#7: With great uncertainty comes great opportunity
Using foresight to identify opportunities as well as risks
It’s been a terrific week talking about Artemon with various people in Singapore, where there’s a lot of enthusiasm for our message of using foresight capabilities to help businesses navigate uncertainty.
Singapore really is an enormous success story in so many ways. There are many reasons for this, but one hugely important reason is the enthusiasm for business in Singapore and such a tight and dynamic business community. The rest of the world has much to learn.
Thanks again to everyone for their comments and thoughts following the Substack each week.
You can email me via david@artemonstrategy.com and please do check out our website www.artemonstrategy.com
This week, the Substack discusses how foresight can help to maximise the opportunities that uncertainty can present. But first, thanks to Andrew Laird, the Chief Executive of Mutual Ventures, for his Linked In post talking about how useful he’d finding this newsletter.
Andrew says that he’s been “getting a lot of new ideas” from reading this Substack, which is always great to hear. Please do share this Substack with anyone you think might be interested.
I’d also strongly recommend Andrew’s excellent “Radical Reformers” podcast, where Andrew talks to people delivering transformation of public services.
Foresight as a sword and a shield
It’s the US Masters golf coming up this weekend. Even if you’re not a golf fan, it does boast some of the most stunning natural scenes in sport. And sporting drama is almost guaranteed.
The course is full of uncertainty and risk, where even the most proficient golfer will find a change in weather conditions can wreck their round and the dream of Masters glory that has been motivating them for years. That the course is full of risk and uncertainty will be clear to anyone who saw Greg Norman’s last round collapse in 1996, when “The Shark” managed to lose a six shot lead in a few minutes.
The story of the photo is here.
A nervous golfer could look at the course and be overwhelmed by the risk that lies around every corner. They might decide to play ultra conservatively, so as to simply “survive the course” and make it to the 18th green undamaged. Such a golfer is unlikely to win the tournament.
A player able to understand the challenges and uncertainties posed by the course and still maximise the opportunities can write themselves into the sporting history books.
This was clearly understood by one golfer in particular. Only a year after Greg Norman was overwhelmed by the uncertainties of the course (and his own psyche), a 21-year old by the name of Tiger Woods won the Masters by twelve shots.
And what is true for golfers in the US Masters is true for businesses using foresight capabilities to navigate uncertainty. Uncertainty represents a challenge to many businesses, but for many it also represents an opportunity. Used properly, foresight capabilities can act as a “shield” to help business identify and tackle challenges and a “sword” to enable opportunities to be identified and seized.
“I am going to wait for the next big thing.” Being able to identify the next opportunity
In 1998, Steve Jobs famously said his plan for Apple was “to wait for the next big thing”. And we all know how well that turned out for what is now the world’s most valuable company.
Not every company is going to discover a smartphone that changes the world and changes how people communicate. But every company should be looking for “the next big thing” for them and the next potentially transformative opportunity. Foresight helps them to do this and growing uncertainty might provide a route to increasing opportunity for some.
One of the defining facts of modern business life is that we are living in an age of unprecedented peacetime uncertainty. A shift from an age of predictability to one of uncertainty has to be met through the use of different capabilities, such as scenario planning, to allow companies to navigate this uncertain environment.
Foresight capabilities when used well will allow companies to consider the strategic environment in a much broader way and to identify emerging challenges and emerging opportunities. Foresight done well can enable businesses to identify opportunities before many of their competitors even realise they exist.
When uncertainty is discussed in many places, it’s all too often associated entirely with risk. And this isn’t without merit. Periods of great uncertainty can pose a real challenge to businesses as their operating environment changes. But, to continue the golfing analogy, merely regarding foresight as a risk management tool is to only ever use a putter, whilst ignoring the driver and the irons.
Foresight must fuel a hunt for new opportunities, leaving companies able to identify such opportunities as they are beginning to emerge.
Focusing purely on mitigating challenges can mean that potentially transformative opportunities are ignored. And periods of great change and uncertainty can also be periods of the greatest opportunity.
