in the city, including health care, demography, legal changes, political shifts, cultural trends, and changes in the local environment. With this nuanced look at the present, the city realized that technology was going to be key to the city's future success. Today, thanks to the scenario that Johnson helped to create, the whole city is being wired with fiber-optic cable, and it has established a biotech center.Pricey. Governments may have the resources to bring in futurists, but for most small businesses it's an unaffordable luxury. (Fees can range as high as $30,000 a day.) So, frontier invited seven futurists, all small-business owners themselves, to identify the trends they think will most affect small companies in the next decade--and beyond. After compiling their nominations, we chose trends with the most consensus.

Sometimes futurists' predictions may seem impractical and even a bit wacky, as in the case of George Washington University's ongoing survey about future technology trends. But most of the predictions that futurists churn out are far tamer. "If you forecast something that's way off the radar screen, you'll be dismissed as a lunatic," acknowledges Gio Gutierrez, a futurist at the Institute for Alternative Futures, a think tank started by Alvin Toffler, author of Future Shock. "It's often safer to say things that are middle-of-the-road."

Nor is future vision always 20/20. Bad Predictions, by Laura Lee (Elsewhere Press 2000, $15.95), offers nearly 300 pages crammed with predictions gone wrong: the end of paper by 2000; the end of credit cards by 1990. Did you know that nuclear-powered vacuum cleaners were supposed to be in stores by 1965? It's true, says Stephan E. Roulac, futurist and president of the Roulac Group Inc., that even with the best intentions, futurists do make their share of bad forecasts, particularly when they're blinded by their own optimism. Roulac says he "flirted with Pollyanna" when he predicted the birth of a new ethical era for the real estate securities industry just a few years before the savings and loan debacle.

So what do these small-business owners/futurists see ahead for entrepreneurs when they peek into 2001 and beyond? Some real challenges and some nasty pitfalls. The good news: Thanks to their agility, small businesses will be better positioned than anyone else to handle the changes to come, says Peter Bishop, head of the future studies program at Texas's University of Houston at Clear Lake.PREDICTION #1LABORFORECAST: If you're waiting for a rising unemployment rate to ease your labor woes, you'll be waiting a long time. Assuming that the economy doesn't take a nosedive, you've got at least eight more years of a tight labor supply, predicts Roger E. Herman, a futurist who looks at the workplace. And don't get your hopes up too high after that, cautions Edie Weiner, president of Weiner, Edrich, Brown Inc. in Manhattan. Entry-level talent will become more plentiful in the next few years with the maturing of Generation Y, but the shortage of senior managers won't let up for years. There are 76 million baby boomers moving through the labor market, but only 44 million Gen-Xers, the first of whom will turn 40 in 2004.IMPLICATIONS: Recruitment and retention efforts will become more important than ever, particularly with senior managers. "If you don't have a stable workforce, you are at a competitive disadvantage," warns Herman. You might take some comfort in the fact that your rivals will be just as hard-pressed, although that means they'll be gunning for your employees. You'll want to keep your successful strategies close to the vest. Your rivals certainly will.PREDICTION #2REAL ESTATEFORECAST: Small companies will relocate in record numbers during the next decade, as they get squeezed by two powerful forces--a tight labor market and rising rents, according to real estate futurist Roulac. Employees in their twenties and thirties, who will be in short supply over the next five years, move around at twice the rate of older people.

To attract these mobile workers, small companies will be forced to create strong images for themselves and spend more time and money marketing themselves. The right location will be crucial, says Roulac, who conducts an analysis he calls a "geostrategy" of cultural, economic, and other factors that help companies determine the best locale for their business.IMPLICATIONS: You'll want to choose the kind of hometown base your target employees want, one with a high quality of life, strong education, public transportation, and recreation and entertainment amenities. "If you're not in a place where people choose to be, you may not be able to attract employees," says Roulac. As more companies seek new homes and demand keeps pushing commercial rents skyward, more companies will seek to buy their own office space. Alternatively, they will scale down their current space and move some employees to less expensive outlying areas accessible by public transportation, says Christopher Ireland, CEO of Cheskin Research, a Redwood Shores (Calif.) forecasting firm. (In fact, she did just that with her own company earlier this year.) That means small companies may lose the classic advantage of having a flexible, cohesive workforce all under one roof. They will increasingly be faced with managing employees in multiple locations. That will require more logistical coordination and technology, so that everyone will stay on the same page. Ireland says she now manages employees at five different locations, making communications and office culture issues more important than ever.PREDICTION #3CUSTOMER RELATIONSFORECAST: The current pace of corporate mergers and acquisitions will continue over the coming decade. So small businesses are in for a rough ride as their trusty major accounts vanish, predicts Jennifer Jarratt, futurist at Coates & Jarratt Inc., based in Washington, D.C. A total of $520 billion in domestic mergers and acquisitions was announced in the third quarter of 2000 alone. That's the third-highest transaction volume in history, according to Mergers & Acquisitions Report. "You just don't have the continuity that you had several years ago," says Weiner.IMPLICATIONS: To cope with customer churn, more small companies will be forced to step up their marketing and rethink their business strategies. Rather than focus so heavily on big corporate clients, they will pursue more stable small- to midsize ones, predicts Jarratt. Companies will also attempt to cope by narrowing their focus to serve a more select group of customers and give them superior service. That strategy could potentially help small businesses retain their clients that merge or are acquired.

While some small companies with desirable businesses will undoubtedly get gobbled up as mergers escalate, Weiner doesn't foresee a future without small business. To the contrary, as giant mergers take place, big corporations will abandon some market niches, leaving new opportunities for smaller businesses, she says. "As merged companies try to find efficiencies they create demand for outsourcing, which spurs growth in medium and smaller businesses," says Weiner.PREDICTION #4WEALTH TRANSACTIONSFORECAST: In what is expected to be one of the largest wealth transfers in history, baby boomers will inherit thousands of family businesses and billions of dollars from their parents over the next two decades, says futurist Johnson.IMPLICATIONS: Some small businesses will profit from an infusion of new blood and leadership that will help them grow. Others will be acquired, leaving heirs with money to invest in other ventures. Baby boomers, who will begin to face age discrimination in the workplace, will also use their inheritances to start new businesses or buy existing businesses that are coming up for sale, says futurist Weiner.

As small-business growth is spurred, business consulting opportunities will abound to provide these newly minted entrepreneurs with everything from succession planning to financial services, says Weiner. For example, Weiner has studied the trend and sees a future for her own company. She says she is already planning to expand her future consulting services to serve more small companies. Other businesses may want to consider a similar move. A five-year projection done in 1997 by Arthur Andersen/Mass Mutual found that 28% of small family-owned businesses expected their owners to retire by 2002. An additional 14% said their CEO would retire in that period.PREDICTION #5TECHNOLOGYFORECAST: The next 50 years will see the evolution of what David Smith of Technology Futures Inc. calls the Age of Bio. Biological science will be applied to manufacturing, information processing, and other fields. As computing power surpasses the abilities of the human mind by 2040, artificial intelligence will become a reality.IMPLICATIONS: The field of "bioinformatics" will explode. Someday, you may trade in your computer monitor for a "retinal display" or use a DNA computer. "Instead of having to dig in the ground for specialty chemicals, we'll be able to grow them," says Smith. These changes will breed new business opportunities.

All this new technology will require more energy resources. But rising prices for oil and diminishing natural resources will trigger the growth of so-called green industries that use alternative energy, says Jarratt.

Running your business could get easier, too. Artificial intelligence might let you turn over to computers an ever-growing array of tasks, says Smith. But since computers still don't have feelings, more consultants will be needed to handle the human issues that arise in the workplace.

One of those issues, of course, is change, which often inspires fear. But Jarratt sees change as an opportunity for small companies with the right attitude--those seeking to "find the customer that we haven't yet met." That's certainly brave talk. If only the rest of us could be so sure.By Alison Stein WellnerReturn to top


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