Avoid the Analysis of Others (Why Now)

If you’re finding this post now, I actually wrote a book about all this… It’s called Why Now: How Good Timing Makes Great Products. You’ll get a fuller perspective there.

This is another in the Why Now series. You might also like to read these posts: Why Now: Timing and Product Success and Timing Drivers Visualized.

In the timing or “Why Now” research I’ve been writing about I do ask you to know about existing and forecasted demand for related products. But this is different from looking at research that predicts demand for your own product. 

In your supporting research, you should look at what’s changing in drivers that support your business arriving at the right time. Look at the converging factors that make this the right time for a product to exist. (Of course, you might find that there are no drivers in your case.) 

But sometimes people are tempted to look at the timing question in an unhelpful way.

One tempting approach when running a Why Now Session is to look up analyst reports of future demand for your product, choose the big numbers, and use that to support your case.

Don’t do that. Here’s why. 

Below is a series of analyst estimates from 2016 for the potential size the virtual reality and augmented reality market would reach in a few years. I chose 2016 since VR and AR received a lot of attention then. That was the year many people expected the technologies to break out. 

• “[T]he market for VR products and technologies was valued at $1.37 billion in 2015 and is expected to reach $33.9 billion by 2022. The overall market for AR was valued at $2.35 billion in 2015 and is expected to reach $117.4 billion by 2022.” [MarketResearch.com]
• “The virtual and augmented reality market will reach $162 billion by 2020.” [Business Insider]
• “Forrester’s report estimated the demand for virtual reality headsets in the U.S. will mean there’ll be 52 million devices in the country by 2020.” [CNBC]
• “According to the report, the global virtual reality (VR) market was valued at approximately USD 2.02 billion in 2016 and is expected to reach approximately USD 26.89 billion by 2022, growing at a CAGR of around 54.01% between 2017 and 2022.” [Globe Newswire]

The above reports were from 2016. Now let’s look at reports published in 2020 about the actual current state of VR and AR.

• “The global virtual reality software and hardware market size was valued at $2.6 billion in 2020, which will jump to $3.7 billion in 2021, $4.6 billion in 2022, and 5.1 billion by 2023 (SuperData, 2020). As of 2020, 26 million VR headsets are owned by consumers globally (CNBC, 2020). The combined augmented reality and virtual reality markets were worth $12 billion in 2020 with a massive annual growth rate of 54%, resulting in a projected valuation of $72.8 billion by 2024 (IDC, 2020).” [Finances Online]
• “The global virtual reality market is projected to grow from $6.30 billion in 2021 to $84.09 billion in 2028 at a CAGR of 44.8% in the forecast period, 2021-2028.” [Fortune Business Insights]
• 5.5 million VR and AR devices were shipped globally in 2020. [IDC]

What wildly different outcomes in just four years! The expectations from 2016 were much higher than what reality served up in 2022.

My point isn’t to pick on VR and AR market analysts. There have been many industries that seemed promising and ready for fast growth that later fell short of expectations. Instead, my point is that if you’re using other people’s forecasts to justify your own timing, you’re skipping the process and just looking for big numbers to legitimize what you’ve decided to do anyway.

You are also missing the point of thinking about timing and running a Why Now Session. You need to approach the Why Now Session from the perspective of learning about drivers that support your business, not by simply choosing research that agrees with you.

Plus, if you just repeat analyst quotes, when you meet someone who doubts the numbers, the best response you can give is “that’s what they say.”

But why were the analyst reports wrong?

It’s hard to know without seeing their process, but I suspect something other than methodology as the prime cause. 

What gets reported and repeated are the big numbers, the big potential opportunities, the stories for how the world will be different in the near future. Teams seeking investment and even investors seeking justification for their investments will be tempted to stress the optimistic outlooks. So will analysts. It’s more noteworthy to publish research claiming a big change is on the way, rather than research saying that the world will remain the same.

Avoid copying analyst research outright and focus on understanding timing drivers and their impact on your business.

If you’re presenting your own Why Now, relying on analyst reports without understanding the underlying drivers opens you up to being challenged by someone who doesn’t believe the reports. Instead, if you present your reasoning behind the way drivers will affect outcomes and the timing for that, you’ll have a discussion.

I’ve done a YouTube timing analysis from the perspective of 2005. In that case I did use analyst reports on the number of projections, including on digital cameras and webcam sales, how broadband penetration was going to grow, and on the cost of file storage. I also showed what people had already done, such as the number of cameras purchased and social media and online image sharing that was already taking place.

But there were a couple differences in the YouTube research I used and the VR / AR examples I showed above.

For some of the research I showed, the world had already reached the point where enough supporting drivers were in place. File storage was already cheap, even if it was declining in cost predictably. Broadband penetration to the home was already becoming common and people were not about to go back to dial-up. Digital cameras and webcams were already becoming common and the idea that people would go back to videocassettes was unlikely.

The supporting drivers were already in place and demand for video was already there.

That list is different from the VR / AR projections for units shipped, which made projections on what people would start to do in the future. 

If you’re evaluating someone’s Why Now and you question them using a set of analyst reports you trust, make sure you understand the drivers of the expected changes. 

If you’re evaluating someone’s Why Now and you instead see a reliance on analyst reports, talk through their logic.

If someone pushes back on your Why Now with an analyst report that they trust, ask how the analyst came to their conclusions. Is the disagreement on how fast the change will happen or on its magnitude? Is there an appreciation for the way multiple drivers may converge?

Simply reporting that a changing industry will be a certain size by a specific date doesn’t give you much useful information.

Feel free to say hello here or at @porlando on Twitter. I hold “Why Now” workshops periodically. Contact me to learn about the next one.