What Steve Jobs famously described as “the next big thing” tends to emerge in a period of change and uncertainty. Charlie Munger also summed up the importance of identifying opportunities quickly and acting on them when he talked about:
A few major opportunities, clearly recognizable as such, will usually come to one who continuously searches and waits, with a curious mind, loving diagnosis involving multiple variables. And then all that is required is a willingness to bet heavily when the odds are extremely favorable, using resources available as a result of prudence and patience in the past.
Foresight capabilities provide companies with the ability to “continuously search” for opportunities and provide the tools to explore the “multiple variables”, which will help illustrate when the “odds are extremely favourable”.
Uncertainty can lead to new markets being opened up. Foresight can help identify growing markets when growth is nascent
Periods of great uncertainty might well also be periods of great change - in technologies, in consumer preferences and in habits. Periods of stasis and stability often means stability of markets. In contrast, during periods of change, new markets might well be opening up to the boldest who are able to anticipate change and act upon it before their competitors do.
Economic history is full of examples of companies who rose to prominence during periods when tectonic plates were shifting. Each wave of technological-driven change, including the printing press; the growth of the railways; the rise of television; mass car use; the invention of the microchip; the invention of the internet; and the growth of the smartphone has been accompanied by firms who understood what that change meant for consumers and how suitable businesses should respond.
(Above chart via WEF)
Four of the top five global companies by market capitalisation today are those who were able to make the most of changes in consumer habits following the transformation brought about with the invention of the internet and the growth of the smartphone.
Successful companies in the age of the internet have often been those who understood the impact of technological change at an early stage and pivoted towards these changes at an early stage. I’ve talked before about the importance of Google’s purchase of Android in 2001, which allowed the company to remain a leader in search when consumer habits shifted from desktop to mobile.
Foresight, by considering various forces at play in the wider contextual environment, can help companies to identify growth markets at an early stage. By anticipating growing markets and shifting consumer preferences when change is nascent, foresight capabilities allows companies to adapt early and embrace opportunity ahead of competitors.
“Only the paranoid survive”. Uncertainty encourages innovation and is the enemy of complacency
Andrew Grove was the CEO of Intel when he wrote the essential business book called Only The Paranoid Survive, built on his opinion that, for business “complacency breeds failure”. For Grove, it was “people in the trenches [who] are usually in touch with impending changes early” and being in touch with changes early is crucial for ongoing success.
Foresight capabilities are so powerful because they help businesses to spot these impending changes early.
He argued that, in many ways the “person who is the star of previous era is often the last one to adapt to change, the last one to yield to logic of a strategic inflection point.” Periods of stability and certainty are often periods where incumbent businesses can grow complacent and also periods in which substantial growth of insurgents can be more difficult. Conversely, periods of change are those in which being “in touch with impending changes” is crucial and in which innovation is rewarded.
Building an Uncertainty Mindset
In many ways, embracing uncertainty is more important than running from it. Uncertainty provides the incentive for innovation, for anticipating impending changes and for being both agile and adaptable. Vaughn Tan is an organizational sociologist and a fellow former Googler, who has written an excellent book called The Uncertainty Mindset. He based his thinking on time spent in high-end restaurants around the world, such as Amaja, Think Food Tank, The Cooking Lab and Heston Blumenthal’s Fat Duck.
What he found was an “uncertainty mindset” in an “industry… obsessed with continual innovation”. This mindset led “each team to build robust responsiveness and flexibility by injecting uncertainty into its structure and organisation.” He contrasts structures in which management theory builds teams designed for efficiency in which “conditions are predictable, stable and controllable… [but] reality is seldom so accommodating.”
Both Grove and Tan are perceptive when they point out that a yearning for the predictable and the certain can introduce complacency and what Tan describes as a “permanent auto-pilot”. For this reason, Grove argued that he would choose “a turbulent world as opposed to a quiet world”. Uncertainty introduces a hunger, innovation and desire to be “in touch with impending changes early” that can often be missing in times of predictability.
We need to stop thinking of uncertainty as entirely negative. Uncertainty provides business threats, but can also provide the basis for substantial business growth. Building a mentality that responds to uncertainty by innovating, reframing and promoting agility can be crucial in helping business to make the most of emerging opportunities. And using foresight to anticipate opportunity early can be just as crucial in making sure that a business is in the right place to adapt to emerging opportunities.