Become a Product Visionary with Alternative Futures Analysis
In the 1990s and 2000s, Blockbuster was the nation’s top video rental company, with over 8,000 stores across the globe. By 2010, the company had shuttered all of its stores (except this one you can rent on airbnb). What went wrong? How did Blockbuster go belly up in less than a decade?
Blockbuster failed to see (or ignored) the forces shaping its industry and was overtaken by a more innovative challenger (Netflix). Netflix took note of changes in consumer behavior, the creation of new distribution models, and rapid increases in network speeds that would eventually unlock streaming. The upstart positioned itself to capitalize off of these forces, while Blockbuster ignored them at its peril.
Of course, the lesson here is: innovate or die. This is a well known mantra among tech CEOs, especially Facebook’s Mark Zuckerberg. When Zuckerberg purchased the now defunct Sun Microsystems’ Menlo Park headquarters and turned it into the social media giant’s home base, he left Sun Microsystems’ logo intact on the back of Facebook’s infamous ‘thumbs up’ sign. This move feeds Facebook’s ‘Move Fast’ culture and serves as a stark reminder of what happens to companies that fail to innovate.
But beyond catchphrases and stark reminders, what can companies do to be more like Netflix and less like Blockbuster (and Sun Microsystems)? How can companies get better at seeing beyond the horizon to capture opportunities before the competition? In addition to hiring really smart people and strong leaders, companies can use Alternative Futures Analysis.
What is Alternative Futures Analysis?
Alternative futures analysis is a structured analytic technique that helps teams predict how the future might unfold. With this knowledge in hand, teams can more effectively identify and exploit opportunities and adopt risk strategies.
As an intelligence officer, I used this technique to help policymakers consider how situations would unfold over time so they could shape US national security policy. Your company can use this same technique to identify how your industry is likely to evolve, helping you stay ahead of the competition, capitalize off of change, and avoid unwanted risks.
Alternative Futures: A Step-by-Step Guide
Step 1: Identify goals and a focal issue
Start by identifying your goals and a focal issue. To help illustrate the process, let’s say we’re an established B2B software company that makes vehicle inventory and sales products for the US automotive industry. We’re in a highly competitive space that is ripe for disruption, with dozens of startups looking to take our place as the industry leader.
Additionally, the landscape of the US automotive industry is changing, with shifting customer preferences toward online shopping and purchasing. These are just a few of the forces we’re eying, but we know there are others at play. We’re trying to figure out how to capitalize off of these changes, and others, before someone eats our lunch.
With this scenario in mind, our goal for the alternative futures analysis might be to:
Identify potential product opportunities to meet evolving customer needs
And our focal issue could be (framed as a research question):
What is the future of the car industry in the US?
Step 2: Identify Key Forces
Now that you know what your goals and focal issue are, gather your team and conduct a structured brainstorming session to identify the forces that are likely to influence your focal issue over time. As you assemble your team, take special care to select a diverse group of subject matter experts.
Next, distribute a stack of sticky notes to each group member (or use Google’s Jamboard if you’re remote). Write your focal issue on a white board and give the group 20 minutes to write down as many answers to the prompt as they can, using one sticky note per answer.
Now that you’ve captured a diverse list of forces, select two group members and give them 10 minutes to categorize the forces into thematic buckets. These themes will become the drivers for the matrices you’ll create in the next step.
A few things to keep in mind… You may find that some of your sticky notes fit into more than one theme. That’s OK. Copy them and place one copy in each theme. You might also find that some sticky notes are irrelevant, don’t fit into one of your themes, or that you don’t want to focus on them. In those cases, create a ‘discard’ bucket and set them aside.
Step 3: Create Matrices
With your forces in hand, it’s time to create your alternative future matrices. Start by identifying spectrums for each of the themes (drivers) you selected in Step 2.
Next, pair your drivers in a series of 2 x 2 matrices. For the purposes of our example, I chose only two drivers (Technology and Isolationism), so we’ll have just one 2 x 2 matrix.
However, for complex situations, you may want to choose more forces to generate multiple scenarios. This would allow you to compare many drivers against one another. The image below shows you what this would look like.
Step 4: Develop Alternative Futures
In each quadrant, create stories that describe the future you’d expect to see, given the respective forces and spectrums.
Step 5: Select Future(s)
Now you need to prioritize the future(s) you’re most interested in exploring. How you choose these futures will depend on a multitude of factors such as the decisions facing your team, the industry you’re in, and your goals. Generally speaking, it’s good practice to base your selection on explicit decision criteria. Here are a few of my favorites.
