The Future of Everything
Tuck faculty foresee distance learning, personalized pricing, the rise of women leaders and more.
Distance learning, personalized pricing, and the rise of women leaders. This is just some of what Tuck faculty say consumers can expect in the next 20 years as technology and broad global forces further transform how we live, work, and play.
THE FUTURE OF HIGHER EDUCATION
Dean Paul Danos
Much has been made of the impact distance learning will have in the coming years. We are already seeing more dynamic classrooms with some types of material covered in class moving online, leaving more time for students to engage with their professors and with each other in problem solving and interactive discussions. Distance learning also brings scalability into the equation. Schools will be able to extend their reach into the world by using technology to leverage their faculty and to accommodate restrictions imposed on students who can relocate to campus.
It seems inevitable that some institutions will try to break through to large scale by attracting an array of new students with programs offered at a distance. The elite programs will watch this development with interest, but out of caution for their brands and reputations, most will be in experimental mode.
The schools with the best faculty, students, and traditional brands will always have the option to enter the market. The pivot is whether they will choose to. Should the more elite schools decide to expand the number of students they admit and the number of degrees they grant, institutions of lesser reputation would face serious challenges in attracting quality students no matter what the delivery method is.
Recently I attended a virtual opera at the Hopkins Center for the Arts at Dartmouth. The piece was performed at the Metropolitan Opera House in New York and broadcast in high definition to Hanover. We had fantastic seats, the sound and video reproduction was flawless, and we experienced the enthusiasm of a live audience. It was a thoroughly enjoyable performance, but it wasn’t the same as being in person at the Met.
If you’re an opera fan who can travel to New York and afford the best seats in the house, there’s no question: you go to the Met. But if you can’t travel, or if you can only afford mediocre seats at the Met, then your money might be better spent on front-row seats (that is, any seat) for a virtual opera; and this is important because the technology is only going to get better.
Students in the coming years will face a similar choice. Those who are able to gain admission to the very best residential programs in the world will choose to attend them. For candidates who don’t get into the best programs, however, or for mid-career professionals or others who can’t leave their cities, a hybrid program could be very appealing.
As more schools begin offering these programs, the question of consolidation arises. A relative handful of top professors could create highly produced online courses that other schools would pay to use as part of their degree programs. The elite schools are likely to be producers rather than consumers in this market, but the non-elite schools will feel great pressure to accept courses designed and produced by the most highly regarded experts in their fields. Schools would have the option to outsource courses, or even whole departments. An institution could choose to specialize, concentrating its resources to attract top-tier professors in a chosen discipline while relying on virtual proxies to teach other subjects.
Already the forerunners of virtual reality—video and teleconferencing, and the omnipresence of email, social media, and mobile voice communications—have fundamentally changed the way we live and do business. One can imagine a time in the not-too-distant future when virtual reality makes it nearly impossible to tell whether you’re sitting together with colleagues or in a different country altogether.
But, in my opinion, virtual experiences will never be the same as immersing oneself for two years of intensive learning with talented, like-minded people from all over the world, as do our 278 entering students this fall at Tuck. There’s no synthetic substitute for that. There will always be a place for full-time residential programs like Tuck’s—if we continue to give a truly transformational experience. That’s the key.
Tuck made its reputation by giving students world-class leadership preparation at a personal scale. We value our high-touch, high-quality model for management education, and we do it as well as any school in the world. That’s not to say we won’t use new technologies to enhance the Tuck experience.
The nature of education will be different in 20 years. Already, traditional classes include online components on technical matters and subjects that can be best delivered that way. That allows the classroom to become more dynamic. We also offer a distance education program to health care professionals. Digital innovation will continue apace, and at Tuck, a school that pioneered by offering the first graduate degree in business, the first Bridge Program for liberal arts students, extensive Research-to-Practice Seminars, and perhaps the finest distance education for executives in our Master of Health Care Delivery Science, we will certainly continue to innovate. But we will also continue to do what we are known best for: deep discussions, stretching and challenging, action learning, and in the end graduating ethical and distinguished leaders.
