How to Find Business Secrets and See Black Swans?
We live in complex, chaotic, volatile, disruptive, uncertain, post-normal times and, yes, every day it becomes more challenging to keep your business profitable and to stay relevant.
The good news is: there’s a way out!
It requires you to look outside, use your brain and challenge your assumptions. By getting better at understanding trends and signals, you can find new business opportunities and identify threats.
Recognizing something that others can’t (or haven’t yet) ensures competitive advantage. How about your company? Does it have a unique point of view about the future? If your answer to the question is no, Gary Hamel says that you do not have a strategy.
“What valuable company is nobody building?” Peter Thiel’s classic question urges us to find our unique business secret.
And, as Thiel notes, you can’t find secrets without looking for them.
Iterating on trends and signals helps your organization stay alive, have a winning strategy, and get better at change. It’s not just my words, Rohrbeck & Kum’s international study revealed that companies utilizing systematic strategic foresight grow on average 200% faster than their competitors and have 33% higher profitability.
The four levels of visibility: How far can you see?
Your organization has different levels of visibility to its business environment.
There are different levels of trends and signals out there, and in extremely fast-paced contexts it is far more challenging to stay aware of them. What counts too, is of course your foresight skills and capabilities, which you can improve.
The four levels of visibility into your business environment. Framework: Nora Kärkkäinen
Visibility level 1: Known-knowns
The easiest trends to see are the megatrends and industry trends that you and your competitors are already aware of. Megatrends are major forces in societal development that are highly likely to affect the future in all areas over the next 10+ years, even decades.
Usually, megatrends occur at the global level, affecting across industries.
These are changes that are already happening today and highly likely to continue happening tomorrow. Development is often believed to continue in the same direction.
Megatrends are building blocks for all trend work. They are underlying forces that drive trends – you must review and consider these, even though these might be same-old-same-old and trend novelty seekers may find it boring to pay attention to them.
As with everything that you know “for sure,” it is crucial to assess the assumptions you have made based on known-knowns – are those still valid?
Also, most of the trends are probably something that both you and your competitors can see. Trends can be only local phenomena or tied to a single industry globally. Trends evolve over time, may be strong or weak, increasing, decreasing or stable. They can be named, analyzed, and considered within business/industry specific contexts.
Visibility Level 2: Blindspots
The most awkward thing is to have limited visibility, not seeing what others around you see. This low visibility level may be caused by several factors, mainly related to biases and noise.
Megatrends, Globalisation and Digitalisation, mean that many trends impact fast throughout industries, and geographies. Established players may find it hard to identify and believe in new trends as quickly and agile as startups (expertise trap). In an organization, its strong beliefs about “only this kind of future is possible in our industry” makes it blind.
Putting too much trust into a single forecast creates tunnel vision, as trends are only extrapolations of the past and present, not future facts! Pitfalls of group thinking may take over (amplifying errors, cascade effects, polarization). On both an organizational and individual level perhaps the most significant ingredient for blind spots is WYSIATI (Kahneman’s What You See Is All There is) and focusing on information that confirms the “known” (confirmation bias).
Visibility level 3: Secrets
This is where you would like to be!
Seeing what others can’t, finding those Thiel’s business secrets, next billion-dollar company that no one has founded yet. It is possible to find these secrets among trends, but usually true secrets can be identified from signals and require imagination.
A weak signal is a first indicator of change, far in the horizon, an anomaly, or emerging issue that may become significant in the future. A signal may grow into a trend, or fade away. Weak signals have no recognizable history, and they can remain singular.
Weak signals demand a combination of a creative mind and discipline due to their high signal-to-noise ratio. In a perfect situation, an organization practices systematic business environment monitoring that considers emerging events on the edges of the industry.
Signals are something strange, unfitting, outliers. Very often signals are hard to verbalise or present with credibility. High signal-to-noise ratio also means that you can’t collect enough data to present the signal more convincingly. The moment you have most trustworthy information gathered, is usually when it too late (Time Zero passed).
Visibility level 4: Black Swans
Here, it’s completely okay to be surprised.
Of course, there are always industry oracles or business hedgehogs who warned about the coming crisis years earlier (and nobody believed). Black swans are highly unlikely or even unimaginable events that have significant influence and that change the course of development quickly, causing uncertainty.
They are “unknown unknowns”, radical uncertainties, and we cannot know things for sure. The paradox of black swans is that they seem obvious in hindsight.
A major part of decision-making in business involves uncertainty. Strategic choices must continuously be made in situations where there is only limited information available. There are no quick and easy formulas with which we can remove the uncertainty or identify the black swans waiting for us on the horizon.
At worst, basic forecasting tools and Excel calculations fail to predict and can even increase vulnerability by offering false security.
Instead, amidst radical uncertainty, all of us on every level of our organizations must be able to say “I don’t know”. Admitting to not knowing something is a prerequisite for learning, renewing, and making discoveries. Combining things creatively, using abductive analysis and taking leaps of imagination, we can at least start to chart possible black swans, testing, preparing and building resilience.
“He not busy being born is busy dying”
In turbulent times, Gary Hamel sees strategy work as ever more significant for an organization to stay relevant.
The most important question for management to ponder is: “How are we going to re-invent ourselves and the world around us during the next five years”?
To answer this question, your organization needs to recognize and understand the trends that have an impact on your business environment, and what all this means to you and how you need to renew.
It requires improving your visibility throughout your business environment and imaginative future thinking to even consider possible black swans or to find your secret.
Contact us to learn more about how we can help you to shape your organization’s future!
Hamel & Zanini (2020): Humanocrazy.
Kahneman (2011): Thinking Fast and Slow.
Kay & King (2020): Radical Uncertainty.
McGrath (2019): Seeing Around the Corners.
Reeves, Goodson, & Whitaker (2021): The Power of Anomaly. https://hbr.org/2021/07/the-power-of-anomaly
Rohrbeck & Kum (2018): Corporate foresight and its impact on firm performance: A longitudinal analysis. https://www.sciencedirect.com/science/article/pii/S0040162517302287
Schoemaker & Tetlock (2016): Superforecasting: How to Upgrade Your Company’s Judgment. https://hbr.org/2016/05/superforecasting-how-to-upgrade-your-companys-judgment
Sustein & Hastie (2015): Wiser.
Taleb (2007): Black Swan.
Thiel (2013): Zero to One.
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