- Most likely. The most likely future.
- Least likely. The least likely future.
- Most dangerous. The most dangerous future to your business.
- Most disruptive. The alternative most likely to upend the status quo.
For the purposes of our example, let’s say our team wants to select the most likely alternative future. We poll the team, and they select the future outlined in the top right quadrant (high Isolation and Technology).
Step 6: Generate Recommendation(s)
At this point, you’ve likely gathered valuable insights — congratulations! Now it’s time to synthesize your findings and provide recommendations.
Going back to our example, imagine our current top priority is to revamp our company’s inventory management software for car dealerships. However, given the future outlined in our selected quadrant, we assess the majority of car deals in the future will occur virtually. This is a problem for our current product offering because it’s tailored for on-site purchases. Revamping our on-site inventory management product, which is already the industry standard, isn’t going to put us in a position to benefit from this shift.
In this case, we may generate a recommendation to build an end-to-end car purchasing product that ties directly to our on-premise inventory and sales management software, an incredible strength that gives us a head start against would-be challengers. We may also recommend that, given the shift to virtual sales, brick-and-mortar stores may go the way of the dinosaur. Thus, it might be wise for us to create a sales system for smaller dealers (or even individual sellers). This could protect us from a collapse of the traditional automotive industry.
Step 7: Identify Indicators
Step 7 and 8 are optional. However, if you identified alternative futures that pose a great deal of risk for your organization, or you want to collect more evidence before actioning potential opportunities, I recommend completing steps 7 and 8.
Step 7 is all about identifying signals that would indicate an alternative future is becoming more or less likely. The best way to do this is to conduct another brainstorm. Start by assuming the alternative future is here. What did you see leading up to it? Those are your indicators.
This is an approach used by the intelligence community to monitor high impact scenarios like the potential for nuclear war between two countries. In this case, analysts would identify likely events leading up to nuclear war and then monitor those signals to determine whether such a catastrophe was becoming more likely. If things were trending in that direction, they could alert diplomats and defense officials to intervene.
Step 8: Monitor
Once you have your indicators, input them into a matrix and track their observations over time. You can use a simple observed, unobserved, partially observed schema or a numerical scale to evaluate each indicator. The more indicators you see over time, and the combination of indicators you see, can help you determine whether you’re trending in the direction of a given scenario.
Tips for Success
Get the right people in the room.
The quality of your outputs will be proportional to the diversity of your group, the perspectives they bring, and their expertise in the focal issue area. Choose people who have deep expertise in your industry, understand your customers, and know how all of those tie to the business. It’s not unusual for teams to secure outside experts to join alternative futures brainstorms.
Bring the data.
Human beings are walking contradictions. We are prone to biases. The best way to cut through these shortfalls is to look at the data and to continuously check your assumptions. This becomes incredibly important when selecting the forces/influences for your analysis.
In our example, it’s easy for me to assume that car buying will go remote in the future because I’m a millennial who values convenience. But what do the data say? Having data about purchase behavior with relevant segmentation can help shed light on the truth.
Validate before acting.
Alternative futures analysis is not a substitute for problem identification and solution generation and validation. Before your team decides to shift its roadmap based on the outputs of your analysis, you need to go through your normal product development lifecycle (e.g., validate the problems you’re trying to solve, assess customer demand, decide whether your solution makes business sense, whether it’s feasible, etc.). The outputs of alternative analysis should help point you in the right direction, but you still need to do your due diligence before proceeding.
Not all ideas are equal.
Great ideas can come from anywhere, but not all ideas are equal. What I mean by this is expertise matters. When identifying the most influential technological forces in your industry, you should pay extra attention to the forces identified by your more technical team members (typically engineers). This doesn’t mean you should ignore ideas from the other people in the room; instead, it means you should weigh the value of ideas based on the experience and expertise of those providing them.
Conclusion
NHL hall-of-famer Wayne Gretzky was once asked what made him so great on the ice. He replied, “I skate to where the puck is going to be, not to where it has been.” In the same vein, great companies anticipate subtle shifts to build products people love and deliver immense value to the business.
No one was better at this than Steve Jobs who famously noted: “People don’t know what they want until you show it to them…” Jobs was remarkably effective at seeing beyond the horizon and then building a bridge there with products people obsessed over, products that spawned entire industries and shaped the world as we know it.
Steve Jobs may very well have been right about us having to show people what they want. But I’m not Steve Jobs, and chances are neither are you. Luckily for us, we have alternative futures analysis to help show us the way.
