Future Focus Edinburgh - Morning Presentations

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Edinburgh
June 11th 2009
2009 IBM Corporation

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Andrew Sime

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Dr James Bellini

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Richard Farleigh

Ned Kelly
Interest Rates
Taming The Lion
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Sir Alexander Fleming
The Nobel Prize in Physiology or Medicine 1945
Igloo Thermo-Logistics
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What's Great about the “Great Recession”?
Ronan Lyons

Contents
Where are we?
Are things that bad?
How did we get here?
Are 'green shoots' in place?
Some things never change...
Ronan Lyons – Economist

June 11, 2009 60 / x 2009 IBM Corporation
Contents
Where are we?

The recession will wipe out an estimated $50trn of global GDP by 2014
Global GDP growth, 2008-2012
In 2007, the IMF expected world economy IMF Estimates from 2007 and 2009
was expected to grow from $60trn in 6
2006 to $90trn by 2014 5
With the world economy growing by just 4% 4

- not 16% - between 2007 and 2010, 3
the world economy will be worth less
than $80trn in 2014 2
1
All major economies are expected to
contract this year 0
2009e
More open economies are generally being -1
2007e
hit more – as are richer ones -2
2008 2009 2010 2011 2012
Source: IMF World Economic Outlook, 2007 and 2009

In the UK, almost 1m households are now in negative equity
10
9
8
7
6
5
4
3
2
1
0
York/Humber East Anglia South-East West Midlands Wales Scotland
Northern East Midlands Greater London South-West North West Northern Ireland

Like other small open economies, Scotland has proved vulnerable
It's estimated that Scotland's economy will shrink 3.1% this year and see no growth in 2010,
before weak growth restarts in 2011
This puts Scotland a year behind the UK average of -3.8% in 2009 and +1.2% in 2010
The Scottish PMI has been below 50 – i.e. economic activity has been contracting – for 14
months in a row
The reading for May was 46.1, up from 36.1 in February and comparable to May 2008
Estimates of employment suggest that 2008 job levels may only return in 2017, with
unemployment hitting 230,000 by 2011
Financial services employment may be particular hit over the coming two years

This recession has shattered some myths of the early 21st Century
“The new global financial system does not require a new level of surveillance”
The recession has made entire models of finance disappear, as well as bringing about a
global re-evaluation of risk and widespread nationalization of banks
Pervasive crashes in stock and housing markets starting in 2007 have destroyed anything
up to 30% of global wealth
“Emerging markets have enough economic strength to decouple from the OECD”
The widespread economic contraction in developed economies has been accompanied by
a huge slowdown in growth in emerging markets

Contents
Where are we?

Measured by job losses, recessions up to the 1980s were short and
sharp
― US as the
bellwether
economy for the
OECD
― Recessions
were frequent in
the post-war era
up to the 1980s

Since then recessions have been getting less frequent, milder... and
longer
― Since the 1980s,

recessions have
become more
once-a-decade
episodes
― The early 1990s

recession was
long – but not
severe in terms
of job losses

The “dot bomb” recession was particularly long, in terms of job
recovery
― The dot.com
bubble created
an unsustainable
amount of jobs
― It took almost
five years for
private sector
employment to
recover

This recession combines the worst of the different post-war
recessions
― Jobs losses
have been as
intense as any
post-war
recession
― It's likely to be
the longest post-
war recession,
barring rapid
employment
growth

Globally, trade and output have fallen at least as much as in the 1930s
Source: O'Rourke & Eichengreen, http://bit.ly/korbe

The severity of the crisis has led to an unprecedented policy response
Source: O'Rourke & Eichengreen, http://bit.ly/korbe

Contents
Where are we?

To some extent, the world economy was a victim of its success

The crisis could not have happened if there had not been a long period of high growth
and low levels and volatility in real interest rates
Nonetheless, there was a market failure at the core of the global economic recession, due to
policy failures
Financial regulation did not keep up pace with innovations in financial services, meaning
regulators could not track risk or stop flawed incentives
Macroeconomic policies did not take into account the build-up of systemic risks in the
financial system and in housing markets
The global regulatory architecture and surveillance system was fragmented, which
compounded the inability to see vulnerabilities and interconnections

Contents
Where are we?

