Strategic Foresight: Creating Competitiveness and Sustainable Business Growth in a VUCA World

FPTI, 13 November 2020

Maree Conway, Thinking Futures

My foresight journey• 28 years as university manager, last five as planning director in two

universities• 21 years using foresight approaches in range of organisations in many

countries• Academically trained in Foresight & Futures Studies (Swinburne

University of Technology)• Practical orientation to outcomes – they must be useful in the present• Cognitive orientation to thinking – shifting mental models from ‘the

future’ to ‘many futures’• Foresight in an inherent human capacity – but we can’t touch it, feel

it, so its value is often dismissed in strategic discussions.

The contextVUCA: Volatile, Uncertain, Complex, AmbiguousTUNA: Turbulent-Uncertain-Novel-Ambiguous

The present context is complex and interconnected.

Old Behaviour dies hard – the used future

Slide used with permission of Sohail Inayatullah

How to make sense of it all?

Photo Credit: https://www.changequest.co.uk/blog/the-5-fundamentals-of-sensemaking-in-an-ever-changing-world/

Using Foresight

• Foresight is the neurological and cognitive capacity we have to think about possible futures, to form a ‘forward view’ and to use learnings in strategy development in the present.

• Strategic Foresight is foresight thinking applied to strategy development in organisations. Also called corporate foresight (CF). I’ll call it foresight.

• Fundamentally, an organised and systematic process designed to engage with uncertainty about the future in organisational strategy development in order to expand thinking about potential strategic options.

Who uses foresight? Here’s a few…

• Shell – origins of modern scenario thinking; their approach has brought imagination as a source of information about the future into organisations; shifting mental models and understandings of the future is critical

• Singapore, Malaysia use foresight at a national level. Emerging at national level in the Philippines.

• Singapore: team in Prime Minister’s office. All civil servants need to learn foresight as core skill.

• Thailand: APEC Centre for Technology Foresight, National Science and Technology Development Agency. Technology focused?

Who uses foresight? Here’s a few…

CiscoDaimlerDeutsche BankDeutsche TelekomFrance TelecomL’OrealPepsiSeimens

• “The expectation is that CF will enable these firms to spot trends ahead of competitors, gain deeper insight into how such trends will affect their organization and identify the most effective response, and ultimately gain a competitive advantage.”

(Rohrbeck & Kum, Corporate foresight and its impact on firm performance, 2018)

http://www.foresightguide.com/large-companies-foresight-leaders/

Is foresight effective?

• Definition of CF: a set of practices that enable firms to attain a superior position in future market – developing futures preparedness

• Futures preparedness : futures ready, prepared for the future, oriented to the future Competing for the future (Hamel & Prahalad 1994) is a better strategy than restructuring and downsizing in times of crisis.

• Value creation occurs by acting earlier than competitors and being able to influence actors

Using Foresight

• CF is best used to identify the factors that drive environmental change, foresee future market changes, and define a course of action that leads towards a superior market position—and subsequently to superior firm performance.

• A CF Maturity Model can measure levels of futures preparedness.

Vigilant, a firm has CF practices that are adequate for its given environment.

Neurotic, a firm has CF practices that exceed its needs for a given environment.

Vulnerable, a firm has CF practices that fall one level short of what would be required to match the need.

In danger, a firm has CF practices that fall more than one level short of what would be required to match the need

The bottom line• Future preparedness a powerful predictor for becoming an

outperformer in an industry• Future-prepared firms:

• outperformed the average by 33% higher profitability; and• outperform the average by a 200% higher growth rate

Slide used with permission of Sohail Inayatullah

These outcomes

• Derive from changing both how an organisation operates and how the people in that organisation think about the future.

• The true value of foresight only emerges when both types of changes are achieved – demonstrated by new actions taken and new mental models.

• Achieved by using processes continuously that enable foresight thinking to become part of an organisation’s operations is essential.

Why foresight?• From global politics and economics to

communications and transportation, education, construction, agriculture, and even fashion, the world is amid fundamental shifts. More and more, systems of knowing and methods of doing are out of date. They are unable to adapt to a dramatically changing world.

• Surrounded by competing priorities, limited resources, and a complex changing environment, governments are searching for new planning tools to meet multiple economic, political, social, and environmental and climate change challenges.

Futures Thinking in Asia and the Pacific: Why Foresight Matters for Policy Makers, Asian Development Bank, April 2020

https://www.adb.org/publications/futures-thinking-asia-pacific-policy-makers

Why Foresight?

• By using emerging issues to develop scenarios, futures studies can help uncover uncertainties, fears, and hopes—the future is questioned.

• This can lead to innovative solutions and resilient policies—because we see problems and opportunities earlier.

Futures Thinking in Asia and the Pacific: Why Foresight Matters for Policy Makers, Asian Development Bank, April 2020

https://www.adb.org/publications/futures-thinking-asia-pacific-policy-makers

First, a critical distinction

Strategy is about moving an organisation into the future while planning is about agreeing on action to be taken today.

