Small Data, Big Disruptions

How to Spot Signals of Change and Manage Uncertainty

Martin Schwirn

• Publisher: Career Press
• Year: 2021
• ISBN:
  9781632657435
• Topic: Business
• Subtopic: Marketing Research
• Index: Business

A method to find and connect the small data clues that show what the future's big picture will look like.

"Strategy decisions are like playing high-stakes blackjack, and scanning is the technique for counting cards. Martin Schwirn isn't a pro gambler, but an expert in scanning." —Bill Ralston, cofounder of Strategic Business Insights and author of Scenario Planning Handbook

An organization's future success depends on their decision makers' ability to anticipate changes and disruptions in the marketplace. But how do you get information about tomorrow today? How can your decisions today account for tomorrow's uncertainties?

Small Data, Big Disruptions presents a tool kit to foresee coming changes:

• Understand why big data will not help you with understanding tomorrow's disruptions. The future starts with small data—first.
• Learn the proven 4-step process to capture small data that help envision the future.
• See examples of how the process anticipated major disruptions.
• Implement the process in your organization and learn how to initiate meaningful actions.

Small Data, Big Disruptions provides the information you need to anticipate the future, understand tomorrow's market dynamics, and make the necessary decisions to meet the future on your terms.

Small Data, Big Disruptions lets you exploit the period between the moment you could know about emerging disruptions and the moment most everybody will know about it. It's the difference between being ahead of the curve and struggling to catch up.

CHAPTER ONE

Look Ahead

ANTICIPATING AND PREPARING FOR THE FUTURE

The hands can't hit what the eyes can't see.

—MUHAMMAD ALI

Humans have always wished they could see into the future. Ancient Greeks visited the Oracle of Delphi, a high priestess reputed to know what would happen long before it actually occurred. Most likely, she was little more than a rambling charlatan operating under the influence of hallucinogens. Then came soothsayers who foretold the future by examining the entrails of sheep and carnival fortunetellers who predicted the future by gazing into crystal balls or examining the lines on your hand. And there's the good old Ouija board. Let the little piece of wood answer all your anxious questions about the future.

Today big data promises to deliver what oracles and soothsayers and Ouija boards failed to produce. Science, we are led to believe, has developed the ultimate crystal ball. But here's the problem with this approach: big data needs, well, a ton of big data. But change starts with small data. The process of scanning lets you anticipate the future more reliably than all of the algorithms on which big-data analysis pins its promises.

I have always wanted to find the hidden clues that can add to the maelstrom called a marketplace. During my studies I became an expert at market research, uncovering the bits and pieces of information that can help decision-makers get a better handle on consumers and market dynamics. I studied quantitative market research and worked with one of the largest market-research companies on refining its testing approaches. Despite all of the miracles related to the quantitative approach, something was missing from the equation when looking into the future. That something is scanning, a methodology that connects the dots (the bits and pieces of small data) that will generate tomorrow's business failures and successes. I have worked with and on this methodology for more than two decades, servicing companies from virtually every industry.

“I didn't see that coming!” How often have you heard that statement about an event that, in hindsight, seems fairly obvious? Consider the evolution of media for recorded music, from unwieldy vinyl records and magnetic tapes to compact discs and digital files for streaming; the death of photographic film at the hands of digital cameras; or the fatal attack on the World Trade Center. Yes, from today's perch, the future seems uncertain, but your environment will change and in ways that you should learn to envision. Leaders may not own a crystal ball that reveals precisely what future perils and chances will visit their organizations, but they can use a powerful tool to anticipate tomorrow's threats and opportunities. And, of course, anticipation is the first step toward preparation.

Scanning, a proven four-step process for capturing and analyzing information from a company's external environment, helps decision-makers foresee coming changes in the marketplace:

1. Filter vital information from an avalanche of data.
2. Identify what matters most to you and your organization.
3. Prioritize the crucial changes that will shape tomorrow's marketplace.
4. Initiate strategies that move you from vulnerability to preparedness.

These steps help business leaders make the best possible strategic decisions. Even if you think you have developed a brilliant strategy, it will inevitably collide with reality. As Mike Tyson famously said, “Everyone has a plan until they get punched in the mouth.” Scanning can take the sting out of that punch or, better yet, help you avoid it altogether.

Don't Fear Uncertainty

In less than ten years, the former telecommunications giant Nokia emerged from Finland to lead the mobile phone revolution. It rapidly grew to become one of the most recognizable and valuable brands in the world. At its height Nokia commanded more than half of the global market for mobile phones; only half a decade later, it had plunged to below 3%.¹ While it rapidly skyrocketed to the top of its industry, it crashed and burned even more quickly, culminating in the sale of its mobile phone business to Microsoft in 2013. Experts could write whole books about why and how that happened, but it all boils down to an inability to anticipate and prepare for the future.

An organization's future success depends on the ability to anticipate market and competitive dynamics, identify emerging opportunities, and foresee potential threats. Add Blockbuster, Borders, Eastman Kodak, and Motorola to the list of companies that went down in flames because they could not see tomorrow closing in on them. In hindsight, the events that led to their demise seem perfectly obvious.

How do you position yourself to anticipate and act on the dynamics, opportunities, and threats you might easily see if you could look back from the future with 20/20 hindsight? This book will answer that question and enable you to put foresight in your decision-making toolbox.

Small Data, Big Disruptions introduces and applies a methodology that enables organizations to prepare for future success. If you can see it, you can prepare for it. As Muhammad Ali once said, “Float like a butterfly, sting like a bee. The hands can't hit what the eyes can't see.”

