Episode 118
CEOs Gamble When They Plan for Just One Future
Navigating uncertainty means one thing: flexibility beats prediction.
Nikolaus Lang, global leader of the BCG Henderson Institute, looks 25 years into the future, breaking down what four plausible scenarios mean for GDP growth, work hours, and defense spending. He explains what CEOs can do today to prepare for the faraway future.
You’ll Learn:
How scenarios connect uncertainty to revenue, risk, and strategy
How to stress-test your strategy with data-driven foresight
What separates resilient companies from fragile ones
How to identify no-regret moves — from supply chain resilience to AI readiness to talent transformation
Learn More:
Nikolaus Lang: https://on.bcg.com/43abruY
Beyond Tomorrow: Four Scenarios for the World of 2050: https://on.bcg.com/49RMhVF
Latest Thinking From the BCG Henderson Institute: https://on.bcg.com/4uHtDbc
Chapters:
(00:00) Why Planning for One Future Won’t Work
(01:04) The Benefit of Planning for Plausible Futures
(03:19) Should You Ignore Extreme Scenarios?
(04:41) Future #1: AI Abundance
(05:34) Future #2: Battling Blocs
(06:09) Future #3: Climate Coalition
(06:45) Future #4: Digital Darwinism
(07:30) What KPIs Help Predict the Future?
(09:09) What Scenario Is the Most Surprising?
(13:50) Is 2050 Too Far to Plan for CEOs?
(15:03) The “No-Regret Moves” That Matter for Leaders
This podcast uses the following third-party services for analysis:
Podtrac - https://analytics.podtrac.com/privacy-policy-gdrp
Transcript
- Many of my clients come to me and say,
Speaker:"Hey, Nikolaus, how should
we prepare for the future?"
Speaker:And my answer is, well,
don't prepare for the future,
Speaker:but prepare for futures in plural.
Speaker:This report provides corporate leaders
Speaker:with a set of four plausible futures,
Speaker:but not only qualitative descriptions
Speaker:but a lot of very hard facts.
Speaker:How will the work world in 2050 look like
Speaker:from an economic,
a political, a defense,
Speaker:a societal, and many
other dimensions?
Speaker:And I think that makes the difference.
Speaker:- Welcome to "The So What from BCG,"
Speaker:the podcast that explores the big ideas
Speaker:shaping business, the
economy, and society.
Speaker:I'm Georgie Frost.
Speaker:In this episode, we
live in volatile times,
Speaker:and prediction feels like a losing game.
Speaker:Not planning though at
all would be reckless.
Speaker:Planning for one future is still a gamble,
Speaker:but planning for multiple
plausible futures,
Speaker:that's strategy.
Speaker:But how do you do it?
Speaker:Joining me today is Dr. Nikolaus Lang,
Speaker:global leader of the
BCG Henderson Institute.
Speaker:Nikolaus, you've just
launched a major new report
Speaker:looking into the imagined futures in 2050.
Speaker:But before we dig in to your findings,
Speaker:just spell it out for us:
Speaker:the benefit of planning
Speaker:in unpredictable and volatile times.
Speaker:- You know, we see
clients, and particularly
Speaker:if you look at big impacts,
Speaker:whether it's pandemic,
whether it's conflict,
Speaker:whether it's tariffs
or other elements,
Speaker:I think many of our clients
were just overwhelmed
Speaker:by the amplitude and the
suddenness of the shock.
Speaker:And I think the scenario
planning allows you
Speaker:to be prepared for different futures.
Speaker:I think in the late 1990s,
Speaker:many companies did long-range planning
Speaker:and predicted their revenues
Speaker:and their EBIT 10 years ahead.
Speaker:I think today the idea is to
say, "Okay, what could happen?
Speaker:What could be different base cases,
Speaker:optimistic cases, negative
cases going forward?"
Speaker:and develop your strategy
according to this.
Speaker:- What do you mean plausible futures?
Speaker:- So to look at where is
actually the world going.
Speaker:Scenarios are always precisely wrong
Speaker:but generally right.
Speaker:And very often clients tell me,
Speaker:"Well, scenarios are a qualitative
description of the world,
Speaker:but that doesn't help me if I want
Speaker:to derive strategy from this."
Speaker:And so together with my team,
Speaker:we really spend time on saying,
Speaker:"Can we describe the scenarios
Speaker:not only in a qualitative, verbal way,
Speaker:but can we quantify it?"
Speaker:And so what we did is we
quantified those scenarios
Speaker:along 20 KPIs, key performance indicators,
Speaker:which cover varieties of society.
Speaker:You have economic indicators,
geopolitical indicators,
Speaker:societal indicators, health indicators,
Speaker:environmental indicators
that describe the world.