INTERNATIONAL TRADE: A-LA-CARTE TRADE PACTS WILL FURTHER ERODE WTO INFLUENCE
Emily Blanchard, Assistant Professor of Business Administration
Tuck assistant professor Emily Blanchard says the surge in a-la-carte trade pacts and a commensurate erosion of World Trade Organization influence is a boon, but also a cause for concern. The next 20 years could usher in an ironic dystopia, in which firms find themselves constrained by the very agreements for which they lobbied. In the worst case, the WTO could lose its influence as global trade referee, leaving international markets vulnerable to a protectionist backlash.
Welcome to the era of spaghetti regionalism. Imagine a map of the world, with red lines representing bilateral agreements and regional trade accords like NAFTA. With more such agreements signed every year, the map begins to look like a bowl of spaghetti. The resemblance doesn’t end there, Blanchard says. Like pasta swimming in a good marinara sauce, these agreements are not only hard to resist, they also have the potential to create quite a mess.
“It’s not just that we are seeing a surge in the number of bilateral agreements,” says Blanchard, whose research focuses on international trade and investment policy. “The provisions that we are putting into these agreements are becoming much deeper.”
At first glance, that’s a good thing. Free trade is the gravitational force causing the world’s economic tide to rise. And the boats that tide lifts—particularly the most powerful multinational firms—are providing much of the impetus for these more numerous and specific trade agreements.
“Firms are coming to governments with these very detailed wish lists, and that’s basically what they’re getting,” Blanchard says. “Imagine the process continues and we get more and more of these detailed, narrow agreements. Firms have gotten what they ask for, but they’ve also potentially boxed themselves in. Preferential agreements undermine multilateral liberalization; down the road, firms may find it harder to reach into new markets where they don’t already have deep political ties.”
There’s a reason trade agreements have moved away from the WTO. With more than 150 member countries, doing anything within the WTO can be an exasperating process; witness the all-but-dead Doha round of negotiations, about to enter its 13th year with no agreement. But for all its flaws, the WTO is an essential bulwark against protectionists, whose increasingly sharp rhetoric has found a receptive audience in democracies around the world in the wake of the recent global recession. WTO members are bound by treaty to play by the rules of international trade. That keeps tariffs at bay.
“The protectionist drums are beating, there’s no question,” Blanchard says. One outlier scenario is that the WTO could collapse in the absence of forward momentum, opening the door to a protectionist backlash unlike anything seen in the United States since the Smoot-Hawley Tariff Act of 1930.
Such a future is possible, but not likely, Blanchard says. The more likely outcome is a continued creep of spaghetti regionalism, and gradual erosion of WTO influence. The United States and the European Union are negotiating a bilateral agreement now, and the Trans-Pacific Partnership—a regional pact that notably excludes China—seems destined to go forward. International trade will continue to thrive, and firms will continue to enjoy favorable terms in many markets. But they may likely have less flexibility to trade outside of the bilateral and regional frameworks that governments have negotiated on their behalf.
LEADERSHIP: MORE WOMEN WILL ASCEND TO THE C-SUITE
Sydney Finkelstein, Steven Roth Professor of Management; Associate Dean of Executive Education
The discrepancy is so great that many colleges and universities have improved their average tests scores simply by admitting more women. It’s no longer unusual for undergraduate classes to be 60 percent female, or even more.
Today about one third of students at elite business schools are women. Finkelstein believes that percentage will increase sharply in the coming decades because the pool of qualified women is now much larger than ever before. “The march of the numbers is going to be powerful, and we’re going to see more and more women as senior executives and as CEOs,” Finkelstein says.
Finkelstein has written scores of academic papers on executive decision-making, and his many books include the No. 1 bestseller “Why Smart Executives Fail.” His answer to the title question, documented in dozens of case studies, is that leaders succumb to an almost biblical list of character flaws, from greed and pride to obstinacy and, almost to a person, a failure to listen.
We can be certain that human nature will change little in the future, but a greater proportion of women in executive roles could shift the decision-making dynamic. For one, the dictatorial chief executive could fall out of vogue. “At the risk of stereotyping 50 percent of the population—and this is backed up by some research—there are some central tendencies in the management styles of women versus men,” Finkelstein says. “Women tend to be more collaborative. They tend to work better in teams, and they tend to be better at communication.”
