Tracking the dimensions of change over time
Innovation means change. Tracking and mapping political, economic, social and technological change is one of the activities you need to undertake at the beginning of a strategy innovation project. Naturally, the changes of the emerging future are grounded in the changes that are taking place at present and the changes that took place in the past.
What if you had a tool to track identifiable time patterns of past and present changes in business and society to better forecast the probable changes in future?
The three dimensions of change: Apart from writing my second innovation book on our X-IDEA innovation process, I am adding additional tools to the X-IDEA toolbox. One of them is called Change Time Patterns, which helps executives to understand better how things change in their industry and the wider business environment. It tracks and maps three dimensions: velocity, direction and impact of observable change over time.
Change velocity: This measurement captures how rapidly things change in a category or industry. Every industry moves forward at a certain velocity, albeit at very different speeds:
Information technology- and internet-driven industries as well as fashion-related industries change the fastest, with novelties introduced in a semi-annual rhythm.
On the opposite end are utilities and infrastructure construction; here, new projects take years to complete and then are operated for decades without much change.
In between these two extremes, things vary by industry, starting from the still rapid fast-moving consumer goods and electronics industries, to the medium-paced automobile industry to slow-paced, asset-driven industries such as finance or oil and gas.
Note three interesting phenomena while considering the velocity of change in an industry:
Over the past 2-3 decades, change velocity has accelerated in most industries. Here, consider how "time to market" -- the key performance indicator -- has shortened in your industry.
Second, the boundaries between industries have become more porous due to technological and IT-driven changes.
Third, agile innovation leaders of modern, speedy industries have started to cross over into older, slower industries. Think of initiatives by Google, Tesla or Apple to reinvent the good old car, or new frictionless and safe payment systems from Amazon, Google and Apple.
Change direction: What's the path that change moves along? Here, we can discern four patterns:
Linear timing asserts that change moves forward in a linear, typically progressive way. This is seen in the economic evolution of humanity from a hunter-gatherer society in the agrarian age to the industrial age and into the IT age, and now the innovation age.
Cyclical timing chronicles change as a wave with four clear cycle phases (trough, rise, peak and decline). Well known examples are the macroeconomic cycle, the product life cycle and industry cycles. Checking your current position in these cycles points you in the direction to possible strategic actions in future.
A pendulum is a third way to describe change over time. Starting from a neutral position, a pendulum swings back and forth between two extreme poles. For example, political developments often swing back and forth between a regressive, traditional, religious, materialistic and nationalistic pole and a progressive, modern, secular, idealistic and cosmopolitan pole. The pendulum is also at work in most large and multinational corporations, where organisational structures swing back and forth between the poles of centralisation versus decentralisation.
The spiral describes how social and economic change flows in a circular motion before spiralling up again to a higher level, where a new cycle starts that eventually leads to a new leap. This model suggests that a business, industry or society develops, grows, matures and gradually declines until a new wave of innovation spearheaded by a small group of innovators spurs activity to a higher level, where a fresh industry cycle starts.
Such a leap is often triggered by the rise of a new lead technology, which happens every two to four decades. Think of how IT in the 1970s to mid-1990s drove business until the internet emerged as new lead technology and spiralled us up to the next level.
Change impact: Probably the easiest way to categorise impact is by using the labels "incremental change", "evolutionary change" and "revolutionary change". Once you have quantitative data available (such as change in revenue growth or change in market capitalisation), however, you may also use a more objective metric system to map the scope of change.
Conclusion: Once we understand the historic and current speed, direction and impact of change in your industry, we can map these phenomena to project possible future directions of change that may guide the strategic actions of the business. Unfortunately, this is easier said than done, as it requires you to collect objective data for all change phenomena and then map them on a three-dimensional map.
Dr Detlef Reis is the founding director and chief ideator of Thinkergy Ltd (Thinkergy.com), an ideation and innovation company in Asia, and an adjunct associate professor at Hong Kong Baptist University. He can be reached at email@example.com