Today, you can’t build a resilient business without robust technology forecasting. If you want to future-proof your business and ensure that it’s capable of adapting to change, looking ahead to the future in a way that’s both methodical and thoughtful is vital.
There are no shortage of tales that attest to this fact. Kodak and Blackberry are two of the best known examples, but one that lingers in my mind is Nokia.
This is a guest post by Craig Wing, futurist and speaker working at the nexus of leadership, strategy, exponential organizations and corporate culture. Follow Craig on Twitter @wingnuts123 or connect with him on LinkedIn here.
Nokia’s failure to forecast the future
When it was acquired by Microsoft back in 2013, Nokia was worth 2.9% of its market cap high of $250 billion. Back then, in the year 2000, it held a 30.6 market share in the mobile market – 17.3% more than Motorola. In less than two decades it had gone from an organization widely regarded as a pinnacle of both engineering and commercial potency, to one that was complacent, blithely ignoring the reality of an unpredictable future that would ultimately lead to its demise.
“We didn’t do anything wrong” Nokia CEO Stephen Elop said in a press conference just before the company was acquired by Microsoft, “but somehow we still lost.”
Although it’s hard not to sympathize with Elop, his words nevertheless bring to mind something Bill Gates said: “Success is a lousy teacher, it seduces smart people into thinking they can’t lose.”
But what should you do to avoid complacency?
Focus on the process of thinking, not its content
Unfortunately, it’s not as straightforward as simply looking forward to the trends and changes that appear to be emerging on the horizon. That’s undoubtedly important, and it’s something you certainly should be doing, but again this can cause a new set of problems. You could be the most future-focused business leader on the planet, but if all you’re focused on is what’s going to be happening rather than why it is – and, more importantly, why it’s relevant to you – you’re going to eventually run into the same sort of problems as Nokia.
This is a common problem I’ve noticed with many clients in many different industries across the globe. There is a recurring tendency to be passive in the face of the future. Instead of seeing it as something they can create and shape in a way that’s relevant to them, they see it as a set of various trends and opportunities that may or may not impact their organisations. They’re always much more interested in what they should be thinking about rather than how they should be thinking.
This is particularly true for those who have a more deterministic view, where they believe everything is already planned out – that type of thinking can be dangerous as well as a little pessimistic. It’s almost as if you’re admitting you have no ability to influence the future.
For the rest of this post I’m going to show you new forecasting techniques for thinking about the future. While I’m primarily talking about technology forecasting, these forecasting techniques can be applied to many different domains. You might find them useful for thinking about the future of your business more generally.
How to rethink technology forecasting and planning for the future
Look backwards from the future
The cone of possibility
The cone of possibility is a common but flawed approach to forecasting. Essentially it extrapolates the future from historical fact. It’s a way of thinking that says this is what’s happening now, which means we can assume this is going to happen in the future.
While this may seem like a common sense approach, it can cause problems. At the most basic level, it can be easy to make mistakes – when you use the present as a cue to think about the future, there’s a big chance that your perspective will in someway be limited. Your understanding of something might well appear sound, but perhaps there’s an important bit of context that’s missing from your analysis.
But there are other issues with this approach, too:
- The cone of possibility approach misses the ‘why’ behind events and developments. It puts you in a place where you’re following others, almost as if you’re trying to keep up with your neighbors, which, in turn, means you only understand the surface elements of a particular trend rather than the more sophisticated drivers behind it. Nokia had amassed a market lead with its smartphones based on the Symbian operating system, only to lose out to Apple’s touchscreen iPhone. This is a great example of a company failing to understand the “why” behind a trend – that customers wanted a new way to interact with their devices that went beyond the traditional keyboard.
- It’s also an approach that means you’ll always be playing catch up. You can bet that the largest organizations are months, if not years, ahead of you in the R&D stakes, which means actually building for the future becomes a game that’s set by market leaders. It’s no longer one that you’re in charge of.
The thrust of impossibility
However, there is an alternative – something that I call the thrust of impossibility.
To properly understand the concept of the thrust of impossibility, it’s essential to appreciate the fact that the future isn’t determined. Yes there are known knowns from which we can extrapolate future events, but there are also known unknowns and unknown unknowns that are beyond our control. This isn’t something that should scare you, but it can instead be something you can use to your advantage.
