Forget crystal balls. These tried and tested strategies can help you see where you need to take your business next.
A young Margaret Thatcher once predicted that a woman would never become British prime minister in her lifetime. A major study of geopolitical predictions by political scientist Philip Tetlock found that political “experts” performed about as well as “dart-throwing chimps”.
Economics fares no better than politics in the prediction game: of 62 national recessions in 2008 and 2009, economists failed to predict even one of them.
The future is a famously difficult thing to forecast. Yet in the absence of a crystal ball, you can use these key strategies to see beyond the present day.
Ensure financial discipline and transparency
It’s not only the world-changing megatrends that can put you ahead. Sometimes it’s enough to be a few months ahead of the competition.
Here the right financial tools and systems can provide valuable foresight. They can help predict patterns, inform the allocation of capital, and identify potential pressure points and growth opportunities.
Consider Patrick Pichette, the former CFO at Google, who landed at the technology giant when its share price was beginning to slide. He implemented much-needed discipline around the company’s financial procedures that helped steer it through a period of rapid growth.
“I joined Google when there were no formal budgetary processes,” he explains.
“The accounting was OK but they didn’t have the tools that provided foresight. They could close the books but they had incredible difficulty in telling you what the next two quarters would look like.”
A clear financial overview helped Google prepare for the rapid expansion of its Android operating system, which now powers about 85 per cent of all smartphones in the world.
“If we could see forward and have a good view of where Android was going, we could hire just slightly ahead of the curve and basically fuel the engine of growth,” explains Pichette.
“That way, you’re always capturing opportunities of growth and there’s no panic.”
Patrick Pichette spoke at the CPA Congress 2016 in Melbourne and Brisbane.
Shift your focus
The past can be a comfortable place to live because we already know what happens. To predict the future, you need shift your focus into the distance.
Thomas Frey, American futurist and executive director of the not-for-profit DaVinci Institute think tank, says predicting the future is like exercising a muscle in your brain that doesn’t get used very often.
“If you spend more time thinking about the future, naturally you’ll get better at it. My job is to help exercise those muscles.”
In 1998, Frey predicted the creation of prepaid credit cards, spherical computer displays and therapeutic amnesia to deal with particularly traumatic memories. Early in 2007, he released a paper on the future of education that forecast free online lessons or MOOCs (Massive Open Online Courses), rapid courseware builders and “super-professors” lecturing by video to large audiences; many of these changes have happened.
Frey spent much of his childhood looking beyond the present.
“For me, the future couldn’t happen fast enough, I just wanted to be part of it,” he says.
Today, Frey gets most of his information from newsfeeds. He reads Shanghai Daily
, The Times of India
, The New York Times
and The Guardian
as well as magazines such as Wired
, The Atlantic
and Fast Company
“We spend more time trying to solve past problems and spend a lot less time trying to create our future,” he says.
“If we did that we could spend more time looking at creating new industries, which might help past problems go away. In any industry, if you have a better understanding of the future than your competition, it gives you a significant advantage.”
Thomas Frey has presented previously at CPA Congress.
Trends come and go. The most important are “megatrends” – sweeping changes in business and society – that may help predict changes in the business environment that you may face in the long term.
Dr Stefan Hajkowicz, principal scientist for strategy and foresight at the CSIRO and author of Global Megatrends: Seven Patterns of Change Shaping Our Future, says that to exploit megatrends, companies must be more innovative than ever before.
Dr Hajkowicz defines megatrends as gradual yet powerful trajectories of change that have the potential to throw companies, individuals and societies into “freefall”.
In his book, Hajkowicz identifies megatrends for the next 20 years, including rising demand for limited natural resources, an aging population with growing healthcare costs and digital technology changing how we work and the way our cities are shaped.
Hajkowicz likens megatrends to a wave coming into a beach: “It can either wipe us out or we can surf it neatly all the way to the sand.”
Dr Hajkowicz has presented previously at CPA Congress.
Innovative thinkers naturally look to the future, says Cheryl Yeoh, successful entrepreneur and former chief executive of MaGIC
(Malaysian Global Innovation & Creativity Centre).
Businesses must cater to shareholders with quarterly profit announcements and responses over even shorter time periods.
“While you have to do that, you also have to look at the future to see how you can grow your company or protect your position if you’re already a market leader.
“Think about the Kodak moment – digital photography replaced film and now smartphones are killing off digital cameras.”
In 2012, Yeoh launched Reclip.It, a personalised shopping list app that helps people save money by matching their list items with digital coupons. A year later, she sold the business to Walmart Labs, a unit of Walmart Global e-Commerce that is dedicated to innovation.
“Walmart Labs is a prime example of how to keep up with technology,” says Yeoh.
“Walmart carved out a department within its business to allow a group of entrepreneurial employees to work on experiments and new products. Management treats it as a core strategy of the business.
“No idea is too small to be voiced and management takes heed and listens.”
Cheryl Yeoh has presented previously at CPA Congress.
Make better business forecasts by changing how you think