Future Savvy: Quality in Foresight

Normally I make a point of not reposting anything put up elsewhere, but this small list of foresight lessons deserves broader attention than just Electronics Weekly. According to EW blogger David Manners, Tsuyoshi Kawanishi, former CEO of Toshiba Semiconductors in his book Chip Management quotes 10 wisdoms of forecasting, see below.

They have a bit of the fashionable “SunTzu Art of War” feel to them, and some of the quotes may be apocryphal. But no matter. What’s really interesting in this very savvy list is how customer-focused the lessons are. As said in Future Savvy, and one can’t say it too many times, what customers (users, the public) want and the cost-benefit tradeoffs they will make is a MUCH more reliable guide to the future than any techno-fantasy.

The wisdoms also reflect a foresight industry insider truism and paradox: you seldom get to the future by asking the customer directly (e.g. in a focus group) what they would like to have. You have to leap for the customer (and use focus groups only to refine new offerings.)

The list:

“1. St Augustine said that it is a blessing from God that we can’t predict the future. If we predict prosperity, we will become complacent. If we predict evil, we will lose the ability to discriminate.

2 Sharp President Haruo Tsuji: ‘You cannot find out what the consumer wants only by doing market research. You need to pull the ideas out of your brain. Manufacturers of the future should not simply respond to market demands, they must create market demands.’

3. Konosuke Matsushita said: ‘Don’t try to fit your business to a forecast. Fit it to the needs of your customers.’

4. Toshiba President Sugiichio Watari: ‘Money doesn’t come falling into the headquarters of Toshiba. If you want money you need to go to the customers.’

5. President Yoshio Tateishi of Omron: ‘Learn from your customers. If you learn from internal resources you will become self-satisfied. If you learn from your competitors you will fall far behind.’

6. Professor Yoshiya Teramoto of Meiji Gakuin University: ‘When companies start a big market research project, it is one sign of the ‘big company’ disease.’

7. Tsuyoshi Kawanishi: ‘The way to predict the weather is to look at the sky. And, every once in a while, you can make your prediction by simply thinking.’

8. President Haruo Tsuji of Sharp says: ‘Don’t be a spider, be a honey bee.’

9. Takeshi Kaneda, a management critic, says: ‘After elaborate research to find out what the consumer wants, Ford produced the Edsel. It was a complete failure. Ford mistook what the customer wanted for what they would really buy. They ignored their insight and relied on consensus. Japanese tend to emphasize harmony and consensus. But insight and decisiveness can be more important.’

10. Someone says: ‘Figures do not lie. But liars often use figures.’”

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Publication of the Institute for the Future’s “Map of Future Forces Affecting Sustainability” on the same day that it is revealed that Sir Fred Goodwin (50) of failed & baled Royal Bank of Scotland (RBS) will get a £693,000 (about $1,000,000) a year payment for the rest of his life, gets me thinking about short-termism and its entrenchment.

The IFTF’s full map is available for download here.  Quick aside: these maps, putting complex forces into visuals, have defined IFTF’s public (and client, one presumes) communications for over five years, and have raised the bar of excellence in the foresight communications. The company has produced many such outstanding maps, some publicly available.

The new map and Sir Fred-gate are unrelated of course. But here was the connection for me: The IFTF map lists six “Key Driving Forces” (2007-2017) in the area of sustainability, and the first is:
“An Imperative for Looking Long: The 21st century will test our ability to grasp the future impacts of present choices, but even as we struggle to incorporate future knowledge into our day-to-day decisions, we’re tuning up our bodies and minds and even our cultural frameworks for a much longer view.”

My question is, “really?” Is the long view really a driver – something that will drive change and shape the future? Or do we hope it is. Are we trying to talk it into being?

No question that the long-term view is crucial. Solving just about any social, technological, or environmental problem requires sustained long-term action. And everyone who works in foresight keeps evangelizing long-termism. But, in fact, what we have in industry and government is rampant short-termism and there is no indication this will change, despite the crisis and many heartfelt calls.

Linking big to long

The problem with Sir Goodwin’s package (in career and in retirement) is that the reward numbers were based on short-term company returns. “Hey, we made lots of money this year, so you get a big bonus, and you get a big bonus,” etc. But a few years down the line  – in the long term – it turns out that no bonuses were valid (if a bonus is, truly, a reward for success).

Put it another way: in finance, as in other aspects of society, technology, and the environment, we don’t know if we’ve succeeded or failed until the long-term numbers are in. Few would have a problem with handsome rewards for a valuable job well done, but those rewards must surely be delayed, and delayed, until we are in command of the long view of the performance.

Easy in theory, hard in practice. Perhaps impossible in practice when most politicians and legislators are themselves on a short 3-7 year cycle, like CEOs. I have some inkling from the IFTF map that the thinking is that life-extending technologies will improve to the point where people will really see themselves in for the long haul, and so adopt a longer perspective on benefits and rewards.

