5

MAKING SENSE OF THE ROAD AHEAD

At this point in the book we have spotted the red flags, overcome the barriers to shifting, and readied the organization for a shift. When an organization actually proactively shifts, it is doing so because it believes that changes in its business environment will require that shift. The organization sees the changes that are happening right in front of it and extrapolates those changes to a longer-time horizon. In other words, organizations shift because they forecast a future for which the shift would be beneficial. Such a forecast requires two skills: the ability to understand what’s happening right in front of you and the ability to carry that understanding down the road. The further you can see down the road, the better you can appreciate the need to shift as well as extrapolate the implications of a decision to shift in a particular direction. While this has always been the case, it has become harder and harder to do when the world is accelerating at such an incredible pace.

Thomas L. Friedman summarized for us the main argument of his book Thank You for Being Late (first discussed in Chapter 1) this way: “How do we align ourselves with these drivers shaping the world to get the most out of them and cushion the worst? That said, you need to focus on your foundation,” he told us. “To try and change without that foundation, you’ll spin out of control.”

That is the subject of this chapter, getting your arms around the drivers shaping your world. It’s not as easy as checking a GPS device to see where the world is going or looking in the rearview mirror to see if it is safe to change lanes. In fact, looking in the rearview mirror is precisely the wrong thing to do. You have to look forward.

Let’s start with the need to better focus on the rapid changes happening daily, right in front of you. Asking people and, more so, watching people in their own environments—obvious, but all too often given short shrift. Paco Underhill, author of Why We Buy: The Science of Shopping, is an environmental psychologist who uses anthropological techniques to collect and analyze consumer data. Underhill’s approach to consumer behavior differs slightly from the mainstream because he focuses not only on why consumers buy what they do but, perhaps more important for shifting ahead, why they don’t or wouldn’t buy something that is no longer relevant.

He told us, “In order to assess how your business might be losing relevance, it’s important to look at it through different lenses.” He asks, “How are we doing in terms of addressing . . . female versus male users? Women, for example, are much more conscious of security than men. Ask a man when was the last time he was scared, and he’d have to think about it. Ask a woman, and she’ll tell you it was within the last week, when she was in a parking lot, or during an interaction with a stranger. You have to apply different sets of logic.”

Underhill believes that “you need to look at different cultures through different lenses to determine if you are relevant or cool on a broad scale.” He cited images of a shopping mall in Shanghai where they grow many of the vegetables that are sold in restaurants. It takes the urban agriculture concept of farm-to-table and puts it into a totally different context from which new ideas can be derived. As Underhill said, “The world is global, and having a global perspective is always a lifeline to the future.”

Relative to this point, Underhill made an observation that, as simple and as obvious as it sounds, it is a common barrier to companies being able to get a broad, let alone global, perspective on the future. “Find the desk farthest away from the customer and that’s where the person in charge sits,” he said. “You need to be an observer of people. You need to look at behavior and focus on the piece that’s not working. You need to look beyond your own Main Street. You need to learn to think standing up. Many of us are all too comfortable sitting down, looking into a database, or sitting around a conference table. To see what’s happening,” Underhill said, “go have a meeting where the customer is. Being able to bring senior management [to] where the customer is—that actual point of contact—is critical.” To reasonably observe the changes in the world, you need to have a lens that provides a sharp focus on the world you compete in. You don’t get that from behind a desk in a corner office.

Underhill’s point is valid. Going five miles per hour, the few minor navigational bumps that might be made from sitting behind a desk are unlikely to derail you. It’s when you’re going 100 miles an hour that those same errors in navigation can have a huge effect and take your car out of control.

When we asked Mark Addicks, former CMO of General Mills, how a company as large and complex as General Mills keeps an eye on the rapidly changing road, he explained that the company actively leverages its very scale to take the pulse of its consumers. “You will never get lost if you start with the consumer first,” he said. “We are hyper-looking at what the consumer is doing, where they’re actually spending their time, and what their behavior is. We see our brand teams not as number crunchers looking at sales, which are lagging indicators, but as journalists and anthropologists. You get people on your team who are used to observing, looking at the culture outside, not just as means to optimize performance, but to look for opportunities. It’s critical to see how people are actually engaging with our product, with each other, and what we are missing.”

