Posted by Adam Gordon on Apr 30, 2012 in all, decision-making, innovation, leadership, managing uncertainty
Ninetendo last week announced a first-ever annual operating loss of 37.3bn yen (about $460m) in the year to March 31.
The company projected sales of 13m Wiis, but moved just 9.8m; and sold about 80% of forecast 3DS handhelds and 50% of forecast DS machines.
In industry foresight we know that projections are reliable when nothing fundamental changes during the forecast period. Where the underlying changes, the forecast becomes ridiculous, leaders look stupid, and investors lose money. That’s why we use non-extraplative tools more suitable to complex situations.
So, what has changed? Rapid, worldwide smartphone and tablet adoption of course, particularly Apple devices. A bespoke hardware-based game company becomes vulnerable when users can play desirable games on the same handheld they use for everything else.
This is familiar ground in media-entertainment, a field that defines itself in part via the ongoing strategy debate of bespoke platform vs. open systems. Yes, if you can win with your own platform, as occurred with Wii, that’s beautiful. But the aggregators like iOS and Android stalk you.
Nintendo is not going to suddenly turn around and license Super Mario and other games for non-Nintendo devices, not least because it has a $14bn cash cushion as a result of the Wii success, so no need to panic.
Cannibalization
When it comes to leaders managing the future, cannabilization of past success in the service of future success, is the hardest thing to do.
But, even leaving aside platform aggregation, there are underlying market change-drivers that are far bigger thanNintendo, that will vigorously shape its future outcomes, which suggest bold leadership moves are required.
These are, first, the inexorable popular drive to ‘social’ – can I easily share what I’m doing, or playing, with others? The second is ‘mobile’ – can I do this wherever I am, and keep doing it as I move through my day and my week?
Reuters reports that a recent survey by mobile gaming site MocoSpace asked 15,000 gamers where they gamed: 53 percent said they played in bed, 41 percent in the living room, 72 percent commuting and 5 percent on the commode.
What goes from the bedroom to the bathroom, to the car, to the office, to the gym, the restaurant, and beyond? The one and only smart phone.
Experience shows that an apparently small leadership move that misses the future can quickly eviscerate a company, no matter what its cash position. Just ask Kodak, or Blockbuster, or even Encyclopedia Britannica. $14bn today… gone tomorrow.
Cursed Pages
Nintendo of course has its plan to turn things around. The company says it will continue its strategy of “Gaming Population Expansion,” growing its market by offering products across age, gender, and gaming experience segments. Later this year it will release the Wii successor, Wii U. Hoping a weaker yen and new games, including Mario Party 8and more Dragon Quest from Square Enix will boost sales, Nintendo’s president Satoru Iwata expects the business will return to profit next year.
In other words, business as usual. But, I look at the new “Spirit Camera” game blurb and I read… “terror from all directions,” “haunted visions,” and “cursed pages,” and I think, yeah, that about sums it up.
read morePosted by Adam Gordon on Jan 30, 2012 in all, decision-making, leadership, managing uncertainty, scenario planning, sense-making
Martin Sheen as Josiah 'Jed' Bartlet. Picture: @Pres_Bartlet
Even by the standards of modern political media prattle, this was odd: the Guardian yesterday invited and ran a “response” to Barak Obama’s State of the Union address, from Jed Bartlet the fictional president in The West Wing.
One should immediately add that the response was not that of Martin Sheen (the actor who played Bartlet) or anyone from the show. It was that of an unnamed tweeter who can be found here.
The reader vox-pop box was quick to cry foul, asking what next: a piece on space exploration by Captain Jean-Luc Picard, or 007’s analysis of the War on Terror?
Fair enough. But if there is a serious point to be made, and I think there is, it is that fictional leaders do have a role in real world business and policy leadership.
Fiction and storytelling is important and enduring in all human societies because it is an excellent vehicle for considering complex human situations, reflecting on competing motivations and interpretations, assessing choices made with incomplete information, and following these through to their win-or-lose conclusion. Fiction allows multifaceted situations to be captured without losing the complexity.
