Early warnings are there if you know where to look

An inflection point occurs. An event signals a 10X shift in something that used to be true. What happens? People say the event came out of the blue and took everyone by surprise. Yet most of the time, that is nonsense. Significant inflection points – the rise of the internet; the emergence of a global pandemic; the advent of generative AI – are usually preceded by a long, traceable period of gestation. Why, then, do they so often take us by surprise? It is simply because we are not paying attention.

Headline from the future

So, here is a straightforward guide to building what my colleague Kes Sampanthar and I call an early warning system in your own organization. It begins by brainstorming a ‘Time Zero’ event. That’s something that represents the arrival of an inflection point. Think of it as a headline from the future. It could be good or bad – what we’re looking for here is something sufficiently noteworthy to attract a reporter.

Unfolding now is the rise of GLP-1 inhibitors, drugs that reduce cravings for everything from salty snacks to cigarettes. The trend has major repercussions for companies – particularly if it catches them unawares. Here’s the headline: “Manufacturers fret as Americans use weight loss drugs to depress demand for their products.”

Now comes the early warnings concept. Before that headline could be written, what would have to happen for it to be true? We call these indicators, and we try to arrange them in terms of timeframes.

Time Zero (today)

  • The drugs are readily available for those who can pay
  • They have achieved social acceptance
  • Celebrities such as Oprah Winfrey have announced they are using them
  • Manufacturers offer food specifically for users of these medications
  • Time Zero less six months
  • Lower cost or more accessible formulations become available
  • Health systems approve payment for obesity drugs because they prevent more expensive conditions
  • New entrants have their own GLP-1 inhibitors approved by the FDA
  • Consumption of soda, salty snacks and baked goods experiences a single digit decline year on year
  • Doctors report that patients who smoke are cutting down on cigarettes

Time Zero less 12 months

  • Public health advocates call for labeling of ‘addictive’ ingredients in food
  • Manufacturers of salty and sweet foods are accused of borrowing from the tobacco industry’s playbook
  • Lawsuits filed on behalf of plaintiffs claiming their overeating stems from food engineered to be addictive
  • Entrepreneurs create small businesses around the supply of GLP-1 inhibitors on a mass scale

Monitoring

Once you have the early warnings identified, assign each one to a specific member of your team to track. Then, regularly, get a small team together, each of whom have responsibility for looking after the early warnings. The goal is not to decide on action steps – yet. The goal is to get everyone in the early warnings team to be more alert to what is potentially going on. This is where AI comes in. If you set up a system of enhancing human monitoring by using AI to identify changes, things become much easier.

Action

Avoid acting on early warnings too soon. Business lore is full of examples of firms who got the general idea right but moved too early on their insights. The sweet spot is the Period of Optimal Warning. Not too early, when signal and noise are very high. Not too late, when it’s all a done deal. Using AI, we expect that acting in the Period of Optimal Warning will become more straightforward than it is today. And if you figure that out before the competition? So much better for you!