Friday, April 17, 2009

Prognosticating the Future

So far, I have covered these themes in my previous Blogs:

· What is IT Transformation

· Why is the transformation needed

· The drivers that are used to justify transformation

Ultimately though, IT Transformation should be aligned with our vision of the future. After all, if we lack this vision then when it comes to defining the direction of the transformation, we would be no better than the proverbial drunken man only searching for his lost keys under a lamppost because “that’s where it is illuminated”. Now, before you say, “Hogwash! No one can predict the future,” I’m not suggesting you’ll need to engage in an exercise of mindless divination but rather in one of informed assessment. There’s a method to the madness. After all, there are different degrees of confidence between forecasting, predicting, prognosticating, and prophesying—the former being more worthy of respect than the latter.

Financial experts forecast into the future by extrapolating known variables, and domain experts can predict the future on the basis of their specialized knowledge—a doctor can predict the progression of a disease, given a certain treatment. But although predicting is great, far more intriguing is the field of prognostication.

The palm reader in the hippie district performs divination, and the mystic interprets dreams as prophecy, but I’m not suggesting you plan your business’s future based on these techniques (at least not yet!). Instead, most of us, poor mortals can prognosticate the future given the right methodology. Prognostication is defined as to foretell from signs or symptoms. It is prediction with a bit less certainty, but it is nevertheless based upon informed opinion. There’s a reason why experts like author Michio Kaku are recognized for their ability to provide sensible prognostications.

No magic is needed to prognosticate. Prognostication’s first technique involves the identification of the various technology trends whose trajectories will make them combine in novel ways. In hindsight (and isn’t everything easier in hindsight!), most major technology events are the result of a novel synergistic convergence or an evolutionary technology development. Revolutions that come about as a result of unexpected scientific discoveries, such as the mastery of fire, the invention of the wheel, or the invention of writing, are a rarity. The chances of serendipitous transformation in a world blanketed by thousands of scientists who are engaged in all forms of structured research are now low, so most of tomorrow’s developments are likely to be the result of inventions that are already well understood today.

Think about it. In hindsight, the “invention” of the Internet should have been easily prognosticated.[1] After all, the appearance of the Internet is almost a foregone conclusion once you combine the concept of a computer on every desk, the availability of faster communication bandwidths, a move to global networking and presentation standards, and lowered technology costs. 

A second prognostication technique is to extrapolate what is known and to imagine what would happen if a known element were to become pervasive. You do this, regardless of how outlandish the extrapolation might appear at first. This is where a Western Union committee, chartered with evaluating the telephone invention from a certain Alexander Graham Bell, got it wrong when they concluded: “Bell’s proposal to place his instrument in almost every home and business is fantastic. The central exchange alone would represent a huge outlay in real estate and buildings, to say nothing of the electrical equipment. In conclusion, the committee feels that it must advise against any investment in Bell’s scheme. We do not doubt that it will find uses in special circumstances, but any development of the kind and scale which Bell so fondly imagines is utterly out of the question.”

Extrapolate this technique to computers. Recall the now famously wrong prediction of IBM’s CEO, Mr. Watson, back in 1943 that the world market for computers is around five? Computers are now everywhere. Do you know how many computers can be found in your car? Indeed, Bill Gates genius, encapsulated by his original motto, “A computer on every desk”, was his ability to rightfully prognosticate the PC revolution no matter how outlandish his vision might have seemed at the time. Contrast Gates’ view with Ken Olsens’ (DEC CEO) 1977 statement, “There is no reason for any individual to have a computer in his home,” and look at what happened to DEC. Bill Gates applied the principle of pervasiveness; Mr. Olson did not, and as a result of this failure to respond adequately to the advent of PCs and open networking, DEC faltered until it was ultimately acquired by Compaq, which was then acquired by HP. Last I checked, Microsoft is still around and going strong despite the emergence of new challengers, so good prognostication is undoubtedly essential to the future of a company.

A third technique of prognostication is this: reinterpret the past, don’t ignore the value of second generation pruning. Let me explain. Let’s say an invention comes along and it becomes popular. The smart investor knows that something even better will be showing up before long. Remember the Atari videogame console? Many at the time thought the videogame market was saturated and that it had nowhere to go. Even the Atari people thought so, and basically gave up on a business which today exceeds the movie and music businesses combined!

I plead guilty for having believed back in the late nineties that the market for Internet search engines was saturated and done for. After all, wasn’t Yahoo the perfect indexing tool? And weren’t there very capable search engines out there such as Altavista, Excite, and others? Good thing, our friends at Google didn’t agree with that limiting point of view! So, look around for first generation ideas with the potential to really stir things up if a new and improved version can be developed.

A fourth prognostication technique is to define a likely frame of reference with assumptions bound by bracketed extremes. For example, when trying to prognosticate the future of Earth, one can assume that it will fall somewhere in between the following possible extremes:

Future that can ruin your retirement plans

Future that would make the Jetsons jealous

World economy continues into a protracted recession that collapses civilization into “Mad Max” territory

Nuclear terrorism tilts civilization towards a new dark age

Yellowstone eruption wipes out Earth

Plagues: Ebola virus mutates to produce air-borne contagion, Avian Flu

Asteroid crashes on Earth

Global warming continues unabated. Polar caps melt flooding most coastal areas.

Energy crisis. No oil left.

World Peace via global social awareness

Environment is managed

World hunger is conquered thanks to artificially produced food

Water is made available to all people

Hypersonic flying makes global travel even more practical

Humanity takes to space: Space tourism becomes common

Genetic therapies cure diseases

Genetic regeneration. Grow body parts

Chances are that the future will turn out to be a goldilocks choice between these two extremes: not all good, but hopefully not all bad. As technology leaders it is our job to assess changes in terms of their probability and of the impact they could have on our business. Your IT strategy should match this assessment. Look again at the good and the bad prognosticates listed above. It doesn’t take a genius to know that climate change and energy supply issues will surely be in the forefront over the next several decades. Of the items listed to the right, which ones could be driven by those listed to the left? Look closely and you will see that every major bad news risk could drive advances on the good news future list. There is something to the cliché that says, ‘for every problem there is an opportunity’:

Nuclear Risks could lead to additional focus on defense and safety technology spending

Plagues could give us greater focus on genetic research

Climate Change can motivate increased research and development of low carbon emission energy sources

Observations determine an asteroid will be heading our way in the near future? You can be sure that investments in space technologies would be the top priority. Then again, that might be one challenge we wouldn’t want to ever have to deal with.

That’s it. If a crystal ball is needed it is just for effect and nothing more. In my next Blog I’ll go over an example of how to apply these techniques to prognosticate a specific future opportunity.

[1] To be fair, legendary MIT professor Michael L. Dertouzos is on record as having predicted the WWW as early as the late seventies.