Parallels
Incidentally, this is why scenario method, which tells stories of alternative future situations, is such an effective planning device. But the point here is that fiction captures complex human situations and senior executives would be the first to recognize parallels between the challenges that imaginary leaders are put through and what they do in a real working day.
If fiction captures and communicates tricky situations well, it therein becomes a learning vehicle. Whether reading a difficult modern novel or watching a soapy TV show, we put ourselves in others’ shoes, vicariously experiencing their conundrums and learning from the outcomes of their decisions.
Would-be successful leaders could do worse than take note of the leadership attributes of winners such as Sherlock Holmes or Superman or Andy Dufresne; or unpick the illusions and ultimate failures of dark lords such as Voldemort or Mr Kurtz.
Furthermore, a good way to learn is to judge real performance against an ideal template. (Judging me against my clarinet teacher, for example.) Whether your politics aligns with the positions and preferences of The West Wing White House or not, there is no denying that Bartlet is set up as a model president in a model administration. He is thoughtful, caring, effective; manifests an ideal balance of intellect, EQ, and decisiveness; is respected and loved by his staff who will go to the ends of the earth for him. He is a template leader.
So it’s hardly off-the-wall to wonder what Bartlet would have made of Obama 2012. That said, it would have been far more interesting to know what West Wing screenwriter Aaron Sorkin or even Sheen, rather than abitrary unnamed tweeter, thought of the State of the Union address.
For the record:
The Lion: President Obama. Mangy, patchy, apparently underfed. Definitely caged. But he has a heart. Whether it is the lion heart of the ruler of Narnia … time will tell.
The Witch: Here we have to go with Shakespeare; in fact there are three witches: Romney, Gingrich, Santorum. On Tuesday Obama called for a fairer country. Notice they responded: fair is foul, and foul is fair.
The Warmonger: he that exited the presidency in 2008, having wasted 4,000 lives and $800,000,000,000 on a war as poorly judged as that of Douglas Haig at Somme, 1916.
Posted by Adam Gordon on Nov 24, 2011 in all, decision-making, managing uncertainty, social change
The future will be full of surprises and reversals. Can leaders and decision-makers get better at seeing them before they happen? Or better at themselves instigating and managing such reversals, in pursuit of social or financial benefit?
A fun and instructive example is the ongoing developments in Exhibition Road, a kind of ‘museum mile’ in London, where the distinction between road and sidewalk is being abolished to make way for a car, bike, and pedestrian free-for-all.
Have the city’s planning wonks finally, truly, verifiably gone mad?
Since the automobile first reared its fearsome fender, road-management wisdom has always been that pedestrians are safest when kept separate from 5,000lb of moving metal.
Evangelists for livable urban areas usually clamor for pedestrian-only streets; or failing that, bigger, better-marked walking, running, and cycle lanes from which drivers are banned.
But pedestrian-car segregation has its own systemic effect. It means drivers are less likely to expect people in front of them, and so less likely to be vigilant and more likely to speed.
Exhibition Road planners say making the street a mixed area makes drivers anticipate something crossing their paths at all times.
Monderman
The mixed-use-street idea is not new: it was pioneered by town planner and traffic engineer Hans Monderman in the Netherlands in the 1980s and 1990s. According to a Guardian obituary, Monderman “succeeded in challenging many long-established assumptions about safety and the relationship between pedestrians and traffic…
“Monderman pioneered an approach that respected the driver’s common sense and intelligence instead of reliance on signs, road markings, traffic signals and physical barriers. He recognised that increasing control and regulation by the state reduced individual and collective responsibility.”
The jury is out on how effective mixed-use streets are; or exactly where they are most effective.
But the leadership lesson is clear: all decisions and resulting directives rest on foundational assumptions. The more robust these underlying assumptions, the better the decisions.
In this case, the assumption that greater safety is achieved by separation of vehicle and pedestrian is being challenged, and may turn out not to hold up at all for specific city areas.
Where assumptions are weak — or become weak over time due to changes in technology or values or market needs — poor decisions follow.
Leaders who don’t identify and regularly revisit the assumptions that underly their past decisions abdicate the ability to manage reversals and transitions when required. And will be surprised and blindsided when others initiate them.