Giving an example, Addicks said, “For instance, relative to Cheerios, a few years back we sent teams out to several cities across the country to do some exploratory work around what Cheerios meant to people’s lives. What we found out when we did this—and what continues to give General Mills a sense of how they’ve needed to shift marketing strategies with Cheerios—is that we heard nothing but emotional stories. Basically, what everyone was telling us was that the true meaning of Cheerios was an emotional connection, a story about nurturing. We came back to the office with all of these stories, laid them out on the floor, and grouped them thematically. This led to a breakthrough in our communications.”

Keeping an eye on what’s happening right in front of you is challenging enough for most organizations, but to successfully shift ahead you need to be able to look down the road much further, with a longer-term forecast, and try to make sense of what will happen, if not precisely when.

If you go back to the movie 2001: A Space Odyssey, one of Stanley Kubrick’s masterpieces, made in 1968, he got a lot of the “what will happen” right: how a spaceship would dock with a space station, which had never been done before; what the controls on a spaceship would look like, with flat-panel screens; how a space station would look, and how people would communicate on picture phones, a precursor to Face-time calling. The Pan Am plane that launched the spaceship was not too different from Richard Branson’s Galactic prototype for a commercial spacecraft. Lots of that was right. The same is true of Star Trek, created by Gene Roddenberry, the original television series debuting in 1966. From the flip phones to the tricorders, which resembled today’s iPads, to the flat-screen televisions that helped Captain Kirk navigate on the bridge, a lot of the “what will happen” was pretty presciently imagined.

“When it will happen” is a different and perhaps more difficult question. Neither Kubrick nor Roddenberry got this part quite right. As inventive as your thinking might be about the “what,” pinning your “what” to a specific “when” can turn the “what” into a “whatever.” Apple is an example of a company that famously and fabulously learned from its mistakes. Think about Apple’s Newton, the first ever personal digital assistant, or PDA, which hit the market in 1993. People weren’t quite ready to have computers in the palms of their hands. That it retailed for between $700 and $1,200, too big to fit in the palm of most people’s hands—and that the handwriting recognition software was notoriously inaccurate didn’t help.

The bottom line is that success in shifting gears depends on being able to get the best possible sense for what will happen, when it may happen, and retaining flexibility to move on a dime when it does happen. The process is both art and science—an art and science practiced by Amy Webb, author, futurist, and founder of the Future Today Institute, a leading future forecasting and strategy firm that researches technology and probes the question “What’s the future of X?” for a global client base. Her third book, The Signals Are Talking: Why Today’s Fringe Is Tomorrow’s Mainstream, is about how to predict technological change and what companies can do about it in the present. In her work, Webb uses a systematic way of evaluating new ideas bubbling up on the horizon and, most important, distinguishing what is a real trend, to which attention must be paid, from what is merely trendy. Among the key goals of her work is being able to follow seemingly random ideas at the “fringe” as they begin to converge and move toward the mainstream and have long-term consequence for tomorrow.

During our conversation, Webb made three key points about the work she does with her clients. “First, you need to recognize what I refer to as the ‘paradox of the present,’” Webb told us. “Companies and leaders of organizations are focused on what they [believe] to be true, and much of that perspective comes from their past experiences. They perceive what they want to see and hear while ignoring viewpoints that contradict their preferred view. As a result, they will gravitate toward choices that pay off immediately, even if success is minimal—versus larger payoffs that take a longer time. This could explain why in business, companies are reluctant to shift if changing market trends do not fit their worldview.”

Behavioral scientists have long known that once we have formed a view, we embrace information that confirms that view while ignoring, or rejecting, information that casts doubt on it. This phenomenon, called confirmation bias or, more colloquially, wishful thinking, suggests that left to our own devices we do not perceive circumstances objectively. We pick out the information that makes us feel good because it confirms our beliefs or prejudices. We become prisoners of our assumptions. For example, some people will have a very strong inclination to dismiss any claims that marijuana may cause harm. At the same time, some social conservatives will downplay any evidence that marijuana does not cause harm.

The second point Webb made had to do with the perception of time and, specifically, the Heisenberg Uncertainty Principle. As discussed in Chapter 3, the Heisenberg Uncertainty Principle describes how it is impossible to simultaneously know the exact position and momentum of a particle at a specific point in time, arguing that there is a fundamental limit on what can be known about a particle at any given moment. Companies look at time in a very linear way, often ignoring that one little change, a single event, can alter what happens dramatically (again, think of how in Star Trek, when they go back in time, inadvertently altering one small event changes everything). In a world of linear rigidity, it’s necessary to become comfortable with a bit of ambiguity.

