Things to watch out for in 2012

It is getting towards the end of 2011, and it is time to look at the year ahead. As our name implies, we do use a lot of ‘futures’ methods here at Forum for the Future. We scan the horizon, interview experts and speak with senior execs in leading companies. Mostly we look 10+  years ahead, but as a Christmas present here are 5 things to look out for in 2012.

The five are:
1. Questioning capitalism
2. Big emerging economies start to own sustainability
3. Peer-to-peer breakthrough
4. Energy price backlash.
5. Brands leading, not following, consumers.

1. Questioning capitalism

People will question whether the recent form of capitalism – hyper-free markets based on debt-fuelled consumption – is fit for purpose. At our recent Pioneer Partner dinner one of the CEOs said: “At first responses to the financial crisis were tactical, now they will have to be strategic.”

Why is this? We’ve all realised these economic headwinds aren’t just a blip. Something fundamental was awry at the core of our recent, Western, capitalism. Europe and the UK face a decade of austerity. It is clear that if we do nothing to change fundamentals, then all is gloom. So, people from a wide range of different backgrounds are questioning capitalism.

Paul Polman, CEO at Unilever, has publically said he wants an equitable, sustainable capitalism. Iain Cheshire of Kingfisher is talking about a paradigm shift. Even the Harvard Business Review has called on CEOs to “fix the system”. From our own conversations with business leaders, we know that some are privately questioning the basic model of individualistic consumption. The Occupy movement is the popular version. They have been painted as anti-capitalist but really they are anti-this capitalism.

If companies are not careful, they could get stuck as the defenders of a broken status quo. If they are smart, sustainability leaders can show what a better capitalism might look like.

2. Big emerging economies start to own sustainability

As economic power moves to emerging nations, they will get to drive the debate on big topics. There are a few events in 2012 which mean that one of the new players may take ownership of ‘sustainability’.

As the long-term shift of power away from the West to emerging markets continues, the rising nations are looking for ways to flex their muscles on the world stage. At the same time, there will be economic stagnation and political deadlock in more advanced economies. The US election will turn American attention to domestic politics.

On climate change we can expect to see a lot of brinkmanship as the clock ticks on Kyoto. The word from Durban is not good right now, and so far emerging economies aren’t taking decisive steps. Next year, the transitional meeting will be in South Korea – which will want to make some noise about its green stimulus packages – and the annual conference in Qatar. There is a chance that China will ‘save’ Kyoto, for entirely self-interested reasons, of course.

And then there is Rio+20. Brazil has the right government and the right environmental needs to step up – and that conference is a great opportunity to step up.

The takeaway here is: these big emerging nations will be exporting ideas as well as products in the future.

3. Peer-to-peer breakthrough

Peer-to-peer businesses – where a website matches people so they can share or exchange stuff – have been around for a while, think Napster. Next year could well see one or two concepts really break through.

For instance, AirBnB is a website where you can rent out your spare room, or find cheap accommodation. It was started in 2008. It now has rooms in 19,000 cities in 192 countries. Think how long it would take to build a hotel group with that reach.

These P2P business models often share a good or item that sits idle most of the time. So, Whipcar in the UK says “drive your neighbours’ cars whenever they are not in use” (and with their permission…). Wikipedia lists 16 peer-to-peer car sharing businesses across the world. There’s also peer-to-peer lending. Gartner has estimated that global market will grow by 66% to a $5b by 2013.

All these business models can scale up quickly when they set up a virtuous circle of more providers attracting more users, attracting more providers and so on. They are surfing the continuing digital revolution, with more smart phones, more connections and more data. At the same time, economic austerity will push people to cut costs.

Of course, when one model takes off it will disrupt the market for companies who sell that product. Big companies can wait for that to happen, or experiment with service business models now.

Many of you who read this blog now will be renting something from a P2P website next year.

4. Energy bills backlash

Energy companies don’t want to take the blame for high energy prices. Neither does government. Some energy companies want to protect their incumbent businesses, and some parts of the government want to undermine environmentalism, while the right-wing press wants to get at all things green.

A coming together of interests will likely become a sustained attack on attempts at a low carbon future, especially on distributed energy grids. That is despite falling prices for energy from solar, wind and other renewable sources.

There is a real chance that this energy bills backlash will get traction with the consumer, which will make a transition to a low carbon world more difficult. This backlash also runs counter to the final thing to look out for.

5. Brands leading, not following, consumers

Companies used to hide behind their customers. “We’re only selling what they ask for.” No longer. Pioneering companies like M&S and Unilever are saying they will try to shift what people buy and how they use it.

Over Thanksgiving, at a key sales time in the US, Patagonia placed an advert in the NYT telling readers “Don’t Buy this Jacket”. They encourage potential buyers to check for pre-loved clothing on eBay. Clearly, Patagonia is using this to position its brand and so doing it out in the open. Other attempts to shift consumers may well be a bit stealthier, like choice-editing.

Once the pioneers have started, it will be easier for other companies to try.

All in all, these 5 things to look out for show there are opportunities for savvy companies to have a few, disciplined experiments that lay the foundations of sustainable business models. We’re in for a difficult but exciting year.