Conventional strategic planning is formulaic, with the plan as the focus and the present as the temporal context.

Strategic foresight is flexible, customised for the organisation with an integrated past-present-future as is temporal context.

We need both activities to generate foresight infused strategy - adds in applied foresight processes that, over time, develop futures literacy skills.

• It may well be that the typical strategic planning exercise now conducted on a regular and formal basis and infused with quantitative data misses the essence of the concept of strategy and what is involved in thinking strategically

(Sidorowicz, 2000).

Strategic Planning Outcomes

• Many organisations can't consistently describe their strategy – strategy needs to be translated into operational terms.

• 60% of typical organisations do not link their strategic priorities to their budget (how do key strategic initiatives get funded?)

• Two-thirds of HR and IT units develop plans that are not linked to the organisation's strategy. This is extraordinary.

• 70% of middle managers and more than 90% of front-line employees have compensation that is not linked to the strategy.

• 95% of employees in most organisations do not understand their organisation's strategy.

Robert Kaplan and David Norton, The Office of Strategy Management,

https://hbr.org/2005/10/the-office-of-strategy-management

Strategic Foresight Strategic Planning

Only the shape of the future can be predicted Future is predictable and specifiable in detail

Relies on self-reference – a sense of strategic

intent and purpose embedded in the minds of

managers that guides their choices

Asserts control through measurement

Requires that managers have an understanding

of the larger system

Assumes that the manager below need only to

know his or her own role well

Sees strategy and change as inescapably linked

and assumes that finding new strategic options

and implementing them successfully is harder

and more important than evaluating them

Assumes that the challenge of setting strategic

direction is primarily analytic

Sees the planning process itself as a critical value-

adding element

Focus on the creation of the plan as the ultimate

object

Purpose Thought Process

Strategic Foresight Discover novel, imaginative

strategies that can re-write

the rules of the competitive

game; and to envision

potential futures; significantly

different from the present.

Synthetic

Divergent

Creative

Beyond linear

Strategic Planning Operationalise strategies

developed through strategic

thinking, and to support the

strategic thinking process.

Analytical

Convergent

Conventional

Pragmatic

Strategic planning seeks certainty, and a single linear future

Foresight injects possible futuresinto strategy development

Two sides of strategic development

• Current strategic planning processes tend to focus on the plan as the major outcome, rather than a shared understanding of your organisation’s preferred future to inform action today.

• They neglect the cognitive side of planning – the ability to think expansively about the organisation’s positioning in its external context, both in the present and into the future.

Identify Drivers of Change

Critique Drivers for Relevance

Imagine what’s

possible

Envision a preferred

future

Plan and Do

InternalQualitativeIntangible

Unseen

ExternalQuantitative

TangibleSeen

Planning

Foresight

Two sides of strategic foresight

Foresight

Planning

Foresight Infused Strategy

• Foresight = the ability to take a forward view and use insights gained in organisationally useful ways (Richard Slaughter)

• Infused = foresight thinking permeating strategy processes at all stages – thinking about the future is the norm

• Strategy = an organisation confronting its environment to ensure its continuing development, to ensure its strategic ‘fit’ in that environment

Foresight Infused Strategy

• Foresight processes are designed to develop strategy that is futures ready

• Futures ready = flexible and robust strategy driven by the future that allows organisations to respond proactively to whatever opportunities and challenges the future brings.

I am open to new ideas

I am a systems thinker

I am curious

I accept the need for

diversity & new

perspectives

I like to think ‘outside the

box’ and think outrageously

at times

I challenge assumptions

about the future –

mine and others

I am aware of my own cognitive

biases and assumptionsCharacteristics

of a Foresight Thinker

Foresight Processes

Just three of many foresight frameworks –all designed to help people understand their context, challenge existing assumptions, find alternative futures, and generate an expanded understanding of strategic options available today.

Individual context: beliefs

about the future and unquestioned

assumptions about the future

Organisational processes:

bringing people together for

strategic conversations

Cultural context: collective norms,

beliefs and unquestioned assumptions

about the future

Social system: social changes

and disruptions shaping the

organisation’ s futures

Individual Conversations

Collective Conversations

Invisible Side of Organisation

Visible Side of Organisation

Individual Consciousness

Organisational Behaviour

Social Systems & StructuresOrganisational

CultureDeve

lopi

ng F

utur

es C

onsc

ious

ness

Deve

lopi

ng F

utur

es O

rient

atio

n

No single right way: The way foresight is used in an organisation will be unique to the organisation.

Foresight everywhere: the organisation must be committed to using the future in the present on a continuing basis.

Know why: be very clear about why you are using foresight in your organisation – what are your desired outcomes?

Start small: don’t pretend foresight is your strategic silver bullet – it takes time to build futures literacy

Facing the future• Scan the environment for changes shaping your

organisation’s future.• Build a unique ‘change ecosystem’ for your

organisation to show the interdependence of these changes.

• Share the information across your organisation.• Promote continuing conversations about your

organisation’s ‘strategic fit’ into your environment.• Changes in the environment can be incremental

but they can also be disruptive – foresight helps you see the disruption ahead of time.

