I’ve recently shared reasons why many governments are not systematically using Strategic Foresight despite the many advantages of doing so. Yet I could have written something similar about businesses failing to factor the future into their planning. According to research carried out at the University of Houston, only one in four Fortune 500 firms are practicing Foresight through in-house efforts.
The management consulting gurus at BCG have seized on this private sector shortcoming in a post jointly authored by Hans Kuipers, Alan Iny and Alison Sander. They observe that most businesses do multivariate modeling (a statistical tool using multiple variables to forecast possible outcomes). Virtually all companies have procedures or systems in place for risk management and business continuity. However, note the consultants, a good number of businesses are excessively focused on the near term and rely too heavily on familiar patterns at the expense of counterintuitive ones.
This is because companies have not built the capabilities to deal with uncertainty, including sensing skills needed to reveal critical trends that can create or destroy value. Many businesses also lack processes to evaluate and prioritize strategic options and use them creatively.
In these volatile times of accelerating change, the conventional modelling and strategic planning undertaken by businesses will be insufficient to drive success in the post-pandemic world. Kuipers, Iny and Sander propose a way forward for companies, advising them to improve their ability to detect signals, be more decisive in acting on them, and be more proactive in building practices that foster resilience.
The BCG consultants point to a small group of organizations that have created a “signal advantage” by developing a more expansive view of potential risks and opportunities, and a more nimble way of interpreting inputs. Businesses with signal advantage take a wide-angle approach to data collection, gathering information under a range of headers, from macro topics like the economy, the environment, and geopolitics to business-specific areas such as customer, market, and technological trends.
What Kuipers, Iny and Sander propose aligns neatly with steps I recommend in Chapter 5 of my new, pandemic-inspired book, Learning from Tomorrow: Using Strategic Foresight to Prepare for the next big Disruption. For instance I propose that businesses regularly scan developments in and around the environment in which they operate, being alert to changes that could have a domino effect.
Take an example from South Asia: last year, when Indian officials issued stay-at-home orders to urban residents to limit the spread of COVID-19, many people in the informal economy lost their livelihoods. Millions of jobless migrants then returned home to rural areas, infecting local populations in areas with weaker health services.
During the pandemic, public authorities in many jurisdictions around the world mandated, or at least encouraged, the wearing of face masks to reduce transmission of the virus. As a result, millions of tons of used masks and other personal protective equipment have clogged sewers and water treatment facilities, and added to ocean pollution.
A regular corporate horizon scan can be done through desk research, focus groups, and expert surveys. It should aim to capture weak signals, that is, early indicators of an emerging issue that could become significant over time. Examples include Elon Musk’s announcement that he will accept bitcoin as payment for Tesla cars, the sale of non-fungible tokens (for huge sums of money), the rapid growth of Clubhouse, increasing cooperation between China and Russia, and the roll-out of food delivery robots in more cities.
By being attuned to weak signals that may gain traction, businesses can position themselves to seize to opportunities that will emerge (or can be created). This is why more and more companies are hiring staff assigned the responsibility of monitoring futures.