Cashing in on the future

Keeping ahead of the competition is vital for any successful business. But identifying the next big thing - or the next big threat - is not easy. George Bevir speaks to some of the world’s leading futurologists about the business of mapping the future.

Encyclopedia Britannica's expensive leather-bound tomes used to be present on bookcases all over the English-speaking world; such was their ubiquity sales of the books hit a record $650 million in 1990. But by 1996, this figure had halved, and sales of the books had fallen from 117,000 in 1993, to 55,000 in 1996.

Former BT futurologist Ian Pearson, now head of futures consultancy firm Futurizon, explains what happened during the intervening years.

"Encyclopedia Britannica visited us when I was at BT, and we explained to them about CDs and how no one was going to want to buy leather bound encyclopedias, and they just laughed at us - they couldn't see that at all. They said, ‘Don't be so stupid, no-one's going to be able to squeeze all of this stuff onto a CD, and even if they could people like the feel of a book'. And they virtually collapsed. They just didn't see it coming," he says.

While Encyclopedia Britannica (EB) considered its options, Microsoft launched its Encarta encyclopedia on CD-ROM for a tenth of the price of the EB books; Encarta became the top-selling multimedia encyclopedia in the US, and EB floundered.

Although EB has since moved online with a dedicated mobile site for modern devices such as the iPhone, it was knocked from its seemingly unassailable position because it failed to recognise technological advances that destroyed its business model.

Staying one step ahead of the competition is vital for any business that wants to survive, but seeing where and who that competition will come from is a difficult process. Telecoms operators can, for example, use the purchasing habits of prepay customers to anticipate when they are likely to churn so an offer can be made to persuade them to stay with the network.

Using data gathered from a customer base in this way can help to plan for the future, but it is a relatively short-sighted process. Futurology, or futures study, looks further ahead - some 10 to 15 years into the future - and can be used to provide the framework for a longer term plan.

Futures study developed during the latter stages of the twentieth century, with a graduate programme in futures study established at the University of Houston in the US in 1975, followed one year later by a course that focused on public policy in alternative futures at the University of Hawaii.

There is now a network of conferences and a range of associations and journals that support the discipline.

Professor Jim Dator, director of the University of Hawaii's Research Center for Futures Studies, says that although "we do not live in a world where anyone can ‘predict' the future in the sense of saying accurately what will happen", he maintains that "futurists can ‘forecast' alternative futures and help organisations envision and strive to invent their preferred futures".

The UK's fixed-line incumbent, BT, has paid more attention to futurology than most telecoms companies, employing a team of dedicated futurologists for the past 15 years. Pearson, who spent 15 of his 22 years at BT as a futurologist, explains: "Futurology is quite different from trend watching, which is very short-term futurology really."

"You can only extrapolate trends a couple of years at most, some not even that. But futurology is about anticipating trends before they start appearing."

The methods for forecasting future trends are varied, but none of them involve a crystal ball, reading tealeaves or staring at the stars. For Pearson, it requires large amounts of reading and talking to fellow futurists and industry experts in a bid to keep as in touch with the world around him as possible.

"I'm not that interested in gadgets per se," he says. "What I'm interested in is the raw capability that is starting to appear, rather than any particular combinations. I'm not really that interested in products, because that just depends on marketing, rather than technology foundation," he says.

Those involved in mapping out likely future scenarios take into account a wide range of fields including economics, sociology, geography, engineering, biology and of course technology. Head of BT's Insight Research Centre, Dave Brown, says that exposure to a range of industries is vital.

"Because our futurists spend a lot of their time working with customers they tend to come across and work with people who are doing futures thinking in other organisations," he says. "Our futurists are encouraged to look not just at the telecommunications space but at broader areas, and by doing that I think we get a far better perception of how the world will evolve in the longer term," he says.

Dator agrees that a collaborative approach is important. "Futures requires so many talents and so much knowledge that it must be a group activity," he says.

True futures study is more intuitive and inspirational than extrapolating data or running computer models, adds Pearson. "I spend a lot of time just thinking about it, and one of the ways that I find I can think better is by writing things down. What I don't do is any of the formal methods of futurology, where you try to assign probabilities and write computer models. I used to do that when I first started off and I realised very quickly that most of the really important things in a model are things you can't quantify, like how will the public respond to this? It's the sort of stuff you can do in your head instantaneously, but to write a computer model is almost impossible - what's the equation, what should the co-efficients be? It's nigh on impossible.

"There are certain things you can model really well - you can simulate weather patterns for example, because we understand the physics of the atmosphere. Certain aspects of the future you can model pretty well, but an awful lot of it you can't, and those are the interesting bits for me."

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