As more women ascend to the C-suite, they will likely bring with them a more inclusive culture. Perhaps more importantly, Finkelstein says, leadership teams will be more diverse. After all, men are not going to disappear; rather than 90 percent men and 10 percent women, the ratio will begin to approach 50-50.
“People who think they’re right all the time, people who don’t listen well, and the tendency to have an imperial CEO—all these things become easier to manage with a diverse team,” Finkelstein says.
“It’s not that human nature is going to change, but the thing that could change—and this may be more hopeful thinking—is that leaders will have greater self-awareness,” Finkelstein says. “And diversity is a good thing in that regard.”
THE EURO: THE COMMON CURRENCY WILL SURVIVE BECAUSE EUROPEAN LEADERS WANT IT TO
B. Espen Eckbo, Tuck Centennial Professor of Finance
B. Espen Eckbo, the Tuck Centennial Professor of Finance and a Norwegian by birth, thinks not. The Euro has been quite successful in its original goal of integrating the European Union and minimizing exchange rate risk for businesses. But critically it also began as a pan-European political idea, and it is Europe’s politicians who most want the Euro to succeed.
“The prestige behind this Euro project is enormous,” says Eckbo. “I think as long as the politicians get their way, it will survive.” A grassroots revolt from masses could upend the Euro, but Eckbo also points out that the United States is far more grassroots oriented than Europe, which has traditionally been politically governed from the top down.
Germany, with the strongest economy in Europe is currently key to the Euro’s success. Angela Merkel’s recent re-election gave a lift to the common currency’s prospects, as Merkel has been a strong advocate for the Euro. And while an independent Deutschmark would be stronger than the Euro, helping the domestic market, it would also have its downside as the German export sector would suffer.
If the Euro did fall apart—a chance Eckbo finds slim—he thinks the most likely scenario would be a splitting of the Eurozone in two, with northern and southern regions. A key question that will be debated, and perhaps decided in the coming decades, is whether the European Central Bank (ECB) should be allowed to buy public debt from each of the member countries. Should the countries be allowed to borrow from the European central system? In the U.S., if a state needs to borrow funds from the federal government, it can do so with certain conditions. So far, the bylaws of the ECB prevent that from happening.
“The problem is if the ECB did allow it, you are implicitly making countries like Germany a guarantor for the debt of countries like Greece,” says Eckbo. “And there isn’t even a legal system in place to allow that to happen.”
Eckbo predict it will not go that far, and that as the economies of Europe turn around, many of these issues will fade, at least from the headlines—and at least as long as the economy stays healthy.
RETAIL: THE REVOLUTION WILL BE PERSONALIZED
Praveen Kopalle, Professor of Marketing
Pricing will be personal. In the future, Kopalle predicts prices will be personalized right down to the individual customer, and dynamic enough to change based on time, place, or person. The airline and hotel industries operate on this model, but soon more product categories will fluctuate in price based on supply and demand, or perhaps to incentivize you based on your geographic location. Harder to fathom now is that different people in the same time and place may pay different prices for the same item. Though the posted price might be the same, customers might, for example, be emailed coupons for differing discounts.
Analytics will rule. Kopalle says retailers have only scratched the very surface of the ways they can use statistics and analytics to understand customers. Gone will be the days of buyers doing guesswork on pricing. “These time, space, and people dynamics to prices are not randomly selected, but based on hard data and analytics,” he says. The cost of data storage has plummeted just as exponentially as computing power has increased. Managers are being trained on analytics more and more. Within a few decades, retailers may know our habits better than we know our own.
Loyalty will be rewarded. Today, customers will be fickle in order to get a better price. But as loyalty programs get sharper and smarter, Kopalle believes retailers will convince us of the value of our loyalty. “Going forward, consumers will realize that being loyal to the retailers and brands they like actually pays off in the long run,” he says.
The line between online and offline retailing will blur. Looking into the future, Kopalle sees the dawn of a same-day delivery of our online purchases as the norm, merging the online world and our geographic one. Bricks and mortar retail won’t disappear, but retailers will view online and offline spheres as complementary and blend them seamlessly.