If we follow the cone of possibility, the market would almost continue in its current state, right?
It works by looking backwards from a fixed point in the future. From this perspective, it is a more imaginative approach that requires us to expand the limits of what we believe is possible and then understand the route by which that end point can be reached. This process of ‘future mapping’ frees us from the “cone of possibility” and the boundary conditions and allow us to conceptualize a plethora of opportunities. I like to think of this as creating memories from the future.
In more practical terms, it allows us to recalibrate our current position according to where we want to be. The benefit of this is that this form of technology forecasting gives direction to our current business strategy. It also allows us to amend our current trajectory if it appears to be doomed for failure by showing how far off we actually are.
A good example of this approach to the future can be seen in Elon Musk’s numerous businesses. Viewed through the cone of possibility, his portfolio of companies don’t really make sense: Tesla, Solar City, SpaceX, The Boring Company – none fit within the framework of the cone. However, when viewed backwards from the “thrust of impossibility” – we can easily see how these seemingly disparate pieces link together as part of a grander vision.
A lesson from conservation: pay attention to risk
Another way of thinking about the future and technology forecasting can be illustrated by a problem currently facing my native South Africa – rhinoceros poaching.
Nearly 80% of the world’s rhinos live in South Africa; the country has been hit hard by poachers criminals, with more than 1,000 rhinos killed each year between 2013 and 2017 (approximately 3 per day).
Due to the severity of the situation, there are a number of possible interventions that authorities are using to curb the slaughter. Many involve the tracking of the rhino themselves and then deploying trackers and game rangers to protect them.
However, the problem with this approach is that if the systems that monitor the geo-location of the rhinos are infiltrated, the hackers will then know the exact locale of the endangered species. Poachers can then use this defensive methodology to their own advantage.
The alternative…
As an alternative, progressive game farms realised they could monitor “early sensors” in the savanna by tracking other animals that would flee in the presence of poachers. These animals, like zebras, giraffes, and springbok, are of little value to poachers, but would scatter in their presence.
By monitoring the movements of these “early detection” herds, conservationists were better able to not only track the presence of poachers in the vicinity of rhinos’ but their general movement. These early, seemingly vastly different, sensor animals are ones that poachers see no value in; but the conservationists (and rhinos) see immense value in their prediction systems.
Likewise, for leaders we need to ensure we have the sensors which are able to orient us to the danger of our current reality. When we monitor only our “rhinos,” we as conservationists may actually be doing more harm by releasing early indicators into the competitive marketplace or causing us to be myopic in our approach of hedging up our businesses.
The sensors we select must be outside of our field of expertise (like the different game animals) lest we, like the conservationists, seek a solution from only one particular vantage point.
Think about the banking sector: if they selected sensors who only view the financial sector, they would likely have missed the rise of mobile payments and cryptocurrencies.
Not only must these sensors be outside of our domain but they also must be able to explore and partner with other companies along the journey. By the nature of their selection, they should not be experts in that domain, but they should be able to provoke and question the basis of decisions from first principles thinking. By doing this you are effectively enlarging the cone of possibility, creating insights into known unknowns and unknown unknowns.
This is very different to the way consultants are used today. Technology consultants are expected to know the what of the future and draft appropriate strategies, without necessarily focusing on the broader context surrounding a clients needs (well, they should do that, but many do not…). In turn, this approach implies consultants must draft something different from the current approach, and likely follow an approach constrained by the cone of possibility originating from the client’s initial conditions. Technology forecasting becomes something passive, starting from a fixed point.
Don’t just think about segments – think about them dynamically
Many of the business tools taught in business schools today, such as SWOT, PESTLE, Porter’s five forces, are sufficient at mapping current market conditions (magnitude) but are unable to account for the forward direction of travel and changing markets. They offer snapshots, and provide a foundation for vector thinking but they lack the dynamism required to help us manage change over a sustained period of time. In the context of today’s fast moving world, this makes technology forecasting and strategic planning very difficult.
This means we need to consider the way plans – and the situations they’re meant to help us navigate – can shift and change, to give us the ability to pivot based on market conditions.
