To identify future market discontinuities, you must gather weak signals—emergent changes to technology, culture, markets, the economy, consumer tastes and behavior, and demographics. As the name suggests, weak signals are hard to evaluate because they are incomplete, unsettled, and unclear. But they are the raw material for making hypotheses about nonlinear changes in the future. These changes feed into generating Box 3 ideas that usually lie at the intersection of multiple market discontinuities.
An understanding of weak signals starts with three basic questions:
Proactively looking for weak signals will help you imagine the future of your industry. Consider how the following conditions might create these weak signals. Ask yourself questions about these situations, and then see how some companies have taken advantage of the weak signals.
Who will be your customers in the future? What priorities will they have? A company in the search engine industry may see weak signals, such as the growing use of technology among younger children, and anticipate the need to cater to a new customer segment: kids. Kiddle, for instance, is a search engine designed specifically for kids.1 Focusing on showing safe sites that satisfy family-friendly requirements, it provides up to three results that are specifically written for kids and another one to three results that are not written for kids but are handpicked by the editors to ensure that the material is easy to understand. The results are shown with large thumbnails to make them easy to see and in fonts that are easier for kids to read.
In a similar vein, since 2018 Facebook has been targeting kids under thirteen with its Messenger Kids app. For a long time, social network companies, in accordance with the Children’s Online Privacy Protection Act, prohibited children younger than thirteen from signing up on the network. However, in a 2017 poll conducted on behalf of Facebook and National PTA, three out of five American parents said that their children under age thirteen used messaging apps, social media, or both. Facebook’s goal is to put parents at ease through its design of full parental controls, such as requiring parents’ authorization for a child to sign up and to add each new contact. Whether the approach is successful, given the huge uproar against Facebook, remains to be seen.
What disruptive technologies can open up new opportunity spaces? Illumina, a San Diego–based firm that sells genome-sequencing machines to software and services companies that analyze the data, provides a good example of disruptive technologies. In a landmark technology innovation, Illumina developed the capability to run a large number of parallel sequencing reactions on a small instrument. This capability helped dramatically drive down the cost of genome sequencing and opened up opportunities for new business models that require genomes to be sequenced.
Are today’s most potent competitors likely to be the same competitors in the future? Who will you be competing against in the future? And on what basis?
Edge computing, where data processing and storage are moving closer to the device or user, is a current trend. It improves application response time. Telecommunications industry players, such as Verizon, AT&T, Sprint, and T-Mobile, are facing competition from cloud service providers, such as Google, Microsoft, and Amazon, as they all compete for the edge infrastructure play. This situation is particularly significant given that telecom players lost to technology companies in the battle for over-the-top (OTT) services—voice, messaging, and video. OTT players, such as Apple’s FaceTime, Google Hangouts, Microsoft’s Skype, Tencent QQ, and Facebook’s WhatsApp, are offering services that were a staple domain of the traditional telecom companies. If the telecom industry just stands still, it will be changed forever in the next ten-plus years.
Will there be fundamental changes in your go-to-market approach in the future? Consider, Amazon, which already partners with FedEx and UPS for delivery. But looking further into the future, Amazon is also exploring new ways to deliver packages by drones, given that more than 80 percent of its packages weigh less than five pounds.2
What are some key regulatory changes that could significantly affect the future of your company and how it responds to customers, competitors, and partners? Regulatory changes, such as the Affordable Care Act that Barack Obama signed into law in 2010 to bring insurance to uninsured individuals, radically overhauled the US individual health-insurance industry. With more than 20 million people added to the population that already had medical insurance coverage, and with the abolishment of the preexisting-conditions restriction, the risk pools for health-plan populations dramatically changed. Requirements to cover preventive services, such as cancer screening and immunizations, led insurers to invest in scale. Major players embarked on mergers to stabilize the costs of operating health-care coverage. Health-care regulations will continue to evolve in the future, presenting new opportunities as well as challenges.
PROCESS
Gathering weak signals requires several steps. Among other steps, you must form a diverse team to capture a variety of viewpoints and to conduct research.
People who are good at recognizing weak signals don’t wear blinders. Their work contains a feedback loop through which they see and “feel” such signals. Younger people in the company, in terms of both rank and years of service, who have not grown accustomed to seeing things a certain way, are great team members.
Other good candidates are individuals who excel at observing schema-breaking changes. They might encounter these anomalies through their work on new technologies or through their interactions with universities or other environments. These individuals may also observe weak signals when they work on customers’ problems at their sites or collaborate with entrepreneurs. When pulling your team together, choose from the following categories to guarantee a diverse set of opinions:
Market- and customer-centric people (e.g., product managers, salespeople, marketing personnel)
Technologists (e.g., application engineers, systems engineers, architects)
Business-centric people (e.g., finance and business development people)
Industry experts (e.g., internal: competitor intelligence and strategic planning teams, corporate development and venture teams; external: ecosystem stakeholders, consultants, investment bankers, venture capitalists, market-research firms)
How you gather these signals could vary from any of the following methods (ordered from least to most expensive):
Whatever your research approach, you’ll want to gather weak signals in the following categories as groundwork for the remainder of the ideation process:
IDEAS IN PRACTICE
Let’s consider a global construction firm engaged in a spectrum of activities, from design to build, in the year 2014. The following chart shows how it would identify key market discontinuities and weak signals in various categories:
To develop Box 3 ideas, you need to pay attention to emerging discontinuities in your industry or in the wider world. These sometimes-hard-to-spot changes, or weak signals, may seem subtle. But watching out for them helps you and your team think beyond Box 1.
The first step in ideation is to identify nonlinear changes in your company’s industry by becoming aware of weak signals.
These signals may forecast the future, or they could simply be noise.
Systematically gathering weak signals in a variety of categories, through a set of inputs, helps you think more broadly and diversely.