Four Challenges for CEO’s

On January 18, 2007 I was invited to speak to the “CEO to CEO Breakfast Forum,” in Seattle at the Columbia Tower Club. This event, co-sponsored by the Evergreen Bank and the Puget Sound Business Journal gathers Puget Sound CEO’s to listen to speakers and then to engage in some roundtable conversation.

Almost never do I write a text for a speech, but this time I did, because the time would be short and I wanted to think through the language I would use. Having produced a text on the four challenges for CEO’s gives me the opportunity to share the speech here on the website, with some links added for website visitors. You can read the entire speech by linking here. In this revised blog entry I’ll provide some highlights.

Introduction

What is your image of the future? Quite literally, when you think of the future, particularly with a longer time horizon, what pictures, sentences, words come into your mind? How do your images influence your everyday decision making? To ask this in another way, how does the future shape the present?…

…Rather than merely reprise the book, what I would like to do this morning is to take us a bit deeper into what I see as important long term opportunities and critical challenges of our time, in hopes that we can make better near term decisions…

…My current image of the future includes four Great Opportunity-Challenges in the medium to long term, i.e. the next 10-20 years.

…AGING POPULATION
…GLOBAL WARMING LEADS TO GLOBAL WEIRDING
…CHINA and INDIA (and the others)
…MILITARIZATION OF OUR FUTURE

AGING POPULATION

…But the first great challenge-opportunity is the aging of the population. We, along with the rest of the world, anticipate a future in which we go from 10 or 12% of the population over age 65, to 25-40% of the population over age 65 (depending on where you live). Obviously this is a challenge, but viewed correctly and in time, it offers opportunity.

For example, what are you doing, proactively, in your company & industry to welcome workers, including brand-new entrants, over age 55? We need to re-think the whole concept of retirement, to account for such large numbers of people living longer & possibly healthier lives. Since most aging people prefer to stay near where they currently live, how can we in this area become an aging haven – supporting housing and community development initiatives that prepare for a population in which 25% are over 65, many are not financially vested for a 30-year lifetime, and housing is too expensive by at least two orders of magnitude…

GLOBAL WARMING LEADS TO GLOBAL WEIRDING

Global warming is leading to global weirding, a term coined by Amory Lovins. A couple of weeks ago, at the Detroit auto show, green cars made a splash. Yet, at the same event, the chief economist for Daimler-Chrysler launched a fierce attack on “quasi-hysterical Europeans” and “their chicken little attitudes about global warming.” He said, “global warming is a far off risk whose magnitude is uncertain.” And, the chief economist for GM predicted that the market for big gas guzzling cars would recover in 2007 as oil prices fell. Here at home, the now notorious Federal Way school board banned the documentary “An Inconvenient Truth” unless any showing were coupled with a comparable program, presumably denying that global warming exists or is caused by the burning of fossil fuels.

Too many of us, even now, are deeply, and sadly, in denial about the reality and the urgency of global warming…

…Rather than illustrating the reality of global warming I would like to suggest what we can do, aggressively, in the next 10 years. I lean on the Carbon Mitigation Initiative as outlined at Princeton, a 15-step program that if implemented would stabilize carbon emission at current levels rather than doubling them by 2050. It is a global vision, not baby steps and half measures. Together it has the scale and timing needed to tackle an immense challenge. And, in the spirit of my book, to turn that challenge into the most incredible business opportunity in history. Here are some of the 15 “wedges”:

1. Increase fuel economy of 2 billion cars from 30 mpg to 60 mpg by 2050.
2. Decrease driving for 2 billion 30mpg cars in half, through mass transit, urban design for walking and biking, telecommuting, and other measures.
3. Develop 0-emission vehicles including plug-in hybrids and all-electric vehicles powered by renewable energy.
4. Increase efficiency of new appliances and buildings to achieve 0-carbon emissions, resulting in 25% total reduction by 2050.
5. Ramp up wind power, (cost competitive now) to add 3 million 1-megawatt windmills globally, 75 times current capacity.
6. Add 3000 gigawatts of peak solar photovoltaic, 1000 times current capacity.
7. No new net coal power plants – for each new plant built improve efficiency from 32 to 60%, require CO2 sequestration, and take one old plant off-line.

CHINA and INDIA (and the others)

The world has simply never seen any thing like China & India, and to a lesser extent their smaller scale counterparts like Brazil, Korea, and even Russia. What do I mean?

