True or false? Organizations can predict the future.
A: There are unknowns, but according to futurist and author Amy Webb, the future isn’t as much of a mystery as it might seem.
When the future meets the present
All organizations need to make decisions about how to create value with limited resources. Portfolio management is a tool for allocating your resources intentionally, effectively, and systematically.
We’ve talked about the portfolio essentials in the past, which are the eight elements to include in your portfolio management strategy.
One of the portfolio essentials is the “Future State(s).” Managing a portfolio includes keeping track of potential future directions and projects you could invest in. But that means more than just holding a brainstorming session and creating a list of possible changes.
The world is changing rapidly and we need to be flexible and resilient to handle what might come our way. But as Webb explains in her book “The Signals are Talking: Why Today’s Fringe is Tomorrow’s Mainstream,” many of the “disruptions” from emerging technologies shouldn’t be a surprise.
“Too often, leaders ignore the signals, wait too long to take action, or plan for only one scenario.”
– Amy Webb
In fact, future shifts can be spotted, tracked, and prepared for farther in advance than most companies realize. That is if you know where to look, what to focus on, and what to filter out.
Webb outlines the process she uses as a futurist. To predict the impact of emerging technologies and help companies take action today to shape the future. As we walk through each of her steps, I’ll also share my thoughts on how you could incorporate these ideas into your portfolio management processes. If you’re interested in learning more, Webb goes into a lot of depth in her book about why to undertake these steps and provides examples of the steps in action.
The six major steps Webb recommends to forecast trends and develop strategies are:
Step 1) Observe the fringe of research and society for clues about what could become mainstream in the future.
Step 2) Uncover patterns within the data you find on the fringe.
Step 3) Determine whether a pattern is really a broader trend. Create counterarguments and test your assumptions.
Step 4) Calculate the timing of the trend. Consider how events might unfold to influence it and when it would make sense for you to act.
Step 5) Write out scenarios to help inform your strategy.
Step 6) Pressure-test the strategy by thinking through potential outcomes.
Step 1) Observe the fringe
Observing the fringe means being aware of what’s going on within your industry and outside of it. But not just what’s trending in the news or what your market research says.
It means looking at what people are doing at the edge of science, technology, design, and society. Paying attention to the creative hypotheses and experiments that overlooked or controversial outliers are tinkering with.
Those ideas may seem out there now, but in time they may be slowly shaped by contributors and adopters. Eventually evolving into something that becomes mainstream and impacts your organization.
Practically, observing the fringe means scanning and mapping the landscape of people and organizations involved in these new ideas and projects. Consider the people directly involved, funders, stakeholders impacted by their work, those who are likely to be against it, and creators who might build upon the concepts. Think about their individual needs and activities plus the relationships between the groups.
“It is important to pay attention to the unusual suspects at the fringe. Often, their work appears as a surprise once it reaches the mainstream, when it could have been tracked all along.”
– Amy Webb
What this means for your portfolio
How do you come up with new strategies and ideas for your portfolio of investments? Are you reacting to customer requests? Industry reports? Or are you examining the fringe developments and connecting the dots yourself to identify trends before they reach the mainstream? You might need to carve out some time or resources to identify and connect with people doing work on the fringe.
Step 2) Uncover patterns within the data you find on the fringe
After observing the fringe it’s time to search for meaningful trends. Webb describes a trend as, “a new manifestation of sustained change within an industry, the public sector, our society, or the way we behave toward one another.”
Trends are driven by basic human needs and relevant both now and in the future. A trend is longer lasting than something that’s “trendy” and popular for a short period of time. One example of a trend vs. something trendy that she shares is “autonomous travel” vs. “Uber-for-X.”
To help identify patterns, look at the data you collected from the fringe and consider what seems contradictory or unexpected. Did you notice industry inflection points or changes in “standard” practices? Are people building hacks of existing solutions? Did you find any extremes or unique solutions that seem to be succeeding?