Speaker:And I think this is the powerful element
Speaker:of these scenarios.
Speaker:Having four scenarios that
go 25 years into the future
Speaker:and that go into a very clear
quantitative description
Speaker:of the world along all
these parameters is quite rare
Speaker:and actually then gives the profound basis
Speaker:for strategic foresight work.
Speaker:- What about the truly
extreme possibilities?
Speaker:Let's talk about those.
Speaker:Do you think that we are all
a little bit guilty--
Speaker:leaders too--of getting a bit bogged down
Speaker:or distracted by the more
implausible scenarios?
Speaker:- Every time I talk to corporate leaders,
Speaker:they always come with
the black swan event.
Speaker:What happens if we have singularity,
Speaker:so AI taking over control?
Speaker:What happens if we have a war in space
Speaker:where satellites shoot each other down?
Speaker:What happens if nuclear fusion
is changing the equation
Speaker:of energy management? And so on and so on.
Speaker:I think these are obviously scenarios,
Speaker:which we also described in the report,
Speaker:but to a lower level because
they're highly improbable.
Speaker:Yeah? It would be wrong
to focus your strategy
Speaker:only on this type of extreme examples.
Speaker:I think what we would
suggest is that you take
Speaker:these four important scenarios
Speaker:which have a high probability,
Speaker:and then you can still
stress test your organization
Speaker:with some of these black swan events.
Speaker:But just making clear
Speaker:that those scenarios have a probability
Speaker:in the high double-digit
scenario probability,
Speaker:while autonomous swarms or a war in space
Speaker:is probably a low
single-digit probability.
Speaker:- Walk me through these four worlds,
Speaker:these plausible futures.
Speaker:What could 2050 look like?
Speaker:- So the first one is called AI Abundance.
Speaker:It's actually a world where tech and AI
Speaker:are dominant, are clearly dominant,
Speaker:are used in a beneficial way.
Speaker:This hasn't happened overnight.
Speaker:On the contrary, in this scenario,
Speaker:we predict major cyberattacks
Speaker:and cyberwars in the 2030s,
Speaker:which triggers then humanity to say,
Speaker:"Oh, we need to have a
much more responsible
Speaker:and positive perspective on AI."
Speaker:But the advantage is a
highly productive world
Speaker:where AI is dominant, people
working three to four days
Speaker:on average around the
world, and of course,
Speaker:benefiting of a high level
of global interaction.
Speaker:The second scenario is
called Battling Blocs.
Speaker:That's actually a very different scenario.
Speaker:It's a scenario where
the world has separated
Speaker:in very different blocs
Speaker:where you have different tech stacks,
Speaker:where you have different trade patterns,
Speaker:where you have also a high
spend on military budgets
Speaker:and also a proliferation of conflicts.
Speaker:In this area with the battling blocs,
Speaker:we are in an environment where people work
Speaker:probably the same amount they work today
Speaker:but in a much more tedious environment.
Speaker:The third scenario is
called Climate Coalition.
Speaker:The Climate Coalition is what
you would say the green world,
Speaker:but again, this world
didn't happen overnight.
Speaker:Here also, we predict some
major climate catastrophe
Speaker:in the 2020s, 2030s, which
act as a wake-up call
Speaker:for the world to set up a world
Speaker:where you have climate control,
Speaker:where you have emission control,
Speaker:where you might also have
a higher level of taxing,
Speaker:and where you try to
kind of distribute wealth
Speaker:in a meaningful way.
Speaker:This scenario, again, is very
different from the fourth one,
Speaker:the Digital Darwinism scenario,
Speaker:where you have actually
a freewheeling tech world
Speaker:that is developing and
progressing massively
Speaker:with big impact on productivity,
on health, on innovation,
Speaker:but where this impact is actually reserved
Speaker:to a certain elite that can afford it.
Speaker:On the other side, you
have parts of the society
Speaker:that are in a very challenged economics
Speaker:and professional environment.
Speaker:So actually a very unequal world
Speaker:where, of course, you do
not have the stability
Speaker:of other scenarios.
Speaker:So that was the attempt to
explain you the world in: Speaker:along four dimensions in three minutes.
Speaker:- And you did very well.
They're very vivid pictures.
Speaker:But this isn't about
just storytelling, is it?
Speaker:You also put hard numbers
on each of these futures.
Speaker:How did you decide which KPIs,
Speaker:which measures to choose from?
Speaker:Because 20 is a lot, but I assume perhaps
Speaker:some were left on the table.
Speaker:- Yes, of course, and
this was a long debate
Speaker:on whether we take life expectancy as a,
Speaker:or also biodiversity.
