Predicting the Future

October 7, 2006 · Posted in innovation 

One of the most difficult aspects of the current world is the speed that things are changing. And to top it off the speed of change is increasing. It’s impossible to survive by merely reacting. Simply being faster isn’t enough. If you’re working on tomorrow’s product and you make a mistake you have missed your chance and you go to the back of the line.

You have to be working two steps ahead.

The only way to stay two steps ahead is to know in advance what customers expect. You need to predict the future.

When I worked at Apple we designed something called n-tier distributed client server computing. That’s a very technical term for breaking a task up among any number of levels of computers. That improves performance, reduces cost and increases functionality. The concept wasn’t completely new but no one had done it very well. The reason we wanted to do it was to solve the two out of three problem.

You’ve probably heard the two out of three problem, “you can have it fast, good or cheap, pick two.” Its most often said as a sarcastic joke to an unreasonable request. The two out of three problem is an impossible problem to solve, unless you do something deceptively simple but I’ll leave solving impossible problems for a future post.

What my team at Apple realized is if we made such a system it would be made in a very different way. So we not only designed a system, we created methods for designing those types of systems. As it turned out, only a few years later n-tier distributed client server computing was popularized by someone else and is now called the web. Because Apple had seen ahead to develop methods for building web systems they were able to keep up and eventually re-gain the lead again with products like iPod and iTunes.

So staying two steps ahead requires predicting the future. What we want to predict is what customers will buy in the near future. It’s essential to predict the near future and not something way off in the science fiction future. If you are too far ahead of the market you will waste resources on marketing. Success comes from giving people what they want when they want it.

I’m now working with OutCompete. They created a system for figuring this out. We call what customers will want in the future their Emerging Expectations. How do you predict customers Emerging Expectations?

First understand what drives customers desires. One basic truth of humans is we always want more. We want better, easier, for less cost and with less risk than yesterday.

As it turns out we follow a predictable cyclical pattern starting with new features moving toward lowest price then starting again with new features.

So look at any product and you will find it’s at one of those stages. Lets look at portable music players. You might not remember but transistor radios were the first portable electronic music player. The next improvement was adding the ability to choose your own music. The tape player did that. At first tape players were big but eventually Sony made a pocket sized tape player. Next came digital music on CDs. At first CDs weren’t portable but soon Sony made portable CD players. The first ones skipped a lot but improvements were made and they became more reliable and smaller and then cheaper.

Now there is the Apple iPod. The iPod improved on portable CD players by allowing you to build your own lists of songs to play along with a store to buy individual songs. When iPods first came out they only played music, Apple made incremental improvements offering smaller ones and eventually competitors came in with cheaper products. Now Apple moved to the next level with the Video iPod, introducing a new feature and is moving steadily through the cycle.

Looking back each step in the progression was very logical. Once you become accustomed to analyzing the more, better, cheaper, with less risk cycle future progressions are just as logical.

By knowing what customers want today and what they will want in the future its possible to sketch out a map of each possible step. With the map of all the possible steps you can always stay two steps ahead.

In future posts I’ll talk about: