Anticipating future needs - buying up the beachfront
He wanted to know why people in the "early days" of the country didn't buy up all of the beachfront property, and if they had, wouldn't they have been rich? If my great, great, great, great, great grandfather had purchased the Outer Banks, for example, would we be wealthy now? I'll give him credit for thinking like an entrepreneur, but his history is a little off.
In the 18th century and well into the 19th century most people avoided the beach. There were few roads, few facilities and the food and water at any beach was relatively lacking. Not to mention that bathing or swimming weren't in vogue, and most people worked 6 days a week. A vacation was something only the wealthy enjoyed, and they took long trips to Europe primarily. I'm sure if my long lost ancestor had turned up to purchase a significant chunk of the Outer Banks, the few residents would have been happy to sell, but it would have taken several generations before the vision paid off.
Few people bought beach front property because no one at the time thought beaches were particularly healthy, few people had time for vacations and if they did they wouldn't spend it at a beach. Anyone buying beach front property with the anticipation of extremely high demand for that property in the 18th or 19th century would have been a visionary at best, and probably considered a crackpot.
Which brings us to modern times. Instead of creating a time machine and going back to purchase the beach front property, I asked my son to consider what people will "demand" in 25 to 50 years in the future. If we can think through what will be in demand in a generation or two, and start cornering the market now, he will retire rich. When we discussed this he nodded solemnly and said - "in the future, they'll all vacation like the guy in the Matrix" - meaning we'd simply plug into our computers and experience virtual vacations in any setting we chose.
The story I've told above is true, and gets to a much larger point. Innovation is as much about discovering what new opportunities or needs may exist as it is about creating the product, service or business model that satisfies that new need. In fact, I'll argue that understanding the emerging opportunity or need is more important, because once the need becomes evident everyone will try to fill it with a product or service, but few of those firms have done the research to understand the real underlying opportunity or need. These fast followers often miss a deeper reality or set of expectations, and offer only a surface solution, rather than addressing the deeper need.
Today, few firms spend any time investigating the future. Most will argue that given the rate of change and the number of "crises" that are occurring simultaneously, they have no time for that. Plus, the market demand attention on a quarterly basis, and is a strict taskmaster. Yet, we don't live in the past, and live only momentarily in the present. All the rest of our lives are in the future, the time we understand the least. While we may not be able to understand the potential futures perfectly, having any understanding about the future has the potential to place a firm in a much better competitive situation than its competitors.
Why is there so little focus on understanding the future, and identifying emerging threats, opportunities and markets? Is it because the work seems too ephemeral or untrustworthy, or because it is too uncertain? Too often firms examine the future hoping to identify a new product or service, which is tangible, when they should be examining the future to understand the setting and scenarios which may occur. Once the scenario is understood, there may be dozens of solutions, products and services that fill the needs. Far too often we assert a product in a specific future setting rather than assert the setting and seek new products and services that are implied by that scenario.
True innovators are working now to discover the "beachfront" property of the future, staking out ownership of valuable real estate that will rise as customers understand the features and benefits. This new real estate may require a change in mores (as it did in swimming) or a change in culture or attitudes (paid vacation) but good innovators understand that everything changes, and often not in the way we anticipate. Less than 50 years after bathing became popular, French designers created the bikini, an article of clothing that if worn in public less than a century before would have caused mass disruption and social condemnation. Henry Ford's development of a standard workweek led to the idea of a regular job with regular hours and eventually to paid vacations, which led to middle class folks seeking entertainment on the beach. Several social, demographic and economic trends combined to make the beach an attractive vacation alternative in less than two generations, and today the beach is in demand even in a recession.
Will that be true in two or three generations? What will happen if the seas rise due to global warming, or the temperatures rise? What if the atmosphere thins and more people become more susceptible to skin cancer? What if the weather at the beach becomes more violent and unpredictable? Many societal, technological and governmental trends could curtail interest in the beach in just a generation or two, just as trends and scenarios may identify new vacation concepts or new products and services.
Trend spotting and scenario planning are the most powerful innovation tools available to a firm, and are often simply ignored or overlooked. The arguments against these tools include:
- A lack of vision to pursue opportunities in the future
- A lack of commitment to big ideas in the future
- Not enough time
- Too much uncertainty about the predictions
- The possibility of new concepts disrupting or cannibalizing existing products
- A new idea or scenario may require a new business model
- A lack of skills or capabilities to conduct the work
Yes, buying up all of the beachfront property in 19th century North Carolina would have take a lot of guts, vision and commitment, but imagine the wealth you'd have today. Since we don't have a time machine, we can't go back and second guess the people living at that time. But we can wonder - what will our grandchildren wish we had anticipated? What is blindingly obvious in their day that with a bit of luck, foresight and commitment we can acquire now?