There is validity in the notion that history repeats itself. In Ray Dalio’s book Principles he provides us with his 40 years of experience looking at patterns in economic markets in order for his company to make successful trades for their clients. Ray notes that each of the major recessions in the last 40 years had a pattern to them but could only be understood by looking at all of the data over time and see how it was repeating itself. Ray is a big fan of data and makes a case that we should be as well because it will help us find the inflection points that can open a better vision of the future. Ray was able to employ a team of programmers and develop algorithms based on the continuous collection of data. From this data, he accurately predicted the credit crises of 2008 and 2009, all based on signs from a previous credit crises that happened 20 years before.
But before Ray there was Peter Schwartz. His first book in 1991 was The Art of the Long View and was required reading for my Executive MBA from St. Thomas University in St. Paul, MN. Peter is a futurist, that is, one who attempts to systematically explore predictions and possibilities about the future and how they can emerge from the present. Boiling that down, drawing from information you collect over time can help you create scenarios for the future, a vision of what might be and then plan the near and middle term accordingly.
Predicting the credit crisis is all well and good, you might say, but how does that help my business today?
Well some businesses have believed in extreme long range planning so much that they created 100 year plans. One successful 100 year plan was from Shell Oil that looked at oil production around the world, the theory of peak oil, consumer trends, and other macro trends to help them diversify and be a very successful company based on looking at potential scenarios of the future. For a different perspective, another company that was famous for their 100 year plan but still missed an important inflection point is IBM. (They predicted that the total worldwide market for personal computers was somewhere around 1,000 so they decided it wasn’t a market worth pursuing.) Having a 100 year plan means that you need to put your arrogance aside, maybe check some of your assumptions at the door, and look at facts as they develop to make alterations to your plan. Remember, a plan is just a plan. To paraphrase from Pirates of the Caribbean, “it’s more of a guideline”. Nothing in the plan should be static. The plan that you created was based on the assumptions you made at the time it was written.
To understand the past and build a time line or establish patterns, you need to keep track of the various news items related to your industry, your technology, your products and services, and your customers. In the old days we would keep a physical clipping file made up of magazine articles and newspaper stories, and industry bulletins. Some of us subscribed to a service that went through all of the industry pubs for you and provided you a file of clippings. (Anyone remember Bacon’s Service?) It was easier back then to see some of these patterns emerging because you would actually put a piece of paper into a file and you could see the other articles you collected and see, really see, how issues, companies, and products were moving or progressing over time.
Now we have electronic clipping files such as Evernote and OneNote or Pocket. You can subscribe to Google Alerts and get a notice of anything related to a certain topic. All marvels of technology but much more difficult to set time aside to review the news stories and try to connect the dots and visualize the patterns. In addition to the news items, have everyone in your company contribute pieces of information that they pick up at trade shows, conferences, customer visits, calls and emails. The hard part that you don’t want to fill up a Google Drive without some way of adding tags or flags of some kind that can help you with sorting.
Do you need a 100 year plan? No, for most business we need to look at last 5 years out, maybe 10. Remember at the graduation ceremony from high school when all the relatives asked you what you were going to be? Most 18 year olds don’t have a clue mainly because they don’t have a history to reflect on. But you as an established, growing business, you need a plan, even if it is a guideline, and some sort of predition of the future, our future, the future of your employees, the future of your customers.
But keep collecting information, all the time, and remember to go back when you are doing your annual plan or quarterly review, or your long term strategy plan to see if the future you are now living resembles the plan of the past and if not, it is time to make some adjustments.
Originally published in Medium - June 27, 2018