A particularly inquisitive group of Turkey analysts, armed with Excel and a data warehouse, might be tempted to conduct a study of Turkey life. These analysts would easily come to the conclusion that, based on the Turkey’s quality of life up to the present, life would continue to improve. Fancy regression analyses conducted over the first 100 days would show that, with increasing statistical significance, the life of a Turkey would only get better.
And then, Thanksgiving would come around.
So much for statistics.
Running a business is like living the life of a Turkey. It’s hard to get going. If it survives, the business receives some positive feedback, realizes some success and plans for a bright future. By extrapolating past successes far into the coming years, strategy sessions often confirm the good positioning and increasing potential.
But, the slaughter is just around the corner.
Yesterday’s success gives the false impression of a solid footing for tomorrow. The reality is that tomorrow is rarely like today. Success in the past guarantees no advantage in the future and, in fact, a successful past can compromise the future by attracting new entrants and competitors who will change the game and drive incumbents out of business.
No business is immune; size, financial position and market share will not prevent failure. Continued success requires a future-focus that starts by breaking free from the past by:
- Identifying trends: Specifically external trends. These are developments in the socio-economic environment within which a business operates, the technological changes that have the potential to disrupt the business and changes in consumer behavior. Some are easy to identify (globalization for example), but understanding consumer behavior or nascent, industry specific, trends will require research. This is a much better use of analyst time than analyzing past performance.
- Identifying uncertainties: While trends paint a picture of where the world is going, uncertainties highlight the variability. For example, there is a trend towards automation, but the speed and ubiquity of adoption is uncertain. Our climate is changing, but the social and economic consequences are uncertain. Thinking through the uncertainties and possible outcomes helps clarify the scope of trends and provide a broad picture of the future.
- Cluster trends and uncertainties to create Futurecasts and Scenarios: While trends and uncertainties are interesting on their own, bringing them together in the context of an industry is key to understanding their impact. Driverless cars may seem irrelevant to a company like Starbucks, until they are combined with urban planning. These could lead to new city designs that negatively impact some retail strategies while creating new opportunities. Futurecasting and scenarios provide a future perspective that is useful in assessing opportunities, risks and future business models.
Even the Turkeys would benefit from a future focus. They might notice disappearing gangs of fellow Turkeys, begin to question the role of the rancher, interrogate the reliability of their food supply and, eventually, draw the conclusion that something is just not right.
Turkeys, however, aren’t that bright and they don’t have strategy teams to help them avoid the slaughter. In this way, businesses have the advantage. Companies can improve their odds by reframing their positioning, developing a future focus and preparing for what will come. Those businesses that are able to do so will have much better odds of survival.
Those that don’t, had best prepare to be a Thanksgiving dinner.