It was around Christmas in 2005 when I was in an oversized van with 5 execs from a major U.S. newspaper touring India. We’d already traveled the disastrous roads of Mumbai and Chennai for a few days, and discussions of bad infrastructure, squalor and absolute poverty had grown tired. Looking for a new topic I commented, "you know, within a few years there will be hundreds – or thousands – of Americans coming to India for surgery and other medical treatments."
The group broke into hysterical laughter. But I persisted. "Look," I said, "health care costs in the U.S.A. are skyrocketing, many people are without or losing insurance benefits (or insured with many uncovered treatment options), and the population is aging. This all leads to expecting demand to outstrip what people can pay. At the same time, many of the best and brightest in India have gone to the U.S. for medical training and they are returning home. Think of all the folks – retirees, truck drivers, farmers and others – who will need hips, livers and heart surgery. They could come to India and get the procedure, plus 8 weeks of great therapy, for 10% of the U.S. cost."
I wanted to get the group to thinking about big themes. The world is always changing. We see the data, but we don’t use it. We don’t change our expectations for the future. And we don’t build our plans to meet the emerging future world. Instead, we rely on what has always been continuing to be. In this case, the emerging healthcare "crisis" in the U.S. is bound to lead to some unusual solutions – and we would be a lot better of if we plan for them.
Last Friday the front page of The Chicago Tribune had the lead "For big surgery, Delhi is dealing" (read article here). The article went on to discuss benefits of India-based medical care, a growing trend for Americans to use it, and how even insurance companies are considering programs for their insureds to take "medical vacations" in India for costly procedures and recovery.
The point isn’t that I got one right. Rather, we should re-evaluate how we do planning. Most of us, and our businesses, plan by obtaining information on the past and projecting it into the future. We love our Lock-ins, based on past economics, markets, competitors, products and services. We love to take for granted that the way things used to work is the way they will work in the future. It makes life easy, and allows us to laugh at the notion that Americans would fly to India for bypass or liver transplant surger. That’s fine as long as everything remains the same. But things change. And when underlying factors change, the future often comes out very different than the past.
We should plan by thinking out scenarios for the future. Start by identifying big themes – like rising healthcare costs in America, higher oil prices, instability in countries that produce lots of oil, increased use of grains for fuel rather than food, global sourcing of products and labor, aging population demographics in American and Europe, long term weather changes, etc. and then say "if these trends continue what will the world look like in 3, 5, 10 years?" Build scenarios. What if the price of diesel hits $12/gallon (that’s only a tripling from today – just one big bomb in Tehran or sunk tanker – which is what happened in the last 3 years as we went from $1.30 to $3.90/gallon)? What would happen to distribution systems, railroads, airplane travel, grocery cost, vacation destination hotels? Figure out scenarios, and then bring them back home to today. What does it mean for your business if these themes really happen?
Obviously, the impact of Google, Craig’s List, internet news sites and blogs on newspaper advertising has been huge. Far worse than any of my colleagues that fateful day were predicting. They were basing forecasts on historical models, and expectations that the business would come back as it always had. They were grossly underestimating just how far advertising rates could fall – and as a result they were not really considering radical changes in their Success Formulas. Just like they didn’t want to consider Americans flying to Delhi for surgery, they didn’t want to consider that newspapers might become a product needed by dramatically fewer readers – and less valuable to advertisers with many new options. Their plans were based on the past – not a potentially very different future. To avoid becoming obsolete, our planning must be based on planning for the future – not the past.