Nathan/ Should every organization be thinking about—and acting on—strategic foresight?
David/ Companies need to reach a certain level of maturity to take advantage of foresight. Not every organization is ready to do it or use it. And, there’s a spectrum. All organizations look into the future, at least a little bit. Anytime they make a plan, they’re operating in the future. But, they don’t always imagine how the future might be different before they make that plan. Most assume that conditions will be, more or less, the same as they’ve been. Of course, that can work well—for a while—depending on your business or industry. But, as we all saw with the pandemic, the future has a way of disrupting the “normal.” You can’t be ready for everything but every business environment and market is changing all of the time, and there are certainly things that more businesses should take into account that they usually don’t.
Some plans look out a quarter or a year. Others 2-3 years, Still others, 5-10 years. And, some look out even further: 20 years or more. Those are all different animals and require different techniques. This isn’t about predicting the future but looking at possibilities, focusing on the most interesting or advantageous, and then planning how to react if they happen.
Nathan/ Who should be in charge of foresight?
David/ it really depends on the leaders and the overall culture of the leadership team. Because it’s an emergent discipline, leaders value different (and at times inconsistent) sets of inputs and they each have different expectations of change in the markets based on their personal frame of reference. Some leaders absolutely don’t think foresight is important or even a thing.That’s fine. Hopefully, they can react well in realtime, as their industry or the world changes. Whoever should be in charge of foresight should strive to influence their leadership while acknowledging some leaders are completely focused on the “now.” Foresight deals with understanding how leadership cultures make decisions. If they find that things need to change, they’ll do that in the next revision or cycle. Some leaders are reluctant to pivot, based on what they find, which is understandable. They think in quarters or six month cycles.
Others are comfortable with some type of foresight tools and processes but not others. That’s fine, too. I look for what works for different leaders and company cultures. Some won’t stick with the process very long before they give up. It really takes at least a six month commitment to get to usable insights on the efficacy of foresight and innovation. When you talk to fitness instructors, most will tell you that you need to sustain a commitment to new activities—to change—for at least 28 days. Otherwise, you haven’t made new habits. That principle also applies in foresight work. I don’t think you can find meaningful insights within your market in a month. Teams should be looking at conditions for longer, to find the best value. It takes discipline, not unlike working out. It also takes discipline to apply the insights you find to new activities and behaviors.
Nathan/ How do you manage a conversation about what foresight can do versus what strategy can do versus maybe what traditional strategy does?
David/ Foresight is relatively new to most professionals; it certainly was for me before I joined the DMBA program. On the other hand, strategy is more widely recognized among a broader audience. However, strategy can be somewhat abstract for many people, and adding another layer of abstraction with foresight on top of it can be especially challenging for those who tend to think in more concrete terms. So, I make an effort to identify practical use cases that illustrate foresight’s distinctiveness from strategy. Frameworks play a pivotal role as well as having dedicated workshops with enough time to think through them.
Furthermore, I’ve observed a growing trend in organizations valuing insights almost as much as they do analysis. My firsthand experience in consulting involved gathering insights while collaborating with coworkers focused on data analysis and strategy. The most successful projects were those that effectively combined both approaches. Foresight enters the picture as customer insights help shape strategic decisions. One valuable framework I learned in my foresight class draws inspiration from Pierre Wack’s scenario planning methodology. This framework introduces nuance to insights by considering the differences between predetermined elements and critical uncertainties. By incorporating time as a dimension into the insights, this framework helps categorize insights – trends that will be around for 20, 30 years or variables that are more malleable to macro change.
Nathan/ What are the differences between these two and how do they change the context of the questions? How do you deal with either differently within different parts of an organization?
