What is strategic foresight?
It’s the disciplined study of the future. It’s a strategic thinking process rather than a strategic planning process. As such, it goes beyond traditional economic, statistical, and business forecasting. It goes beyond extrapolating current and past trends. It may apply scenario development as a tool.
Why is foresight important?
We live in an increasingly complex time in which the connections between past, present, and future are often unpredictable. People use foresight to help steer a course between the false certainty of precise forecast models and the chaos of ignored circumstances.
Several years ago, I attended a certificate program in strategic foresight at the University of Houston. The class comprised a cadre of individuals from the military, national security, think tanks, corporations and higher education. Highly diverse, but with a common goal: how to prepare for the future.
Every long-term decision is a bet on the future
Foresight methods, many of which were developed by the RAND Corporation, have been used for decades, particularly in the military. Unlike forecasting, in which individuals attempt to predict a singular future, foresight identifies several plausible futures to allow leaders to prepare for what might happen. The objective is to stimulate, inform, and prepare people for a variety of future possibilities.
Interestingly, the actions we take can shape the future. An excerpt from past promotional material from the World Future Society reiterates this point.
If one could predict the future with certainty, it would mean that the future could not be changed…Yet this is the main purpose of studying the future: to look at what might happen if present trends continue, decide if that is what is desirable, and if it’s not, work to change it…The ability to see and create the future is the essence of leadership.
I love that last line: The ability to see and create the future is the essence of leadership.
Think about it. The future is not predetermined. Each of us has the ability to influence some aspect of the future. (While I’ll focus on organizational foresight, the concepts can be adapted for personal foresight, as well.) Are you up to it?
A common tool of foresight, especially for long-term strategy, is scenario development or planning. It’s a way of envisioning alternative futures by telling stories about how the future might unfold for your particular organization. The goal is to increase an organization’s readiness for a range of possibilities.
Because the past may not be a good predictor of the future, scenario planning encourages organizations to consider how demographics, globalization, technology, and other changes will shape the future. By doing this, decision makers decrease the likelihood of being unprepared for discontinuities. They can challenge their own entrenched mental models and assumptions, and anticipate a broader set of future possibilities.
- Define your focal issue
It’s impossible to study all aspects of the future all of the time. Some constraints are necessary to prevent scenario planning from disintegrating into a mushy pool of wandering. Frame the focus as an open question, such as the following.
- What impact will artificial intelligence have on the internet-of-things for residential products over the next ten years?
- What factors will reinforce or disrupt long-term care in the United States by 2030?
- How and where will green energy evolve over the next quarter century?
Note that the questions don’t have a yes-no decision format. The goal is to generate a range of plausible futures that might include something that would be overlooked in a simple question.
- Identify plausible catalysts of discontinuity
The next step is to analyze driving forces of change. There are many acronyms of topics categories to consider.
STEEP (social, technological, economic, ecological, political)
PEST or PESTLE (political, economic, social, technological, legal, environmental);
TIME (technology, industry, market, ecosystem)
Study trends in each of these categories, paying particular attention to inflection points. If the trends continued at a faster, slower, or a similar pace, where would each lead in the future?
- Gather diverse perspectives
People need to push past their comfort-level box-of-knowledge for foresight. Shell Energy’s team for its Global Scenarios to 2025, for example, included both internal and external experts. Some of the internal authorities were the group’s chief economist, the head of its energy team, the chief political analyst, and members of group strategy and planning, among others. They also received insight from centers of excellence in academia, consulting, and think tanks.
Geraldine Wessing, Shell political analyst, points out that for most people…
“imagining the future and recalling memories both use the same area of the brain, which means we can only imagine the future as being similar to what we already know. One way of challenging our assumptions is by becoming aware of and understanding different perspectives.”
- Create plausible futures
Now it’s time to create stories about the future. How do the drivers–the catalysts–relate to one another? Is a high extreme on one factor related to a low extreme on another? Craft the information into three to five scenarios, each with a description of a paragraph or two. In 2006, Sai Ma and Michael Seid published a disease management set of scenarios for 2020. Here is a partial description of one of the probable futures.
Multinational corporations that control pharmaceutical and health information technology have grown exponentially; much of the data used by these corporations is proprietary; patents continue to be rigorously enforced….In this world, players are very diffuse and each has little purchasing power….As a result, cost of treatments (drugs, surgeries) could be very high due to the lack of negotiation power and “wholesale” price.
- Determine the implications of each scenario
Several plausible scenarios have been defined. It’s time to prepare a high-level strategy for each. What capabilities are required to execute each strategy? What gaps exist? What would be the risk posed by a particular scenario happening for which you didn’t have the necessary competencies?
Take a look at each strategy and see how well it would fare in the alternate scenarios. If you are fortunate enough to identify a strategy that is sufficiently robust to work under all scenarios, that simplifies the choice.
But it is more likely that the strategies are winners in some scenarios and losers in others. Look for common elements of all (or most) strategies and try to create a modified strategy that minimizes the risk of failure regardless of which of the scenarios comes to pass.
At the same time, keep abreast of any early indicators of progress toward or away from each of the scenarios. As mentioned already, the essential value of scenario development is an examination of a broader range of plausible futures than is the case with traditional business planning. Since most large organizations have a bias toward the status quo, scenario development may provide a gentle reminder that a current business model or strategy may not be the best option for all defined plausible futures.