Speaker:So I think the first thing we wanted to do
Speaker:is we said we want 20 KPIs--
Speaker:and a reasonable number
but still diverse enough.
Speaker:And then we went with a
clear perspective of saying
Speaker:we want to cover the key
elements of the world.
Speaker:What I said before:
There has to be something
Speaker:covering economies, something
covering politics or defense,
Speaker:something covering climate, and so on.
Speaker:And we obviously were also looking at KPIs
Speaker:which we can really predict--
and I think this is
Speaker:also something which is interesting--
Speaker:KPIs which we can also
trace back into history.
Speaker:Because, and I think what
is quite, quite powerful,
Speaker:we did, for some KPIs,
we went back until: Speaker:so 175 years, to see
how the world evolved.
Speaker:Because, although the future is unclear,
Speaker:the world is still an ecosystem
Speaker:which has always evolved
along certain parameters.
Speaker:And so it's at least good to
understand how the past was.
Speaker:And I think that was a
little bit the combination.
Speaker:So is it meaningful?
Speaker:Does it cover the different dimensions?
Speaker:Is it traceable into the future,
Speaker:and can we predict it?
Speaker:I think that's the criteria we adapted
Speaker:and applied to this selection.
Speaker:- So across those 20 indicators
of the four scenarios,
Speaker:which ones do you think tell
the most interesting story?
Speaker:What surprised you?
Speaker:- Well, let me start
with the one which I find
Speaker:pretty interesting, which is GDP.
Speaker:And why is it interesting?
Speaker:Because it's, in many cases,
at least an economic sum
Speaker:of what all these parameters translate to.
Speaker:And so if you take GDP
or the growth of GDP,
Speaker:so the growth of GDP over the years,
Speaker:it gives you the impact it has actually
Speaker:on the overall economy
and the overall society.
Speaker:And what I found particularly interesting
Speaker:is that when you look at GDP,
Speaker:you get a lot of very
headline-grabbing news
Speaker:such as AI will allow us to
multiply GDP by 10x or more
Speaker:in a, I don't know, decade or two.
Speaker:Now when you look back at history,
Speaker:you see that actually GDP
has never grown more than 5%.
Speaker:Never. Never more than
5% around the globe.
Speaker:The highest GDP growth we had was 4.7%
Speaker:in the early 1970s over
a decade perspective.
Speaker:So I think that's one
element where you say,
Speaker:"Okay, 4.7% doesn't sound
like 10x in 10 years."
Speaker:The other message you get is to say
Speaker:AI is like the invention of electricity.
Speaker:Well, when electricity was introduced
Speaker:in the early 20th century,
GDP growths worldwide
Speaker:went from 1% to 2%.
Speaker:So again, we're not talking about 10x.
Speaker:So what I want to say
is that it's important
Speaker:to ground GDP in the past development
Speaker:and to reasonably project
it into the future.
Speaker:This doesn't mean that our
projections are very narrow.
Speaker:On the contrary, when I
take the low projection
Speaker:and the high projection, the
world in: Speaker:that is 1.4 times bigger
or three times four bigger.
Speaker:So there is a fundamental difference
Speaker:between the projections we have,
Speaker:but it's still within
reasonable boundaries.
Speaker:- You said a few things
surprised you. GDP was one.
Speaker:What were some of the others?
Speaker:- Yeah, one other which
I found interesting
Speaker:is working hours.
Speaker:You know, again, you have a
lot of headline-grabbing news
Speaker:of saying, "Okay, people
won't work at all anymore,
Speaker:we will have a universal basic income,"
Speaker:and things like this.
Speaker:Today, the reality is that on average,
Speaker:the world works 2,100 hours per year,
Speaker:so every person.
Speaker:Europeans are the lowest part of this,
Speaker:which is about 1,500 hours.
Speaker:US is at 1,800 hours.
Speaker:What we foresee is that in
our most aggressive scenario
Speaker:of AI Abundance, we believe that probably
Speaker:we will end up in a three-
to four-day workweek,
Speaker:but we are not ending
up in a one-day workweek
Speaker:for the world.
Speaker:And we actually see that
in most of the, let's say,
Speaker:more traditional scenarios
where AI is not completely
Speaker:kind of driving this, we are in a more,
Speaker:I would say, traditional
perspective going forward.
Speaker:I found it very interesting, again,
Speaker:to go a little bit beyond
the headlines and to say,
Speaker:if you look at the working time,
Speaker:if you look at real productivity,
Speaker:probably will have a
reduction of working hours
Speaker:by 20%-plus, but not by 80%.
Speaker:So that's, for example, a point.
Speaker:Another parameter which
I found interesting
Speaker:is defense spend.
