Stop Flying Blind - A book by Michael Mace

1. Introduction. We’re very, very, very bad at predicting the future

In 1994, a best-selling business book declared that the world was “standing on the edge” of a series of technology changes that would revolutionize our lives. It’s interesting to check in on those predictions to see how they have turned out. Here are seven predictions made in the book:

Live machine translation of speech, so people in different countries could talk to each other on the phone. Nope. The closest thing we have today is automatic translation of websites, which occasionally lets you dig out a useful fact from a Chinese or Korean website but is mostly good for a laugh.

For example, I used a prominent automatic translation service to convert the paragraph above into Chinese and then back into English. Here’s what happened to it:

Speech, therefore person’s live machine translation can converse with the different country mutually makes the telephone. Nope. We have the closest matter is the website machine translation, occasionally lets you dig but today is main good is smiles outside a useful fact from Chinese or the South Korean website.

Not only is it pretty much incoherent, but Korean was changed into South Korean, a subtle error that could cause big problems in certain political situations. If that’s the best we can do with text, how do you think we’d do with live speech, which can be pronounced in a huge variety of ways?

Urban underground distribution systems that let companies deliver goods without tying up traffic. Right. Anyone have an update on the construction of that delivery tunnel system under, say, Paris? Or New York?

Microrobotic machines that could unclog arteries. We call it nanotech today, but we’re nowhere near having autonomous surgical robots you could inject into the body.

Virtual meeting rooms so people can have meetings without travel. We’ve made great progress on this with Web-based conferencing systems, but they aren’t nearly as ubiquitous as the book predicted.

Satellite-based communicators that would let anyone make a call from anywhere on the earth. You can actually buy these today, but satellite phones are incredibly unattractive compared to a cellphone. Here are typical specs:

Satellite Cellphone
Monthly charge $30 $40
Per minute $1.50 First 500 free, then 45¢
Phone weight 13 oz 4 oz
Standby time 24 hours 200 hours
Cost of phone $1,500 Free with contract

Not surprisingly, satellite phones are being used today mostly for specialized purposes like ship to shore communication. So does this prediction count as a hit or a miss? Since the context was helping businesses plan for the future, I think you have to call it a miss. A company that bet big on satellite communication in 1994 would have lost its shirt. In the case of Motorola’s investment in the Iridium satellite phone system (which Wired magazine kindly called “Edsels in the Sky”) the shirt cost about $2.6 billion.

Machines capable of feeling emotions. We’re not completely sure how emotions work in human beings, so putting them in machines may be a bit of a stretch for now.

Digital highways that bring torrents of information into the home. Right on! This one was correct.

The book’s batting average was .214: one correct, one partly correct, and five wrong. In baseball that would buy you a ticket to the minor leagues — but business isn’t baseball. In business, a single wrong prediction can cost you billions.

It’s tempting to say the authors screwed up, but actually future business predictions are almost always wrong. Check any 10-year-old business strategy book and chances are you’ll find celebrations of companies that subsequently collapsed, and technology predictions that turned out to be fantasies. And it’s not just a book problem. Companies make the same mistakes internally, as Motorola discovered with Iridium.

The problems with the future are so common that I don’t think we can blame them on dumb authors or dumb managers. There’s something systematic going on. I think the trouble is that we’re looking at the future the wrong way.

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Our bipolar view of the future

I’ve been in the technology industry for almost two decades, which in Silicon Valley makes you a grizzled veteran. I’ve worked with a lot of different companies, spending much of my time on strategy and trying to figure out how the marketplace will develop. One of the most striking things I’ve noticed is that most of the companies I work with have trouble thinking about the future.

Silicon Valley likes to present itself as the place where the future comes to life, but in practice the companies are bipolar about it. They either try to beat the future into submission, or they surrender to it as an immutable force of nature. These two groups, which I call visionary and reactive companies, both mishandle the future in important ways.

Visionary companies represent the triumph of individual brilliance over mundane thinking. They’re usually still led by founders who started the company with a strong idea of a new market or product that could change the world. Despite doubters (and there are always doubters in the backstory of these companies), the founders had a correct vision of what would happen, and they drove the company to success.

Visionary companies are usually focused and decisive. They are very good at tuning out distractions and staying on course, because they believe that with good execution they can force the future to evolve the way they want it to. These companies are often indifferent to market research and outside information from people who don’t “get it.” Based on their own history, they usually feel they can do a better job of intuiting opportunities than any research can. Research would just get in the way of their freedom to create.

In my experience, the visionaries are completely right about this up to the point where they start being badly wrong. Even the most brilliant individuals have limits. Eventually inspiration runs out, and the company’s differentiators are copied by competitors. Or the vision hardens into dogma, and the company starts missing new opportunities. Visionary companies are the most likely to march into utter disaster as they cling to a vision that’s no longer valid. They’re flying blind because when you’re inside a vision, you can’t see what its limits are.

Reactive companies are on the other extreme. They view the future not as something they can control (they’d call that arrogance), but as something they can predict, like the weather. Once they have predicted the future, they then make logical plans that react to that prediction. These companies are often superb at responding to changes in the market. They’re very open to outside information, and are willing to learn from anyone.

