Few business leaders appreciate the power of foresight, much less how to apply it. Jeff Bezos will likely soon be the wealthiest person alive not because he’s always right (he’s not), but in no small part because he understands how to envision and create the future.
Charles Babbage designed mechanical computing machines in the 19th century that anticipated the computer revolution. He had stunning foresight, but in his explicit missions to create technical and financial success in his lifetime, he failed.
Great strategy can only be created with foresight.
Great strategy can only be created with foresight. Simply doing more and better of what you already do will only work until something changes, and it will. How might we generate foresight that works for business? Most people equate foresight with prediction. Prediction is relevant but insufficient. We can only confirm predictions in retrospect, but we must lead looking forward.
Foresight should be fit for purpose
Leaders require foresight fit for purpose. Are you seeking to envision the far future of humanity or build a successful enterprise? Leonardo DaVinci was one of history’s true visionaries; however, few of his musings translated into outcomes within his lifetime. His sketches presaged helicopters and armored cars by over 400 years. Stunning foresight, but not of much value for the investors of his age.
Ask first why you are seeking foresight. To enhance your business unit’s performance over the next few years, or to ensure your long-term legacy? To drive market adoption of a technology, or to resurrect a declining business? The future has no obvious boundaries, so you must define your own. Defining your search should be driven by clarity of purpose.
Explore what’s plausible, not just what’s likely
Don’t try to predict what will happen. We typically expect the future to be an extrapolation of the present. A review of history confirms that given enough time this is not the case. If it were, we’d today be riding faster horses. Little appears to change over a year, but change can be dramatic over a decade.
Most leaders want to know what will most likely happen, then invest accordingly. Doing so is dangerous. You’ll have all of your eggs in the proverbial single basket. The essence of strategy is to have a thoughtful portfolio of options.
Considering the future, focus on what is plausible even if somewhat unlikely. We call these plausible futures. Sure, aliens could invade, but we can’t spend time worrying about that. We should consider the wide variety of directions in which our markets might evolve, then ensure we have projects underway to keep us relevant. In the mid-2000s, few energy industry experts believed that the availability of hydrocarbons would increase in the future, but it has. Explore what could plausibly happen even if you don’t think it’s very likely, then evolve your portfolio against that.
How far should we look?
Your purpose should inform the horizon to consider. How far in the future you’ll investigate. If your objective is to grow successfully over the next few years, you should explore at least a few years beyond that. Weak signals today might fade, or they might become the trends of the future. When we consider the near term, it’s tough to release assumptions about the world as is. 10 – 20 years out, we can more easily accept things might be far different.
In my work recently with a major regulated electric utility, I posed the rhetorical question, “Do you think your current business model will remain viable in 30 years?” The question is not if their future will be dramatically different, but when.
Bring the outside in — with your decision makers
Any foresight initiative must include broad and diverse perspectives from outside your company and industry. No matter how creative, all firms develop perspectives that pervade the company. Xerox invented the entire personal computer revolution in the 1970s at their Palo Alto Research Center (PARC) in Silicon Valley. They commercialized almost none of it. Responding to one success story at that time—an ink deposition technology invented for laser printing (also invented at Xerox PARC) and used in a copier— a Xerox executive commented, “Finally, those idiots in Palo Alto get it. We’re a copier company.” The company’s strategic frame was too narrow. It almost destroyed the company.
For foresight to be effective, the right decision makers must be directly involved. Generating foresight is an art and science, so external facilitation is usually required. However, simply relying on external experts to create future scenarios usually fails. The reason is simple. External experts might be brilliant, but they aren’t the ones who have to believe and commit. Your company’s leaders will have to put capital and reputations on the line to invest in as yet unproven visions. To truly understand and believe, they must be engaged.
Continually iterate and update
Strategy is about your vision for the future and the actions necessary to manifest it. As Silicon Valley entrepreneur Sam Shawki elucidates, “long term vision is blurry.” The bolder your vision, the farther into the future you seek to impact, the less defined will be the details.
The future is a moving target, so your foresight must move, as well. Change doesn’t conform to annual budget cycles. Companies require the ability to act as new insights arise. Leaders require what academics unfortunately refer to as slack resources. Overwhelming focus on near term results and efficiency drives out slack and creates enterprises unable to adapt. Too much efficiency increases risk as conditions change.
Too much efficiency increases risk as conditions change.
But you can’t invest in everything. How do you know when what looks like a trend might be a fad, or might only impact a small population? Once you’ve identified something of possible future interest, define indicators to track so you can be ready when the time is right. We call these leading indicators.
Energy drinks remained a localized phenomenon for years in Thailand and Japan. For years they weren’t interesting to global beverage players, but anyone paying attention would have noticed Red Bull’s growth in Central Europe in the early 1990s, well before it became a global phenomenon. Years later, the beverage incumbents spent billions of dollars to catch up.
Foresight as will
Ultimately, foresight shouldn’t just be about what might happen to us, but instead, it should help us define what we strive to create. Nietzsche’s will to power. We cannot understand our present without considering our perspectives regarding the future.Decisions will be circumscribed, even driven, by leadership’s beliefs about the future. Implementation will be impacted by how people company-wide perceive the future and their roles within it.
Effective foresight is both about what might happen to us, as well as what we commit to create. Few of us will become a Bezos or a Babbage, but everyone has the opportunity to co-create the future. Our future has everything to do with how we envision it.