Ethnographic Foresight: Understanding Your Customers’ Futures

Originally published in Research-Technology Management

Trends are a commodity. You are one Google search from discovering hundreds of forecasts, trend lists, and predictions for your industry. Unfortunately, so are all of your competitors. Innovating against these known trends is table stakes. You need to do it just to stay in the game, but doing so will likely yield only market-rate growth unless your company already has a particular advantage. To grow at above-market rates and achieve truly transformational innovation, companies need to create a proprietary understanding about the future. This enables them to focus innovation, acquisitions, and other activities to build unique capability in tomorrow’s growth areas.  

One way to achieve proprietary understanding of the future is through ethnographic foresight. This research method combines customer ethnography techniques with foresight tools to anticipate future customer demand and build new capabilities ahead of competitors. Ethnographic foresight has a rich history: futurist Arnold Mitchell created the VALS (Values, Attitudes, and Lifestyles) instrument as a foresight tool to understand how society might develop in the future for a 1978 study at SRI International; it became one of the first foresight-related tools used by business (Yankelovich and Meer 2006), and it’s still in use today. VALS identified specific groups of consumers who shared unique values that were expressed through behavior and consumption. Companies were then able to develop products and services aimed at those values and begin to anticipate how those groups might behave in different potential futures.

Today the use of ethnography for business that VALS helped engender is very sophisticated; it underpins the marketing activities of many companies. Ironically, though, ethnography is not commonly used as VALS was originally intended, to understand the broader future of society. Rather, business ethnography often focuses on understanding customers as they are now. Ethnographic foresight combines business ethnography with foresight tools such as scenario planning, systems thinking, and forecasting to unearth unique insights into the future. There are three main ways to do ethnographic foresight:

·       Incasting—placing your current customers into new futures and evaluating how they might respond,

·       Forecasting—identifying new consumer behaviors and looking for how they might be creating unique futures, and

·       Co-evolution—recognizing that people both shape and are shaped by the future and developing ways to monitor this co-evolution over time.

An example ripe for ethnographic foresight is playing out right now with the rise of the Millennial generation. Connected technologies, a parental focus on safety and security, and a slow economy are shaping the values and behavior of Millennials. Applying the tools of future ethnography can yield a rich harvest of insight to drive product, service, and business model innovation:

·       Using incasting, we can ask how the expression of Millennial values might change in different futures or contexts. For instance, as the financial hangover from the Great Recession finally dissipates, the United States, with its large, highly trained workforce, could be poised for a sustained period of above average financial growth. How might Millennials react to this economic boom scenario, which would be unfamiliar to them? How would their desire for access, as opposed to ownership, be expressed? How would their need for virtual experiences and companionship change or be enhanced by increased disposable income?

·       Using forecasting, we can look for affluent Millennials, use ethnographic techniques to discover behaviors or desires that differentiate them from the rest of their generational cohort, and then look forward to see how those behaviors may influence the emergence of an economic boom scenario. Would suburban housing rebound as this generation creates families or would the trend toward urbanization continue? Would the travel industry grow, and what types of destinations and experiences would be valued?

·       Considering co-evolution, we can look at how an economic boom scenario would influence the Millennial cohort and how that cohort might influence the economy in such a scenario, and look for ways to monitor trends and determine how and where those mutual influences are emerging. Millennials are fed news, entertainment, and search results based on very specific information gleaned from their social network activity and purchasing history. This may facilitate a balkanized society in which individuals have little understanding or awareness of social perspectives different from their own, leading to tension and disconnection.

Moving from theory to practice, the first step in this process is often incasting—placing existing research about consumers into new contexts defined by potential futures.1 Many companies start here because it’s often the easiest step: most already have active consumer research groups, and many have separate scenario planning or business forecasting activities. Incasting connects the two, by positing a potential future, or set of futures, and projecting how different customer types would act and make decisions. Questions to ask range from the quotidian—How are they commuting to work? How are they feeding their families? How are they shopping? (Schultz 2003)—to the existential—Who is being silenced? Who is privileged? Whose truth is accepted? (Inayatullah 1998). Incasting questions should be developed based on how your company creates value and how your products and services participate in your customers’ lives.

