Two weeks ago, I shared with you a series of forecasting questions that I gained in a Futures Foresight workshop run by Prof. Dr. Sohail Inayatullah, one of the world’s leading futurists. I introduced to you a series of forecast scenarios on the future of innovation in Asia, one of which was called “Entrepreneurial Asian Innovation 2035”. But why is Asia —like other parts of the world— likely to see a shift from a managerial to an entrepreneurial society? Let’s explore this question with the help of a futures forecasting technique called Causal Layered Analysis (CLA). Thereby, we will first do a CLA to capture the layers of Asian business as it is today, and then in two weeks’ time, contrast the status quo with a second CLA that forecasts the future of Asian business in 2035.

What is Causal Layered Analysis? Why is it useful?

Causal Layered Analysis (CLA) is a forecasting technique created by Dr. Sohail to more effectively shape the future. CLA explores ways to create a coherent new future by playing on four levels that he likened to the layers of an iceberg:

1. The tip of the iceberg is called the litany, and summarizes well-known, observable facts and quantitative trends.
2. “Located right below the waterline”, the second layer captures the systemic factors that include economic, social, cultural, political, and historical factors.
3. The third layer hosts the worldviews, which are deeper-lying beliefs and viewpoints of stakeholders involved in the forecasting issue.
4. Finally, the base of the iceberg is the metaphor (also called narrative or myth), a symbolic catchphrase that likens the essence of the issue to another situation.

As such, while we start the CLA with observable facts and quantitative factors, we become more qualitative, emotional and intuitive the deeper we go. Dr. Sohail maintains that to create real future change, we need to analyze and synchronize all four levels of a CLA.

Asian Business 2015: A Causal Layered Analysis on the managerial society

How may a causal layered analysis describe the state of Asian business as of today?

• The litany: In 2015, Asian economies are driven by multinational or Asian corporations (“Asian Business Inc.”). These “big fish” dominate most industries, and in the managerial society, the managers who run these firms are everybody’s darling and role model.
• The systemic factors: Production- and asset-based industries (the “old economy”) are at the heart of many Asian economies. Oligopolies dominate these asset-driven industries because (a) new ventures need substantial capital to get started, (b) the existing players enjoy higher economies of scale, and (c) the “big fish” can use their supreme market position to lobby the political system to influence rules and regulations in their favor. Large Asian corporations organize themselves in hierarchical structures that are more based on seniority, power dominance and connections than on merit. Nevertheless, the “big fish” still attract top local talents because they pay higher salaries and they “give face” to employees who work for a well-known name.
• The worldviews: Here, we take a look at how different stakeholders involved in the issue see it:
• How may managers in multinational and Asian corporations look at the situation? “We rule business in our industry. But things were easier in the past. It’s getting increasingly difficult to make the numbers. And between the two of us, I don’t agree with a number of things that we do.”
• Asian entrepreneurs and new venture founders tend to maintain these worldviews: “We are more agile and creative than the large corporations, but we’re not able to compete with them as Asian business is not a level playing field. We feel bullied by the “big fish”, who push us away with their sheer size and at times operate according to the motto: ‘The end justifies the means.’”
• Asian government agencies tend to think along these lines: “We support the “big fish” with our policies. They create jobs and pay taxes. They also donate to social projects and to political parties. And we “gain face” when we associate ourselves with the “big guys”.”
• What are worldviews of a typical Asian consumer? “I am quite loyal to the trusted brands I know well. I gain face if I show that I can afford to buy glamorous brands. SMEs and start-ups are less sophisticated. If I buy from an unknown start-up, I may lose face —so at least, I should pay less... But better safe than sorry, let’s stick with brands that everyone knows.”
• Last but not least, let’s also probe for the worldviews of the Asian Financial System. What do banks think? “We favor the vital few “big fish”, not the trivial many SME. We don’t like to lend to start-ups; it’s more risky and non-lucrative”. In contrast, business angels and venture capitalists tend to have these worldviews: “Start-ups have few funding alternatives in Asia. It’s a buyers’ market. We can set the valuation at a lower value, thus giving us more shares for the capital that we give to a start-up”.
• The metaphor: “The big fish rule the sea, but they start feeling a tidal wave coming.”

Outlook: Two weeks from now, we will contrast this Causal Layered Analysis of “big fish”-driven “Asian Business Inc.” with a second one. This comparative new CLA will describe how in the coming two decades, we may see a shift from a managerial to an entrepreneurial society that is driven by millions of small ventures that we may call “Asian Business Me”.

© Dr. Detlef Reis 2015. This article was published in parallel in the Bangkok Post under the same title on 1 October 2015.