How do we manage uncertainty and entrepreneurship?
Discussions About Finding Opportunities In the Future
Recall from our previous discussion, that entrepreneurship, risk, and uncertainty are long-time bedfellows and how they push the entrepreneur to the limit. Some influential business thinkers, most notably Geoffrey Moore, seem to suggest that disruptive technologies and the environment of uncertainty that follows favors entrepreneurial activity. When disruptive technologies force changes in common product platforms and force new rules of the game entrepreneurs can be more responsive with their creativity and innovative organizations.
According Susana Khavul, Assistant Professor of Entrepreneurship at London Business School, entrepreneurs need to stay alert of their fast-changing environment. They need to continuously scan their environment and analyze what is going on in their space. Her point is this, when uncertainty hits, reacting quickly depends on having clear, up-to-date knowledge of the environment.
Investing time in getting to know the environment can mean the difference between survival and extinction. Our work in this article is here to help you answer one simple question, “How will the future of your industry be different?” As Kim B. Clark says, “The mission is not to look back at what has sold in the past, but to look forward to and anticipate emerging trends and to shape the future.”
Getting To The Future First
If anything, we have just completed what some are calling the transition period from the old-economy to new-economy. Look ahead, Khosla assured us that, “What we saw in the last ten years is peanuts compared to what we’ll see in the next ten.” Sunli Dhaliwal, with Battery Ventures says, “The best candidates (for funding) are those focusing on problems or opportunities that will crop up in the next 18-24 months.” But the important questions are: Which way is the future from here? How do we get to the future first? What problems will we see that we can solve profitably?
Some are born with a great sense of direction in answering these questions. Seth Neiman, Managing Partner at Crosspoint Venture Partners explains, “The great successes are made by people who can see so far ahead they can’t explain what’s on the other side. We have a code phrase: ‘the genetic defect.’” Wayne Gretzky explains his success in hockey, “I don’t skate to where the puck is, I know to skate where it’s going to be.”
Others like Gary Hoover, founder of Hoovers.com, rely on a disciplined approach to seeing value in new technologies. According to Hoover, entrepreneurs should ask: What are these technologies capable of doing? What should they be able to do? What other innovations might they lead to?
But Paul Saffo, a director at the Institute for the Future in Menlo Park, CA, says, “Nothing is harder to predict than the future of science and technology.”
The “misses” in history of business are quite interesting:
A Western Union official said in 1876, “The telephone has too many shortcomings to be seriously considered a means of communications.”
Mercedes-Benz performed a study in 1900 and estimated that worldwide demand for cars would not exceed one million.
In 1943 IBM’s president Thomas J. Watson remarked that there was a worldwide market for “about five computers.”
Ken Olsen, founder of DEC said in 1977, “There is no reason for any individuals to have a computer in their home.”
AT&T believed in 1980 there would be 900,000 cell phone users in 2000.
In 1981, even after they started selling their 8088 microprocessor to IBM, Intel’s internal market forecast did not rank the PC in the top-fifty applications.
A famous VC responded to Jeff Skoll’s pitch about eBay with, “Let me get this right, people are going to buy and sell antiques online. I gotta go.”
Conclusion: Do not count on the experts for insight.
Setting Your Point of View
Once Chairman of AOL Time Warner, a $40 billion company, Steve Case still concentrates on “having a point of view” above the horizon of his day-to-day challenges. He says, “I really do plan myself five to ten years into the future.” Winning in the future means creating an organizational learning strategy today to learn about the customers of tomorrow.
Regis McKenna shared with us these insightful words, “Marketing is the continuous process of organizational learning whereby the enterprise gains knowledge interacting with customers and the marketplace so as to innovate, adapt and respond competitively.”
But it is important to have the telescope in the right direction when looking for the future. The developers of the laser at Bell Labs could not only not foresee the numerous applications, everything for CD players, eye-surgery, to telecommunications, but they did not think the invention worthy of patent applications, since “such an invention had no possible relevance to the telephone industry.”
It is also important to keep a focus on the major forces that will be shaping business in the future: globalization, geopolitical restructuring, deregulation, changing patterns of demand, and new societal needs.