Predict the Future Better
By Michael Maccoby
Research Technology Management; Volume 52. No. 6. November-December, 2009. pp 64-65.
Our minds are at the same time in the past, present and future. Our experience, personality and values, formed in the past, are the lens through which we view the challenges of the present, and our expectation of the future colors our emotions and motivation. We feel hopeful when we look forward to a positive future, fearful when we expect danger, and anxious when we are unsure and worried about the future.
In turbulent times, like the present, we look to leaders with foresight, able to anticipate the future and act to make us hopeful. This is a major challenge for CEOs, and they need all the help they can get from research/technology managers.
Because they would like to believe in a positive future, leaders tend to be optimistic. In good times optimism works to make leaders seem prescient. In turbulent times, optimism can become a liability, and to avoid wishful thinking leaders need to sharpen the skills of foresight.
Methods used to predict the future in the steady-state economy of the past are worthless in turbulent times. When I worked with large market-controlling companies in the 70s and 80s, corporate strategy was based on using formulas to extrapolate from the present to the future as a basis for deciding how to plan and budget. If a certain number of people were likely to buy cars or install telephones next year, companies like GM and AT&T would use algorithms to plan on producing enough product to satisfy the expected demand.
Bureaucratic managers liked having the hard numbers, and in a steady-state economy the predictions were usually good enough. But that methodology was useless when they were dealing with innovation. For instance, in 1980, AT&T used surveys to predict that the market for cell phones would be small in the year 2000, not a good business. In the early 90s, AT&T top management rejected a proposal from John Petrillo, an insightful executive, to make a large investment in the Internet. He was told there was no hard evidence that there would be many customers for it. One top executive called it science fiction.
The entrepreneurs who profited from mobile phones like Craig McCaw, and the Internet, like Steve Case, Sergey Brim and Larry Page, were not only trying to predict the future, but more important, to create it.
You Need Methods
Chastened by their slowness to recognize game-changing technologies, executives now stay awake worrying about market inflexions and disruptive innovations. Andy Groves book, Only the Paranoid Survive (Doubleday, 1996) was a wake-up call for complacent corporate executives. For Grove, paranoia meant being prepared at all times for attacks by innovative companies that could destroy your market position. However, a paranoid treats possible attacks as though they were probable, and you could go crazy trying to prepare defenses for every dangerous possibility, however implausible. To predict probable or at least plausible futures, you need methods.
There are two methods for predicting the future in turbulent times. Scanning is the most direct approach for anticipating the currents of change that might affect your organization. The executives who best demonstrate foresight continually scan for patterns of change. They seek out and listen to people with specialized knowledge that might reveal dynamic trends that could become threats or opportunities for their organizations. Those in business quiz customers about their future needs. They observe the buying behavior of innovators and first adaptors.
If you lead a business, your foresight also depends on studying the factors that will change the market, like new products and technologies. You should also pay attention to demographic and social trends that might impact customer behavior and the skills and talents available in the human resource market.
Scanning the Audience
When I spoke at the IRI meetings in Boston last spring, I was asked to predict whether there would be a cultural change in peoples attitudes to saving rather than spending. To answer the question, I made a quick scan of the research/technology managers in the audience. I said, raise your hand if you believe you can count on your company to provide a pension when you retire? Not a single hand was raised. I then said, now, raise your hand if you believe you must save more to guarantee that youll have enough for your retirement. I saw a sea of hands and declared:
there is your answer. People who were brought up in the 1930s, the Depression era, were more conservative about money than people like most of you who were raised after World War II, in an era of rising prosperity. This was also a period in which large companies promised lifetime employment with guaranteed pensions. Today there is no guarantee that even the largest companies will be around in the future. The collapse of companies like GM warns people to take responsibility for their own futures. The cultural change is likely to result in people saving more and also distrusting organizations and leadership. People growing up today will probably have these attitudes.
These likely changes in the culture, combined with other trends, may call for shifts in an organizations strategy. However, the ability to interpret trends requires creative intellectual qualities such as pattern recognition, systems thinking and imagination. Broad knowledge of psychology and the social sciences also helps.
Even if you practice developing your foresight and engage the qualities of your leadership team, you may expand your views of the future by using a second method: scenario building. With this approach, a mix of participants with different knowledge and expertise are encouraged to suggest dynamic trends and transform them into plausible futures. In his classic book on scenario planning, Peter Schwartz writes,
In a scenario process, managers invent and then consider in depth, several varied stories of equally plausible futures. The stories are carefully researched, full of relevant detail, oriented toward real-life decisions, and designed (one hopes) to bring foreword surprises and unexpected leaps of understanding. Together, the scenarios comprise a tool for ordering one's perceptions. (The Art of the Long View, Currency Doubleday, 1996 p. xiii)
Scenario planning can boost your foresight, but it depends on who participates and with what knowledge and imagination. The most respected experts can be wrong. Few economists predicted the market collapse and deep recession starting in 2008.
Of course, much better than trying to predict the future is creating it, and the best way to do so is by innovating. Another way is the search conference which combines some elements of scenario building with deciding on steps toward a desired future. The recently published book, Business Planning for Turbulent Times, edited by Rafael Ramirez, John W. Selsky and Kees Van Der Heijden (Earthscan, 2008), reports interesting examples of scenario building and search conferences. Some form of a search is particularly useful to design an organizational vision and gain support for developing it.
I first led a search conference 30 years ago with Einar Thorsrud in Port Antonio, Jamaica. It was sponsored by Knut Kloster, the CEO of Norwegian Caribbean lines who wanted to help develop the region for tourism. We brought together hotel owners, craftsmen, farmers, school teachers and students to determine how they could collaborate in developing their community and its appeal to tourists. I have subsequently used a variation of a search conference at AT&T, ABB and the MITRE Corporation where participants indicated gaps from their view of an ideal future organization and planned steps to close the gaps.
Develop Strategic Intelligence
In turbulent times, change is constant. Techniques like scanning, scenario building and search conferences can help you to predict the future and manage change. However, the most effective leaders will not depend on formulas but will develop their strategic intelligence including foresight, partnering with people who complement their strengths, visioning with systems thinking, motivating and empowering their collaborators to realize their visions to create a winning future for their organizations.
However, even leaders with strategic intelligence have to bet on the future. Keep in mind Winston Churchills statement : Without courage, all other virtues lose their meaning.