How do we actually do this? Well, we need to think carefully about the ‘snapshots’ that form the basis of our analysis. For example, the time they are taken, how frequently they are taken will impact how helpful they are for formulating a more coherent long term strategy. Strategies and plans that are only refreshed annually will yield an imperfect view of the total cone of possibility. Moreover, while quarterly plans will yield greater resolution images, these are still not sufficient in market places that are accelerating faster.
Indeed, it might sound like a nightmare to have business leaders tweaking plans constantly – and it is! The practical steps are instead to decentralise control away from central planning offices and allow those who are actually executing on the strategy the freedom to move with haste to meet customer demands and address shifting market conditions. Trust those closest to problems, and trust those closest to customers to set and revise plans accordingly – but make sure there are clear communication channels so leadership understands what is happening.
In the context of technology and software engineering, this maps on nicely to ideas around Agile and Lean – by building teams that are more autonomous and closely connected to the products and services they are developing, change can happen much more quickly, ensuring you can adapt to change in the market.
Quantum business: remember that you’re dead and alive at the same time
Quantum theory has been attracting a lot of attention over the last few years. Perhaps due in part to The Big Bang Theory, and maybe even the more recent emergence of quantum computing, the idea that a cat can be both dead and alive at the same time depending on the fact of our observing it (as Schrodinger showed in his famous thought experiment), is one that is simultaneously perplexing, intriguing, and even a little bit amusing.
The concept actually has a lot of value for businesses thinking about the future. Indeed, it’s an idea that complements technology forecasting. This is because in an increasingly connected world, the various dependencies that exist across value chains, customer perceptions, and social media ecosystems means that, like Schrodinger’s cat, we cannot observe part of a system without interfering with it in some way. If we accept that premise, then we must also accept that ultimately the way we view (and then act on) the market will, subsequently, affect the entire market as well.
While very few businesses have the resources of Elon Musk, what’s remarkable is that he has managed to shift the entire auto-manufacturing sector from the internal combustion engine to electric. He’s done this by doing much more than simply releasing various Tesla vehicles (Toyota and others had a greater lead time); he’s managed to redefine the entire sector through autonomous manufacturing, Gigafactory battery centres, and “crowdsourced” marketing, among other innovations. Try as they might, the established players will never be able to turn back the clock. This is the new normal.
As mentioned earlier, Nokia missed the entire touch screen revolution initiated by Apple in 2008. In the same year, Google launched the Android operating system. Nokia profits plummeted by 30%, while sales decreased 3.1%. Meanwhile iPhone sales grew by 330%. The following year (2009), as a result of the changing marketplace and unable to keep pace with these two new entrants, Nokia reduced its workforce by 1,700 employees. It finally realized it was too slow to react to changing shifting dynamics – the cat’s state of being was now beyond its own control – and Nokia was surpassed by Apple, Blackberry and new non-traditional players like Samsung, HTC and LG.
Nokia is not the only giant to be dethroned, the average time spent by a company in the S&P500 has dropped from 33 years in 1965 to 20 years in 1990 and only 14 years by 2026. Half will be gone in 10 years. Further, only 12% of the Fortune 500 remain after 61 years. The remaining 88% have either gone bankrupt, merged or acquired or simply fallen off the list.
From 91 companies (revenue over $1 billion) across more than 20 industries, executives were asked: “What is your organization’s biggest obstacle to transform in response to market change and disruption?” Forty percent cited “day-to-day decisions” that essentially pay the bill but “undermine our stated strategy to change.”
Herein lies the biggest challenge for leaders in a quantum business world: your business is simultaneously dead and alive at any given time. Every day, you as a leader make decisions to decide if it lives or dies. If you decide not to, your competitors are making the same decisions and every individual decision cumulatively adds to the entire system being shifted.
Put simply, in a quantum world where everything is connected, and where ambivalence appears to rule, decision making is crucial – it forms the foundations from which more forward thinking technology forecasting can take shape. If you don’t put the care and attention into the strategic decisions you make – and the analysis on which all smart ones depend – you fall into a trap where you’re at the mercy of unpredictability. And no business should be the victim of chance.