From the February 1996 issue of Entrepreneur

Do you have an extra $35,000 lying around? That's what it costs to become a member of the Global Business Network (GBN), an Emeryville, California, think tank that specializes in helping some of the world's biggest companies anticipate what tomorrow's business climate may look like. Subscribers include Royal Dutch/Shell, AT&T, Ford and dozens more corporate titans.

Just what makes GBN so special? The quality of its staff, foremost among them co-founder Peter Schwartz, former head of planning for Royal Dutch/Shell and author of The Art of the Long View (Doubleday Currency), and co-founder Stewart Brand, former editor of the Whole Earth Catalog and founder in 1984 of San Francisco-based The WELL (Whole Earth 'Lectronic Link), a computer network.

Schwartz is widely credited with helping propel Shell to its giant status among multinational corporations. As for Brand, as far back as 1972, in an article in Rolling Stone, he wrote: "Ready or not, computers are coming to the people"-and that was a decade before IBM introduced its PC!

Fortunately, you don't have to shell out $35,000 to find out what's on these progressive thinkers' minds. In this exclusive Entrepreneur interview, Schwartz gives us the framework for thinking about tomorrow, while Brand-himself a lifelong entrepreneur-joins in with a few well-honed observations especially suited to the entrepreneurial mind-set.

Entrepreneur: Why do we need to think about the future?

Peter Schwartz: It used to be in business that you could count on the near-term future being fairly similar to the present and the rate of change being manageable.

What has happened in recent years is the nature of change-how substantial it is-has altered enormously. And the rate of change-how fast it happens-is also different. Change, today, comes much faster. Worse, if you wait for change to occur, it's almost always too late to catch up.

Entrepreneur: A problem with thinking about the future is that today most of us are so busy dealing with the present, just thinking about next week can be difficult. I understand, Stewart, that you recently logged onto The WELL and found 288 e-mail messages waiting. Have we entered an era of information clutter?

Stewart Brand: The problem with those 288 e-mail messages is that I needed to read about two-thirds of them. This wasn't clutter but essential information.

Technology basically is forcing us into the now rather than the future. But just because more is going on now doesn't make the long term go away. We still need to think about it.

Entrepreneur: Besides not thinking about it at all, how do we think incorrectly about the future?

Brand: A problem we deal with is people still think of the future as the year 2000-which, basically, is the week after next at this point. You need a much longer view than that now.

The other problem is that most of us have an "official" future. This means we have an expected set of things we believe will happen over a period of time. This future often reflects what's happened before and what we are prepared for. But many businesspeople now have had it with that viewpoint because they find the "official" future keeps not happening.

Schwartz: When I look back at my own errors [in thinking about the future], it's that the boundaries of the problem were drawn too narrowly. How we draw the boundaries of the issues we face is critical because often, the real threats come from outside.

IBM, for instance, saw mainframes as the future of computing and PCs as little, pesky things. The Detroit car makers saw their significant competitors as each other, and maybe the Europeans, but not the Japanese. We have to work to stretch the boundaries of what we see as possibilities for the future.

The second mistake most of us make is imagining that the future is predictable-"If we only had the right seers, we could predict the future." An enormous amount of effort goes into trying to predict what is unpredictable.

What we can do is develop what we call scenarios. Basically, these are short stories about what tomorrow may look like. But they are also powerful planning tools that help us think systematically about the different possibilities and how we might best respond. [For more details about using scenarios in your business, see "Competitive Edge," June 1993.]

Entrepreneur: What exactly is scenario thinking?

Schwartz: It's a state of mind where you challenge your thinking by asking difficult questions such as, What would make my business a greater success than I could possibly imagine? What would kill it? And, finally, What could happen to change it fundamentally?

Next, you want to identify appropriate sources of information that challenge your perspectives and broaden them. A small business clearly cannot go out and pay big fees to consultants. But the honest truth is, most of the good information is out there to be had relatively inexpensively.

Here are three examples: The World Bank publishes its World Development Report every year. It's an extremely insightful guide to what's going on around the world, and it costs only $19.95. Second, good information is increasingly available online, relatively cheap or free. Third, there are conferences. An entrepreneur probably wouldn't hire GBN, but I go to many conferences as a speaker.

Entrepreneur: Let's make this more concrete with a for-instance. What scenarios do you see for the U.S. economy over the next decade?

Schwartz: I see two plausible scenarios. One is for slow growth of the sort we have experienced since about 1989. That's based on the assumption that we will continue to become more protectionist and the world, too, will become more protectionist. It also assumes we don't meaningfully invest in our economy or education.

Conversely, if we take global leadership and we have an open trading system, if we invest heavily in the quality of our labor force, and if we are adaptive with new technologies, somewhere around the year 2000 to 2005 we could see a significant acceleration of economic growth. This would be a period of new, huge growth.

Entrepreneur: Those are sharply different scenarios. What is an entrepreneur supposed to do with them?

Schwartz: What I want is for them to ask themselves: How will my business fare under both scenarios? What are the consequences? Am I prepared to deal with both of them? If one of them would do great damage to my business, how can I prevent that from occurring? If one represents huge opportunity, how can I be prepared to act on it quickly? You want some detail in the answers you come up with, too.

Entrepreneur: Are you telling us to find a strategy that lets us straddle as many scenarios as we can come up with?

Schwartz: Yes, with one important qualification-I wouldn't use the word "straddle." I would say, be prepared for different scenarios. In some cases, that may mean finding a strategy that works in all scenarios. Or you may choose to commit to one view of the future, but also keep your eyes open so you can act in a timely manner and change strategy if it turns out you're wrong.

Entrepreneur: For entrepreneurs, isn't a core problem of scenario thinking that often they cannot afford to hedge their bets?

Brand: It's true that if you spend too much of your scarce resources hedging bets, you may not be able to win with the bets you can afford to make.

Another approach is the adaptive strategy. This requires an organization to be very light on its feet. This is hard for major corporations. They basically are like ocean liners, and they have to start making their turn several miles before they hit the rocks. Entrepreneurs are more like speedboats. They can turn fast. But to do that they've got to be alert.

Entrepreneur: Alert to what?

Brand: That's the question, of course. But here's where scenario planning can equip you with leading indicators-signs that show where the flow is shifting and enable you to adapt in the early stages of change. To do this, you need to develop your attenae so they're more sensitive to the world. That can be especially difficult for an entrepreneur.

Typically, an entrepreneur is in a world of trying to make it happen. Starting something from zero is a huge undertaking, and it's easy to lose sight of what's happening in the world. But scenario thinking can help you watch for things out of the corner of your eye.

Entrepreneur: What are some scenarios for the structure of business in the years ahead?

Schwartz: Today, we have three primary business structures-multinational corporations, medium-sized companies and small businesses. In many ways, their structures have outgrown the management styles and technologies available to operate and organize a business. But it seems to me we are moving into a world where information technology makes it possible to organize business very differently.

It's plausible to me that in 10 years we will not see today's multinationals but, rather, large "umbrella" organizations that act as hosts for many small companies that come together for brief periods to do short-term but big projects-for example, the production of a new car. But the umbrella organization may not be an enduring organization in the way, say, GM has been. The model is more like a movie studio where the studio coordinates a project but doesn't actually do it. The work is done by many different small contractors who come together for a project that may last three years, from the time a movie is born as an idea until its release.

Today's information technologies make it possible to link people in ways they weren't linked before. If I'm right, this will create a huge opportunity for small business-if you've stayed alert to the signals and have taken steps to make the most of this scenario.

Contact Source

Global Business Network, P.O. Box 8395, Emeryville, CA 94662, http://www.gbn.org.