David/ Predetermined elements have a certain level of predictability in their evolution whereas critical uncertainties carry an element of unpredictability regarding their trajectory. In a given business environment, both elements are present. For instance, let’s say we’re building a new B2B product and we want to really understand the value proposition in a particular market, and we need to really solve someone’s pain. During research, we want to understand the nature of the challenge so we can use this framework as one lens to organize our findings. When working on discovery-oriented research, we might ask: “How long has this problem been going on? Is this something that you think is endemic to the industry? Or, do you think this is more nuanced? Talk about what triggers the pain points.” The answers we hear, how they describe the situation, all will help to make sense of the magnitude of the problem and how long it has been around.
For example, in the facilities operations industry, a predetermined element would be the belief that this business function will always be a cost center. Therefore, we can expect workers to continue having the mindset that ‘less is more’ thus influencing the way they construct value. An example of a critical uncertainty is that brick-and-mortar stores will remain important in retail going forward. The pandemic exposed its fragility, but it remains one that requires the industry to plan mitigation strategies. Now, we have to take a step back and start asking, “What degree of uncertainty does this element have?” Maybe we want to prioritize them, which could lead to some really interesting other exercises. Maybe some scenario mapping on the degree of uncertainty might yield more certainty or, at least, details?
Nathan/ How do you engage those questions or the results that come back with everyone in a company that needs to engage with them, because it doesn’t seem like most companies ask enough relevant stakeholders to be part of those discussions?
David/ This is really about culture and intention, which is likely a strategy unto itself. I’m in a world, now, with quite a bit of rigor in our processes. If we want funding for any kind of research investigation, we need to have our learning objectives established. We need to describe how this research will be applied and what audience will see the results. Some of our research projects are slated for discovery and they’re meant to actually uncover new insights. So, we talk in terms of horizon one, horizon two, etc. if we’re on an H2 project, we will start to slip in the idea that we need to change our mental model, we need to have a different lens of how we’re perceiving something that’s always been here, but now we need to have a new interpretation of it.
Nathan/ The ecosystem is so much bigger than most people realize or define. Is it difficult to convince clients or peers to investigate the rest of the stakeholders?
David/ Unfortunately, I think it’s often a hard sell. Many companies struggle building a coherent strategy with their primary stakeholders already, so widening the investigation and conversation beyond that is something many just can’t manage. However, I do think there’s a responsibility to be conscious of your externalities as a business. It’s critical. It takes time to get there, though. The audience also matters. In my current job, I communicate with a cross-functional leadership team—all of the departments share a wide variety of insights. That works well. We’re also in a holdings company, so we have another level of stakeholders beyond that, requiring us to communicate a different set of insights to them. There is a lot of room for innovating these processes and relationships—especially as competition gets more intense
Nathan/ There are many examples but let’s talk about Nike, for a moment. They were focused on making the best sports equipment and clothing that they could, and then their world explodes when NGOs announced that some of their products are made by children. That’s a force they hadn’t considered. No one in the company was looking at that, right? It’s one thing to do deep investigations of stakeholders but it’s not common for companies to do even shallow investigations. No one took one day out of their work to just ask about NGOs—which ones that are aligned with us? Which ones are against us? What are the issues that could arise? And, what can we do about these now? That’s not a difficult process.
David/ One thing that really helps creating more intellectual scaffolding to support that effort is having rigorous brand values. Brand values allow you to justify spending time and effort to really think more critically. Without them, guiding principles tend to default to profit and other core business fundamentals. Brand values give teams permission to think bigger. And sometimes those can be fluffy, but I think one,
Nathan/ I don’t disagree at all but no one’s brand values are to annoy customers or be unfair. Yet, Comcast still treats their customers terribly and Uber lost a billion dollars in revenue because they treated their women employees terribly. There’s a disconnect between brand values or any goals and action.
David/ That disconnect is the failure where it‘s beneficial to give teams permission to go outside their standard realm. Many are captive to mid-management who may not see the bigger picture you do or even that executives might appreciate so organizations need to empower those folks to surface concerns more seriously and share insights—particularly opportunities and threats—more widely, regardless of hierarchy. In public companies, especially, there is so much anxiety that you could be accused of doing something that does not directly support your shareholders. We need to learn how we can be bolder even while working within a publicly traded company and show shareholders that these things do matter. But, I do think that’s a tough hill to climb.
