Prediction is difficult, especially of the future.
Yes prediction is difficult, but when we innovate it is essential. We are thinking not only about the market need as it is today, but as we think it will develop over time. Especially if we are innovating in a market where new products and services may take years to be commercialised. Then we need to try and aim off for the changes that will happen whilst we are bringing the innovation to market.
The drivers that will shape markets
We need to understand how the interplay of consumer wants and needs, technology, and social, environmental and political drivers will shape the markets we serve over time.
We look at what changes are happening now and listen for the faint echoes and whispers from the future that can guide our innovation. It is a complex task and doesn’t yield definite answers. We are looking for hints and clues; futures that are more likely and futures that are less likely.
Fortunately, you don’t have to develop predictions all on your own. There are many people from:
- trade associations
actively publishing visions of the future. Working in different parts of the economy and looking from different perspectives.
You can use the hard work they have already done to develop your own picture that addresses the key issues you see for your sector and business.
Many techniques have been developed to explore possible futures. These are some of the most popular.
1. Foresight studies
These use a variety of processes to build a consensus amongst experts on long term futures. They are often used to inform policy debates in government.
The UK’s Government Office of Science has published a large number of studies on a 20-80 year horizon, covering everything from sustainable energy management to infectious diseases, and the future of food and farming. These are in-depth studies of key societal challenges built on the latest expert thinking.
If you are lucky enough to find your target market covered, they are an excellent source of well researched analysis
Scenarios are less in-depth extrapolations of what we know now, and more stories about possible alternative futures.
Often developed by experts with the help of the public, they describe the different ways in which society or a market might evolve as different forces become dominant. Since we often don’t know which changes will happen at what speed, scenarios don’t give a specific future, rather examples of how things might turn out.
Forum for the Future has done some excellent work on how society might react to climate change. Offering alternatives from rapid innovation leading to radically improved energy efficiency, to protectionism and nationalism as nations fight over declining resources.
The great thing about these kinds of scenarios is that they are rooted in the day to day realities of life and so it is easy to think through their implications. The question is not which scenario is right, most probably none will be, but what the range of scenarios tell you about the future you are planning and innovating for.
Shell has famously used scenarios for many years to think through their long-range strategy for a business based on long-lived and expensive assets.
The latest in their Future Lens series talks about the future in terms of two very different pathways:
- Mountains: where power is held tightly by the elite and change is slow
- Oceans: where devolution and collaboration dominate
Each leads to very different outcomes and strategies for a company like Shell, and it may be the same for you.
Innovate UK will shortly be publishing some scenario work on cities in the future to help businesses develop innovation strategies for this rapidly growing market, so keep your eyes open for that.
The American futurist and author John Naisbitt coined the term megatrends in the 1980s. Megatrends are the big slow waves of change that transform our world. They don’t go away and they can’t be ignored. Well they can be ignored but that is a very risky strategy because they are going to happen.
There is much that is uncertain about our future, but:
- a lot of climate change is already baked into the system
- the world’s population is living longer
- certain key resources are under pressure
- the global middle class continues to grow
Any strategy for the future of a business needs to think about the implications of these and other megatrends.
Consultancy organisations such as PWC publish a lot of information on what they think are the key megatrends.
The important thing is that megatrends don’t change very quickly. The specific solutions to the challenges and opportunities may change, but the underlying trends and drivers are persistent.
I recently reviewed some work on megatrends I did for the chemical using industries about 10 years ago. Out of 25 key trends and drivers, I would change one of them because a new technology is accelerating faster than looked likely then. The rest are still the things business should be thinking about as critical to their future markets.
4. Technology roadmaps
Technology roadmaps are much more focused and shorter term than foresight studies or scenarios. Often done at the level of an industry, they show how current and emerging technologies can be combined to create new products and services that meet future market needs.
Like a cookery recipe they show what components and capabilities need to be brought together, when, to enable a solution to a specific market need to be delivered at a specific point in the future.
Like any map they don’t prescribe the route, they show the options, and leave you to work out what the best path is for you and your company.
A good example is the Automotive Council low-carbon vehicles roadmap. This shows how the many possible technologies to reduce the carbon emissions from road vehicles interact, when technologies are expected to be ready for use, and what solutions are most likely to be commercially viable at different points in the future.
If you are selling to, or hoping to enter, an industry sector with a technology roadmap, read it. It will give you an excellent overview of what the insiders think could happen.
So what should I do?
The important thing is that there is a lot of good material out there, freely accessible. Reports about your current market and the market you want to grow in, the technologies you use and the technologies you would like to use.
Skim read the key points from as many as you can. They won’t agree, and you would not expect them to, but there will be shared themes. Still points that different predictions converge on. Think about which outcomes seem most likely to you, and how big an impact they would have on your business, positive or negative.
Likely outcomes are the most immediate concern, but lower probability high impact outcomes are also worth thinking about. The game is to build a sustainable future for your business by having a resilient business model that can cope with the change we know is going to come. Not to be trapped with a product or service that is fine today, but not fit for the future.
As the ice-hockey superstar Wayne Gretzsky said:
Skate where the puck is going to be, not where it has been.
Follow me on Twitter: @miller_klein
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