“When forecasting the future, there is no definitive answer to exactly what’s coming next. While we perceive time to move in a linear fashion, in reality it is elastic. Therefore, there is no point in making a ‘prediction,’” Webb said. “A prediction would imply that the answer is knowable, and the answer is not knowable. There are any number of possible futures; there are probabilities within these possibilities. What’s important to consider when future forecasting is that time is arbitrary. It’s not based on cycles and quarters. It’s really based on internal and external events. Humans understand units of time because that’s how we measure things. Companies like to encapsulate strategies in basic units of time—five years, ten years—but that’s not how change occurs. A smarter approach is to instead focus on a general direction,” said Webb. “Based on what you know right now—and assuming you’ve done the requisite research [with a] ‘fringe sketch’ and modeling—this is the best strategy for the next few years. If you understand that time is fluid, then it relieves the pressure of having a ten-year plan.”

The third point Webb made was also about how companies have a tendency to look at future forecasting incorrectly. It isn’t simply a matter of facilitating a brainstorming group to imagine science-fiction scenarios. She emphasized that future forecasting is data-driven, that it’s evidence-driven, based on activities including pattern recognition and regression analysis. She also emphasized that it’s not a matter of turning to the “usual suspects,” but of putting together a team comprised of creative types and number crunchers. It’s essential to look at what might be next from the multiple perspectives of the Kubricks and the Rodden-berrys and the scientists. You need to look and listen for the “signals” from those on the fringe, and meld them with the insights from the engineers and data thinkers.

“For example,” Webb told us, “one of the things that impresses me about IBM is that it often partners with a variety of thinkers, from cartoonists to research scientists, journalists, doctors, and diplomats. That diverse group of thinkers helps the company overcome the paradox of the present and to develop much richer visions of the future. They’re not trying to find the answer; they are seeking the path to an answer, collaborating and sharing information along the way to development of products and services. As futurists, we view trends as guides, not answers. It’s a matter of ‘these are the places we should be paying attention to over the next year.’ A good way to think about it is not trying to figure out what the next light bulb is going to look like, but what’s the next phase of light.”

Relative to this last point, imagine going to the garage to get your car only to find the battery had died. You call AAA and a millennial-aged service guy shows up. The garage being pretty dark, you go to the car’s glove compartment to look for a flashlight. Before you could get to it, Mr. Millennial takes out his iPhone and taps on the flashlight app. If you were advising a manufacturer of flashlights a couple of years ago, would you have been able to see this coming? Would you have been focused only on improving the flashlight, making it more durable or waterproof, or would you have been able to see a point down the road where people would never need flashlights again?

In the film Creed, Rocky Balboa shows Apollo Creed’s son Donnie a piece of paper that he wants Donnie to study. Donnie takes out his iPhone and snaps a picture and then gives the paper back to Rocky. Rocky then asks him if he wants to take the paper. Donnie replies that it is “in the cloud.” Would the manufacturer of a copying machine have been able to see this coming? Would he have been focused only on other copiers, those who made more durable or smaller designs, or would he have been able to see a point down the road where people would snap photos and either view and/or print them when needed, and therefore never need copiers again?

Such a view of the future is what drove Uber’s investment in self-driving cars through its purchase of Otto, a developer of self-driving technology. Uber cofounder and former chief executive Travis Kalanick characterized self-driving cars as an “existential” threat to his company.¹ Self-driving cars would be much less expensive to operate than cars with human drivers. Robots work tirelessly, don’t demand raises, and don’t ask for tips. The first company to deliver a fleet of automated taxis could quickly put the human variety (both conventional taxis and Uber-like companies) out of business very quickly. If Uber is not that company, or at least close in time to that company, it would fall victim to the same technological disruption that it promised to inflict on the auto industry. The Uber philosophy has been that it’s a hassle to own a car. Maybe so, but Uber managers don’t want someone else to eliminate that hassle in a cheaper way than they can.