ENERGY: TECHNOLOGY WILL FUEL THE NEXT BOOM
Bob Hansen, Senior Associate Dean; Norman W. Martin 1925 Professor of Business Administration
- Natural gas will be a large source of energy worldwide. While many view it as a 10- to 20-year transition fuel from petroleum to the renewable future, Hansen thinks it will be around for even longer. It’s a well-functioning market and prices are low, and as long as that remains true, its future is bright. Hydraulic fracking has been so successful that the U.S. is now even exporting its natural gas.
- New technology will let us strike even more oil (and gas). Hansen says that thanks to new technology, we are finding new oil today in the same wells that John D. Rockefeller once tapped —and was thought to have tapped out. “And that’s just in the U.S. Think of being able to do this worldwide in places like Venezuela, the Middle East, and parts of Europe.”
- Prices for solar and wind will fall, but it won’t take off without grid-level storage. The problem with solar and wind is their unreliability. Right now, if it’s cloudy or calm, you simply have to wait for your energy. The key to making renewables reliable will be the invention of new grid-level storage technology to harness the power when it’s available for when it’s needed. Entrepreneurial minds will make it happen.
- Climate change will not be as severe as predicted. Climate change is one of the biggest wild cards in the energy market. While acknowledging he may not be in the mainstream on this one, Hansen thinks the effects will not be as dire as predicted, and as a result governmental regulation on carbon will stay weak. “If I’m wrong and we end up getting some severe data on climate change in the next five, 10, or 15 years, then the efforts to heavily regulate carbon will be more fruitful.”
COMMUNICATIONS: SOCIAL MEDIA WILL MAKE STRATEGY EVERYONE'S CONCERN
Paul Argenti, Professor of Corporate Communication
Because of social media, strategy will have to be more egalitarian. Companies need to realize that social media has allowed the democratization of content. The ownership and development of content is at least as powerful for the audience as it is for the company, and the best companies get that. Companies have to be willing to open themselves up to comments, thoughts, and feedback from their constituents. Otherwise customers just won’t accept the strategy. And it’s increasingly going to be a give and take: right now, 68 percent of CEOs do not participate in social media in any way. Twenty years from now, my guess is that 100 percent will participate.
Another trend I see building is companies making a shift from asking, “How do we manage our reputation?” to “How do we manage ourselves so we have a great reputation?” There is still a sense among companies that whether it’s through PR or spin, you can create a great reputation by advertising. I believe more in what Socrates said: “To gain a great reputation, endeavor to be what you desire to appear.”
Finally, I think we’re going to see a widespread acceptance of the concept of shared value and the importance of corporate responsibility. It’s been viewed as a nice thing to do, and a profitable thing in terms of sustainability, but I think in 20 years, you won’t be able to operate unless you take into account a company’s responsibility in society. With the limitations and downsizing of government, it almost seems that corporations are the only ones who can solve society’s problems. Where the UN and governments fail, corporations will be able to step in.
HEALTH CARE: HOSPITALS WILL TAKE A PAGE FROM THE AIRLINE INDUSTRY'S PLAYBOOK
Vijay Govindarajan, Earl C. Daum 1924 Professor of International Business
- Focused Factory - Automobiles were invented by Karl Benz, who went on to create Mercedes Benz in 1876. Every Mercedes was handmade with the thought that every customer is unique, so every auto should be unique. So when Henry Ford came into the automobile industry, cars cost $10,000. But he introduced a mass production principle of “focused factory.” By having factories make only one type of car, the cost came down dramatically. The Model T was $600. Today if you want a Rolls Royce, it still will be handmade, but Henry Ford moved the bulk of the industry from craft to mass, reducing cost without sacrificing quality. Medicine in this country has gotten caught in craft. We are producing a Rolls Royce for each patient. Why can’t we have focused factories for things like heart surgery and some standard cancers? There is a cardiac hospital in India which follows focused factory. It is able to do a cardiac surgery for $3,000, versus $150,000 in the United States. In this country, we do more open heart surgeries than anywhere in the world, but it is done in thousands of hospitals. If you consolidate it to only a few centers, the costs will come down.
- Hub and Spoke - The airline industry introduced us to the “hub and spoke” model, but it has the potential to create great savings in medicine as well. For example, the largest cancer hospital in Asia has a main hub in Bangalore and 17 spokes throughout India. The spokes handle basic treatment and have less expensive equipment and more general physicians. The hubs have specialists and the most expensive equipment for more complicated cases. Importantly, the spokes and hub are technologically connected. A radiologist sitting in the hub can read the scans from spoke hospitals. In this country, we have too many hubs and too few spokes. Each hospital has less specialization and lower volumes.
