Don't Try to Be 'Disruptive.' To Really Have an Impact, You Need to Reverse Engineer the Future.
Innovation is moving at an accelerated rate. Here's how you can get in on the action.
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The inventor and author Ray Kurzweil likes to say that the next 100 years will resemble 20,000 years of progress if we continue to innovate at our current rate. I think rather that next 15 years will feel like walking into the future -- the way it must have felt at the turn of the 20th century.
In 1895, people washed clothing by hand, traveled by horse and chopped trees with axes. By 1910, they could use a washing machine, travel in a Ford Model T and cut down trees with a chainsaw. Planes flew overhead, streets were lit with electricity and telephones were becoming ubiquitous.
Between now and 2032, American society will experience changes of that magnitude again. The entrepreneurs who thrive over the next 15 years will be those who reverse engineer the future.
Too many founders settle for building "features" -- incremental novelties that modify mature technology. Reverse engineering is for entrepreneurs who want to build disruptive technology (hint: if your marketers have to say it's "disruptive," it's not).
Reverse engineering the future has three steps:
- What does the future look like?
- What is the hidden need in that future?
- When will that future be ready?
The hard part is answering those questions, not asking them. Let's examine how the best reverse engineers do it.
Start from the summit.
Elon Musk reverse engineered the future. I have proof from his 2006 blog post titled "The Secret Tesla Motors Master Plan (just between you and me)":
- Build sports car.
- Use that money to build an affordable car.
- Use that money to build an even more affordable car.
- While doing above, also provide zero emission electric power generation options.
- Don't tell anyone.
In the same post, Musk wrote that "... the overarching purpose of Tesla Motors (and the reason I am funding the company) is to help expedite the move from a mine-and-burn hydrocarbon economy toward a solar electric economy, which I believe to be the primary, but not exclusive, sustainable solution."
The 2006 post shows that Musk worked from a future -- the solar electric economy -- backward to the short-term goal of making an electric roadster faster than a Porsche. It's as if Musk planned an ascent up Mt. Everest from the summit, not the base.
That's step one in reverse engineering. Start in the future and plan your way back to the present.
Find hidden needs.
Entrepreneurs love talking about unmet needs. The press releases all say, "We fulfilled an unmet need in [generic industry]." I prefer entrepreneurs who find hidden needs that people don't know they have. That's step two in reverse engineering the future.
I credit consultant and polymath Sylvie Leotin for inspiring my thinking. She created a groundbreaking model that combines empathy and multidisciplinary techniques to help companies reverse engineer the hidden needs of customers.
She argues that you find hidden needs through empathy.
Apple once struggled with empathy. In the late 1980s, it developed Newton, a PDA that sold from 1993 to 1998. I was a consultant on the project. At the first Newton focus group, the facilitator said, "Imagine a computer you can carry around and write on with a stylus."
The participants asked questions like, how fast is it? How big is the hard drive? How much memory does it hold? They were trained to buy computers.
At the second focus group, the facilitator said, "Imagine you have magic paper that makes everything you write digital." That didn't work either.
Meanwhile, Palm figured out the hidden need. People wanted rapid connectivity everywhere, but they couldn't lug around phone books in their pockets and purses. Its PDA stored names, phones numbers, appointments and other information about relationships. The PalmPilot had empathy. Newton just had features.
Set a stage.
If you're struggling with hidden needs, learn from Disney. When I was consulting for Disney in the 1990s, it wanted to create a better TV remote control. These were the days when you clicked channel up, channel down or numbers.
Disney built a living room with couches and TVs where it could test remote controls. Rather than thinking like customers, the Disney team acted like them. It produced a grid-based remote control that could visit any channel in three or four clicks. It remains an intuitive and rapid navigator, although Disney's business interests went elsewhere.
Twenty years later, Netflix still can't get channel navigation right. Browsing shelves at Blockbuster was easier than scrolling through Netflix today. Maybe Netflix needs an imaginary living room.
Disney built a stage and played out different scripts until it found the best one. It practiced empathy through imagination and story.
Ready, set, wait.
The reverse engineer's vision is less of a goal and more of an inevitability. That's why reverse engineers have the confidence for step three: wait until the future is ready. The technology will speak to you when everything comes together. Apple envisioned the iPad in 1987, but had to wait over 20 years for cost, capability and connectivity to come together.
They say there are three rules of real estate: location, location, location. I say there are four rules of venture capital: too early, too early, too early, too late!
Take virtual reality (VR) as an example. Facebook spent $2 billion on Oculus Rift and now plans to spend another $3 billion over the next decade. Zuckerberg says VR quality won't be good enough until the end of those 10 years.
Too early! VR needs a few flips of Moore's Law to achieve sufficient computer power and resolution in a compact device. After Facebook has spent a decade and $3 billion, some startup will make a better VR headset for a tiny fraction of the cost.
No company can invent every technology it needs for its future. Thus, Tesla sells fancy cars you can drive now, not affordable cars that (maybe) will drive themselves in five years. What is Oculus going to do for a decade?
Here's why reverse engineering matters.
As a venture capitalist, I hope you build revolutionary companies. You don't need to convince anyone that you're "making the world a better place" or trying to "have an impact" (on what?).
The people who created washing machines, cars and chainsaws between 1895 and 1910 weren't trying to save the world. They weren't trying to be disruptive. They were trying to make great products (and lots of money). Your better world will be a side effect of reverse engineering the future.
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