Looking outside the obvious parameters, getting a broader view of possible futures, was also something we talked about with Rita Mc-Grath, a professor at Columbia Business School. Her particular emphasis is on developing sound strategy for moving forward in uncertain or volatile environments. One of her bestselling books is The End of Competitive Advantage: How to Keep Your Strategy Moving as Fast as Your Business. During our conversation with McGrath on the challenges of staying relevant, she said, “It’s as simple and as challenging as keeping your eye on what’s going on with consumers today and making a better bet than the competition on where they may be going tomorrow. Among the first steps is to ask if you are framing your category within a wide enough lens. For example, Ford is not looking at cars, but it is looking at ‘mobility’ as a point of reference. They’re very aware that their existing strategy of making a full range of cars globally is going to be changing, based on how people are looking at transportation options. They’re switching their language and looking at mobility solutions. When you do this,” said McGrath, “it opens up a whole new range of options you might pursue. So, as to your notion of shift, Ford is evaluating which strategies relative to mobility they are going to make a bet on. The next stage is to assess what you’re going to stop doing, and in some cases, that’s even harder than figuring out what you’re going to start doing.”

McGrath went on to explain that what a lot of companies do is make a half-hearted stab toward doing something new, but they’re still carrying on things from the old business. “If you want to move ahead, you have to be very clear that ‘these are the things we are no longer going to bet on’—and even if you don’t get rid of them, shrink them for sure. It’s at this juncture that a company also has to be realistic about its skillset. They might have made the right choice in terms of which gear to shift, but they may not be realistic about what it’s going to take to execute on a new strategy,” she said. In other words, they are susceptible to confirmation biases.

McGrath brings us to another of the factors inherent in successful shifting, which is the ability to get the right balance between “performance” and “opportunity.” Performance is a matter of optimizing your current direction and strategy, looking at what you currently do that’s working to a great enough extent, and strengthening it. You do what you must to get better at your existing game while balancing other opportunities. Take the Wall Street Journal, as an example. For more than 125 years, it has represented the best in business journalism, setting the standard in bringing readers comprehensive business news via the printed page. But the WSJ had to confront changes in how people read newspapers and consume media in light of so much information before us and the ever-faster pace of disseminating it. People were reading shorter stories online. So, in late 2016, it launched a reformatted newspaper that is a shorter and more concise read for subscribers. Twenty years earlier, the WSJ launched its online site, in response to the same challenges and opportunities presented by people’s evolving reading and information-gathering habits. Initially, newspaper websites tried to replicate the actual newspaper. Today, the trend has reversed. The new Wall Street Journal print edition was modeled after its online presence. For this to work, the WSJ will have to continue its focus on preserving and building on its heritage as an authority on business news.

Among the most well-known people in the field of predictive research and repositioning for the Fortune 200 is Faith Popcorn, author and founder and CEO of Faith Popcorn’s BrainReserve, another of the experts with whom we had the privilege of speaking. Agreeing with others that it takes as much art as science to predict which trends will become sustainable advantages for companies, Popcorn has a very impressive track record. She was one of the first to foresee the demand for fresh foods, the move toward four-wheel-drive vehicles, and the demise of film. She was also among the first to name and frame “cocooning,” a term that is now in Webster’s Dictionary, and to anticipate the boom in home delivery and working from home.

When we spoke with her about the topic of this book, and how she does what she does, among the first things she said to us was, “You can’t directly ask a consumer what they want. If you asked someone back before it was invented if they wanted a smartphone, how would they possibly be able to answer that question? You don’t ask consumers what they’re going to do in 2020; you look for the gaps in their lives. I look for unhappiness. What I try to really get at is, ‘Where’s the discontent?’ If you ask about the discontent,” she said, “then you can ask them how they’d fix it. And by getting into a conversation about how you could fix it, you can almost visualize a concept, a company, a new product, a new medium, a new system. You ask people what’s bugging them, you’ll get fuel for insights about what trends will shape the future. Our predictions have been 95 percent correct, thanks to our two pieces of IP [intellectual property]—TrendBank, a system that includes seventeen trends that we’ve been tracking since 1975, and TalentBank, a universe of thousands of Futurists in varied fields.”

Lessons Learned

No hockey fan, outside of a few diehards in Boston chanting Bobby Orr’s name, would deny that the greatest player in the history of the sport was Wayne Gretzky. Gretzky was neither the fastest skater in hockey nor the best, nor did he have the best shot. What made him great was his sixth sense of being in the right place at the right time and getting the puck on a breakaway more than anybody else. He knew where his teammates were going to be when he had the puck and was able to pass it. It was more intuitive than actual physical skill. He had this incredible ability to know where the puck was going and where the other players were going. Those who are most successful at shifting ahead can tell you where the puck is going: where consumers will be, not in weeks, but years from now or even longer. The best companies do whatever they can to get an extended sense of the future.