Speaker:Those who spend, we spend on defense.
Speaker:The money we spend on defense,
Speaker:and given the moment
we're talking about now,
Speaker:I think this becomes
particularly relevant.
Speaker:Again, when you look back in history,
Speaker:you see that the world has
rarely spent more than 5 to 6%
Speaker:of its GDP on defense.
Speaker:Actually the highest spend
was during the Cold War
Speaker:where we were at 6%.
Speaker:Currently we are at 2%.
Speaker:Now people will tell you,
Speaker:"Oh, but that's not right
because US has spent
Speaker:12% during the Korea war"
Speaker:or "Ukraine is spending currently
Speaker:30 or 40% of its GDP."
Speaker:But the point is these
are single countries.
Speaker:This is not the global world economy.
Speaker:So if you bring it back to
the global world economy,
Speaker:you see that actually in some scenario,
Speaker:in our most aggressive
scenario, Battling Blocs,
Speaker:we have 7% spend of GDP
on defense, which is huge.
Speaker:That's an extreme perspective,
Speaker:but it will not be 10, 20 or 25%.
Speaker:So I think that's something
Speaker:which is important to understand.
Speaker:- I think at a time when,
and I could be wrong,
Speaker:CEO tenure is about three years,
Speaker:is 25 years or 24 years
just a bit too long?
Speaker:Is there benefit to looking
perhaps a little closer term?
Speaker:- Look, I think our perspective
is that you should not
Speaker:only do 20 to 25 years exercises,
Speaker:but that it's a combination
of what I would call
Speaker:a midrange scenario,
a long-range scenario,
Speaker:and then long-term scenarios.
Speaker:And again, for a CEO, yes,
Speaker:I think there's a pressure
of quarterly results,
Speaker:but at the same time, it is
our conviction that you need
Speaker:to take decisions now to be
successful in the future.
Speaker:And you cannot only calibrate
into the short term.
Speaker:You need to have a long-term perspective.
Speaker:And what is also interesting
is I actually face
Speaker:a lot of CEOs who tell me,
"Well, you know, my shareholders
Speaker:want to know where we stand in 5, 10,
Speaker:maybe 20 years from now,
Speaker:how resilient my operation is
for a certain set of shocks
Speaker:that might not come in the next 18 months
Speaker:but that might come in 10 years or later."
Speaker:So I think a good corporate leadership
Speaker:has that also in mind.
Speaker:- So we've covered the so
what. What about the now what?
Speaker:If I'm a leader listening to this,
Speaker:the range is wide, the
future is uncertain.
Speaker:I can't bet on a single scenario.
So what do I actually do?
Speaker:What are my next steps?
Speaker:- We describe it in the report
Speaker:as a set of no- or low-regret moves.
Speaker:The first seems like a self-advertisement,
Speaker:but I think it's really important
Speaker:is use scenarios and
practice strategic foresight.
Speaker:Develop the muscle to be able to do this.
Speaker:This doesn't come overnight
Speaker:because many of our corporate leaders
Speaker:used to do a one single
monodimensional future analysis.
Speaker:I think that's something
which is important.
Speaker:But then when we look at the
operations of the company,
Speaker:I think there are four or five areas
Speaker:where I would double down on:
Speaker:first and foremost, supply
chain and operating resilience.
Speaker:Don't focus on one single factory,
Speaker:but set up a network of factories.
Speaker:Don't focus on a single supplier,
Speaker:but have two or three suppliers at hand
Speaker:to cover for unpredictable and unpredicted
Speaker:and unforeseen changes.
Speaker:Second, prepare talent for a new world
Speaker:where talent will have
more support from AI
Speaker:but will also move to
maybe more oversight jobs
Speaker:versus what they do today.
Speaker:Give them purpose.
Speaker:I think this is something
which plays an important role.
Speaker:I think then the third element is also
Speaker:to really think around tech and AI.
Speaker:Where is your technology
coming from the future?
Speaker:Is it a tech that is freely available,
Speaker:or is it tech that you will need to source
Speaker:from a strategic point of view?
Speaker:Then there is the whole dimension
Speaker:about how you set yourself
up organizationally.
Speaker:Many of these future worlds
are divided, are fragmented,
Speaker:so is that the end of the
global multinational company
Speaker:with one headquarter?
Speaker:Maybe you need stronger
regional headquarters.
Speaker:- Nikolaus, thank you so much,
and to you for joining us.
Speaker:If you want to gain more
insight from Nikolaus
Speaker:on this subject, you can
find links to his report
Speaker:"Beyond Tomorrow: Four
Scenarios for the World of: Speaker:in the show notes.
Speaker:(bright music)
