The future is hard. It’s all out there but we’re not quite sure what it’s going to be. If you’re an optimism you know it’ll be better than the past; if you’re a pessimist you know it will be worse; if you’re a realist you know it will be different.
Good companies are learning companies so realism is the way to go. Here are three sets of analytical thoughts to use.
Learn From The Past
Think about why you were really successful. Then deconstruct that to find the elements which are not time-limited. Such as quality, design, customer responsiveness as opposed to cashing in on a one-off bonanza of government regulation (for instance). Build the durable bits into your next steps. Think about why you weren’t successful. Be tough on yourself. Eliminate these business strategies from your toolkit and these unproductive lines of thinking from your mind. Learn!
Have Options
Don’t be like the criminals in the Film Bandits who saw every possible option for gainful employment through the prism of robbing banks. (’But we’re bank robbers.’) These attitudes shackle you to old business models and old ways. You need imaginative options that play to what customers are going to want and to what you’re good at. Peter Thiel (Zero to One, Notes on Startups or How To Build The Future), who started Paypal, points out that if you have 10 opportunities one of them is likely to return as much as the other nine combined. The problem is you don’t know which one. Options are essential, as is the willingness to move away from opportunities that are going sour.
Make Sure Your Options Are Value Builders
What do your reasonably validated forecasts show (ie; future profits and the necessary development costs of development and getting ready for market)? It is easily possibly to run discounted cash flow rulers (or discounted profit vs cost rulers) over projects. Do profits come out ahead? If they don’t. why are you thinking about that opportunity? A really good quick check is to compare the opportunity’s total likely EBITDA (Earnings Before Interest, Depreciation & Amortisation) with the total estimated development costs. If total EBITDA falls short, think hard!