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Why your business needs to understand the future

Written by Scott Smith on Wednesday, 14 October 2020. Posted in Leadership, People

Think about where your business stood five years ago—sometime in late 2015.

Why your business needs to understand the future

Think about where your business stood five years ago—sometime in late 2015. Economists weren’t exactly crowing, but global and regional economic forecasts indicated moderate growth ahead, or possibly slowing. Coming out of the Great Recession at the end of the 2010s, the US, UK, and the world were coasting on several years of recovery and expansion. All in all, 2015 was a textbook year of general stability in a world steered by affluent nations. There were few caution signs flashing. Five-year outlooks were broadly steady, economically, socially and politically. If you were at the helm of a large organization, all signs pointed toward general continuity of strategy, with limited expansion in some sectors. With venture capital and bank funding flowing again, opportunities for small or startup companies also looked rosy. 

What a difference five years make. In 2015 we had only just seen Donald Trump announce his long-shot presidential bid, and then-PM David Cameron’s UK referendum gamble was set in motion. Short of a true wildcard event, climate disruption seemed the biggest Bad” in the script, to borrow a screenwriting term. Any business strategist would have followed the usual strategy of recent trendlines. Most innovators looked to be the disruption, not suffer it. 

Flash forward to our shaky ground here in 2020 and it looks like we’re going to need something stronger than Annus Horribilis to swag as a headline over the year-end retrospectives. A year that started with protests in Hong Kong and bushfires in Australia quickly went downhill, and all of that was a prelude to a pandemic that has killed a million people worldwide. Dealing with the final details of Brexit seems like a footnote to a stream of discontinuities that have kicked glib phrases like “New Normal” to the curb and left everyone in a permanent state of uncertainty. Yet, we still have a few months, and twists and turns ahead. October surprises loom ominously.

Perfection as the enemy of perception

The problem isn’t that businesses couldn’t see this parade of disruptive changes ahead of them. To be fair, 2019 and 2020 have dished up an extraordinary run of black swans—high impact events that initially appeared as low probability. The issue is that in an age of Big Data many organizations have let their inherent capacity for foresight weaken, relying instead on past performance, or costly analytics that are mostly backward looking. Like pedestrians who over-rely on their smartphone’s maps, many companies have seen their organizational ability to read the landscape atrophy. 

2020 has provided a harsh wakeup call that this anticipatory sensibility needs to be reawakened, and reinvigorated. In these turbulent times, the desire to get the future “right” needs to be set aside in favour of practicing future awareness—by cultivating a systematic approach to collecting and making sense of environmental and broad market signals, and practicing the lost art of frequently playing out the “So what, then what?” implications of these signals.

This doesn’t mean following the momentary vogue of hunting for rare superforecasters, or sequestering this capability in a small office at headquarters, but taking steps to enable future-awareness throughout a business, and creating practices that exercise this awareness frequently. For example, many businesses have latent awareness of the subtle signals of change spread throughout the workplace—awareness of small changes in the operating environment, competitive shifts both little and large, unusual movements in adjacent markets, and changing customer attitudes all get noticed, but practices to collect and understand these signals collectively are often not in place. We never fail to be amazed at the tacit awareness businesses already have, only no one asks in any systematic way what the business “knows” that could provide indicators of potential change in the near or far future.

Taking this knowledge one step further and using it to create small stories of possible futures that pose potential challenges is also an undervalued practice. “What if our customers couldn’t reach us due to a public health challenge?” is a question nearly no one asked in 2019, even though data has pointed to the possibility of major pandemic for a number of years. As a result, nearly everyone was caught flat-footed at the beginning of the COVID-19 emergency, and many have struggled to regain any semblance of stability.

These questions should be the type every business asks itself regularly, if only to process the risks and opportunities. “What if the materials we need doubled in price overnight?” “What if our closest partner became our biggest competitor?” “What if we had 10x better data on demand?” Such what-if exercises, if carried out regularly with broad inclusion and intent, engage the organizational mind in the agility of exploring alternative futures in a way that becomes muscle memory, just as an elite athlete practices drills not to predict the exact competition, but to ready the mind and body through “pre-rehearsal” of many different situations. 

Numerous variations and flavours of strategic foresight are out there, and plenty of resources exist to draw on. Starting openly with the skills and information an organization has to hand but underutilizes—knowledge, insights, research, and unbounded critical thinking—is the critical place to start. Experience tells us things won’t remain stable, and this anticipatory capability is invaluable in adapting to it. The only constant is uncertainty.

About the Author

Scott Smith

Scott Smith

Scott Smith is managing partner of Changeist, a future foresight consultancy, and co-author with Madeline Ashby of How to future: Leading and Sense-making in an Age of Hyperchange.

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