Predicting the future is an impossible task. But according to Richard Watson, a futurist and author, what is taken for crystal ball gazing is really just a close analysis of the present. He agrees with the science fiction writer William Gibson who maintains that the future is already here, just “unevenly distributed”.
“Talk to 18-year-olds about their media consumption and you have a glimpse of the media landscape in 20 years’ time,” Watson says. “Go to Seoul or Tokyo and you will see younger people using mobiles in ways that they do not use them here.”
Most change takes the form of a reverse ripple effect: it begins on the fringes and moves towards the middle, he says. Signs of the future are already around us. “If you look hard enough you start observing and picking things up. Take demographics: the most certain of all the trends is ageing. It is hidden in plain sight,” Watson says.
Businesses must constantly look to the future, anticipating and adapting to change, or risk becoming extinct. While most typically work to 18-month or three-year timeframes, scenario planning for even seemingly impossible predicaments is a rigorous way to test current strategy, Watson says.
He feels that our short-term, often overly optimistic worldview sometimes leads us to ignore what is really taking place. In 2005 he undertook a scenario-planning exercise with a major retail bank. One scenario involved major financial collapse; the bank refused to accept it; three years later, it played out in nightmarish fashion.
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Businesses can be short-sighted, he says. “When oil was $147 a barrel everyone was interested in what would happen if it rose to $200 dollars a barrel,” Watson says. “Now that the price of oil has dropped, no one is interested in talking about it. But the $200 figure is still a certainty: with Asia powering ahead it’s not a question of if, it’s when.”
A recent report from the CBI: The Shape of Business - The Next 10 Years, said that the recession would be a catalyst for a decade of business change, dramatically reordering everything from corporate ethics to the workforce. Tim Bradshaw, the head of enterprise and innovation at the CBI, says: “Businesses don’t try and predict the future, they hedge their bets and try to beat the future by investing in R&D.” One example is companies looking at climate change data and investing in “resistance”: Fresca, a fruit distributor, recently built the largest greenhouse in Europe in Kent to help supermarkets cut their carbon footprint.
Only a handful of companies invest in future-gazing in-house, Bradshaw says these include Arup, the building consultancy, which has a ‘head of futures’ and BT. Yet innovation is no good without spotting its business potential – BT’s futurologist, Ian Pearson, invented the technology for text messaging but the company failed to capitalise on the market.
Talking to universities about their social science and technological research is a good way to gauge future trends, Bradshaw says. Tammy Smulders, managing director of SCB Partners, a strategy consultancy, has seen an increase in interest in predictions for the future since the financial crisis. “For quite a while things were going in a linear fashion. Suddenly everything has been thrown. Companies are looking for clarity, saying ‘where do we go from here’?” she says.
The first question is ‘how do you define the future?’, she says. “Are we looking at something six months away or a generational trend?” Motor or pharmaceutical products can take years to develop; in the short term companies might be able to change the way they pitch your product through advertising campaigns. “You don’t want to come out in 2013 with something that was relevant in 2010.”
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There is no one approach to seeing the future, she says. “How you look at the future depends on your industry and what you compete on – price, innovation, content, volume.” She advocates talking to as wide a variety of people as possible - industry experts, editors, innovators and sociologists - to get the full picture.
While climate change or the price of oil is to an extent predictable, all businesses fear events that cannot be prepared for. Watson talks about ‘black swan’ events such as 9/11; Smulders mentions the release of a new “game changing” product or killer application by a competitor that can catch any industry unawares. Take Spotify, which is changing the music industry,” she says. “Or TopShop, the first store with a high fashion solution that changed the whole retail landscape. You have to be able to respond quickly.”