Getting ahead by looking ahead: a practicing futurist explains why foresight can make the difference between success and failure.

A funny thing happened in the music industry a few years ago. Record companies began suing their customers. The Recording Industry Association of America (RIAA) filed lawsuits against, among other defendants, 13-year-old girls in order to stem the rising tide of Internet downloading of MP3 files. Most would agree that lawsuits are a less than perfect way to relate to people who buy your products, especially since the industry normally spends millions to attract teenagers. The record companies' peculiar choice illustrates why, in this rapidly changing world, foresight is so essential.

When you look back to the 1990s, it is important to recognize that record executives are not stupid. The marketing and strategic planners at companies like Sony, Atlantic, and Universal were and continue to be experts in finding talent, market segmentation, retail channels, branding, and promotion--all the things you need to compete in the entertainment industry. They were right on top of their competitors, scanning their marketplace for new trends in customer taste, tracking the moves of other record companies, and even looking out for substitute products. Video games and cable television were as much potential competitors as another record label with a hot band. These executives did what most people do--they looked at their competition and their customers and tried to anticipate the next move.

What they did not do was follow a couple of key technological trends outside of their industry. Throughout the 1990s, home computer ownership was increasing. At the same time, more and more computers were capable of accessing the Internet. On the horizon were new improvements in software that enabled audio to be compressed into a small amount of data while retaining good sound quality. The file format called MP3, or "Motion Picture Engineering Group Audio Layer 3," was born. Unlike previous attempts to digitize music into a small package, MP3 files actually sounded like music. Unlike copying music onto cassette tapes, you could make an unlimited number of copies at the touch of a button. This technical revolution occurred at the exact moment that consumers everywhere were connecting to the Internet at home or at work.

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If you recognize the word "Napster," the renegade free file-sharing site, then you remember the chaos that resulted. By late 1999 and 2000, free music poured out of the Internet with no cost to consumers and few technical difficulties. Napster was so terrifyingly efficient at connecting consumers with one another to "share" their music that anyone with a computer could quickly find any song with a simple Web search. Music no longer was a physical product made of plastic; it was now an ethereal concept that could be stored on a hard drive and shared at will, broadcast to anyone with a few moments to do a Web search.

Moreover, market research showed that young people trading MP3 files had significantly different values than their elders when it came to the legality and morality of downloading. Appeals to younger consumers by the RIAA to equate the trading of MP3s with shoplifting fell flat. The industry sued, and came off looking like bullies in the process.

If industry executives had spent a little more time thinking about how technologies could affect their business, we might have had iTunes five years earlier and fewer teenagers hiring attorneys to defend themselves from record labels!

The Transformative Power of Trends

In today's world, you need to think not just about your own future, but also about the future of nearly everything. Now, if you are a record company, you aren't just worried about other entertainment providers; you've got to be looking at electronics in the home and computers in the workplace and the next technological innovation to see tomorrow's competitive challenge.

Like the record industry 15 years ago, businesses today are facing a special kind of challenge. They aren't just dealing with traditional threats from new competitors, substitute products, and shifts in the market, but are instead seeing entire industries turned on their heads in incredibly short periods. This significantly more difficult phenomenon occurs when too many changes occur at one time and, in effect, begin to fold in on one another. I call this superconnection, or the interaction of multiple forces in society and technology at one time. Of course, there have been disruptive technologies and social trends in the past, but today, things are accelerating so rapidly, and globalization spreads change so quickly, it's as if it were all happening in your backyard.

Today, the sciences have begun to overlap as biotechnology, chemistry, and physics advance to become nanotechnology. Globalization meets new information technology, and your customer service reps suddenly speak with a foreign accent. Your biggest market segment is suddenly retired people, because the baby boomers are aging. India's middle class is nearly as big as the population of Europe. Traditional competitors fade; completely new ones appear. Your own customers become as big a threat as your fiercest rival. Companies in countries you've never heard of begin outproducing your factories. Chaos seems to reign.

But chaos is not impossible to manage if you give yourself enough time to look at external forces before the problem lands in your lap.

Competitors, product substitutions, and changes in the market are not new. But the speed and complexity of these changes are giving leaders whiplash. One minute, you are selling records; the next, you are deposing little Brittany Johnson from down the street for swapping MP3s with her friends.

The changes are circling around us, popping up in the headlines and appearing in the form of new realities in our businesses. The population of Italy is getting older, just like Japan, Russia, the United States, and most Western nations. Biotechnology is getting cheap. Nobody has a solution for the addiction to oil. The ethnic face of France is changing. China has too many boys. The rich-poor gap is increasing. It is interesting to read about, but leading an organization in the face of this seems daunting at the very least. This brings us to the subject of you.

Not every industry is facing such dramatic changes forcing life-or-death decisions. Maybe you run a bowling alley and just want to know what the customer of the future will want for entertainment. Maybe you are considering a second career and wonder what jobs will be hot in the next few years. You could be an investor trying to get in early to profit from what the future holds. Once you understand how to see what's coming next using such tools as systems thinking, trend analysis, and scenario generation, your view of the world will change and you will be better prepared. Onward to the future!

About the Author

Eric Garland is the principal of Competitive Futures Inc., a futures consultancy, www.competitivefutures.com. His last article for THE FUTURIST, "Can Minority Languages Be Saved? Globalization vs. Culture," appeared in July-August 2006.

Adapted from Future, Inc.: How Businesses Can Anticipate and Profit from What's Next. Copyright [c] 2007 by Eric Garland. Published by AMACOM Books, a division of American Management Association, New York, New York. Used with permission. All rights reserved. www.amacombooks.org.