9 out of 10 CEO's are completely wrong about this strategic challenge
The most common myth we hear in 'C suite' strategy sessions is “It’s impossible to anticipate what the future of our business will be”. We hear this in Manufacturing, Finance, Start-ups, Techs, Pharmas and FMCG’s. From the USA and Europe to Asia and the Pacific CEO’s have got it wrong when it comes to the future. The fact is that it is possible to anticipate what the future holds and create a commercial strategy that takes full advantage of future trends, disruptors and future customer demands.
Why is it then that if it’s possible to anticipate what the future holds that leaders are not following up on this capability? Partly this is due to the fact that too few organisations understand how to utilise futurist skills and how to incorporate them into their business strategy. Futurist skills are the skills utilised by professional futurists, yes this is a real profession and it’s even possible to gain tertiary degrees in Future studies at certain universities around the world.
Futurists employ a number of techniques to allow them to anticipate a future for an organisation. These techniques can range from environmental scanning to scenario planning. The challenge that many CEO’s have is in finding the right futurist to help them them with identifying the key drivers, trends and uncertaininties relevant to their specific industry and furthermore following this up by developing a commercial strategy. There good news is that any smart ’C suite’ executive can learn and apply these futurist skills to create a commercial strategy.
Here’s 4 simple ways to ensure your organisation is on the front foot with Futurist capability and strategic skills to capture the future market.
Scan – start scanning for emerging trends
Plot – determine and plot future key drivers and uncertainties
Imagine – imagine what future worlds will look like
Design – design strategies and contingencies for future scenarios
Now before we unpack the futurist strategic techniques, let’s identify the five key consequences if we fail to capitalise on the future.
- Our products or services fail to captivate the market
- We fail to anticipate future customer needs
- We cannot close the gap on a competitors lead
- The intellectual property is all sewn up and untouchable
- We lose massive market share
1. SCAN. Foresight requires a fresh vision of what’s coming up. The more we scan current and emerging trends, the further we can see into the impending future. The futurists’ foundation is scanning for emerging trends. Futurists use the STEEP methodology for this. It is, without a doubt, one of the most powerful, yet simple, tools in their skill set. The more niched a futurist’s expertise, the more likely other scanning areas will be included. I’ve worked with organisations that have even included legal trends as part of their scanning work. You too may find you have your own version of scanning.
To begin scanning, the futurist identifies what materials they want to scan. Digital materials make sense yet futurists aren’t averse to analogue materials. The challenge many people have, when looking for emerging trends, is that they usually start looking within trade publications in their industry. Whilst this is valuable and should be done, you’re unlikely to find the next big thing before your competition if you’re all reading the same articles.
Futurists cast their net much further afield than the specific industry in which an organisation is working. What’s more important is considering the context of the information for which they are scanning. The context includes the specific services or products the organisation provides, their customers, consumers and users, and other elements that can affect them. Understanding this context allows futurists to scan a wide range of materials and to discover emerging trends, long before the competition is aware of them.
Media that futurists scan may include newspapers and magazines (including social, lifestyle, hobby, business and industry publications). This can be done in a cost-effective manner by applying for a digital trial subscription to a syndicated magazine publishing company, which allows the perusal of multiple magazines or newspapers, without having to pay for them. Let’s not forget white papers, green papers, reports and other serious papers.
Now that they’ve collected materials to scan, there are five key corresponding areas to the STEEP acronym that the futurist scans, for emerging and existing trends.
Sociocultural Trends - Every organisation is affected by sociocultural trends; the challenge is determining how they’re affected. A sociocultural trend is something like the amount of time people spend on their digital devices when they are socialising.
As futurists scan through their collected materials, they are asking themselves ‘Is there a relationship between this trend and what our organisation does?’ and ‘Could this trend affect us or the people who use our service or product?’ The futurist isn’t hell-bent on trying to answer this question as they scan; instead, they keep it in mind as a loose contextual filter to what they are scanning.
A current example of a sociocultural trend that has been on the rise (when going to print) is the sharing and trust economy. In this trend, people are becoming more willing to share with and trust other people, as is demonstrated in the success of AirBnb, which currently facilitates sharing over a million rooms. As futurists find trends, they simply collect them to compile later.
Technological trends - Next, futurists scan technological or scientific trends that may have an impact on their world. A technological trend ranges from the latest wearable smart sensor technology to a new advance in genome testing. Technological trends are always changing—from the cloud and big data to genetic profiling and targeted personal medication. It’s all worth noting.
Economic trends -The volatility of the economy on both an international and local scale is a trend definitely worth scanning. Futurists scan for trends, signals and indicators of new directions the economy might take. Will the China boom continue and what does that mean? Will coal-seam gas exploration in the United States lead to economic recovery?
On a national scale, are there trends such as employment rates, award rates and wage increases worth noting? Perhaps there’s a trend of increasing pharmaceutical benefits or a change in environmental rebates for home owners using solar panels that should be noted. On a micro scale, are trends signalling a resurgence or demise in a local suburb or municipality? Is there a new residential, commercial or retail development planned?
Other economic trends include ‘I need, you have’, which means people would rather hire than buy. This has led to the preference to hiring a car through a car club versus buying one, as well as to paying for access to music collections versus buying individual songs or albums. Another economic trend worth noting is that an ever increasing number of AirBnb hosts report they use the income to help pay off their mortgages.