Time on the clock

Perhaps. But, life-technologies aside, plenty of decision-makers – Goodwin included – still have a lot of time left on the clock and that doesn’t appear to stop them chasing and cashing in short-term incentives at the expense of the future. Or legislators (and the public who votes them in) structuring performance rating on our immediate perception of their performance.

What we have, and what we have increasingly had (the trend) over the past few decades, is systemic short-termism. Winning in the next annual report or the next election is what what leaders’ rewards are based on. Incentives for politicians or business leaders or even scientists or engineers to make a better world for 2025 or 2050 are negligable.

Until there is reason to anticipate that this fundamental underlying short-term incentive structure and mentality changes (that is – convince me – who will change it and how?) the future savvy perspective must say that the “long-term imperative” remains a nice sound-bite, but not a material driver of anything.

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It’s an auspicious time for those of us long convinced that design and future studies are fields with significant overlap whose coordination is helpful in addressing both social and commercial problems and/or future opportunities.

Conference: March 19-21

Tim Brown of IDEO, the the industrial design firm, recently published a Harvard Business Review piece Design Thinking – investigating designer-methods in business innovation. At Davos last month there was a “Global Agenda Council/ Design,” featuring Newsweek’s Bruce Nussbaum and built-environment design firm ARUP’s head of foresight, Chris Leubkeman. (The general agenda may be found here.) Next month, the Association of Professional Futurists are having a “Futures by Design”  conference in association with The Art Center College of Design in Pasadena, CA.

And so on. I’m going to be blogging more about this. But for now I wanted to put out a note-to-self I wrote on the issue about five years ago, trying to briefly define how the fields relate to each other, and what the crossover is. Here goes:

The tools of design and planning dovetail closely with those of industry foresight. The overlap and interaction between these two disciplines is not commonly understood, and so the methods and process insights from design professions that could augment the range of strategic foresight tools is often ignored.

1. Beyond aesthetics
Sunday supplements and glossy magazines often use “design” to mean style and fashion. While aesthetics is important, good design means much more than how products appear. It is about creating better processes, interactions and solutions for human benefit. This often involves experimenting with new technologies, envisaging possibilities under conditions of uncertainty and complexity, exploring and comparing alternatives, and determining the best and most durable solution for the long term.

2. Future focus
Whether planning a building, or redesigning a product, or innovating a process, the designer is called on to anticipate a solution that caters to future needs ­ often responding to futures issues, for example environmental-sustainability pressures and changing social values. In other words, design methods, like futures tools in general, form the bridge between current products, systems and practices and what it will be required and desired in the future.

In achieving this future focus, designers, like good “futurists,” must use techniques of imagination, creativity and intuition to generate and evaluate future outcomes. Like futures professionals, designers are called on to practice original thinking, imagine the world differently and see possibilities that others don’t. They are required to take risks, negotiate change and challenge the status quo under conditions of ambiguity and uncertainty. And like good foresight work, design succeeds only if it finds the right tradeoffs between technology possibilities, economic realities, and social needs.

3. Rendering
More than merely anticipating the future, designers and planners are practical agents of visual imagination, creating the blueprints for the objects and experiences of tomorrow. From product creation to urban renewal, designers and planners have tools and experience translating abstract future concepts and ideals into visible or tangible form ­- “making the invisible visible.” Through this rendering function they are primary agents in articulating the future, and therefore in helping us see and negotiate (or refuse) the transition.

4. Systemic innovation
Design is about systems and practices as much as products: better-designed systems improve utility, cut costs, and improve resource use. Designers play a key role in the organizational innovation process as a whole, including the development of integrated product and services, or inventing new types of value chains, alliances, and collaborations.

In sum, much of what foresight professionals are trying to do every day is already being done by design professions. Their methods and process insights should be integrated into the foresight field as a whole.

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This is a how-to book: how to evaluate predictions about the future – how to assess which ones are credible and/or how credible they are (how likely the future will turn out similar to the prediction). It is not just a guide to bad forecasts, it is also about how to identify and extract what is valuable in any forecast. This benefits readers who are required to manage professional or  personal situations that depend on correctly anticipating change. Whatever we want to achieve – help a company be more profitable – solve the world’s problems – develop their career – success depends on a good reading of the future. There are many guides to the future (predictions) but no guides to the guides. This book fills that gap. It helps readers assess predictions so they can make better judgments about the future for themselves and their organizations.