Posted by Adam Gordon on Mar 16, 2011 in all, decision-making, forecast filtering, leadership, management, managing uncertainty, risk management, strategic foresight
Fukushima plant, Japan. Picture: digitalglobe.com
At the time of writing, Japan is battling a nuclear meltdown and radiation emergency, and Fukushima could become a word suddenly the whole world knows, like Chernobyl.
Bloomberg News has called the whole tsunami crisis Naoto Kan’s “Katrina moment,” and one can only hope and pray for all concerned that the Japanese prime minister is a more competent leader than Bush was at this moment of human catastrophe.
As to the nuclear meltdown: If ever we have been warned about anything in the future, we have been warned about nuclear plant catastrophes. Not only have there been, as it were, verbal warnings going all the way back to the 1950s, but real-world events such as Three-Mile-Island and Chernobyl have fully fleshed out the scenario of nuclear reactor failure or near failure in populated areas.
If nuclear-generated electricity makes sense anywhere, it makes sense in Japan, which famously has no coal or gas reserves. But these are nuclear plants … built right on the Pacific Ring of Fire? Japan is a small island with 125 million people densely packed into urban areas. As we face the possibility of this many people put at risk, however the next few days play out it’s clear the risk and reward of nuclear energy here is out of alignment.
This is hardly news. The question is, why are the plants are there? And the answer is not a simple one of collusion or corruption of government, or shenanigans of power companies, although there may be some of that. It comes down to a misapprehension of probability and risk among leaders and decision-makers such that it appears that risk and reward are in balance, when in fact they are not.
Year 869AD
To think about this, consider yesterday’s BBC Story: Japan tsunami ‘could be 1,000-year event,” saying last week’s tidal wave was equivalent to a giant wave that hit the Sendai coast in 869AD. The report says: ”It is not unusual for undersea earthquakes to generate tsunamis in this part of Japan. Offshore quakes in the 19th and 20th centuries also caused large walls of water to hit this area of coastline. But previous research by a Japanese team shows that (only) in the 869 ‘Jogan’ disaster, tsunami waters moved some 4km inland, causing widespread flooding.”
The point is, tsunamis are common, but “the big one” is a one-in-thousand year event — an extremely low probability outcome.
Here I’m strongly reminded of the days following the depth of the Credit Crunch, Bear Stearns’ collapse, and general world financial system meltdown of 2008. If bankers said one thing sensible through the whole period it was: “this was a one-in-ten-(hundred, etc.)-thousand probability outcome, and extreme ‘outlier’ event!”
A low-probability event means we can relax, right? Wrong. The problem is probability says zilch about impact. “Wild Cards,” or now more famously in Nassim Taleb’s terms, “Black Swan” events are low probability but of game-changing impact.
Taleb’s point, made repeatedly across his various books and articles, is that standard probability theory and Gaussian statistics lull analysts into thinking that because an event is low probability – an outlier in a normal bell-curve distribution – it is of low or lower consequence.
Ignoring the tail of the Bell Curve is okay if events are genuinely assessed as low impact. If they are high-impact aka “fat-tailed” events, they are the most important events we face in the future, in building or maintaining any system or organization.
A probabilistic framework misleads decision-makers because it degrades their attention to crucial events (by tagging them low-probability,) which means next thing they are betting banks on mortgage-backed securities, or building nuclear plants on earthquake fault lines.
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Posted by Adam Gordon on Nov 11, 2010 in all, managing uncertainty, strategic foresight
I was recently in South Africa where I had a hand in setting up an executive foresight-innovation executive training program to be run in association with the Stanford Center for Foresight and Innovation.
While I was there I couldn’t help noticing the business print and radio waves being dominated by the potential entrance of Wal-Mart, with all the jitters of local businesses considering the knock-ons and side-effects of the “über cost competitor” turning up at the end of the street.
If it goes ahead, Wal-Mart will enter via acquisition of local retailer Massmart which is, as the name suggests, a copy-cat company anyway, so it would seem all there is to talk about is price. As things stand, Wal-Mart is in its fifth week of due diligence on Massmart, currently visiting all 288 stores under acquisition, according to a recent WSJ report.