Also consider, how do these technology and business changes intersect with other sources of change in our society? Look at changes in wealth distribution, education, government, politics, public health, demography, economy, environment, journalism, and media. All of these sources of change intersect with each other and follow their own path. You can’t treat any aspect of society as completely separate.
“We misidentify trends (or miss them altogether) when we focus exclusively on technology, when the other factors in play are seemingly unrelated, or when the adjacent sources of change aren’t part of a compelling narrative.”
– Amy Webb
What this means for your portfolio
What’s your strategy for sharing and synthesizing the information that you’re finding at the fringe? How are you encouraging people in different disciplines to share their insights? Try building in a few sessions per month to purely discuss new findings, search for patterns, and ruminate on what they could mean for the future.
Step 3) Determine whether a pattern is really a broader trend
Not all interesting patterns will manifest into a broader trend that changes how we operate in society longer-term. Challenge assumptions and ask targeted questions to see if the patterns will hold up to business realities.
Consider questions like, how pervasive could those changes be? Would people use the solution frequently? Could it influence consumer behavior in other industries? Might it impact business models in other sectors? Does it address a basic human need?
What this means for your portfolio
If you’ve identified some trend candidates, before moving forward, poke holes in the argument. Where could the assumptions, evidence, and projections point to something that’s just trendy instead of a long-lasting trend?
Step 4) Calculate the timing of the trend
Trends will evolve over time, and there are a lot of unknowns involved in the journey. But tracking a trend’s trajectory, milestones, and timing could help you make better decisions about when to take action and how.
Webb suggests tracking the trend’s estimated time of arrival by considering internal tech developments and external events. How long might it take for the trend to arrive given the work that firms are doing internally and how far along the development process they are? Then factor in external influences that could speed the process up or slow it down. Like new partnerships, regulations, or other external events.
She also recommends keeping watch over time and adjusting your timing assumption as new events unfold.
What this means for your portfolio
Your time is limited so make it easy to track relevant events for the trend(s) you identified. Create a shared RSS feed for your portfolio team that tracks external product and company updates, press releases, policy changes, and news stories from a variety of sources. Try Google Alerts or an app like Feedly to easily keep up to date on changes. Especially the types of changes that are influential but might not make the headlines.
Step 5) Write out scenarios to help inform your strategy
Scenarios put the data you’ve collected into context. They help attach a narrative so we can analyze the impact of potential trend trajectories and outcomes. Thinking through how the trend could unfold and impact the world can also help organizations decide which actions to take in the short term to prepare for that scenario if or when it occurs.
An easy way to approach writing scenarios is with “if, then” statements. For example, if [this potential technological future] occurs (given the facts we know and the perspectives of people involved) then we (might/will expect to) see [this outcome] in our organization, industry, or society.
What this means for your portfolio
When exploring the future state, don’t just think about your future products or business model, consider how the general industry may evolve as emerging technologies are introduced. Use scenarios to consider how external technologies, policies, social dynamics, and customer preferences may shift and impact you in the future.
Step 6) Pressure-test the strategy
Before taking action, run your strategy through more thought experiments to check if you can deliver the change and consider some of the potential impacts before going live.
What this means for your portfolio
Consider including a set of pressure-test questions at decision points like before a pilot, planning a release, or launching a major initiative.
While getting good at predicting the future probably involves a lot of practice and time, Webb provides some great tips that organizations can use to prepare for inevitable shifts driven by technology. If you’re pressed for time and resources, start small, automate data collection where you can, and add over time.
In my opinion, after reading this book, the process for forecasting the future is like reverse engineering a vision and plan. Futurists look at the actions other people and organizations are taking in order to piece together what the future might be and how it could unfold given uncertainty. In the book, Webb gives a lot of examples of the types of clues that companies like Google and Uber leave behind as they work toward larger company goals and contribute to societal changes. As well as additional tips on how to approach thinking like a futurist.
Futurist techniques could be a great complement to proactive planning to get a sense of how the rest of the world might evolve alongside your own organization as everyone creates the future.
Is your organization reacting to, preparing for, or consciously creating the future?