Like a Turkey Before Christmas

In his book The Box (Princeton University Press 2006), the author, Marc Levison writes: “Economists, myself included, are in the business of predicting events; we like to think that we can analyse what has happened and gain insight into what will occur in the days to come. Business school students take a similar approach, learning to apply quantitative analysis to historical data in order to draw conclusions about the future. In the business world, this way of looking at the world through a spreadsheet is treated as modern management thinking. It’s the bread and butter of some of the world’s most famous, and expensive, consulting firms. The story of containerisation attests to the limits of this sort of rational analysis, for the developments recounted in The Box turned out not at all as expected…Absolutely no one anticipated that containerisation would open the way to vast changes in where and how goods are manufactured, that it would provide a major impetus to transport deregulation, or that it would help integrate East Asia into a world economy that previously had centred on the North Atlantic”. In fact, the container, a simple aluminium box, has enabled globalisation as we know it. And it is not the only example of a disruptive innovation.

There is always, obviously, the losing side for every disruptive innovation. In this example they were port workers (longshoremen) who were no longer needed, and local manufacturers that could not compete with cheaper imports, not to mention all the others who relied on local manufacturing – food suppliers, local shops, car dealers, etc. The list is long.

There is also the famous story of Blockbuster refusing to buy Netflix in its early days for a few tens of millions of dollars, and in another case these were the film camera and the camera film itself (and photographic papers and development materials) in the case the digital cameras and soon(ish) the service stations when driverless truck convoys start roaming the cross-continent highways. Unless another unexpected disruptive innovation literally kicks driverless trucks off the road before they even begin to run.

Nassim Taleb writes in The Black Swan (Penguin Books) that until Christmas eve a turkey thinks that humans are the most benevolent creatures on earth. It is fed, protected, and looked after to their best ability. And then Christmas comes with a big knife.

The crux of the matter is that, as the saying goes, it’s difficult to make predictions, especially about the future. As humans we have, though an advantage over Turkeys before Christmas – if we are alert enough we can see the telltale signs. All we need is to not close our eyes and ignore what’s happening around, and not make detailed 5, 10, 15-year plans. They are too risky and you need to be agile and flexible enough to deal with an ever-changing environment. In order to thrive, organisations cannot set their sights on a distant target and pursue it without constantly looking around, see what changes, and react.

A much better approach will be to indeed start with a far-away dream (how will the business look when I am happy with it) but plan for the next twelve months (an arbitrary number, just because Augustus Ceasar decided 2000 years ago that a year is 12 months long, but a convenient number, nonetheless. Any other will do so long as it is long enough to achieve anything of significance and short enough to reasonably be able to predict the outcomes). Set a measurable, ambitious but realistic goal, break it down to quarterly targets and weekly tasks, and review it frequently. By review I mean not only on the tactical level. While a weekly review of the tasks is crucial, from time to time it is essential to look at the entire plan – from the far-away dream goal, through the yearly goal to the quarterly targets. You don’t want to keep dreaming of world-domination in camera-film when the world has already moved to digital. Just ask Kodak.

Going back to the shipping metaphor, a container-ship captain that will navigate his 14,000 TEU ship by looking at the compass will find himself (and his ship, crew and cargo) very far from where he intended to go, if not beached somewhere. Just as you would expect our captain to use a GPS to know where his ship is at any given moment, read the weather-alerts, and change direction when winds, currents and passing vessels veer his ship off-course, an organisation “captain” must navigate their company, knowing where they are, who is around, what’s effecting their performance and react swiftly and properly.

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