Understanding current trends isn’t the key to business success, and in fact, if you are planning on growth based on the fact that you are “in the know” as to what’s going on, you’re probably going to fail. Those big trends that are already starting to emerge are already on a hundred other entrepreneurs’ radar. Tapping into them makes you nothing more than an also-ran.
A recent editor’s note from Entrepreneur’s Middle East editor-in-chief Fida Chaaban asks how entrepreneurs predict the future, noting the importance of foresight in a young company’s success and growth. It’s not the ability to spot trends that are already here that is important -- it’s the ability to predict trends that haven’t happened yet. Willingness to take action when everyone else thinks you’re crazy is what makes geniuses.
Steve Jobs was just such an innovator. While CEO of Apple, his advisers warned him against trying to move into the music and mobile phone businesses. At the time, the digital music industry was tarnished by illegal downloads, and Internet access for mobile phones was weak and slow. He didn’t make decisions based on what was popular at the time -- but what he knew would be popular in the future.
In a contrary example of extreme lack of foresight, PC processor giant Intel has all but given up on the smartphone market, having gained no traction. The processor giant just canceled its SoFIA and Broxton platforms, and very few Android products have been built around its Atom processors. While Intel did have the foresight to know what was coming early on -- having begun Atom development as early as 2004 -- they just didn’t want to risk moving too far afield from their highly profitable CISC based processor business. In fact, Intel passed on an opportunity to design the chip for the iPhone, believing that it wouldn’t sell enough to cover costs.
“You can have all the insight in the world, but if you’re not leveraging it to look at what’s coming in the future, then it’s fundamentally less valuable,” said Nick Weber, Principal at 4i, a foresight consultancy. Weber says that foresight analytics isn’t just for big companies with deep enough pockets to afford massive data warehouse operations. “It’s very accessible to small and midsize companies,” he says. “There is a huge amount of data that is out there, just on the Internet, which you can access using your own tools.” In fact, entrepreneurial firms can dive into foresight analytics with little more than a Web browser and a spreadsheet. Weber notes that while large companies do put big money into predictive analytics, smaller firms can access much of this power with only a small budget, and without sophisticated equipment. “There is a ton of data you can get from the census, from the IMF, and a lot of other sources,” he suggests. “You can download this data and start to understand where the pockets of opportunity and growth are.”
Weber compares the predictive process for small entrepreneurs to budgeting. Costly budgeting tools are naturally available, but all you need is a spreadsheet and some basic guidance to get started. “If you don’t have any budget, I guarantee that you can just Google ‘how to budget,’ and greatly improve your financial situation. The same thing is true with foresight analytics. If you can download data and use some simple analysis to identify where the future is going, it will help you prioritize your investments for what types of products to invest in or what channels to get in.”
When a small business, startup, or entrepreneur wants to create a strategy based on foresight, expensive equipment, massive data warehouses, or crystal balls won’t be necessary. A few places to start include:
- Publicly available data. Larger companies that have created foresight-driven success often collect their own data. But, the U.S. government is the largest collector of data in the world, and much of it is freely available. Start by taking advantage of the data that is already there.
- Desktop tools. Larger companies also commonly leverage very sophisticated data modeling and visualization tools, but you don’t have to have a staff of analysts to get a feel for which way the wind is blowing. A data visualization tool like Tableau provides the means to see and understand data, and is affordable to most smaller businesses. You can even use your standard desktop suite and basic spreadsheets like Excel to get started.
- Be willing to pivot. Foresight means peering into the future, and it’s given that you won’t be right 100 percent of the time. Try to know what’s coming and can avoid unexpected results -- but the unexpected will always happen. Have a “Plan B” for if you run short of cash. For startups, having a ready supply of back-up money isn’t always easy, so be proactive and understand what resources are available, from leveraging assets, peer-to-peer programs, taking out personal loans, or other types of alternative lending.
You may have a good feeling about macroeconomic conditions that affect your business for example, but that intuition by itself is less valuable than it could be when paired with a formalized process. “Once you map it out, you can start to know about how those dynamics that you have an intuition about really affect your product and your category, and you can have a much more precise idea about how those dynamics are going to affect your products,” said Weber.
Every entrepreneur has said at least once, “If I only knew then what I know now.” You may believe in the path you’ve taken, and you may be convinced that you know the future -- but most entrepreneurs still go by instinct. Foresight analytics lets you create knowledge that didn’t exist before, and create a map of the future.