Nathan/ How do we ask better questions in an organization?
David/ It does come from the top, in my experience. A leadership team who has some connection to the results of those questions makes a difference. It’s an exhausting and unsuccessful conversation if you can’t frame them in terms of the organization’s strategic goals. Teams can also bring innovative, creative thinking to tactical levels if given the chance. There is value in running research projects‚— even ambiguous ones—that work from a valid hypothesis. We don’t necessarily know the outcome but these can still be rigorous investigations of assumptions. For me, it comes down to “What are we trying to learn? How do we understand what’s really insightful and going to drive the decisions we need to make?” It’s a puzzle that needs articulation, and it doesn’t happen as often as you might think. And then getting people to very consciously analyze and agree upon this is what we’re going to be pursuing in the next year. That’s something we’re trying to do a lot.
Nathan/ It’s not easy to have a conversation with a bunch of people, all with a different contexts. How do you create a shard context so you can have the conversation that isn’t being had?
David/ It’s not the most revolutionary insight, but it comes down to having objective conversations on the pain points you’re trying to solve. Something that happens is people who work in organizations for a long period of time believe they really know their customers. They probably had a season in their jobs where they spend a ton of time with customers, but then 10 years might’ve gone by and they’re still operating on an older mental model. What can have the most impact is direct, fresh research and the storytelling that comes out of that. My teams and I spend a lot of time in front of customers but, then, it’s on us to disseminate that knowledge. If we just had a little bit of production budget to spread what we’re hearing on a daily basis, I think those kinds of insights can create a huge culture change. One of my team members is managing an innovation project and he put together just a two or three minute video of customer feedback—nothing groundbreaking, just a nice montage of customers giving positive feedback. But, it made the all-hands meeting. Because the insights were so clear and the value of hearing them was so powerful. It was exciting for everyone to hear directly from customers. I could even imagine working with producers to communicate these insights more effectively and create that shared context.
Too often, the financial info are lagging indicators. Leaders—really everyone in the company, ultimately—need to be looking towards leading indicators, more. Where is the portfolio delivering value, and how do we anticipate the way that the market forces are going to shape that value creation in the next three to five years? Then, get aggressive about competition and really ground your assumptions, insights, and predictions. Then, help your team understand for which new opportunities we really have conviction. Because too often we’re trying to get as much out of the one market we do have a good handle on, but then there are few places to go. Leadership should invest in rigorous work to anticipate the next opportunity and support a team to go do that.
That’s where scenarios are helpful exercises to loosen people’s thinking. I recently ran a workshop where an innovation team was looking at new opportunities, so we gave them archetypes to reconsider their value chain as well as Jim Dator’s scenario archetypes. . They loved being able to work within a holistic frame on where their market might go but without the usual constraints in their thinking. They threw-out some crazy ideas but they also found associations that they didn’t see before. Then, in back-casting they come back with usable innovations. Leaders aren’t enabling this enough.
Andy Dong’s research into abductive reasoning is a nice structure for me to think within cognitively. It’s just using decision-making functions in new ways. Realizing the elasticity of time makes you see there are more opportunities out there and if we don’t play with time, we treat that as too fixed. We think that the world is a lot more predictable than it really is. Which is ironic because so businesses —especially startups—are focused on growing value so much but most don’t bother to use these tools.
A typical startup takes five to seven years to build its value into something significant. But, God forbid, we think beyond a quarterly cycle. If we think about how long it takes to build something, sometimes 18 months to build, how long will that last? Three years? What if it takes the same 18 months to build but lasts 10 years because you did the foresight work up front? That’s a lot more value for your money and time.
Nathan/ Could you talk a little bit more about trends, because you started essentially describing the difference between a trend and a fad, but time is the real timeframe?