Sensing the future could be the most important challenge in maintaining the long-term health of an organization, but it is also the most mushy in some sense. Understanding the future for decisions today is not simply the description of what and when. It is more of a “what might be” at some point. The managerial shift needed and preparation activity is not episodic; you don’t say, “Okay, here’s a forecast and let’s make a decision to respond.” It’s more like, “Okay, here’s a likely scenario and let’s prepare for the time when it is upon us.” We can offer several tips to help get a better sense of the future.

Lesson #1: Get out of the bubble. As Paco Underhill explained, it is hard to see how the world is changing from sitting behind a desk.

Getting out into the world is how Howard Schultz of Starbucks fame transformed a commodity into an upscale cultural phenomenon. In 1971, three coffee aficionados opened a small coffee shop specializing in selling whole arabica beans to a niche market of coffee purists in Seattle’s Pike Place Market. Schultz joined the Starbucks marketing team in 1982. Shortly thereafter, he traveled to Italy, where he became fascinated with Milan’s coffee culture, in particular, and the role the neighborhood espresso bars played in Italians’ everyday social lives. This inspired Schultz to the point where he convinced the company to set up an espresso bar in the corner of its only downtown Seattle shop. This bar became the prototype for his long-term vision of Starbucks being a “third place”—a place different from home and work where people could go to relax and enjoy others or just be by themselves.

Lesson #2: Find the fringe. So, given that you are going to get out from behind the desk, where do you go? One place to go is what Amy Webb calls “the fringe.” Most companies begin their forecasting the future exercises by commissioning some standard marketing research—focus groups, for example. However, such research is more about the past than the future. Participants enter a focus group constrained by their own experiences. Those constraints shackle consumers when they try to imagine the future. Before the advent of personal computers, suppose someone asked you what you would like in a spreadsheet. It would have been almost impossible to answer. Now that we have experience with Excel and Google Sheets, the answer would be much more meaningful, but too late unfortunately.

If not consumers in a focus group, who then? Webb says “the fringe” is the “place where scientists, artists, technologists, philosophers, mathematicians, psychologists, ethicists, and social science thinkers are testing seemingly bizarre hypotheses, undertaking wildly creative research, and trying to discover new kinds of solutions to the problems confronting humanity.”²

For example, Jane Goodall’s foray into Africa to live with the chimps to better understand and learn about them inspired the safari segment of the tourism industry. The massive video game industry is an outgrowth of the training and instructional programs and demonstration programs intended to impress or entertain the public, developed by universities, government organizations, and large corporations a half century ago. In 1971, while he was working with Boeing in Huntsville, Alabama, Theodore Paraskevakos, a Greek-American electronics instructor and inventor, demonstrated a transmitter and receiver that combined data-processing capabilities and visual display screens into a modest-size communications device. By the mid to late 1990s, the technology had advanced to the first generation of what we now call smartphones.

Lesson #3: Look for the pain points. One of the main focuses of Faith Popcorn’s work is to locate the discontent in daily life or, as we call them, the pain points. Several stories in this book illustrate companies’ searches for the pain points (e.g., Hertz, Marriott). In the spirit of “necessity is the mother of invention,” ailments demand cures. Indeed, that is literally the purpose of the medical and pharmaceutical industries in general. Look for ways to heal the sick.

Few commercial developments provide us with as much daily comfort as air-conditioning. Air-conditioning provides a wonderful example that illustrates not only this learning point, but the previous one about the fringe as well. Willis Carrier was a bona fide member of the fringe. While working for the Buffalo Forge Company in 1902, Carrier was tasked with solving a humidity problem that was causing magazine pages to wrinkle at the Sackett-Wilhelms Lithographing and Publishing Company in Brooklyn. Carrier designed a system that controlled humidity using cooling coils. He secured a patent for his “Apparatus for Treating Air” that could either humidify (by heating water) or dehumidify (by cooling water) air. It wasn’t long before Carrier realized that humidity control and air-conditioning could benefit many other industries, and he eventually broke off from Buffalo Forge, forming Carrier Engineering Corporation. Today Willis Carrier’s company is a world leader in heating, air-conditioning, and refrigeration solutions.