Industrial Distribution, May, 2002

Bob Treadway, CSP, Business Futurist

In two decades of helping clients develop strategic plans, I’ve come to the conclusion that businesspeople suffer from chronic myopia. Nearsightedness. Or as it’s sometimes called: shortsightedness. The condition is understandable. With days crowded with essential minute-to-minute decisions, it’s difficult if not impossible to get your head up and focused on the horizon. Thinking about what’s over the horizon, especially what’s not obvious is even harder.

In the early 90’s a fellow approached me after a presentation to tell a story of blind-siding. He’d lost his job because he wasn’t thinking broadly enough about developments and their implications for his job. One event had spelled doom for his job and his company. He told me he was a rep for a steel distributor. The event, he told me was, “The unexpectedly quick end of apartheid in South Africa.” The lifting of embargoes on South African steel products released a flood of high quality, low-priced competing products on his market. He and his company never envisioned the scenario.

When asked how to develop 20/20 foresight I recommend the futurists approach, “Cheat.” Futurists avoid getting trapped into being precisely accurate about what’s coming. We want “wiggle room.” We need leeway for our forecasts. Above all, we don’t want to be pinned down to the decimal point accuracy you see economists blithely put forward in their predictions. You want to use the same approach.

I describe a “cone of relative certainty” for forecasting the future. The range of possibility and probability become wider as we move further into the years ahead. An economist does straight-line, best-guess forecasting. The futurist describes a range. The description of that range involves scenarios. These are different alternative stories of the years ahead that allow you to envision the business climate and prepare for it. It’s only by being imprecise about the future that we can have 20/20 foresight.

The “Facing the Forces of Change” study looks at the range of possibilities for how distribution will evolve in the years ahead. This is excellent work and a starting point for guiding your company through a decade that could bring radical adoption of technology, unforeseen business models, a return to the value of relationships, or the emergence of strong new competitors.

\ Use scenarios as a base for forming your own forecast for your unique business situation. Look at the future of your distributorship based on your specialization, industry niche, market share, geographic service area, customer composition, technology adoption within your segment, abilities of your sales force, and how you add value in your own position in the supply chain. Be ruthless in your realism. Look at the full range of what could happen, not just the rosier scenarios.

Acting on scenarios is the crux move. You must develop a flexible but strong set of business strategies that will succeed in the range of scenarios. You’ve got to take action.

A real estate development client looked ahead using scenarios back in 1998. With huge holdings in downtown, high-rise office buildings in major cities they were threatened by economic cycles, transportation congestion, and uncertainty over the future impact of technology on traditional working environments. In a courageous move, they sold off their buildings to focus on what they identified as their core competency: development. They realized they were great builders but not very good owners and managers of buildings. They took their proceeds and looked into the future for opportunities they felt would pay off in 2008 and beyond.

Today, they develop active senior housing communities, downtown parking structures, residential communities on high speed rail links, and warehouse construction near the two current primary air package hubs of Memphis and Louisville as well as what could be the third and fourth air transfer hubs in America. They took action. When you envision our world in 2008, their ventures have a strong chance for big payoffs.

I receive reports from Berkshire Hathaway as a shareholder. CEO Warren Buffett writes them himself in a folksy, matter-of-fact tone. With huge holdings in reinsurance, 2001 was a difficult year for the company. Buffett said he’d foreseen the negative consequences of a devastating terrorist attack on the U.S. But in his self-deprecating manner he criticized himself by pointing out that he had ignored the “Noah Rule.” “Predicting rain doesn’t count,” he said, “Ark-building does.”

Bob Treadway is a futurist and strategic planning consultant and facilitator. You can reach him at (800)769-8554 and see more about his work including recommendations for a scanning system at www.trendtalk.com.