Sheryl Connelly has some ideas about “future-proofing” businesses for the coming decades.
Connelly, in-house futurist for Ford Motor Co., shared her insights as keynote speaker for SalesPad’s “Back to the Future” PANELS tech conference.
She distilled planning for the future into three “legs:” where one is currently, where one wants to go and how to get from point A to point B.
“The problem is in that third leg when you encounter something that wasn’t in your plan and it goes off the rails,” Connelly said.
She said businesses usually try to plan for the future by performing a SWOT analysis — strengths, weaknesses, opportunities and threats — but despite its popularity as a business tool, Connelly advised against it because it’s inwardly focused.
“The problem with a SWOT analysis is, at its heart, it’s glorified navel-gazing,” she said. “You begin with questions about yourself and your organization, and because of that, we are blind-sighted to things that are out of our control.”
Another problem Connelly identified with the SWOT analysis is its assessment of strengths. She argued strengths are not something an organization or business leader owns but are determined by the marketplace, which can change “on a dime.”
Connelly also said it’s a mistake to look to the past to predict the future. While the past can be a good tool to identify patterns, it can never be an exact indicator of what to expect later on.
“A lot of people look at sales numbers, market share, they do the number crunching … and at the end of the day, you have this really exquisitely detailed spreadsheet … but all of that precision can give people a sense of false confidence,” she said.
Connelly mentioned Uber, which she said was one of the largest transportation companies today but owns very few automobiles, as an example of market force disruptors with no historical precedent.
Part of “thinking like a futurist,” she said, is to be provocative. One tool to be provocative is to perform a “wild-card” analysis or an analysis of events that have a very low chance of happening but could have a severe impact if they do happen.
As an example, Connelly pointed to the 2011 earthquake and tsunami that devastated Japan and seemed to catch the rest of the world by surprise.
“Why? Anyone who’s familiar with Japan knows that it has been and always will be geographically vulnerable to this type of natural disaster,” she said. “In fact, inside of Japan, they have taken extraordinary measures to help mitigate the damage.”
The real problem was nobody outside of Japan, business stakeholders included, considered the consequences of such a natural disaster. Foreign companies that relied on Japanese commerce for natural resources, manufacturing and tech support were suffering the impact as much as four years after the earthquake hit, Connelly said.
Wild-card events don’t always have to be negative, however. Connelly referenced the advent of the internet, cell phone technology and decoding the human genome as wild-card events that continue to have positive implications.
She noted it is one thing to be provocative, but one also has to be plausible. She said her own predictions are based on global trends.
While Connelly didn’t completely discount the use of the SWOT analysis, she did encourage businesses to use it sparingly. An alternative to the inside-out approach of the SWOT analysis is the outside-in, three-ring bull’s-eye approach.
The outside ring involves global variables like population growth, aging of the world’s population and access to resources like food and clean water.
An aging population is one of the greatest economic problems for the coming decades, Connelly said. Based on a metric called the dependency ratio, there are now fewer workers to support retirees, and the ratio is even starker for more rapidly aging populations like in China and Japan.
“When the United States put social security into place, we had 44 workers for every single retiree,” Connelly said. “Today, we have barely two workers for every single retiree.”
Based on population growth, Connelly also predicted a rise in megacities or cities with a population of 10 million or more. She also said the new model for sustainability is to build vertically, to have a footprint blueprint and to use fewer resources.
The second ring of the bull’s-eye involves the marketplace. Previously, workers were paid for their time, but now, workers are multitasking in an attempt to get back their time, Connelly said.
“This means that status symbols are changing,” she said. “It used to be you had the biggest brands, the most luxurious things that called attention to … the way that we now show off is to be in the know, to be at the right place at the right time or to have access to things.”
Young people now are generally more interested in having access to the things they want than the “burden” of actual ownership, Connelly said. Even retirees are trying to offload the “burden of ownership” by downsizing and moving into to smaller homes.
The center of the bull’s-eye is the individual. Connelly said more people today believe they individually have the power to bring about socio-political change, and such a belief is influencing their consumption habits and which organizations they choose to do business with.
“Even though we have more choice today, consumers are adding a new thing to their purchase decision-making … today, people want to know what the product stands for,” she said. “What does it say of me when I choose to do business with you?
“If you consider, in the last 12 months — the things that have happened to Delta Airlines, Starbucks, Papa John’s Pizza — these aren’t brands that set out to make a political statement, but found themselves in the middle of a firestorm.”
Connelly said more consumers are conscious their money is a tacit endorsement of a business and how it’s run, which leads to difficult decision-making because consumers today have a lower level of trust in businesses, as well as government and media.
“Even good companies find themselves doing bad things when they haven’t thought through all of the processes, all of the values,” she said. “Having a clear brand identity will be increasingly important for any brand going forward.”
Connelly has been Ford futurist for over a decade. She also is a member of the Global Advisory Council on transportation for the World Economic Forum, and Fast Company magazine named her one of the Most Creative People in Business in 2013 and 2015.
She also has been a featured speaker at TEDGlobal, appeared on “CBS This Morning,” CNBC’s “Fast Money” and NPR’s “All Things Considered” with Robert Siegel.