David/ Sure. It’s a broad field with many ways to structure trends. I’ve been trained on horizon scanning, so that’s the model I use. It’s a straightforward method of capturing different types of signals—especially weak signals that, by themselves, might not have commanding power but if true could create big change. These are low likelihood, high impact trends that you should pay attention to. It reaches the next level of importance, moving away from fad status and towards a trend, if you find documented evidence showing sustained change. You can build an evidence-based view of what constitutes a trend (and whether it’s a macro or micro trend). You might have a small set of macro drivers that, once identified, you only update every year or two. I’m rooted more in the qualitative behavioral world so I want to understand how people are making decisions, not just that they are, and learn the forces that are shaping their decisions. We still want to link it to data, but also frame it around their perceptions, their mental models, and how they view it as a problem. We will do that for early adopters, say, and then map it to the differences we see in mid-market customers or laggards. But, it all starts with those signals from horizon scanning. It’s always so enlightening to visit customers and talk to them about how they perceive the future.
Nathan/ Most companies don’t have a trends team. In the past few years, we saw COVID-19 slam into every business in the world here. Many businesses haven’t yet recovered, some will never recover. What could a company have had in place so that they had some warning or some preparation for this pandemic? How could they have seen those signals in a way that they could identify or use them at the right moment?
David/ This gets to the core of sensemaking, which I learned from Daniel Schmachtenberger’s work. It’s a 22nd Century skill that helps businesses discern what’s happening around them and operate more intelligently. Many leaders are stuck with financial pressures, often asked to hit numbers that are unrealistic. That makes foresight feels like a luxury the more you ignore these things, the harder they’re going to be to address.
Nathan/ I’m smiling because the only way they’re going to make the incredible numbers they’re either promising or being expected to is if they find something new that nobody else sees. The more they ignore the tools that will help them find big, relevant innovations, the less likely they’ll be at doing just that, hurting their ability to hit goals.
David/ It’s a catch-22. A lot of leaders need to see the light at the end of the tunnel of innovation which is often to get a return of investment on the effort. But, innovation and new opportunities aren’t sure things, especially at the start. It’s not easy to justify them then. We’re getting better at the research gathering and problem definition. I even think we’re getting better at experimenting and de-risking but, still, there are still major challenges bringing new products to market. My personal gripe is the ideation process which I find is underwhelming in corporate contexts. Because of that, I don’t think we are giving the creative process enough time—not enough oxygen to let it breathe. If there’s any time to step away from a linear, left brain, deductive, or inductive analysis, it’s this time to give people a real chance to think and design a new solution. Often, these processes are reduced to a workshop or a week or a weekend hack-a-thon. If you spent six weeks in research but give people only six hours to innovate the next big idea, that should be a sign. If we learn what customers are thinking about and where their future’s going, we then need to allow and empower people to take the time to really think about solutions that are multi-phased. Too often, leaders invest in the first phase and expect that to make all the difference. We don’t actually have a precedent for that. Important things take time to grow.
Nathan/ How would you redesign an organization that practices these processes in a better way?
David/ I really like how Boston Consulting Group’s think tank, The Henderson Institute, talks about a company as a ‘bionic company”, like a living organism that is always evolving.
Whatever tool or template you use can never be the perfect template because it, too, has got to evolve. I think it’s important to ask each roles, recognizing their authority. If it’s the CEO, they need to set the big vision. Then, each department needs to set their own sub-vision and then you have to find a way to integrate these and communicate them in a way that is clear and digestible for teams to work with. Everyone needs to be able to bring their creativity to bear so the boundaries can’t be too solid at each level.
Too often, much of the strategy is just boilerplate. Most leaders don’t think they have enough time to refine enlightened strategy. I could wave a magic wand, I slow some of these steps down, connect them to three to five core visions, and help them scaffold down throughout the rest of the organization. Maybe what you’re handing off is your questions. You’re asking teams to tackle uncertainty rather than a predefined solution.
This interview is from A Whole New Strategy: Everything You Need To Think And Act More Strategically
Recent Comments