• The aim is to ‘use the future’ in the present.

Beyond the status-quo

Integrate the long-term view into your short-term planning.Both are critical for successful strategy.

Data + Imagination• The future exists in the present only as ideas that

are generated by our imaginations.• Data tells us about the past and the present.• We need both for futures ready strategy.

Challenge the validity of your assumptions

• Deeply-held and unchallenged assumptions about futures that are ‘real’ can shut down conversations about the full range of futures available to you in the present.

• What futures do you accept as real and what futures do you reject?

Strategy without people is strategy without a future

Put people at the core of your strategy development.

Foresight everywhere

• Communicate information about foresight to increase awareness on a regular basis

• Promote opportunities for people to experience foresight processes• Train people in foresight thinking and approaches• Learning how to see the ‘new and novel’ in the present by challenging

assumptions.• Moving beyond the single linear plan that emerges from strategic planning to

many feasible pathways into the futures yet to emerge• Ensure ‘using foresight’ is part of your organisation’s culture

Critical Success Factors

• The future is a learning journey, see it as an asset - use it in the present

• Challenge the used future – the one that doesn’t work anymore

• Look for emerging issues – the periphery, the new, the novel

• Create alternative futures – beyond the single assumed future

• Make the vision real – your preferred future• Find your guiding metaphor

Slide used with permission of Sohail Inayatullah

The Asian Development Bank

• The future is not set in stone

• We still have time to design the sustainable future we want

• Infrastructure bank to a Knowledge Bank

• Shift from “knowledge on a leash” to “knowledge with wings”

Dr. Susann Roth

Slide used with permission of Sohail Inayatullah

2017 INTERNATIONAL BANK 2037 INTERNATIONAL BANK

Activity Bank finances x number of kms of roads and other utility infrastructure

Bank finances integrated and sustainable (green, smart, equitable) urban and transport planning.

Minimize travel distance

Minimize carbon emissions

Systemic causes shaping activity

Population growth, a greater number of cars, increased wealth and larger flats

Integrated planningDriverless and autonomous vehiclesSmarter city systems that coordinate traffic and safety

Shared and pooled transport

Dominant belief Car-centric

The right to drive our car whenever and wherever

Ownership

Human and connection centred

Mobility of persons via integrated planning as opposed to ownership

Metaphor I love my car I love my neighbourhood

Slide used with permission of Sohail Inayatullah

46

Current Transformed

Activity We need energy for comfort (lights, heat, cooling, cooking)

We are all customers and producers of energy

Systemic causes shaping activity

Energy is becoming more expensive, harming the environment. There is more competition, price disruption, other products (solar, batteries)

Household control their energy usage, cost and environmental impact through smart digital systems. Energy is integrated beyond the home to the community and beyond

Dominant belief

Energy as an essential service Energy is a decentralised and integrated ecosystem

Metaphor “Keep the lights on” – the safety box

“Connect your home and community” – the connector

Slide used with permission of SohailInayatullah

The value of foresight

• Identifies & challenges beliefs about ‘the future’ in the organisation – identifies new understandings of strategic options in the present.

• Helps organisations prepare for and manage risk into the future – to be alert to risks before they emerge.

• Enables flexibility and adaption as change emerges – rather than reacting to change after it has happened.

• Helps you consider the needs of future generations.• Builds collective futures literacy capacity.

Seeking Futures Literacy in Organisations

• Thinking about the future is like any skill – it builds over time until you are ‘futures literate’.

• Futures literacy is the competitive advantage.

• Provides an early warning system –to see change coming, and not be blindsided.

• Moving from “nice to have” to “a capability one must have.”

Futures Literacy – UNESCO Futures Literacy Labs

Futures literacy is the ability to become aware of ‘anticipatory assumptions’ about the type of future being imagined, and mastering it allows us to view uncertainty as a resource, rather than an enemy of planning

By imagining different futures, individuals can become aware of their capacity to shape and invent new anticipatory assumptions. The act of shifting this ability from an unconscious to a conscious state is the start of becoming futures literate.

It enables us to become aware of the sources of our hopes and fears and improves our ability to fully appreciate the diversity of both the world around us and the choices we make.

Vigilant, a firm has CF practices that are adequate for its given environment.

Neurotic, a firm has CF practices that exceed its needs for a given environment.

Vulnerable, a firm has CF practices that fall one level short of what would be required to match the need.

In danger, a firm has CF practices that fall more than one level short of what would be required to match the need

Three thingsThere is no such thing as ‘the future’. There are always multiple futures

available to us in the present.We just need to open our minds to

them.

There is really only one way to live in a world of speed, surprise, noise, and responsiveness, and that’s to visit the future frequently.

Grant McCracken, The corporation is at odds with the future

Get in touchMaree ConwayThinking Futures

Melbourne, Australia

W: https://thinkingfutures.netLI: https://linkedin.com/in/mareeconwayT: https://twitter.com/mareeconway

E: maree.conway@thinkingfutures.net