How does one prepare for the future business environment? What new markets will emerge? What kind of products and services will customers pay for? What technologies will disrupt the industry? What will disappear? What will become a commodity? And what will be the new high-margin and value adding areas in future?
Above questions are the key to long term business and product strategy of a company. So how does a company be future ready? There could be four approaches to it.
- Predict the future accurately and invest for it?
- Invest in various potential futures scenarios?
- Evolve as the future unfolds?
- Shape the future itself?
However, each of the above may not be sufficient in itself.
- As to first point, predicting the future has never been easy. A future is an outcome of complex interactions of several factors, some of which are known today and some are not. For every person who predicts the future correctly (and becomes famous), there are hundreds who get it wrong.
- As to second point, creating several future scenarios is helpful. It improves the probability but still doesn’t guarantee success.
- For the third approach, it’s easy to apply but then the company remains a laggard, a follower, a second-best. It’s not a bad business strategy though. Not every company can be a leader.
- Fourth is a game-changing proposition, but need to be realistic if the company has the required resource and clout to shape the futue.
What could be a realistic and practical approach then? The recommended approach is to create a portfolio of future bets by leveraging the above four approaches. Each bet can be dropped or scaled up in response to business environment. And a dropped bet can be revisited if required.
Following are the three grounds for creating the future bets:
- Future scenario studies based on megatrends, customer shifts and other factors.
- Emerging or current hot topics so as to evolve with them.
- Own strengths (technological or business). So that company can shape a future where the strength will give a competitive advantage.
Number and size of such bets would also depend on how deep the pockets are of a company.
But what does a company with not so deep pockets can do about it? How to make Active bets rather than just Passive bets? Well… that would be the topic for my next post.
