Predict the Future Better

Abstract

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 1970s 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 Grove's 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 who 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 adoptors. 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 Industrial Research Institute annual meeting in Boston last Spring, I was asked to predict whether there would be a cultural change in people's attitudes to saving rather than spending. …