Business Growth Strategy

Most planner's forecasts about the future miss the mark.
How to Improve Your Predictions...

Marconi once made the prediction that use of his new radio device would likely be limited to solving the problem of ship-to-ship and ship-to-shore communications. Little did he know that huge broadcast networks would someday fill the airwaves with news, music and pictures. The steam engine was once thought of only as a way to pump water out of coal mines. 100 years later and a half a world away, steam engines powered a transcontinental railroad that opened up the American West. In the early 20th century, many people thought that airplanes would be limited only to transporting mail.

In the 1940’s Thomas Watson Sr., then chairman of IBM, announced that there would never be a need for more than 5 computers in the whole world.

Inventors, business leaders and the government officials seem to have a dismal track record in forecasting the future. So why should we business planners be any different?

The rate of change is accelerating...
Consider the lowly stirrup. Until the year 850 or so, it was just a great way to hoist yourself up onto a horse. Then Charles Martel discovered that a horseman using stirrups to steady himself could deliver a lethal blow to a foot soldier without falling off his steed. This development literally changed the course of human history, politics and culture, Military conquests, lead by cavalry, eventually lead to the coronation of Charlemagne and the subsequent founding of the Holy Roman Empire. It took over 1200 years for cavalry to be replaced by the tank and airplane in war. (Horse cavalry was used extensively as late as the 1930's.)

Contrast that with the fact that it took 38 years for radio to reach 50 million people, 15 years for television and only 5 years for the Internet to do the same... And the iPhone moved millions of units in just a few months. And the iPad... well you get the idea.

Growth of the Information Base
The number of pieces of information that are available to be combined to form new concepts and inventions is rising exponentially. Up until the end of the Middle Ages, a scholar could literally know all there was to know. In many countries, most people did not know how to read or write until the end of the 19th century. Even in the early 20th century, an 8th grade education was all you needed. By the 1960’s a college diploma became a virtual guarantee for moving ahead in the world.

Now, in the early 21st century a student who enters a 4-year engineering program will find that half of what they learn in school will be obsolete on their graduation day! Information is simply accumulating too fast for anyone to comprehend, much less control.

Unintended Consequences
The telephone remained unchanged for decades, until 1976 when the President Gerald Ford asked Americans to call a "new toll free line" set up to receive suggestions for "whipping inflation now" (WIN). That telephone number started with 1-800. Al Gore may not have invented the Internet, but Ford accidentally became the father of modern day telemarketing.

Not Yet
New products and ideas are often hyped in an effort to secure investors, sell products or boost careers. The reality is often less than predicted. Remember cold fusion and paper clothes? They made for better press than return on investment.

Our "Connected" Economy
Here is an example in the current "connected economy". In the past scarcity determined value. (Think of farm commodities or gold.) Under the rules of the internet economy, value can be now derived from abundance. (Metcalf’s law states that the value of a network increases with its size.) Consider the case of Netscape Corporation who gave away their browser software for free. This was possible because additional copies of an intellectual or knowledge-based product have little or no marginal cost, only up front development expense. Once the network was established, Netscape was able to convince companies to purchase server side software to interact with all the new Netscape users out there. America Online did it with millions of diskettes and CDs in the mail. Has the law of law of supply and demand been repealed? No, simply applied to the new connected economy.

Are you banking the future of your business on today's knowledge?
If so, you are not alone - you are acting just like most other companies. And just like them, you may be risking the future of your business.

Let's say that you spend the next 12 months developing your next-generation products. As they reach completion you spend another 6 months getting them to market, those "new" products may be based on an understanding a market that is as much as 2 years old. Or will they be based on what you think your customers will want 18 or even 36 months from now? Will you be right?

Here are two business growth strategies that will help you overcome this problem:

1. Make the study of the "future" (the next 2 to 7 years) a priority. As humans, we tend to see things in terms of solving the problems immediately in front of us... not in their other potential uses. (Think Arm and Hammer Baking Soda here. How many alternative uses have they come up with for such a simple product?)
Know what is happening in your industry in terms of supply, demand, market demographics, and product life cycle. What are your competitors doing? What emerging technologies may potentially help or hurt your business? Develop the two or three most likely scenarios in terms of this information and include them in your strategic planning process.

2. Shorten your product/service development cycle. In an increasingly fast paced environment, planners no longer have the luxury of putting off new product development (or slowing it down) to maximize current earnings. 25 years ago we may have successfully pulled this off... but today, slow reaction times can severely damage even the short term viability of your business.