- Task Shifting - The surgeon’s time is the biggest cost in a hospital. In U.S. health care, we typically eliminate low-skilled, low-paying jobs, leaving the surgeon to do dictation, photocopying, billing. For this type of routine task, we need a layer of semi-skilled workers. There is a cataract eye hospital in India that does this very well. The surgeon spends 10 minutes removing the cataracts, and then high school graduates with 24 months of training do the rest. They go to the villages and screen people, transport patients, prepare them for surgery, and help them recover. Another hospital in India shows the patient’s spouse a four-hour video and then has them handle much of the post-operative care at home. The hospital is the most expensive resource. As our population ages we have to be able to treat some end-of-life and chronic conditions at home and use the hospital only for emergencies.
INNOVATION: HAVING A GREAT IDEA WILL NO LONGER BE ENOUGH
Ron Adner, Professor of Strategy and Entrepreneurship
Strategy is the new bottleneck. Innovation is not a matter of high-tech or even mid-tech, but rather the way we organize things—whether they’re technologies, organizations, relationships, or business models. That has always been true, but never so true as it is now and will be in the future.
Risk will be assessed differently. The nature of risk expands to include not just your ability to execute, but also your ability to lead this collaborative ecosystem. Before, if you’re assessing the risk behind an activity the question would be, ‘Do we have something the customer wants, can we deliver it, and can we beat the competition?’ Now it’s ‘Can we align everybody in order to deliver this thing, and can we capture as much of the pie as we’re hoping to?’
The ecosystem will redefine winning. The ecosystem doesn’t just affect which innovations succeed; it affects the distribution of success. You can contrast what we’ve seen with the iPhone versus Android. Apple retains more of the value in the iPhone ecosystem than does Google in the Android ecosystem.
The future will be collaborative. To bring more complex ideas to market, innovators will need to harness the capabilities and resources of multiple partners. At the same time, technology will continue to make collaboration easier, cheaper, and more universal.
Innovation begets innovation. Take the example of Facebook and Zynga, the online game startup, which in 2009, took FarmVille from zero to 10 million users in just six weeks. When Facebook came about, it created an opportunity for Zynga to succeed.
Your kid’s bedroom is the new NASA. During the Space Race, if you wanted to write software for NASA you had to be at IBM. Today, you could be a 14-year-old kid in a Brazilian suburb. It used to be that you could write a program in your bedroom. Then you could write an app and distribute it through the Apple ecosystem. Now you can design a product and have it manufactured in China, or create it in your bedroom with a 3-D printer.
Bets will be smaller and more frequent. When we reduce entry barriers, sometimes we also reduce the willingness to make big investments. Investors may want to revisit where they lay their bets. In many industries, big firms are no longer the only entities with the resources to bring an idea to market.
The company with the fewest barriers wins. Suddenly there’s this new dimension that you need to evaluate, which is not just ‘Is this something we want to do?’ but also ‘Who is most likely to be able to do it?’ And that calculation is changing as these barriers fall. You could probably make a pretty good bet that the people who are driving down the barriers will probably be in a pretty good position.
ORGANIZATIONS: OUR DEFINITION OF COMPETENCE WILL RECEIVE A BADLY NEEDED UPDATE
Ella L.J. Bell Smith, Associate Professor of Business Administration
Rather than working from 8 a.m. to 7 p.m. every day, top performers will find ways to work smarter, with high-impact hours that vary seasonally. For workers who can do their jobs remotely, there will be greater location choices to balance virtual work and office time. We often assume that putting in more hours means we’re more collaborative and that our informal network at the office is a measure of competence. We will be better served to measure competence by the value we bring, the connections and relationships we have across the organization and with other organizations, and our problem-solving skills.
We’ll also see a rise in entrepreneurship as future generations of women and men, many of whom will feel disenfranchised by the current system, create the businesses that will support their family realities and allow them to thrive. In that way, the smaller businesses may create the workplace innovations that larger corporations follow.