The second way to use ethnographic foresight is to forecast how new values, behaviors, or persona types discovered through ethnographic research may create new futures. Generational research, like the example given earlier, is the simplest approach of this type. As generations move into new life stages—completing their education, getting their first jobs, marrying (or not), starting a family (or not), retiring (or not)—the values they have developed will influence their consumption choices, political decisions, and lifestyles. These changes will significantly shape the broader future in which they live; the recent, rapid shift in attitudes toward gay marriage is a recent example. A critical question to ask in this research is how much behavior is driven by true values, and how much is an artifact of a particular life stage. For instance, are Millennials embracing the sharing economy because they value access over ownership, or because they have not been in a life stage that requires much ownership? When Millennials marry and have children, will they still be renting apartments in the city and using Uber to get around, or will they buy minivans and homes and Costco memberships? Finding these key cohorts and examining how they are making decisions as they move into new life stages can highlight opportunities to develop products or services based on the cohort’s emerging values and needs.

Co-evolution is a more sophisticated approach, usually taken on only after companies have developed maturity with enthnographic foresight. The co-evolution approach begins with the recognition that the future both shapes and is shaped by people—the future and consumer behavior co-evolve with each other. Millennials have been shaped by growing up with constant connection to information. At the same time, the different choices they are making as a result of this experience are driving the future in new directions.

One foresight tool useful at this stage of analysis is crossimpact analysis (Gordon 1994), which evaluates the interaction of trends on a matrix (Table 1). This format enables companies to evaluate how consumer behavior may shape different elements of the future, and how the elements of a particular future may affect consumer behavior. The original method assigned probabilities to each interaction. However, the method is most productive in this context when the focus is not on a quantitative evaluation but rather on   a conversation about the interplay of forces. That kind of wide-ranging discussion can produce important qualitative insights.

In the example matrix, a hypothetical consumer persona, Seeker, is analyzed against key trends of a particular scenario. The method asks how elements of the Y-axis affect the elements of the X-axis. How will Seekers shape the economic boom? How will the economic boom affect the Seekers? Applying the results of the cross-impact analysis back to your incasting and forecasting research can lead to deeper insights that competitors may not be able to replicate. 

Using your existing consumer behavior research with these established futures tools will help identify areas where long-term innovation may allow your company to colonize a new market and build a proprietary competitive advantage. Like all foresight tools, ethnographic foresight is best done as an ongoing process rather than a single project or event, since the future will continue to evolve in unanticipated ways—despite our best efforts to pin it down. 

Notes

1 A key focus of any foresight activity is to develop proprietary insights about the future. The differentiation of these insights from those of com- petitors relies on the scenarios being unique. Inductive scenarios, those built with systems thinking, are especially effective for this type of analysis because they can offer a rich set of interactions that may shift behavior or change decisions made by actors in those futures. See Farrington, Henson, and Crews (2012) for more information on this approach.

References

Farrington, T., Henson, and Crews, C. 2012. Research foresights: The use of strategic foresight methods for ideation and portfolio management. Research-Technology Management 55(2): 26–33.

Gordon, T. J. 1994. Cross Impact Method. United Nations University Millennium Project. http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.202.7337&rep=rep1&type=pdf

Inayatullah, S. 1998. Causal layered analysis: Poststructuralism as method. Futures 30(8): 815–829.

Schultz, W. 2003. Scenario incasting: Exploring possible alternative futures. Hawaii Research Center for Futures Studies, February. http://www.infinitefutures.com/tools/inclassic.shtml

Yankelovich, D., and Meer, D. 2006. Rediscovering market segmentation. Harvard Business Review 84(2): 1–11. https://hbr.org/2006/02/rediscovering-market-segmentation