Confidence and activity are returning... slowly
US - manuf UK - manuf Eurozone -manuf
US - services UK - services Eurozone - services
65
60
55 Growth
50
45
Decline
40
35
30
Scotland:
06
08
09
07
6
9
8
6
8
7
6
r-0
r-0
r-0
r-0
-0
-0
-0
l-0
l-0
l-0
n-
n-
n-
n-
ct
ct
ct
44.4
Ju
Ju
Ju
Ap
Ap
Ap
Ap
Ja
Ja
Ja
Ja
O
O
76 / x 2009 IBM Corporation

Each region faces its own growth challenges and
opportunities
Where will
growth come USA Europe Asia
from?
Company balance sheets in good Business - and consumers - Shift towards domestic consumption
Business shape pre-recession... vigorous cost particularly dependent on bank and welfare systems likely to offset
cutting since lending trade's weaker growth contribution
Retirement of baby-boomers... USA Rapidly growing populations in most

Population at work is shrinking...
Demographics will need to remain open to migration
rapidly in some countries
countries – China and Japan ageing
in the future as it has in the past very fast though
Major problems remain in banking Concerns over transparency of banks

Lessons from 1980s and 1990s mean
Banking system but some signs of confidence and ability to develop Europe-wide
financial system in good shape
returning solutions
Significant fiscal boost in short-term... Administrative burden and red-tape A lot of countries are in catch-up,
Government but the shift to bigger government is an issue for business... being tackled with significant infrastructure
likely to last by the EU head-on programmes
Huge variety between large and small,

A very flexible economy, close trading
Other rich and poor across the 40+ Major environmental challenges
links with Asian economies
countries
Contents
Where are we?

There remain significant opportunities for alert and agile business
Some of the golden rules of business apply even more so in recession than before
Develop a strategy on innovation to differentiate from competition, and meeting clients'
requirements at the lowest cost
Maintain corporate brand and behaviour to attract and retain clients... and also staff and
investors
Leverage technological possibilities to enable an ambitious strategy for emerging markets
Agility in identifying and capitalising on new opportunities

While recession has shattered some beliefs,
others remain firmly in place
“There are always opportunities to establish or expand”
Inc.com identifies almost 20 industries and activities in demand
They range from small flexible activities (such as home healthcare, niche consulting and
repair services) to large industries (including education and construction)
Some are staples – like fast-casual dining and temporary staffing – while others are hi-tech
or green-collar, such as cloud computing, education technology and energy
“Technology is a game-changer”
In the dot.com collapse, belief in the potential of ICT to change our world was shaken
In the current recession, faith in ICT is – if anything – stronger, as policymakers and
business people see how it can cut costs, inform decisions, and change business
models

Technology really is flattening the business landscape
Disruptive technologies do not care whether Scotland's most popular brands on Twitter
it's boom or bust
At the height of the boom, Facebook grew
from 14m users in mid-2006 to 27m
users by mid-2007
At the height of the bust, Twitter grew from
0.5m users to 4.5m users over the
course of 2008
There are over 40,000 Scottish users of
Twitter – the most popular are
dominated by SMEs

Thank you
For more, see:
www.ronanlyons.com

Future Realities
Focus

Future Focus
In the Future We’ll All Be Older
Professor David James

Firms get out of shape in the good times
Recessions force us to get back into shape
Treat everyday as if you were in a recession

What‘s Your Core
Competence?
3.0bn
we‘re addressing a new
Breed
of customers

All businesses are liars....

the media revolution
we are talking to a new
Breed
of customer...

we are talking about
DIY MEDIA

garage influentials
Generation C(ontent)
Micro-Celebrities
curators of style
Who are the world’s
most trusted brands
?
you
&
me
Thank-You
david.james@henleymc.ac.uk
07710 754017

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Future Communications
Focus

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Euan Semple

Focus

Gavin Wheeldon

A few facts...
― Fastest growing language company in the world
― 23rd Fastest growing private company in Britain
― Over 100 full time staff in 10 offices across 7 countries
― Over 14,000 linguists worldwide in our network
― Translation and Interpreting for over 3,000 clients including Nike, Google, UN and CAT
Presenter’ Name – Presenter’ Title

Date 101 / x 2009 IBM Corporation
Focus

The Future of Work
Chris Livesey, IBM Scotland

IBM’s transformation: An ongoing journey
1984 1992 2004 2005 2006

Knowledge Creation in the “old world”
Subject Matter Experts
Create Content for others to use

Access to “Experts” in the “Old World”

Changing Nature of Work Drives a Need to Connect Dispersed Workforces

Something Changed .............