Now Wal-Mart is not busting a gut for the SA market, population 45 million, of course. The whole project is about using the South African operation as gateway into Africa as a whole. It is bet on the 5-to-10-year-and-beyond future of sub-Saharan Africa.
Massmart Chief Executive Grant Pattison is quoted as saying “you have to take the long view on Africa,” and this is exactly what Wal-Mart is doing. Enacting a long forward play for the newly strengthening African retail market.
Other than inventing the scale-based supply-chain-squeeze model of retail, which must go down as one of the great business innovations of all time, Wal-Mart is hardly known as a foresight-based player. As forward looking as the Massmart acquisition is, Wal-Mart has in fact been well beaten to the African punch by the Chinese who have been investing across the continent over the past decade (although the Chinese investment has been predominantly in infrastructure and resources, while Wal-Mart’s would be in anticipation of lower-middle class consumer enrichment on the back of that.)
The glass half full
The Chinese invasion is by far the biggest thing to happen in African economies since European colonialism, not only due to widespread infrastructural investment, and not only because it comes without “Washington Consensus” strings attached, but, even more fundamentally, because it is driving a zeitgest shift in business confidence. Deep problems remain, but suddenly the glass that was half empty appears half full, particularly to occidentals.
One expression of the new half-full perspective is McKinsey’s breathless report (June 2010) on Africa’s economic emergence, entitled “Lions on the Move,” which starts: “Africa’s collective economy grew very little during the last two decades of the 20th century. But sometime in the late 1990s, the continent began to stir. GDP growth picked up and bounded ahead…”
Asian Tigers. African Lions. Geddit? But when both Wal-Mart and McKinsey are setting their watches to the near-term future African economic growth story, you can bet other companies are set to pounce too.
Posted by Adam Gordon on Oct 11, 2010 in 2015, all, forecast filtering, managing uncertainty, strategic foresight, technology change
I’ve been mulling over an S+B interview with Lawrence Burns, former head of R&D at General Motors, ahead of the release of his book ‘Reinventing the Automobile: Personal Urban Mobility for the 21st Century’ (MIT Press, 2010, co-authors Christopher Borroni-Bird and William J. Mitchell.)
Truth be told, the foresight field is littered with predictions about the future of the automobile, from the futurists’ flying car that never happened to the-pumps-run-dry doomsday, and everything inbetween.
The Xiao EN-V concept car. Photograph © General Motors / Wieck Media Services Inc
But, judging by the interview, Burns has a higher-quality foresight view of this industry than most, and this because he prioritizes what consumers really value as a guide to what will emerge over any policy principle or ideological interest.
What do consumers really value? “There’s nothing like the freedom they (cars) provide to let us go where we want, when we want, with the people we want to travel with,” says Burns.
“Ever since people could walk, the ability to move when they want and where they want is something people have found very compelling.”
Nothing new, but what he is warding off, in preparing the ground to looking to the industry future, is views of the automotive future that are ideologically colored, particularly those imbued with the virtues of public transport.
Says Burns, “Three major impediments get in the way of public transportation:
This balance could change — this is what public transport executives seek to effect. But until there is clear reason to see public-transport pain-points diminishing, there’s no reason to see anything but private-dominated transport in the future (other than very dense urban environments such as Manhattan.)
Pain avoidance
Burns places automotive foresight at the intellectual crossroads between what the majority of consumers really want (or what pain they want to avoid) and what pundits and ideologues think would be a better solution. Guess which always wins?
With that issue solved, the question then turns to what these private vehicles are exactly? Here Burns and co-authors have a vision, but it is more “anybody’s guess.” Their fundamental assumptions is that onboard inter-vehicle accident-avoidance technology is watertight, which means cars don’t need all their defensive armour and can so be far lighter, and therefore use less energy, so battery power and life is no longer the limiting issue it is today. See the concept-car above.
This blog first posted at Forbes Leadership: http://blogs.forbes.com/adamgordon
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