Some peo­ple be­lieve gift­ed peo­ple can pre­dict the fu­ture. Of­ten, we cred­it en­tre­pre­neurs’ suc­cess to their abil­i­ty to see what comes next. The fact re­mains that our minds are ex­pla­na­tion ma­chines which fre­quent­ly get con­nec­tions be­tween phe­nom­e­na wrong. Do en­tre­pre­neurs re­al­ly see around the bend? The busi­ness land­scape is full of cas­es where en­tre­pre­neurs got it wrong, as many peo­ple do. If you can­not pre­dict the fu­ture, what is the best mod­el of think­ing when faced with un­cer­tain­ty?

We are suck­ers for false prophets, pseu­do-ex­perts, and econ­o­mists who claim their econo­met­ric mod­els can ac­cu­rate­ly fore­cast fu­ture GDP growth. Even though we know we can­not fore­tell the fu­ture, we still plan for five years. Fo­cus­ing on pos­si­bil­i­ties rather than prob­a­bil­i­ties can help en­tre­pre­neurs feel more con­fi­dent in nav­i­gat­ing un­cer­tain­ty. In­sur­ance com­pa­nies fo­cus on the chances of an event hap­pen­ing (prob­a­bil­i­ty); en­tre­pre­neurs make qual­i­ta­tive as­sess­ments (pos­si­bil­i­ties) and em­brace un­cer­tain­ty dif­fer­ent­ly.

Ko­dak’s blind spot

Steve Sas­son, an elec­tri­cal en­gi­neer at East­man Ko­dak, in­vent­ed the first self-con­tained, portable dig­i­tal cam­era in 1975. Ko­dak’s fail­ure to see the cus­tomer ben­e­fits of dig­i­tal pho­tog­ra­phy and to test its mar­ket po­ten­tial ex­em­pli­fies the need to chal­lenge as­sump­tions. In­stead of as­sum­ing film would dom­i­nate for­ev­er, Ko­dak could have test­ed dig­i­tal’s vi­a­bil­i­ty and avoid­ed its fall from grace.

The les­son is sim­ple: in un­cer­tain times, test your as­sump­tions, gath­er cus­tomer in­sights, and seek learn­ing op­por­tu­ni­ties to shape your strat­e­gy. Recog­nise that psy­cho­log­i­cal bi­as­es may in­flu­ence your de­ci­sions, so un­der­stand­ing these forces helps build re­silience.

Dan­gers of be­liefs

Ko­dak be­lieved its film busi­ness mod­el was rock sol­id. One big dan­ger is com­plete­ly be­liev­ing your own fore­cast or mod­el of the world; Ko­dak could not vi­su­alise pho­tog­ra­phers grav­i­tat­ing to dig­i­tal, even with the ben­e­fits of in­stant re­sults, which would no doubt kill the pro­cess­ing chem­i­cals Ko­dak sold.

There are many dri­vers of change. Cus­tomers may want bet­ter dig­i­tal ex­pe­ri­ence for cer­tain in­for­ma­tion, but they still want a prop­er­ly trained sales pro­fes­sion­al for more com­plex is­sues. You might be tempt­ed to guess the hy­brid mod­el and start to in­vest in an ex­pen­sive e-com­merce site. You as­sume the shift from in-per­son to vir­tu­al will hap­pen fast; how­ev­er, cus­tomer adop­tion may lag your ex­pec­ta­tions.

The is­sues to test are which clients want ful­ly dig­i­tal or face-to-face, which want a com­bi­na­tion, and at what stage of the buy­ing process. A re­tail en­tre­pre­neur should not avoid a dig­i­tal pres­ence al­to­geth­er; in­stead, they should test its vi­a­bil­i­ty to re­duce tele­phone calls and drop-ins for in­for­ma­tion, then slow­ly ex­pand e-com­merce for less tech­ni­cal parts. In­stallers may al­so re­sist a dig­i­tal so­lu­tion and need train­ing to nav­i­gate the sys­tem.

