We noticed you're blocking ads.

Keep supporting great journalism by turning off your ad blocker.

Questions about why you are seeing this? Contact us

Font Size

- Aa +

Tue 16 Dec 2008 04:00 AM

Font Size

- Aa +

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.

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." CAPEX rewards

Brown argues that companies with long investment cycles need to address possible future scenarios in order to avoid wasting their capital expenditure budgets.

 "If you're building network capacity, that network capacity is going to be a big investment, and it's going to last for a long time, so it's worth putting in a bit of effort into thinking about how the future might evolve and whether your investments are going to work well in different sorts of futures," he says, highlighting the oil and pharmaceuticals industries - along with telecoms - as areas that have devoted a lot of resources to studying futures.

Brown describes oil giant Shell's "big push" towards going green that occurred before environmental awareness became imperative as an example of the multinational's attempt to keep ahead of its competitors and anticipate the changes that would inevitably affect its business model.

For telecoms operators, the challenges are different, and they even vary from region to region. But for some in the industry, peering 10 to 15 years into the future is not considered a worthwhile exercise.

"Anyone who looks ten years out is guessing" says Luis Leon, group strategist at Kuwait-based operator Zain. "We have to look at the potentials of our market and where they are," he says.

"The vast majority of growth and more than 95% of our revenue in Africa is derived from voice. So what we look at are ways of being profitable as we continue to grow on that base. So we're not really stuck in that position of Vodafone or AT&T where the markets are quite mature in terms of looking at other ways of service delivery. If you do things correctly you are going to create a lot of value just with the opportunities that present themselves."

No one involved in futurology would argue that it is an accurate science. Although Brown estimates that the 10 year predictions made by BT's futurologists have an accuracy level in the region of 85%, he says the nature of the "generalised" predictions means the figure must be taken with a pinch of salt.

Despite the uncertainty, it is still a worthwhile exercise, argues Pearson. He compares the practice with driving in foggy weather conditions.

"None of us would think well it's foggy and you can't see very much, so I'll sit and read a book with my foot on the accelerator."

"You still look out the front window of the car on the grounds that even if all you can do is spot some vague shapes in the distance it's probably enough information to avoid running into trees every couple of yards and when you get closer you can see them in more detail. It is useful to make out even the vague shapes in the distance, so it's well worth doing that. Blurred vision is better than none at all."

Understanding that a variety of futures are all a possibility is a hugely important part of the process for Dator.

"Getting decision-makers to understand this is the biggest difficulty responsible futurists have since most of us still imagine we live in a ‘Newtonian' world where prediction works whereas we do not," he says.

"And so they often invest in false predictions which end up being worthless, or worse, and thus give up on trying to anticipate alternatives and strive to invent a preferred future, which should be worthwhile."

"The ongoing collapse of the global economic system is an example of what happens when rigid ideological belief in a single future drives decision."

For companies like Zain that operate in less mature markets the future can be measured in distance rather than time, with technologically advanced countries such as South Korea providing clues as to what the future common standards could be.

Mobile TV penetration in South Korea is already in the region of 28%, with 13.7 million devices sold in the Asian country alone. And with 44% FTTH penetration, it is possible to monitor the roll out of technology in a live environment years before it might reach an operator's domestic market.

Telefonica, despite being present in some highly penetrated regions, has a similar strategy with a network of individuals who work in different industries around the globe on its payroll, feeding back information to the Spanish operator about new and exciting trends in their particular part of the world.

"We look at what other services are being positioned around the world and look at it in our context and ask: What is relevant? What are the enablers? And are those enablers present in our market place? If they are not, what are derivative products and services we can offer in our market place?" says Leon.

Marketing value

For BT the benefits of forecasting the future are not confined to being first to market or anticipating a rival's technology. The value of the research can also be harnessed by sales and PR teams.

"We find it a very good way of engaging customers in debate - one of the prime roles of the team is to be used in terms of sales events and really to have a dialogue with customers," says Brown. "If you are a sales team trying to sell into a large business, then actually having the ability to talk about long-term futures really generates a lot of interest."

As well as a tool for the sales department to use to attract customers, a well-oiled PR machine can also help to convince customers that the futures envisaged by futurologists are the only alternatives.

"To some degree, you can drive the future," Pearson says. "If you think about what could happen, and what are the possibilities, and then show people, and if you do it in the right way then you can actually steer people down that path. So you can actually drive the market in directions which will benefit your company."

A three stage approach to forecasting

Understanding technology

"There are arguments that nearly all ideas in terms of new technology take at least twenty years to evolve and often more. If you understand what's going on in the universities then it's unusual that a technology will come along and completely blindside you," says BT's Dave Brown.

Fulfilling needs

"When a new product emerges on the market place it is rare that a completely new need has been identified," says Brown.

"The more common thing is that someone has found a way of enabling a person to fulfill the need with a new product or service."

Commercial viability

"The thing that's the real challenge when you are predicting is establishing when something will be commercially viable. Innovation is about taking an idea and turning it into something people can use, and probably something you can make money out of," Brown adds.

Arabian Business: why we're going behind a paywall

For all the latest tech news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
Real news, real analysis and real insight have real value – especially at a time like this. Unlimited access ArabianBusiness.com can be unlocked for as little as $4.75 per month. Click here for more details.
Adam Gordon 11 years ago

Thanks for interesting article. Good foresight also depends on the ability to critically evaluate the predictions made by experts - see Future Savvy, Amacom Press, NY, 2008 http://www.futuresavvy.net http://tinyurl.com/5mdu2c -Adam