Business leaders have always struggled with this issue of wanting to know exactly what’s coming next and picking the right horse.
Trained futurists think this desire for a single rigid view of the future is what destroys a business. We believe you need to prepare for a range of possible future scenarios so you’re forewarned and forearmed and better able to anticipate and respond to change. We need to examine different possible scenarios over the 5-20-year horizon. Then, we need to take these longer-term perspectives to drive the mindset change and business transformation. It’s our actions over next three to five years that will position us well for the long-term scenarios; however they might play out.
It’s the job of futurists to help business leaders:
1. Understand the key forces, trends, developments and ideas shaping the future
2. Identify opportunities to inform future business decisions
3. Help gear companies up to be more forward thinking.
Avoiding mindset failure
Exponential business thinking is becoming more common. In the IT world people are very used to Moore’s Law, the idea that the amount of computer power you can buy for US$1000, doubles every 18 to 24 months. Many organisations that are born digital are saying: why can’t we apply exactly that same philosophy to other aspects of our business? For example Tangerine has seven times more customers per employee than a typical bank; Airbnb has 90 times more bedrooms available per employee than the average hotel group.
So instead of seeing the world in a linear, analogue way, the goal is to drive exponential improvements. The best example of this right now for me is in the car industry, where the typical Ford has about 5,000 components. Local Motors’ 3D-printed car has 50 components, which means that it can literally produce a new car design about 1,000 times cheaper and deliver cars off the ‘line’ five to 22 faster than a typical car company.
The rules of the game are changing in lots of industries. We all know the story of Kodak.
What goes wrong in those companies, and is it something that’s avoidable? What we see is a mindset failure. They saw themselves as producing very physical things such as phones, cameras, houses and machine tools. People from those worlds often have a linear or analogue mindset and tend to think you can only drive growth, innovate or solve problems in a very incremental way.
The problem is they’re butting up against people who were born digital. The born digital players – the Facebooks, Googles and Apples of this world – don’t see phones, people, bank accounts or legal contracts. All they see is a universe of data. They believe everything can be reduced to data, and every problem can be addressed by finding the right algorithm. You scale it up with technology, and apply digital and exponential mindsets to drive 10, 20 or 100 times improvement in key aspects of the business.
Today, Facebook is considering becoming a bank because it has one and a half billion customers with whom it has a continuous relationship. Facebook talks to me several times a day. I talk to Facebook. It knows my spending patterns because I take photographs of the things I do. It knows about my travels, it knows I have air miles. It’s in a position where it can start to monetise things for me, so it can auction my travel plans to get the best deals for me. It can take my air miles and get me the best deal for those.
It can create new value for me. It can monetise my assets such as my network, so it can go out and say to people, look, this guy’s got 200 ‘influencer’ connections on Facebook, out of 1,000 in total. What would you pay to advertise on his page? It can take responsibility for renting out your car or spare bedroom when they are not in use and even arrange for you do to deliveries on behalf of Amazon if they happen to fall on your route today. Hence it can create multiple streams of revenue and value for me in a way that no bank can even conceive of doing.
These digital-centric businesses can see the size of the prize. They understand that there is a huge opportunity if you can apply digital, exponential and lateral thinking to put yourself in between the customer and everything they consume or experience.
How can we dodge the disruption bullet?
No industry is safe. Disruption is coming to every sector. But there are three guiding principles to navigate future change:
1. Plug and play.
One view is to say this is all just too complicated – acknowledging that we just can’t cope with the pace of change and the array of disruptive developments coming our way – such as 3D and 4D printing, AI, robotics, drones, the internet of everything, hyperconnectivity, synthetic biology, and human augmentation. Instead of trying to make sense of and integrate them all, we’re going to go to a ‘business light’ model. This means slimming down to a really small core of strategy and financial management activities and then basically buying everything else in as a service when we need it so we can move very quickly in response to new opportunities and threats.
We’ll just adopt a ‘plug and play’ approach to selecting the components of our business, working with best-of-breed suppliers. Our partners then have the responsibility for making sure they are up to speed with or ahead of the curve on the latest developments in the activities we entrust to them.
2. Work faster and harder.
We’re going to carry on doing it the way we do it, playing within the rules of the game – continuing to treat data and technology as a cost within the business rather than the core around which we design our future enterprise. Instead we’re just going to work harder and faster to respond to change and try to squeeze our human and physical assets just that little bit more.
3. Reinvention of the game.
We have to adopt a digital mindset if we are to reinvent ourselves to survive and thrive in a rapidly changing world. We have to bring in the people who were born digital or think digital, and give them the licence to change the organisation.
The traditional model of a corporation and even capitalism are being challenged today. Right now, there are some fundamental philosophical choices and design tensions facing business leaders as we look to develop future strategy. Technology is also evolving rapidly and creating tough choices.
There’s also the question of how quickly we move? Do we wait and follow the crowd? Do we just do what everyone else is doing and be either a little bit quicker or a little bit slower than them? Or do we follow our curiosity in getting to spaces and really unexplored territory that no one else is willing to go because it’s a new and poorly understood area – with potentially much higher rewards at stake?