Small Business MBA
Living in the Future
Part 1 of 2: Harness the Power of Strategy to Build Success
Part 1 of a 2-part post on harnessing the power of the future to drive your business today.
The interesting thing about the future is that it lies just beyond our grasp. To the best of our abilities, we as humans cannot step one nanosecond beyond the moment that exists right now. Scientists are moving closer to disproving Einstein’s posit that we are locked into one-speed, one second at a time, but they are not there yet. We’re trapped in the moment. As effective business strategists, we’ve got to break the rules. The present state of our operations is already history when we see it. What’s done is done and we can only look at the measurements we record to see how it all went. We must counter physics with the one tool that makes time travel possible: our minds.
Analytics — the science of using past performance to predict future outcomes — is a good place to start. The scope and scale of data crunching algorithms go well beyond the mathematical skills of even the most brilliant mathematician. In the end, they cannot (as of yet) make the leap to fully understanding the sense of ‘place’ that a human analyst finds second nature. The promise of the IoT will be one of efficiency and effectiveness, but not necessarily one of creativity.
To be competitive in the future, organizations need to skip ahead and see how it’s all going to turn out. We must live in that future moment, understanding what drives behaviors and delivers value to people who aren’t going to catch up to us for quite some time.
Shaping structures and capabilities to meet future markets can be a complicated task. Both consumers and competitors will have changed by the time reality catches up. The United States military has an acronym — OBE, or Obsolete by Events — to sum up where the best efforts at strategic positioning often end up.
To best operate our organization in the future, we need to take a note from the greatest hockey player the world has seen (to date), Wayne Gretzky. “Skate to where the puck will be.”
That seemingly simple statement contains quite a lot of wisdom. Primarily, it is axiomatic that a company can’t operate based on the state of affairs as they exist now but must predict out to see where it will be when the time comes to act. Secondly, the implication is that those follow-on actions are based on the future position, with its accompanying complexities, that don’t exist now.
Simple but powerful statements like Gretzky’s often generate more questions than answers. How can we anticipate where the objectives will be in the future? Based on that knowledge, what actions can be taken to shape events even further forward in time to our advantage? Most importantly, how can we proceed into the future using history, analytics and good judgement to effect changes that can improve our confidence in making our strategies work?
The Shortest Path
Given that we know where our business is in the present, and where the objective point will be in the future, most project planners and strategists opt for the shortest path between any two known points: a straight line. Moving the organization from one point to the next is simple, neat and tidy.
Seeing the world as binary, with an ‘as-is’ and a generally amorphous ‘to-be’ state, helps easily manage expectations as well as forming extremely elegant MS Project plans. If only the world were so precise…
Gretzky rarely went from ‘Point A’ to ‘Point B’ directly. Dodging opponents, passing to his teammates, building feints, moving laterally — and sometimes away — from the puck, he would set himself up for the score. Gretzky did not think in binary terms. He visualized where he needed to be and then orchestrated his environment to make it happen, adapting the whole effort as conditions changed. When it worked — and it did work better than any other player before or since — it was the opposite of the chaos one might expect. It was beautiful, effective poetry in motion.
Future Back
Building a scenario of where your company should be in the future provides is a place to start — not finish. The ‘to-be’ world is nothing more than a set of preferences at this point. Trying to drive more details at this stage can severely limit future potential by erecting barriers to guide us to that state. More often than not, those barriers act as roadblocks to an even more optimal future state. How many projects can you think of that were obsolete by the time they completed? Could those resources have been diverted to make a better outcome? In many cases, the answer is a resounding, “YES!”
Not precisely defining objective end points introduces variability into the design, but little ambiguity (one of those is advantageous, the other dangerous) as the path from the present begins to take shape. Building a set of desired states, with well-defined boundaries, begins to give your strategy a form.
Along with those points a mandatory addendum lays out the mechanisms to measure progress, as well as adapt as the landscape changes. Knowing the general direction you want to go is good, but knowing when, how (and how much) to move the guideposts is better.
Having a crystal ball helps. As luck has it, we have one readily at our disposal.
Knowing the Unknowable
The renowned physicist, Enrico Fermi, asked his students a seemingly absurd question, “How many piano tuners are there in Chicago?” This being the PG era (pre-Google), they had to work it out using only the resources available to them in the classroom. Pencils and paper being the order of the day, this seemed to be an impossible question to answer.
In our current climate of digital precision, we are in danger of losing the art of estimation. Ask a person under the age of 30 what time it is. More than likely, you will get a precise answer, “It’s 12:48.” They learned the concept of time as a precise, linear construct. If you ask someone in their 70’s the same question, you will get a different answer, “It’s about a quarter till 1 o’clock”. Analog estimation is ingrained in the way they think. Both answers are probably ‘right enough’ for your purposes.
The digital mindset sees Fermi’s question to be unanswerable to the precision they expect. The wonderful thing about estimation is that it’s going to provide us enough of an answer to get the job done. Even better, bringing all of the power of IoT analytics to bear on the modern business equivalent of Fermi’s question gives us improved confidence that our estimations are correct — and precise.
But how do you answer Fermi? The answer lies not in knowing the number but defining the best way to know the number!
When faced with an ‘unanswerable’ question, you find that it can be broken down into its components which are answerable with the knowledge and resources available. I challenge you to pose a question or find a scenario that cannot be decomposed into more manageable pieces.
If you want to know how many piano tuners are in Chicago, think in terms of how big the city is, how many people on average own a piano, how long it takes to tune one. Each of those are knowable to some degree of confidence. Some are factual, some are educated guesses. The level of confidence you have in each ‘knowable’ answer defines your overall level of certainty, while the errors in your estimation define the accuracy of your result.
If Gretzky wanted to know where the puck was going to be, he appraised his opponent's abilities, positioning and intent. Combining that with his own teammates’ parameters, as well as ice ‘feel’ and temperature, timing in the game and thousands of other seemingly insignificant other data points, he estimated where his objective was…and went there.
Of course, piano tuners and hockey pucks are probably not integral to your business model!
How do know what products or services your competitors will develop over the next 18–24 months? How many citizens will be using our targeted recycle program in 36 months? How much money should we allocate towards risk reduction/disaster avoidance in the next 4 budgetary cycles? All are difficult to answer questions, whose implications are huge for moving your organization into the future.
In Part 2, we will start to look at how asking the right question is the best path to predicting how future positions will arrive. From there, we will take a look at concrete steps to help you understand how today’s actions can confidently shape and form desired outcomes for the future.
Stay tuned, the future is coming faster than you think!
David Daniel is a former EDS, IBM and PwC CxO level management consultant. He takes his years of big business experience and tailors it for small businesses and startups across the business spectrum.
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