Larger economic trends can be indicators for our own nation’s economies and the demand for an organisation’s products and services. Perhaps the trend of ever increasing venture capital funding from crowd funding is worth keeping in mind. At time of writing, crowd funding in the United States was estimated to be worth over $16 billion, as well, on its way to raising $34 billion.
Environmental trends - I’ve found that sometimes there’s push back around scanning for environmental trends. A financier might say, “This has nothing to do with me.” “Really?”I ask. I quickly follow up with some relevant trends on organisations investing in environmental projects, such as Google’s environmental investments in wind farms and financing for solar residential rooftops or I might mention the $8 billion dollars invested by households in renewable energy. The rather sheepish financier usually sees the opportunity after those remarks.
Environmental trends can also include that involve the built environment and the effects this has on people. Trends, such as the increase in obesity or interest a new professional field such as neuro-psychology, may be areas from which you can draw insights.
Political trends - Political trends include challenges regarding illegal immigration, potential changes in government; the rise of an environmental political party that opposes coal-seam gas exploration or a movement to decommission nuclear power plants. Perhaps it’s a country’s commitment to military offensive or a government’s policy to spy and gain information on a country’s residents.
One of the fastest growing companies in the world at the moment is NEXTDC, with over 3,626% growth. It’s growing this quickly because organisations don’t like governments spying on their data and want more privacy. NEXTDC recognised this emerging trend and pounced on it to provide the most secure private data centres in the world.
Once futurists have completed their scanning, they proceed to sort through the results and they create posters for each trend area, by noting the relevant trends, labelling them and recording any insights they may have gained. They then proceed to share their learning and insights with their clients and to start a discussion about the emerging trends they have discovered.
This key futurist principle that you now have in your possession is a great tool to create commercial insights.
2. PLOT - Trends drive uncertainties and drivers create new trends. To deal with uncertainties, futurists need to select key drivers and uncertainties. Once they’ve plotted these, they can create scenarios of what these worlds will look like. Following on from their scanning, futurists begin to review the results next, so that they can choose the best ones, from which to construct potential worlds.
Futurists follow a six-step method.
- Time frame – set a time frame for when they want to construct a future world
- Drivers – review the trends and select the key drivers that will affect the organisation in said time frame
- Uncertainties – review the trends and select the key uncertainties that will affect the organisation
- Prioritisation – review the selected drivers and uncertainties and prioritise them
- Combination – combine closely related drivers or uncertainties if possible
- Plot – create an x and y axis using the best drivers and uncertainties
By selecting and plotting the best uncertainties and drivers, futurists avoid being overwhelmed by limiting themselves to four potential future scenarios.
3. IMAGINE - Constructing the future starts with imagining the future - In some ways, constructing the future involves becoming a science fiction writer. If you can imagine it, then other people can imagine it and create it as well. By stepping up your imagination and applying it to the construction of future worlds, you can pre-empt and precede the competition.
Futurists use previous plot lines to know what worlds they need to create. This is called the scenario principle. Here’s an example. A futurist is working for a printing company. The futurist and the organisation have identified two key drivers and uncertainties that are most pertinent: 1) The Chinese economy and 2) The preference for a digital or analogue experience. Part of the team has noticed that the stronger the Chinese economy becomes, the more expensive Chinese printing costs become. Yet at the same time, the stronger the Chinese economy gets, the more the Australian national economy tends to increase. They also question whether the desire for digital media will eliminate all types of paper-based printing and whether the analogue world will evolve to more boutique printing or even 3D printing.
With the plot lines created, the futurist starts to construct what each world may look like relative to the axis. The futurist applies imagination to consider what people are wearing, listening to, watching and doing. Where are they working? What’s the zeitgeist or feeling on the street? Are people optimistic, happy, loving life and work or are they scared of losing their jobs and homes?
The futurist uses five modes to help them construct a great future world.
1. Imagination - imagining what it would be like
2. Exaggeration - making things larger than life to emphasise the changes
3. Implication - recording the implications in this world for their organisation
4. Perception - stepping into the shoes of their future customer and determining who are they and what they want
5. Fiction - applying or writing this in a way that is compelling and believable
An approach I’ve used with futurists is to employ a ‘movie trailer director’ or ‘script writer’ mind set. I like to get people to name their worlds with a movie title theme. Their brief is to become a movie script writer for this future world. Using a classic trailer intro such as “in a world where....” is a good starting point. The more imaginative, the more compelling the world becomes.
4. DESIGN - Tomorrow is not today - Today’s business model needs to meet tomorrow’s needs. Business models and strategies change in response to changing business and social environments. Thinking like a futurist gets you ready for these changes.
Once a futurist and their client have created their future worlds, they then need to think of the possible implications. The futurist’s role in this design stage is to help facilitate the organisation to create strategies to counter each anticipated future world. A common mistake is to think of these future possible worlds as set in stone, which is by no means true. They are possibilities, and it’s up to the organisation, with the assistance of the futurist, to establish a strategy that can deal with the implications to capitalise on the potential opportunities.
The strategies might include:
- WHERE you could compete. Examples include which geographies, which segments, which customers, which products and which value chain steps. 2. HOW you could compete in this world. Examples include value propositions, products, differentiation or channels of distribution.
You now know the most powerful foresight principles in the world. The STEEP and scenario principles can be implemented either biannually or yearly. Any more than that is likely to be overkill.
To find out more about innovative strategy for your organisation consider coming to one of our events such as The Next Big Thing, reading our book - Innovation Archetypes - Principles for world-class innovation, or completing one of our online programs.