Strategic Futurists; Value Systems Specialists


Cattle, Coal and Copper. Why old markets are vulnerable to leapfrogging technology

Sunday 9 November 2014

The essence of Strategic Planning is to identify a desired future outcome for your organisation and then establish how you plan to arrive there in the time frame you've indicated. But in working with all sorts of organisations, I can assure you that one of the most difficult thinking problems is giving up on the reliance on old ways of doing things, even when the signs say that change is coming. The example I'll use here is the fading lights of Cattle, Coal and Copper

Despite a recent announcement that the Australian Cattle Industry might export as many as a million head of live cattle to China, the reality beyond the headline is less certain. As the TASPI model shows, one key phase of effective Strategic Planning is to test your assumptions because without doing so  (and if they are unfounded or based on poor information), it is unlikely that your expectations will be met.

For Cattle there are two main issues for Australia. 1st issue is the idea that social pressure will challenge the legitimacy of the live exports model. The old model has come under increasing scrutiny with regard to treatment of animals on board the ship and at point of transfer. Arguably supporters would say that the examples are rare, that the industry does a good job overall, and that China is not the target destination for current exports that have provided such abhorrent images. And that would be fair enough. But not FAR enough. Simply the old model of live exports is under extreme pressure at a social level and therefore vulnerable. 

2nd issue is water. Growing a million cattle each year requires an enormous amount of fresh water and as climate change (humman made or otherwise) continues, reliable access to fresh water is severely challenged, especially in Australia which is the driest inhabited continent on the planet. At the same time, farmers with non cattle growing needs or crop based needs will claim that they have greater rights to water due to their lower consumption. It'll be a cropper versus a herder discussion on top of the ones that look at best sources of protein. In effect, Australia is currently a new EXPORTER of water.

You can add in the idea that some target markets (like Indonesia) are building up their own stock and that China has been buying up huge tracts of land in Africa to develop places to grow food for it's ballooning population and you begin to see the challenge of allowing assumptions about your future to go untested.

Copper is another industry. The big telcos of the world, including Australia's incumbent Telstra, have vested huge amounts of money building telephone networks based on copper cable transmission wires - both for electricity and phone signals. Incumbent copper providers have in the past believed that export opportunities for developing nations would also be a lucrative target market. But India shows the fallacy of relying on that assumption. India has simply moved straight to mobile phones - the take up is astounding, and the costs for developing that infrastructure has been near zero cost compared to copper wiring.

Add in the newest technology that sees electricity transmitted WITHOUT WIRES as Nicola Tesla told us, and the future looks decidedly different.

Finally is coal. The last of the great incumbents. Coal's main competitor, renewables, is seeing costs for production of solar cells plummet. Whilst the carbon based fuel energy lobby groups have delayed the roll out of wind energy with dubious campaigns about wind noise and health (with yet another showing the claims are bogus) the market place is seeing a decoupling from price rebates and actual costs. In Australia, despite repeated repeals or removals of solar support from Government, the domestic consumer take-up continues to grow inline with reduction in panel costs. Again, the old model and assumptions that underpin it, have been undermined (if you'll pardon the pun) by consumer sentiment and lower production costs of a cleaner and more desireable alternative. The strategic plays of India (a deliberate move away from Coal to be replaced by solar) and China (a closure of coal power and turn to non importation of coal by increases tax levies) will see the two biggest markets change their dynamics.

Cattle, Coal & Copper - three big, long standing industries based on assumptions about how the world works and what the world needs. If those assumptions turn out to be redundant or even false, those industries will decline in fits and starts as their cost to profit ratios flip into unsustainable levels.

In the Philipinnes, the super typhoon Haiyan killed more than 6000 people, displaced over 6 million others and wiped out entire old standing infrastructure. Right now, under the Leap Frog from Disaster project will see a rebuild based on new technologies and thinking that completely by-pass the old incumbent models. And whilst disaster can often be a trigger for moving to new ways of doing things, often the signs of a growing shift away from an incumbent and toward a new approach can be seen.

The role of Strategic Planning - to identify and allocate resources towards achieving a desired outcome, is GREATLY enhanced by looking at emerging signals of change, asessing your existing approaches and asking 'what if...?' questions to trigger a test of those assumptions you hold. And right now, your own organisation holds plenty of assumptions. The question you need to answer is 'have we identified them and have we tested them?

Because if you haven't, your risk profile is MUCH higher than you understand

Talk to us of you want assistance with working through the process

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