Tuesday, October 24, 2017

Understanding the future leads to better innovation

As many of you loyal readers know (thanks Mom!) I'm a big believer that success in life, as in innovation, is about understanding the future and bringing products and solutions to the market just as the market realizes its needs.  This builds on the famous quip that to win the future you should create the future.  The unspoken but obvious counterpoint is that you can wait to see what the future holds and then react to it.  Many is the company that has decided to take the more passive, reactive, wait and see model, rather than invest a few dollars into trend spotting and scenario planning.

Why aren't we doing more work on understanding and predicting the future?  It's pretty obvious that most companies aren't good at understanding and predicting the future, and they are so bound up in efficiency and quantitative metrics about the next month or quarter that they don't believe they have the time or insights to get it right.  There's a famous quote attributed to Niels Bohr, a renown physicist, who said it is very hard to predict, especially about the future.

The future is already here

Contrast that quote with one of my favorites, by William Gibson.  Gibson is quoted as saying "the future is already here, it's just not evenly distributed".  What he meant was that there are events and trends underway in some corners of the world that are advanced and futuristic.  Imagine how primitive tribes in the Amazon jungle think about airplanes.  In the same way imagine how your grandparents think about Snapchat and Facebook.  Signals about the future are all around us.  Some places (Tokyo and Dubai come to mind) feel like they are already a few years or even a decade ahead of us.  What's required is for us to identify the trends that are occurring and make sense of them, to visit the places that are moving forward and experimenting, to see what the future might hold.

Rejecting the "straight line" future

I've coined what I call the "straight line" future, from my work with customers in trend spotting and scenario planning.  When we ask people to imagine what the future will look like 3-5 years from now, most people will imagine a future that looks and feels exactly like the one they are living in, with minor tweaks around the edges.  In other words, the journey from here to there is a straight line with few disruptions or deviations.  This is the future that we expect and want if we are comfortable and don't want uncertainty or risk.  This is not what is going to happen.

Just a few years ago, Obama was president and the thought of Donald Trump becoming president would have seemed laughable.  Hillary Clinton seemed likely to win and there were an acceptable range of leading, plausible Republican candidates.  Yet history and fate intervened and we have a future few would have expected, with very different political, economic and perhaps military consequences.

The future will look subtly different than the present does, in ways we often don't anticipate or expect.  Those companies that discover the differences with enough time to create valuable products and services will win big.  Bill Gates of Microsoft fame said that we often overestimate the change that will occur in the next 2 years and underestimate the amount of change that will happen in the next ten.  With the pace of change accelerating, we might make that 2 years and 5 years, as you'll see further down the page.

The Point of all This

The point of this post is that change is happening very quickly, and companies that wait to react to emerging events simply cannot react fast enough, with products and services that are compelling enough to win.  Rather than wait, you must create and shape the future that you want to participate in.  Much of the information and signals about the future are out there, waiting to be discovered.  Don't fall into the trap of plotting "straight line" futures, because they aren't real.  Small, subtle changes in the economy, technology or society will create new customer segments, new needs and introduce new threats and potential product or service substitutions. 

Think this can't happen very fast?  iTunes was first released in 2001 as a way to store and manage music.  It was the first really successful commercial way to acquire and manage digital music files.  Tower Records, the largest distributor of CD and albums, declared bankruptcy five years later.  An entire music industry and major distribution channel was destroyed in only five years.  And this didn't happen without clear signals.  Napster and other music sharing platforms proved that customers could strip and share music files for years before iTunes was released by Apple.  The future, as Gibson said, was out there, just not widely recognized or distributed.

Even if you aren't interested in innovation, but merely want to remain competitive and keep pace with your industry and your competitors, understanding trends and predicting the potential direction of your industry and customer base is vital.  It's the minimum to simply keep up with your market.  Good innovators will be looking for clues to find the big shifts that they can take advantage of.

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posted by Jeffrey Phillips at 7:03 AM


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