But this same openness makes reactive companies vulnerable to industry groupthink. In the process of scanning the world for ideas and trends, those that have the most currency among analysts and press will naturally rise to the top of the pile. It’s almost like a voting process — if enough consultants and other credible people are saying satellite phones will take off, it must be correct.

This makes it very difficult for a reactive company to form a differentiated strategy. Instead, it tends to pursue whatever everyone else is pursuing. You could see the process at work during the Internet bubble, when the tech industry consensus said the most valuable thing to own was an online service. Many of the established companies in high tech threw themselves into the creation of online services, or paid enormous sums to acquire online service companies, even if those services didn’t actually have much to do with their core businesses.

In response to thrashes like this, reactive companies sometimes evolve into fast followers. They become convinced that you can’t really predict the future at all, so they focus instead on quickly co-opting new opportunities and products that other companies produce.

Although American business culture tends to admire renegade visionary leaders, there’s nothing shameful about being a reactive company. It’s the strategy followed by many of the world’s largest consumer electronics firms, most of them headquartered in places where renegade behavior is discouraged. But whatever your cultural attitude, reactive companies are flying blind when it comes to the future. If the consensus prediction of the future turns out to be wrong, or if they don’t spot a major change early, they won’t be able to react in time to survive.

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The middle road: Anticipate, don’t react

I think there’s a third approach to the future, one that’s more powerful than either the visionary or reactive path. In this approach, you have to take a different view of how the future works. It’s not something you can control completely through sheer will, and it’s not a single force of nature you can predict perfectly through logic and research. The future is a series of possibilities that might or might not come true. Although you can’t predict what will happen, you actually can predict pretty accurately what might happen, and how you can change it.

Once you’ve made a list of these potential futures, it works like a road map for a family vacation. It shows you cool destinations, routes to get there, and potential hazards along the way. It also shows places that you can’t possibly reach, no matter how badly you want to drive there. Unlike a vacation map, a futures map also shows you the competitors traveling those same roads — where they are, and where they’re likely to go.

Once you know what the routes are and where they lead, you can pick ones that take you to the best destinations.

To a visionary company, this means the right kind of futures analysis can help you extend your vision, to give you new ideas on possibilities and to anticipate the cliffs before you march off them.

To a reactive company, this means you can free yourself from responding to either rigid predictions or marketplace events. Instead you can identify the best possibilities and the risks along the way to them, and guide the future toward the outcome you want.

Specifically, mapping the future lets you:

–Anticipate the development of new markets, allowing you to seize the best position in them before your competitors even know they exist.

–Predict how competitors will react to actions your company takes, so you’re ready to counter their responses before they even happen.

–Identify major technological turning points that will change your industry (and learn to disregard the changes that won’t really matter).

Most of the companies I work with are not organized to map the future. The people who know critical parts of the map — competitive analysts, market researchers, and advanced technologists — are usually scattered in different parts of the company, where they perform mostly support tasks for the business. These functions often don’t communicate with each other, and don’t even respect one-another’s work. To map the future successfully, they need to be organized differently, taught how to work together, and in some cases staffed with a different type of people.

In other words, they need to be treated like a single strategic asset, rather than three separate service groups.

In this blog I’ll give my ideas about how to map the future — how to manage the groups that build the map, how to tie them together, and what sort of benefits you should expect from them.

Think of this as a how-to manual. It’s based on almost two decades of competing and partnering in fast-changing markets with large, aggressive companies like Microsoft, Intel, IBM, and Nokia, often with very little budget or headcount.

Sometimes I’ve been successful, sometimes not. But I’ve learned a lot, and one of the things I’ve learned is that most companies don’t think about the future the way they should. I’d like to fix that.

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Disclaimer: “What works for me”

Gardening is supposedly the most popular hobby in America, and there are an incredible number of books and websites telling you how to do it. Somebody smart once pointed out that every one of them ought to carry the disclaimer, “this is what works for me.” Conditions vary incredibly from yard to yard and from state to state. The exact same treatment that grows a pine tree at my place might kill it in yours. The best I can do is say what works for me, and hope you can adapt it to your needs.

I think the same is true of business advice. Companies, industries, and national cultures differ so much that what’s brilliant in one firm may be disastrous in another. In my case, I’ve worked in high tech, in Silicon Valley, in the United States, for most of my career. Our company cultures here are very informal; information flows up and down the org chart readily. For example, it’s commonplace for a CEO to exchange e-mails with an individual contributor — and woe to the middle manager who gets in the way.

Darwinian competition dominates our economy; firms grow up fast and die even faster. Almost no one builds a long-term career at a single company. In fact, you’re viewed with suspicion if you stay in one place for too long — it must be a sign that you couldn’t get work elsewhere.

The lessons and techniques I’ve learned are adapted to conditions here. If you’re in a hierarchical company, in a conservative industry dominated by 30-year veterans, some of my advice may be irrelevant, if not downright dangerous to your career.

On the other hand, if there’s one dominant trend in the world’s economy, it’s that the pace of change is accelerating. Companies are becoming more flexible, information needs to flow more freely, and the days of lifelong employment in a single company seem to be coming to an end.

