You Can’t Predict the Past

[photo by The Wandering Angel]

[Note: You can also listen to this post as a podcast]

Sometimes there is a convergence of ideas on the internet. Maybe we’re all reading the same sources so we’re all thinking the same thing. Maybe it’s in the water. But for whatever reason it happens from time to time that bloggers express similar ideas at the same time, independently.

In the past two weeks several posts have got me thinking about the same concept. They may not seem related but they fit together in my mind. A couple weeks ago Justin Kownacki wrote a post about the future of media.

In his post he talks about how successful filmmakers are always pushing boundaries and experimenting. Doing something new instead of what other people were doing, or what they did in the past. They broke out by not following the rules. They made their own rules and other people followed.

Are you thinking what I’m thinking? Sounds a lot like a leader.

“Predicting the future instead of just repeating the past.”

He makes some other good points too. Like creating an experience people enjoy. But I’ll let you read the post. It’s worth the trip. I just wanted to point out the part I thought was pertinent to my thought process.

The next thing that caught my attention around this business of what’s next and predicting the future instead of just repeating the past was a tweet by Chris Brogan. Chris tweets a lot and I’m not on Twitter all that much but fortunately I caught this one. A simple, short tweet with a link to Rentalic.com.

On June 8 Chris tweeted this: “@chrisbrogan Interesting. Peer to peer renting - http://bit.ly/98AZJG”

Interesting to be sure. It’s a site where ordinary people, not businesses, rent out common household items at nominal rates. The site coordinates the process of linking owners and renters, processes the financial transaction, and provides an umbrella organization to facilitate trust.

Economic viability produces unpredictable opportunities

As an economist I was instantly intrigued. There are many items which are used infrequently and require a significant financial investment yet still fall below the threshold of profitability to make them a commercially viable item for rental companies.

These would be things like bread machines, ice cream makers, cameras, bicycles.

Or items which would be profitable for commercial ventures but which the owner uses frequently enough that it makes more sense to buy it rather than rent it every time.

Things like tents and camping equipment, skis, power tools, perhaps artwork.

It’s interesting to see what people will come up with to rent once there is an efficient system for doing so. And that’s really the point. This would not have been practical prior to the internet NOT because people didn’t have the same stuff lying around and the same desire to use it.

“These didn’t exist, not because there was no need but because they weren’t viable.”

It didn’t happen because there was no efficient mechanism for coordinating it. That’s what the internet does best: coordinates people. It reduces the transaction costs for bringing buyers and sellers together in the marketplace.

We’ve seen what this can do with companies like eBay, Amazon marketplace and Etsy. Suddenly the ability to open a store with practically zero overhead cost is available to everyone. Then peer to peer lending services like Prosper, Lending Club and Kiva became practical.

Book lending sites like Paperback Swap and now peer to peer rentals are made possible by the great coordinating power of the internet. These are all service which didn’t exist ten years ago not because the need did not exist but because it wasn’t economically viable.

So the internet, by reducing coordination and transaction costs, provided an environment where these latent needs could be fulfilled.

How we can be ready to take advantage

On June 9, Julie Roads wrote a piece which really resonated with me. It was titled I’m Training for Everything. It was ostensibly about exercise but it was really about how we live our lives. If we’re improving ourselves, educating ourselves and informing ourselves we’ll be ready to take advantage of opportunities as they arise.

This is essential training because we don’t know what will happen in the future, what opportunities there will be for us. We can’t predict what doors will open or what possibilities, not economically viable now, will become economically viable in the future due to technological advancement.

Successful people are often those who have the right skill set when an opportunity presents itself. They did not know those opportunities were coming, could not have predicted them, but they had to prepare for them in the past.

How do we do that? How do we know what to prepare for? I suggest we do two things: pay attention to what’s happening today and consciously think about future applications. And do what Julie does; get the most out of the experiences that are given to us.

We can also think about what’s going on around us rather than simply passing through. As Julie says, “there are always lessons to be learned.”

Don’t waste your time predicting the past

Another post that needled me this week was by Shawn Christenson writing on Nathan Hangen’s blog Build Your Empire. On June 10 he wrote a post on marketing but it was really about doing something new. It was about all the people who are shouting, “Look what I’ve done. You can do it too by doing the same thing I did.”

The problem is, the landscape is changing. Technology is making things possible which weren’t possible before and some things which worked in the past won’t work now or in the future.

I know, I know, some things never change. There are bedrock marketing principles and business models but let’s face it, the people who are touting their plan aren’t going to teach you some tried and true marketing principle you heard when you were in high school. They’re going to give you some tip or trick which worked for them and tell you it will work for you too.

“You have to predict the future, not what’s happened in the past.”

I’m not saying it won’t. A lot of people made money flipping houses in the early part of this decade, but it’s not the right environment for it now. You have to know what is coming in the future not what happened in the past.

It does no good to predict the past. What we need to think about today is what’s coming in the future.

Where are consumers going? What needs do they have which could not be filled before but can be filled in the future?

Finally, Jane Friedman sent me a link to a video she took at BEA 2010. It’s a short video of Clay Shirky talking about the future. As always with Clay, insightful and entertaining stuff. He gives a great example of how McDonalds was doing research on what to serve next for breakfast.

It’s about knowing what people are looking for or as Justin Kownacki put it, pleasing the audience. It’s about thinking through the opportunities available with new technologies.

Predicting customer needs

What’s different today then twenty years ago? Ubiquitous credit cards, online payment mechanisms which make micro-payments possible, internet coordination, lower retail overhead, location specific mobile devices.

Think about all the services you use today which would be impossible without those advances. What other opportunities are they opening up?

I was on a conference call today with Chris Brogan and Sonia Simone talking about figuring out how to monetize a blog. The biggest take away from their conversation: figure out what the customer needs to buy not what you need to sell.

Brilliant.

Leadership is being bold; it’s thinking audaciously, not just following those who went before you but figuring out what’s next. Leaders challenge the status quo. They don’t ask “how do I do that?” they ask themselves “what’s next?” They develop and innovate by using their creative brain to link concepts.

As Julie said, “train for everything” by developing an inquisitive intellect. Since we can’t predict the past, let’s work on predicting the future.