“Experts” are everywhere
Knowledge

And they are networked
Instant Messaging
File Sharing
Social Bookmarking
Wiki's Activities
Blogs

....the world of work is changing
From Hierarchies
Exploration & Production
and Teams … to Networked Communities
O’Brien
Senior Vice President
Extended Community
Stock
Jones who leverage Cole’s
knowledge to do their
Explorations Drilling Production jobs
Williams Taylor Stock
Shapiro Paine
G&G Petrophysical Production Reservoir

Cohen Cross Sen O’Brien Shapiro
Smith Andrews Moore Paine Cohen Cole Jones
Hughes Miller
Kelly
Andrews
Ramirez Smith
Miller
Hughes Williams
Bell
Cross
Hussain
Cole
Taylor
Hussain
Moore Ramirez Bell Sen
Kelly
Social Network Analysis
IBM’s internal innovations
Connections
Persona Bluepages Beehive Profiles
Profiles
Connections
Communities
BlueGroups Community tools Community Map
Communities
Connections
BlogCentral Blogs
Blogs
Connections
Cattail Files
Files
Connections
Dogear Dogear
Dogear
Instant Activity Connections

Activities Collaboration Explorer UAM OpenActivities Activities
1998 2003 2009

IBM Lotus® Connections social software
Lotus Connections is
social software for business
that empowers you to be
more innovative and helps Home page
you execute
more quickly by using
dynamic networks of Profiles Communities
coworkers, partners and
customers.
Blogs Files Activities Wikis Dogear

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Future Focus Edinburgh - Morning Presentations

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Future Focus

2009 IBM Corporation

2009 IBM Corporation

2009 IBM Corporation

2009 IBM Corporation

2009 IBM Corporation

2009 IBM Corporation

2009 IBM Corporation

2009 IBM Corporation

2009 IBM Corporation

Ronan Lyons – Economist

Ronan Lyons – Economist

2006 to $90trn by 2014 5

With the world economy growing by just 4% 4

Source: IMF World Economic Outlook, 2007 and 2009

Ronan Lyons – Economist

Ronan Lyons – Economist

Ronan Lyons – Economist

Ronan Lyons – Economist

Ronan Lyons – Economist

Ronan Lyons – Economist

― Since the 1980s,

― The early 1990s

Ronan Lyons – Economist

Ronan Lyons – Economist

Ronan Lyons – Economist

Source: O'Rourke & Eichengreen, http://bit.ly/korbe

Ronan Lyons – Economist

Source: O'Rourke & Eichengreen, http://bit.ly/korbe

Ronan Lyons – Economist

Ronan Lyons – Economist

To some extent, the world economy was a victim of its success

Ronan Lyons – Economist

Ronan Lyons – Economist

76 / x 2009 IBM Corporation

Retirement of baby-boomers... USA Rapidly growing populations in most

Major problems remain in banking Concerns over transparency of banks

Huge variety between large and small,

Ronan Lyons – Economist

Ronan Lyons – Economist

Ronan Lyons – Economist

Ronan Lyons – Economist

For more, see:

Ronan Lyons – Economist

2009 IBM Corporation

2009 IBM Corporation

Recessions force us to get back into shape

Treat everyday as if you were in a recession

85 / x 2009 IBM Corporation

88 / x 2009 IBM Corporation

89 / x 2009 IBM Corporation

90 / x 2009 IBM Corporation

91 / x 2009 IBM Corporation

95 / x 2009 IBM Corporation

2009 IBM Corporation

2009 IBM Corporation

2009 IBM Corporation

2009 IBM Corporation

2009 IBM Corporation

Presenter’ Name – Presenter’ Title

2009 IBM Corporation

2009 IBM Corporation

1984 1992 2004 2005 2006