In other words, like it or not, the business world is becoming a little more like Silicon Valley. Maybe some of my experiences will help you, and your company, compete better in that future.

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This is a book in progress. Please Click here to rate this section (the link will open a one-screen anonymous survey, and you’ll get to see the results after you take it). I’d also appreciate comments and suggestions.

5 Responses to “1. Introduction. We’re very, very, very bad at predicting the future”

  1. Dave Garr said on May 22nd, 2006 at 1:35 pm

    A few suggestions:

    - My overall comment: I didn’t get a sense that this was really the beginning of the book. Why? First, it seems like it might need more of an intro before jumping in and analyzing a 12-year-old book (that isn’t named). That first paragraph is key to hooking a reader or not. Second, at the bottom, I would expect there to be a link to “Read Chapter Two” or something like that. Instead I see something at the bottom “…filed under Chapter” and I click on the word “Chapter” and go to “Archive for the file Chapter.”
    - As a reader, this would be more interesting if I knew the name of the 12-year-old book. Maybe that would “hook” me more. Idea: what about linking to that book on Amazon.com? (BTW, I know your style…you don’t like to “out” someone who has made a mistake. So you can ignore this bullet.)
    - Are these the only seven predictions? If so, I would say that. If not, then your wording is best.
    - I would modify the virtual meeting rooms sentence to say “they aren’t nearly as ubiquitous or as useful as the book predicted.”
    - Change “In this blog I’ll give my ideas…” to “In this book I’ll give you my ideas…”

    Okay, that’s it.

  2. Mike Mace said on June 1st, 2006 at 9:54 pm

    Hi, Dave.

    Thanks very much for the comments.

    >>I didn’t get a sense that this was really the beginning of the book.

    Hmmmm. Thanks, and I’ll think about that some more. I was trying to emulate the introductions to some other business books I’ve seen, which jump right into an example. But maybe I jumped too fast.

    >>at the bottom, I would expect there to be a link to “Read Chapter Two” or something like that

    Yeah, I’d expect that too. The trick is that as I post each chapter, I haven’t yet posted the next chapter so I can point to it. I need to figure out how to make changes to the posts without having them re-send through the RSS feed. Then I will go back and add these links.

    >>As a reader, this would be more interesting if I knew the name of the 12-year-old book….(BTW, I know your style…you don’t like to “out” someone who has made a mistake.

    Thanks for giving me the benefit of the doubt. I do think it’s unfair to beat up on the authors when the problem is not that these guys were dumb, but that it’s impossible for anyone to predict the future accurately.

    I think I also had a second motive, though — the book was Competing for the Future by Hamel and Prahalad. It was a mega-bestseller among business books, and introduced the idea of core competency, one of the trendiest business ideas of the 1990s. I was a little reluctant to call those guys on the carpet, which qualifies me as a wuss.

    I think you have talked me into naming the book.

    Your other comments are also helpful. Thanks!

  3. Lefty said on January 16th, 2008 at 5:27 pm

    Hey, Mike, I just stumbled across this, don’t know why I missed it previously.

    Yes, we’re terrible at predicting the future, but we always have been. In fact, my keynote at the Nowthwest Technical Conference for Undergraduates last year was about just this subject.

    I like to think of this as the “von Gernsback Syndrome”. Hugo von Gernsback was a classic illustrator of magazine covers for early sci-fi pulps like Amazing Stories and the like. He’s largely the creator of the Jetsons’ version of The Future, where we all have flying cars, domestic robots, live in two-mile-tall spires and wear skintight jumpsuits.

    Most prediction is just wishful thinking, our fantasies about the present projected onto the blank slate of The Future. I’ll be interested to read your take on this.

    As Firesign Theater said, “Live in The Future! It’s starting now!”

  4. Mike Mace said on January 16th, 2008 at 10:53 pm

    Thanks, Lefty.

    I agree with you completely. Hadn’t thought of the Hugo angle, but you make an interesting point — many of our imaginings of the future are driven not just by writing, but the images we’ve created. Movies and TV let us experience imagined futures very vividly, which makes us feel even more betrayed when they don’t come true.

    Is there a podcast or video of your keynote? I’d like to see it.

  5. Rik Ganju said on December 16th, 2010 at 11:46 pm

    How about this prediction by Ben Bernanke in May 2007. My all time favorite.

    The rise in subprime mortgage lending likely
    boosted home sales somewhat, and curbs on this
    lending are expected to be a source of some
    restraint on home purchases and residential
    investment in coming quarters. Moreover, we are
    likely to see further increases in delinquencies
    and foreclosures this year and next as many
    adjustable-rate loans face interest-rate resets.
    All that said, given the fundamental factors in
    place that should support the demand for housing,
    we believe the effect of the troubles in the
    subprime sector on the broader housing market
    will likely be limited, and we do not expect
    significant spillovers from the subprime market
    to the rest of the economy or to the financial
    system. The vast majority of mortgages, including
    even subprime mortgages, continue to perform
    well. Past gains in house prices have left most
    homeowners with significant amounts of home
    equity, and growth in jobs and incomes should
    help keep the financial obligations of most
    households manageable.

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