The introduction presents the four basic steps of scanning: filter, identify, prioritize, and initiate (FIPI). By taking these simple steps, any organization can avoid the disasters that befell yesterday's corporate dinosaurs and begin the journey to future strategic dominance.

The future is uncertain. But company leaders have to make decisions today. Your chosen strategy inevitably will meet reality. Better make sure that you had a chance to consider what the future might bring. Better you spent some time anticipating future plausibilities.

Your ability to anticipate future dynamics and markets is your insurance against surprises. Today's world is the result of yesterday's decisions. Tomorrow's fate starts with today's weak signals of change. If you want to identify emerging opportunities and foresee developing threats, why would you look at market charts that reflect yesterday's world?

Alas, companies don't have a future-predicting crystal ball or the Oracle of Delphi. They can fail spectacularly when they foresee a future that will not materialize. Worse, day-to-day operational needs can push aside long-term requirements; strategic thinking about the future is delayed. People usually mention Blockbuster, Borders, Eastman Kodak, Motorola, and Nokia when reminiscing about major corporate mistakes—people whose hindsight is by then 20/20. It is easy to become a retroactive expert in discerning the future that was to come. What seems so obvious when looking toward the past from the present was very difficult to anticipate when looking from the past toward the future.

The world is not becoming an easier place to navigate. My program's predecessor Kermit Patton emphasizes, “The likelihood of strategic plans' being blindsided by external developments increases every year with the increasing complexity and competition in the business environment.”² Physicist Mark Buchanan points to a reason for such a development. He maintains, “With the global economy now far more integrated than it has ever been, chains of economic cause and effect reach across the world with disconcerting speed, exposing individuals, firms, and governments to a new kind of ‘interdependence risk’—to the possibility that events quite far away can undermine the activities on which their security and prosperity depend.”³ The world relates, dots connect, and developments interact.

Anticipating tomorrow's world to prepare your organization for future strategic needs therefore is daunting. That is why many decision-makers eagerly gobble up sales forecasts and market size predictions. But everybody knows they will be wrong. These charts have a market because they pretend to reduce uncertainty. They provide a misleading picture of the future, though, because they build on past dynamics.

Embrace uncertainty instead. Learn to understand what future issues will be, where pain points emerge, what changes are ahead. Scanning offers a disciplined way to address the challenges that doing so presents. Four straightforward steps offer strategic foresight, anticipating and envisioning future possible developments (rather than predicting the future or forecasting developments in mathematical models). Strategic foresight addresses the uncertainties decision-makers face. Anticipation is the first step to responding correctly and in time when futures become the present. Strategic-management authority Paul Schoemaker maintains, “Anticipatory experiences develop [firms'] reflexes and skills for the future.”⁴ It's these reflexes and skills that you can train to step prepared into tomorrow's world. Presenting a method to anticipate developments and dynamics is what FIPI is about.

The idea is not new. When SRI International started working on its scanning program in the 1970s, James B. Smith and Pamela G. Kruzic commented, “As a result of [growing] uncertainties, managers are beginning to broaden their approach to planning by exploring what the future might look like before attempting to forecast what it will look like.”⁵ There was a time when long-term planning and explicitly accounting for uncertainties were important parts of strategic decision making. What happened? Acceleration of business dynamics leads decision-makers to believe that quick reactions can be better than proactive responses. And the growth of advanced analytics distracted decision-makers from tomorrow's challenges to today's fires.

Schoemaker underscores the importance of dealing with uncertainty in the business environment: “it affects the part of the business that managers very often don't even try to manage—the external environment—and this is where much of the potential value of the business is created or destroyed.”⁶ Patton refers to the interplay of such external developments in science and technology, consumers and society, and commerce and competition as the “Value Creation Maelstrom,”⁷ a similar notion to Schoemaker's idea but packaged in a more vivid picture that hints at decision-makers' challenges more acutely.

Hugh Courtney, former professor at the University of Maryland's Smith School of Business, calls for a more deliberate approach to address uncertainties. “If you want to make better strategy choices under uncertainty, then you have to understand the uncertainty you are facing. Instead of burying uncertainties in meaningless base case forecasts—or avoiding rigorous analysis of uncertainties altogether—you must embrace uncertainty, explore it, slice it, dice it, get to know it.”⁸

Four intuitive steps guide you toward making uncertainties tangible. Scanning will reveal the commercial forces that count in the future, the competitive dynamics that will matter tomorrow. The process I have put together and refined over the years will teach you the science and art of identifying those forces, grouping them in informative ways, and putting them in context. You will end up with a narrative, a message from the future. You will become aware of things you won't have considered. Then I will show you how to translate such knowledge into action, how to move from anticipation to preparation. Uncertainty is your friend. Ever...

Table of contents

• Cover Page
• Title Page
• Copyright
• Dedication
• Contents
• Summaries
• Foreword
• Preface
• CHAPTER ONE: Look Ahead
• CHAPTER TWO: Reimagine Tomorrow
• CHAPTER THREE: Set Expectations
• CHAPTER FOUR: Filter Information
• CHAPTER FIVE: Detect Patterns
• CHAPTER SIX: Develop Narratives
• CHAPTER SEVEN: Identify Meaning
• CHAPTER EIGHT: Take Action
• CHAPTER NINE: Abandon Today
• CHAPTER TEN: Inhabit Tomorrow
• CONCLUSION: The Future Starts Now
• Notes
• Bibliography
• Quotations
• Index
• About the Author