Huge populations, increasingly educated, fiercely motivated by poverty to catch up and surpass us, unaffected by and uninterested in our preoccupation with the exaggerated threat of terrorism, and aiming, within 30 years or so, to supplant the U.S. not just as economies but as scientific and technological leaders.

We are tremendously conflicted by this prospect. Though we know better, we still view these nations as suppliers of low-cost labor and manufacturing, while we simultaneously underestimate the impact on our own middle class of this globalization of labor. As Lou Dobbs and others so ably point out, the middle class is under attack in this country, and the moneyed and national political classes in general do not see this at all, because they are so removed from middle class life themselves. This particular challenge will be a two-generation soft spot in our culture, which we pretend is no problem at all…

MILITARIZATION OF OUR FUTURE

For this final challenge-opportunity may I advise you to take a deep breath, and grab hold of your seats. Not everyone will agree with what I am about to say, though the idea is neither brand new, nor unique.

Recently, I have been pondering, with much concern, the growing militarization of our society, by which I mean essentially the near worship of all things war. We all know why this tendency has increased in recent years, just as we all know how in 1961 Eisenhower warned that excessive influence by the military industrial complex could undermine our free society. Are we going too far, and does this threaten our future? I think, yes.

Do not misunderstand. In a world of human beings, a robust and effective military is necessary to survival and safety. But I think we need to consider turning back from the belief, the image, that the future is war and war is the answer to our problems.

This was the week of Martin Luther King day. I had occasion to read his 1967 speech in which, after much urging, King called for an end to the Vietnam war, a war that at the time was being escalated with a surge in U.S. troop numbers.

In this speech, he quotes a statement by Buddhist leaders in Saigon, again, in 1967:

“Each day the war goes on the hatred increases in the heart of the Vietnamese and in the hearts of those of humanitarian instinct. The Americans are forcing even their friends into becoming their enemies. It is curious that the Americans, who calculate so carefully on the possibilities of military victory, do not realize that in the process they are incurring deep psychological and political defeat. The image of America will never again be the image of revolution, freedom, and democracy, but the image of violence and militarism (unquote).”

In this issue, it is doubly hard to know the future. Yet, taking into account all the trends I have mentioned, one can say with some confidence that “if present trends continue” the U.S. military will be ever more obligated to roam the world protecting U.S. access to sources of oil and natural gas, and protecting pipeline and sea lanes that deliver these energy supplies to our shores. This has, one could argue, already become the primary mission of our military. Though oil may not have been a sole or even principle reason for the Iraq adventure, it is easy to see how Iraq is now a game piece in the larger global game of energy Risk…

…My suggestion is that, if you feel as I do that King had it right in the title to his 1967 speech – A Time to Break Silence – that you break your own silence in the coming days. It is time to turn back from an unconscious yet deliberate, inexorable yet voluntary march toward a militarized future.

So, these are four large, long term, challenge-opportunities. Can we see them playing out, singly or in combination, locally and near term?

Yes, we can. Consider housing. As the WA Association of Realtors points out in their current PR push, between 2001 and 2006 housing costs in King, Snohomish, and Clark counties rose 60%, in Thurston county 75%, and in Island County 160%. Thus we need, not just for the age wave, but for all middle class Americans, a two-order of magnitude breakthrough in the cost of building housing, and a re-thinking of community development policies. So many of our problems – sustainability, transportation, etc. are caused because our housing policy is, (Growth Management Act not-withstanding) essentially, “keep driving until you qualify.”…

Conclusion

What we know, if nothing else, about all four of the challenge-opportunities that I have presented today is this. Waiting is not a strategy. To quote Dr. King one more time from the same 1967 speech,

“We are now faced with the fact, my friends, that tomorrow is today. We are confronted with the fierce urgency of now. In this unfolding conundrum of life and history, there is such a thing as being too late. Procrastination is still the thief of time. Life often leaves us standing bare, naked, and dejected with a lost opportunity. The tide in the affairs of men does not remain at flood — it ebbs. We may cry out desperately for time to pause in her passage, but time is adamant to every plea and rushes on. Over the bleached bones and jumbled residues of numerous civilizations are written the pathetic words, “Too late.”

The future, my friends, is not something that just happens to us. The future is something we do, by the choices we make and the choices we avoid.

Glen Hiemstra
January 2007
Again, link to the entire speech here.