Sig­nals are not pre­dic­tions

En­tre­pre­neurs need to look for in­di­ca­tors that usu­al­ly jump out at you—even if they seem like out­liers, just ran­dom hap­pen­ings we should ig­nore. Your man­age­ment sys­tem may tell you the change in sales is sea­son­al, but some­thing more is go­ing on. You asked a few ques­tions at your week­ly sales meet­ing to get a bet­ter un­der­stand­ing of the team’s per­cep­tions. What ques­tions are cus­tomers ask­ing that they weren’t ask­ing six months ago? Is the de­cline oc­cur­ring in a spe­cif­ic area? Is it just a few large clients dri­ving the rev­enue de­cline? What is the im­pact of the loss of a key sales­per­son? Is the com­peti­tor now stronger be­cause I lost a key ac­count?

While these ques­tions of­fer in­sight in­to pos­si­ble root caus­es, you need to dig deep­er. Mar­ket­ing is­sues re­quire that you hit the road. There may be con­flict­ing sig­nals; how­ev­er, fo­cus on ask­ing why sev­er­al times un­til you are sat­is­fied you have a work­ing ex­pla­na­tion.

Test­ing beats guess­ing

Af­ter you have a good idea of what could be dri­ving your low­er per­for­mance, the next step is to test to re­al­ly get a bet­ter feel­ing for things. Be­fore com­mit­ting re­sources, the re­source­ful strat­e­gy is to con­duct a busi­ness ex­per­i­ment. If the as­sump­tion is, “Cus­tomers will pay more for a pre­mi­um ver­sion,” test a small pre­mi­um of­fer with a seg­ment be­fore repric­ing the en­tire busi­ness. If the as­sump­tion is, “This new mar­ket needs what we sell,” run a tar­get­ed cam­paign, con­duct sales con­ver­sa­tions, and study ob­jec­tions be­fore open­ing an of­fice or hir­ing a re­gion­al team.

A small test should teach you what works and what doesn’t. Test­ing doesn’t re­move the risk of fail­ure, but it does re­veal where the risks are if you de­cide to move for­ward.

Change your think­ing

Adapt­abil­i­ty is not im­pro­vi­sa­tion. It is built be­fore it is need­ed; it is not spon­ta­neous. You are not a jazz mu­si­cian—they make things up on the fly and hope for the best; en­tre­pre­neurs see many sce­nar­ios and dig deep­er by test­ing their as­sump­tions. En­tre­pre­neurs can­not pre­dict the fu­ture. That is not a weak­ness. It is the con­di­tion un­der which an ag­ile busi­ness is built. The re­al ad­van­tage be­longs to own­ers who do not con­fuse con­fi­dence with cer­tain­ty. Build­ing adapt­abil­i­ty through test­ing and quick de­ci­sion-mak­ing can make en­tre­pre­neurs feel more ca­pa­ble and re­silient in fac­ing change.

How­ev­er, you need to have a few habits:

• ↓Look at lead­ing in­di­ca­tors, not lag­ging ones. Some of your key clients may give you in­sight in­to new de­vel­op­ments;

• ↓Short­en your de­ci­sion cy­cle so your re­sponse time is quick­er;

• ↓Iden­ti­fy and test your as­sump­tions to re­veal hid­den be­liefs; and

• ↓Sep­a­rate your learn­ing from your ego

The fu­ture will al­ways sur­prise you. Ex­treme un­cer­tain­ty is here to stay. En­tre­pre­neurs can­not pre­dict the fu­ture. That is not a weak­ness. It is the con­di­tion un­der which they build their busi­ness.

Saj­jad Hamid is an SME & Fam­i­ly Busi­ness Ad­vi­sor, Fel­low of the Fam­i­ly Firm In­sti­tute and au­thor of Build Your Lega­cy Busi­ness: Solo­pre­neur To Fam­i­ly Busi­ness Hero, who can con­tact­ed at en­tre­pre­neurt­nt@gmail.com or at en­tre­pre­neurt­nt.com