Laws of Satisfaction of Needs
Purpose of life is beyond the life’s boundaries.
- Vladimir Tarasov, Technology of Life: Book for Heroes.
What is the purpose of forecasting? Obviously, any forecast makes sense only if it influences today’s actions, improves chances for tomorrow’s success and reduces risk of tomorrow’s loss.
Both “success” and “loss” should be defined out of the boundaries of “actions.” “Success” is the achievement of a goal, and “loss” is the extent of missing this goal. Hence, both should be defined in terms of “goal” rather than “actions,” and any properly stated goal is above the actions aimed at its accomplishment.
What is the goal of industry actions? The obvious goal is, to make money. Some industries even declare, “We are in the business of making money.” Sounds cool, but makes no sense. If they are not printing money or (god forbid) counterfeiting, we need to analyze their business goal deeper.
How companies make money? The most popular formula is, “buy cheap, sell high.” Another cool slogan, because it lacks the “adding value” portion. Hence, the “comprehensive formula” is, “buy cheap, add value, sell high, and gain profit.” This sounds much better. Profit is a reward for efficient activities of buying, adding value and selling. If this reward is “as expected” or higher, the business is successful; if reward is below the expected level, or even negative, the business is a loser.
Which activity of “buying,” “adding value” and “selling” is actually producing the profit? Of course, it is “selling,” because both “buying” and “adding value” are rather expenses that reduce profit. Hence, company’s success depends on its ability to sell its product or service profitably, i.e. for the price that overcomes expenses. Expenses include cost of supplies and cost of labor.
History demonstrates that “cost reduction” provides rather for temporary relief than for sustainable success, while sustainable efficient selling is a key to business success. But, does it mean that the company with better sales force is always successful? Not at all.
Did we miss something important in this analysis? Of course, we did. We missed the customer, the ultimate source of money. “Selling” is an activity rather than goal, and goal – which is, again, out of the industry’s boundaries – is to “make” customer buying the industry’s product or service. Just like leading horse to water and “making” it drink. If horse is not thirsty, it won’t drink whatever you do. If customer is not “thirsty” for a product, he won’t buy whatever you do.
Belief that customer can be lured into buying something he absolutely doesn’t need is nothing but a myth. “Lured” means that customer expects that this product will satisfy his need, but later finds out that this product doesn’t provide the promised satisfaction. Of course, such deceit works, but it cannot serve as a solid basis for sustainable business.
Hence, the forecasting the industry’s future achieves its purpose if it can predict with sufficient accuracy what customers will want to buy in the nearest future. Then, and only then, such forecast can influence today’s actions, improve chances for tomorrow’s success and reduce risk of tomorrow’s loss. If we know for sure what customers will buy in the nearest future, we could develop appropriate products today, successfully (profitably) sell them tomorrow, and thus reduce risk of tomorrow’s losses from attempts to sell outdated products.
The Laws of Satisfaction of Needs describe the fundamental principles why people buy or ignore a new product or service. These Laws are the rock-solid foundation of FutureMapping forecasting. Without these Laws, the FutureMapping forecast is as doubtful and inaccurate as any wild guess. Law of Purchase explains the key reason for buying, expectation that a product or service will serve as a solution to satisfaction of customer’s need. Law of Steady Increase of Degree of Satisfaction of Need explains why products that are satisfactory today won’t be satisfactory in the future. Law of Underlying Process explains the immutable structure of process of satisfying the need.