Predicting the future and out-innovating competitors?

Many people think that it is impossible to predict the future and as such to out-innovate competitors. In 2008 however, Simon Wardley published the following Wardley Map :

For those not familiar with Wardley Maps, it basically says that compute will convert from something you buy as a product from IBM/HP(E)/Dell/... in a box to a commodity you buy from Amazon through an API. Because compute will become a commodity, developers can create new applications (=SAAS), have new ways of handling application management (=DEVOPS) and new platforms will come along (=PAAS). However the center piece of his strategy was the Guest OS. If we transition from a world where each company has its own data centre with a limited number of servers to a world where a limited number of cloud providers offer compute to anybody in quantities never seen, the guest operating system on those cloud servers had to be a commodity.

With the map in hand, Canonical (the company behind Ubuntu) optimised their operating system to be a commodity on the cloud. Ubuntu was the first free cloud operating system, whereas competitors like RedHat, Windows,... were charging for their OS. They introduced innovations, e.g. Cloud Init, which allowed anybody to quickly launch many Ubuntu instances on the cloud. Ubuntu went from around 0% market share in the data centre in 2008 to 75% of the cloud in 2010. Small no-name Silicon Valley dotcoms in 2010 started to use Ubuntu, years later they would become household names. Five years later Canonical would earn millions from Amazon, Google, Microsoft, IBM, Oracle,... who all needed the leading Cloud Guest OS to always work on their cloud. RedHat, Microsoft Windows, Solaris,... never dominated the cloud guest OS market.

In 2013 I was responsible for the cloud strategy for Canonical and Simon Wardley was my mentor. Ever since I have been close to the birth of Cloud, AI, IoT (I invented Ubuntu Core which was Ubuntu for IoT), Ethereum (Smart contracts on blockchain),... and applied these disruptive technologies to create profit generating opportunities for the companies I worked for.

Predicting the future and beating competitors

So how come Elon Musk was able to become the richest person in the world while telling everybody about his master plan (published 16 years ago) and part 2 (published 6 years ago), years ahead? Why in 2018 was Wall Street predicting Tesla would go bankrupt while now it is the most valuable car company in the world?

Here is the secret! People like Elon and Simon do not look at today's innovations but look at tomorrow's technologies, as well as the problems and opportunities they will bring. Most executives (as well as everybody else) underestimate anything following an exponential path. If cloud computing, AI, mobile phones, battery technology, solar/wind energy generation,... are on an exponential path then in the next 3 years changes will be hard to observe but in 5 years change will be enormous and in 10 years the world will transform.

Take battery technology as an example. The prices of batteries have declined with 97% in the last three decades . Any visionary leader who sees this, is not thinking about where the price will be next year but where the price will be in 10 years. If the price of electricity is going to be close to zero whenever there has been wind or sun in the last days, then this will transform everything. From how products are produced, e.g. melting metals when it is sunny, to transport (all electric or hydrogen), to heating (no more gas), ... What industries will be possible if electricity is free?

To help your thinking, let's look at an industry which became almost free, i.e. computing. All of a sudden new business models were possible, e.g. streaming like Netflix/Youtube, free video calling like WhatsApp, massive multiplayer mobile gaming, autonomous driving cars,... The core question becomes: What product/service can be offered in a world where what used to be expensive becomes cheap?

Once the visionary leader has determined the end goal, e.g. establish cities on Mars, they need to come back to today's reality and define a multi step plan that takes them towards their bigger vision. Here is a Neurolink connection into Musk's brain: What if we build an expensive electric sports car and show rich people it is more fun to drive electric? With the obtained funds we can build a luxury SUV and saloon car. Afterwards we reinvest and create a mass produced volume product, i.e. the Model 3. We go towards autonomous driving taxis that transform the economics of owning a car into transport as a service and generate enough money to pay for the next phase.

For all of this, we need factories which need to be able to mass produce at a scale never seen before. We also need robots to do the repetitive work, humans are not good at. What if we start to create factories who create factories who create robots who create other products? Once we know how to do this at large scale, we need to make micro factories that create products just in time and fit in small containers. What if we create rockets that can be reused and send the robots, autonomous vehicles and micro-factories to Mars. Can the first generation of inhabitants of Mars be robots who prepare cities for humans to come and live in?

Another visionary leader was Steve Jobs. Steve understood that any new product needed to be easier to use and better looking, than anything available until that moment. The first iPhone was so much easier to use and better looking than the leading Nokias. People would literately sleep in the street to be able to acquire the next iPhone before anybody else. Musk learned a lot from Jobs because the Model 3 and Cybertruck were all about creating this next generation product and validating demand as soon as possible. People slept in the street to preorder a Model 3. This was the same year Wall Street was saying Tesla was going to go bankrupt. When a product impact people so much they are willing to forego their bed, the company behind it is going to become very valuable.

Compare this with the traditional MBA educated CEO who spends the majority of their time in meetings and looking at spreadsheets and slides. Their product decisions are based on market studies. For years researchers have asked customers if they wanted an electric car. Few were interested. Nobody wanted a robot taxi driving them. Traditional companies deliver what their customers want today. Innovative companies understand their customers ' problems tomorrow and focus on resolving them in highly innovative ways thanks to disruptive technologies.

Few car CEOs have ever slept in their factories to make sure urgent production issues were solved. Because Musk made a habit of this in 2018 and 2019, initial teething and quality problems have made room for a production process of the Model Y which is now far ahead of the competition. Kilometres of wiring have been substituted by an in-car communication ring. The body is stamped out of aluminium in one go. Everything is controlled through software instead of buttons. Chipsets can be substituted quickly, allowing quick workarounds for shortages of specific components.

The next frontier are decentralised autonomous organisations. Where traditional financial institutions would need days and lots of people to approve a loan or underwrite an insurance, the next-generation of decentralised finance companies have moved these decisions into code and can make them in sub-seconds. If you can make super efficient marketplaces without intermediaries who introduce opacity in order to optimise profits, then you can easily see why decentralised finance is going to become very disruptive for the traditional finance industry.

Anybody who has experienced the amazing power of OpenAI's DALL-E and how any request results in high quality art designed from scratch. Imagine how humans will soon be able to order the computer to create a personalised medicine, smart contract or other revolutionary digital product. Visionary leaders who can see the power of Web3, combined with deep learning, personalised micro-factories full of 3D printers and all the other innovations, will be able to do what Musk did in a decade and a half in a matter of a few years. The next decade will see the era of the disruptive entrepreneurs who rethink industries through the lens of combining disruptive technologies. Any industry which is still using Cobol and working on their cloud migration are at high risk of being disrupted. They are optimising DVD rental by buying the right real estate in the era of Netflix subscriptions.

Musk recently started writing down the 3rd part of his master plan. Here are my predictions of what will be included. Has your CEO published their 10 year master plan already?