Decision success always implies congruence between decisions and the world in which those decisions play out. If we decide today to launch a product, buy a house, study for a degree, build a new light rail system, or take any similar decision of significance, the environment of tomorrow will be a key factor in the success or failure of that decision. What we do will be tested by the future conditions that emerge. Where there is a good “fit” between the initiative and the environment it plays out in — “the right product at the right time” — we can expect success. If not, we should expect to fail. Our decisions are only as good as the view of the future they rest on. All opportunities and successes and profits are realized in the future. All threats, failures, and losses are in the future.

In a fast-moving world, we know that the future environment will be different to that of today in big or small ways. New technologies, market shifts, changes in legislation, or evolving social values damage or destroy the traditional good fit we have between ourselves and the world. To achieve “future fit” we therefore use forecasts to position ourselves and our organizations, creating (or renewing) the fit between our initiatives and environment. In some cases we may be strong enough also to influence future events and outcomes for our own future benefit, and forecasts help us do this too.

All enterprises benefit from narrowing down what they must adapt to and plan for – all effort spent preparing for a future that will not emerge is a waste of personal or organizational resources. Good forecasts are a key ingredient in limiting the vagaries of uncertainty, and therein working smarter not harder, avoiding surprises, exploiting new opportunities and plugging weaknesses in fitting in with the future, and where possible influencing the future to suit the organization. This is true not only of business. People and institutions of all types position themselves for success by anticipating and adapting to events, or shaping them. Whether it is an NGO raising money for developing-world children, an urban planner advocating a light rail system, a homeowner deciding to sell a house, or a student making a career choice, identical principles apply — a higher-quality reading of the future operating environment in which these decisions will play out is what separates winners from losers. We should all be vitally concerned with forecasts as we are all effectively betting significant resources on their validity.

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The book Future Savvy shows readers how to critically judge forecasts for themselves. These are the chapters that take the reader there:

Chapter 1: Recognizing Forecast Intentions, deals with considerations of how forecasts come about, who makes them, and with what intention. Those who research and produce forecasts, those who invest in understanding trends and drivers of change, and those (including the media) who bring the forecasts and their implications to our attention, inevitably have reasons for doing so – to benefit from the knowledge by seizing opportunities or avoiding threats or by affecting outcomes in the world. Understanding a forecast’s “return on investment” gives us an important vantage point in assessing the merits of a forecast.

Chapter 2: The Quality of Information, shows how a forecast communicates information between forecaster and reader subject to the same standards of accuracy, truth-telling, and bias-control by which one would judge any communication. Forecasts can be very different in methods and goals, but all forecasts lay claim to factual truth, particularly truth in the data, and the argument deals with the various ways in which data can be less solid than it looks, even with the best intentions.

Chapter 3: Interpretation and Bias, considers how data – whether good or bad in itself – can be interpreted or misinterpreted in forecasting, that is, the “political” aspects of forecasting. Just as there is no value-free look at history, so too there is no value-free look to the future and asking the right questions allows us be ready to mentally rebalance forecasts that are presented.

Chapter 4: Paradigms and Perception, investigates how predictive statements are exposed to a broader form of interpretive bias that has to do with the forecaster’s mental model or “paradigm,” and the “zeitgeist” (spirit of the times) when the forecast is made. This chapter investigates situations where forecast failure is caused by failure to escape society’s current mental models – which often do not hold through the forecast period.

Chapter 5: The Utility Principle, considers economic and market forces, and the role of consumers, in promoting or resisting the future. Without reigning in creative thinking, some simple economic filters inevitably apply direction or timing realism to futurist flights of fancy.

Chapter 6: Drivers, Blockers, and Trends, consider drivers and blockers of change, and how viewing these dynamics improves forecast assessment. It identifies the roles of Drivers, Enablers, Friction, and Blockers acting on events to cause change or resist it, and problems in dumbly projecting current trends.

Chapter 7: The Limits of Quantitative Analysis, discusses the role of statistical analysis and quantitative modeling in predicting the future – where this is possible and useful and where it is not, and why not.

Chapter 8: The Systems Perspective, investigates “system effects,” which occur whenever different elements or variables that may appear isolated are in fact linked together, such that changes in one element cause changes in others. Anticipating future behavior of any variable hinges on identifying the broader systemic elements influencing it and failing to do this is a big part of what causes forecasts to fail.

Chapter 9: Living with Alternative Futures, investigates non-predictive ways of approaching change – where the tone is more about managing uncertainty than predicting the future. It acknowledges unfathomable complexity of most future questions and provides perspectives that raise chances of success in an inherently unpredictable future.

Chapter 10: Forecast Filtering in Action, illustrates the processes of the book by applying them in case studies to real-world sample forecasts that decision makers in business and policy areas might find themselves interacting with. This demonstrates how real everyday predictive material may be probed and critically evaluated, following the principles developed in previous chapters.

Chapter 11: A Forecast Filtering Checklist, is a cross-cutting checklist which summarizes the principles of the book in one convenient, thematic list.

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