One of the hardest things about predicting the future is knowing where to set the “dial”. If you’re trying to understand how highspeed internet is going to affect your business in five years, where do assume the average household speeds land? 20mbps? 50? 1000? 10,000? All of those are technically feasible, but there is a 500x difference between the highest and the lowest – and that really, really matters a lot.
We face this problem other places too – what are competitive costs going to be like in a few years? How high will the price of oil go? How low will the price of online storage go?
Here’s a simple rule of thumb – turn the dial to the extremes and see what happens.
For example, what happens if bandwidth goes to infinity? What happens if storage costs go to zero? What happens if the price of oil goes to infinity?
This isn’t necessarily a way to plan a strategy that depends on market timing, but it’s a thought exercise that opens the eyes to possibility and helps to see around corners in ways that aren’t possible when you’re trying to guess precise prices and values and dates.
When Netflix was founded in 1997, there wasn’t enough bandwidth nor were prices reasonable enough to deliver “flix” over the “net”. And yet they chose the name Netflix. Why? Likely because they did some version of this thought experiment and realized that over time, bandwidth prices would be effectively zero and speeds would effectively be infinite.
Is bandwidth infinite? Are prices zero? Of course not. But the point is that they have increased and dropped respectively by orders of magnitude, and this kind of thought experiment helps to illuminate what opportunities open to a business when those orders-of-magnitude changes happen.