Strategic Foresight - The Power of Standing in the Future

What is Strategic Foresight?

Strategic Foresight is a process that supports the development of strategies to future proof businesses and organisations. It helps us gain a better understanding of how trends, discontinuities and uncertainties might impact upon the future of our organisation.

There are two ways businesses base their strategic planning - projective (forecasting) or strategic foresight based (backcasting). The former approach is a traditional approach that, if followed, can lead to the rapid demise of a business today. We can think of it in terms of Mental Models

Mental Model 1 is how we see the world around us today and tends to have a strong historical and “now” component. This type of model is used as the basis for making forecast projections - but is inherently flawed because it is always based upon dated information.

Mental Model 2 is a picture of how we see the world in 5 - 10 years time. This model is not conceived by crystal-ball gazing. Mental Model 2 is constructed upon the basis of some serious research into trends, technological developments, demographic change patterns and expert opinion. Scenarios are developed as a result of this research and create a future view from which a position today can be backcast. The backcast pathway forms the basis for forward strategic planning - i.e. strategic foresight based planning.

The future just doesn't happen!

In reality it is, to some extent, pre-determined. There are many signals out there that can provide us with clues as to how the future may play out. For example, if birth rates fall or stay low, then the average age of future populations will increase. If billions of dollars are being invested into R & D projects in specific areas of technology, e.g. fuel cells, there is a high likelihood that this technology will impact upon our future.

By developing an understanding of emerging trends, discontinuities and critical uncertainties, we can develop medium and long term pictures of the how the future in which we need to live and do business may look. These pictures help prevent us from becoming blindsided - suddenly finding out that what we are doing is no longer relevant adn we are out of business or out of a job.

A simple illustration

The following simple story uses a current change situation to illustrate how strategic foresight can be used to future proof a business.

Two corkscrew manufacturers need to expand their production capacity because wine consumption is increasing at 5% annually and their current production facilities are already running at capacity. The investment in additional capacity will require $250,000.

The first manufacturer invests his $250,000 in a new machine to make additional corkscrews based upon the consumption projections.

The second corkscrew manufacturer does a bit of research. He discovers there are some trends that will change the future market demand for corkscrews. So he decides to invest his $250,000 into a machine that will manufacture a device that cuts the serrated joint on wine screw caps and which is particularly suited to older consumers.

The first manufacturer has failed to future proof his business because he has not recognised the impact screw caps are beginning to have on the market.

The second manufacturer has future-proofed his business by not only recognising the rapid shift to screw caps by wine producers but also the ageing of the population and future consumers. These ageing consumers not only will control the larger part of the country’s wealth but also will require assistance with tasks that require physical exertion - such as breaking the serrated cap connection.

What about your sector?

The construction and contracting sector of the future will look quite different to today as new technologies, systems, demographic trends, and changing markets impact. Being aware of what is coming and being in a position to make informed strategic decisions based upon that knowledge is what differentiates a successful business from one that fails.

The construction and contracting sector has been constrained by traditional thinking and has been slow to innovate and develop future proofing strategies. That is why so many fail.

Often changes come from outside the sector you are in. Intelligent roading systems have come from the IT sector, not the roading sector. Teflon coatings for household products came from the space exploration sector.

Those which enjoy long-term success in the future will be the ones which have invested time and effort into developing an understanding of what the future markets and client needs will be and have then developed strategies to position themselves to take advantage of changes as they arise instead of scrambling to catch up after change has already happened.

It’s impossible to be 100% right about how the future may play out. But being 50 - 70% right is better than being 100% wrong!