Are you steering with your rear view mirror?
My original undergraduate work was in economics but you don’t have to have an economics degree to have heard about the “leading economic indicators.” These often-cited government statistics measure economic activity that points to future trends. Economists measure things like stock prices, consumer confidence and the number of help wanted ads because they provide a glimpse of future economic activity.
Such harbingers are rare in economics. We hear less about “lagging economic indicators” but that’s what most economic data consists of—information about what’s already occurred. Lagging indicators are things like the unemployment rate and retail sales numbers. They’re symptoms of what’s happened but not great predictors of what’s coming. One reason that economic forecasting is so difficult and often unreliable is that most of the information we have is old news by the time we compile it. A common analogy is that it’s like steering your car by only looking in the rear view mirror. It can be done, but it’s inefficient and dangerous and not something you would ever want to try on the highway.
Yet such rear view steering is how most businesses operate. Not because they don’t know better but because, just as with the economy, that’s the only available data. Virtually all the metrics managers have about sales, marketing, hiring, operations and so forth is this same kind of old news. Predictions are based largely on tracking trends in the past and extending them into the future. Or by taking specific actions that have been taken in the past and assuming that those strategies will pay off similarly in the future. It works pretty well—as long as there are no surprises, nothing unexpected in the road ahead.
A recent presentation I attended reminded me of this Econ 101 chestnut and it struck me that it also says something very compelling about innovation. It occurred to me that virtually everything that we call knowledge consists of this same kind of old news. Knowledge is a lagging indicator! It only tells us what has or hasn’t worked in the past. Our leading indicators are imagination and creativity and insight. When we focus only on what we already know, no matter how good that data may be, we’re steering with the rear view mirror. Looking out the windshield requires more than knowledge and experience and expertise; it requires new ideas and new approaches, experimentation and improvisation. In other words it requires innovation.
When we stop using our imagination and fail to constantly pursue fresh insights, frankly, we become a road hazard, a danger to both ourselves and our business. Sticking with the status quo may seem safe but in a changing marketplace it’s a strategy that’s almost certain to fail. Are you looking out the windshield or relying on what you see behind you? Are you encouraging everyone in your organization to be looking out the windshield? It’s a much more effective way to steer into the future.