We’ve met leaders who’ve inspired us, mentors who’ve shaped us, and family members who’ve pushed us to be better. And do you know what they all had in common? They were all terrible at predicting the future!
Yes, as much as we admire and respect the courage and intellect of the aforementioned, every single one of them has been wrong about what would happen in the future. Some of them had previous predictions proved true, and were thus more emboldened about their future predictions...which turned out to be incorrect. Guess they were human after all.
We’ve read that our brains are pattern-recognition and prediction machines. It is therefore no surprise that human hubris and failure in predicting future events would be shared by everybody we’ve ever met, including ourselves. Our brains are excellent at making assumptions and filling in the blanks to help our day-to-day, but terrible with volatility, black swans, and prediction.
Knowing this, why the hell would we try (and fail) to predict the future of our business? Why would we plan out budgets twelve months from now, set revenue goals three years from now, and develop a product strategy that might become obsolete in four months?
No surprise, but we have some guesses. We think it’s due to the wiring of the human brain and a legacy work mindset (probably created by management consultants) combined with the dumb expectations of traditional financial markets.
We find it comical that an organization’s initial success will lead the founders to claim it’s because, “We’re geniuses!” But when things fall apart or goals aren’t met it’s because of “bad luck.”
How about: “Randomness was at work in both the good and the bad.” And likely, the initial success was due to the fact that the founders sensed an opportunity in the market and responded by starting the company.”
Some other sentences we feel founders should say more often: We sensed we needed to make changes to our product and we responded by building those features. We sensed we needed to hire someone who was good at dev ops and we responded by hiring someone who was good at dev ops. We sensed the need to buy software to manage our contact lists and we responded by researching and buying the best software to manage our contact lists. We sensed we needed to change our pricing and we responded by changing our pricing. We sensed we needed to talk to our investors and we responded by scheduling a meeting with our investors.
Sensing and responding allows a team to react to change. Sensing and responding reduces tunnel vision. Sensing and responding allows one to “kill their darlings.” Long-term planning drills like product strategy and yearly budgets disappear in favor of near-term responsiveness to the needs of customers and the market.
Why do the traditional financial markets hinder sensing and responding? For starters, companies “provide guidance” to “26-year old Dartmouth grads” and need to “chase that growth” regardless of long-term consequences. And then sometimes companies need to “revise their guidance” because, gasp, they could not adequately predict the future (most assuredly because of events out of their control… but also possible events they could have sensed and responded to if they were able). Investors set “growth metrics” companies need to hit and companies find a way to hit those metrics short-term, without thinking long-term and without the ability to sense and respond (For examples, see most of the companies in Softbank’s Vision Fund Portfolio like WeWork).
Sensing and responding applies to more than planning. In fact, we find this approach works well for interpersonal matters. When talking to colleagues, we enjoy sensing how we and the other person are feeling and responding appropriately, instead of with a canned or pre-planned answer. This approach feels much more humanistic than the usual, inauthentic personas people display while “at the office.”
We get the human desire to plan for and predict the future, When we started Sobol we set long-term goals. We stopped when we realized that if we had followed those goals we wouldn’t have a product that customers wanted, and therefore wouldn’t have had a company for very long. Sensing and responding allowed us to nimbly iterate on our product to solve organizational issues faced by our users. Which, no surprise, allows us to maintain that "start-up feel."