Four Successful Leaders' thoughts on Strategic Foresight
For the sake of confidentiality, all names have been modified to protect the interviewees’ identities. All identifying information has been changed or removed.
“Our industry is undergoing huge, huge changes,” says Trent, a senior leader at a materials design company. “Strategic foresight [is] part of the planning process… and there would be more predictability to it ten years ago than there is today.”
The phenomenon Trent describes within his industry is VUCA, the fundamental assumption (and acronym) of strategic foresight that describes the world as volatile, uncertain, complex, and ambiguous. Factors like technology, politics, and consumer preferences are just a few of the myriad forces that are shaping the competitive landscape for companies all around the world. In order to succeed, leaders everywhere are required to plan for an increasingly VUCA future.
To uncover what companies are doing in the face of the unknown, I interviewed four leaders from various industries to get their take on strategic foresight. First, I’ll discuss three major themes that emerged from the interviews; next, I’ll cover each leader’s unique approach to strategic foresight execution; and lastly, I’ll share three key takeaways for leaders looking to bolster or jumpstart their strategic foresight initiatives.
Three Major Themes
1. Strategic foresight is a competitive means of staying ahead. Across the board, the leaders agreed that the practice of forecasting and planning for the future was vital to staying ahead of the competition; forward-thinking, in other words--not merely considering where the company wants to go, but where the market may take it. Companies that embrace this practice remain poised to capitalize on VUCA rather than be caught off-guard.
“If we’re waiting to see if something happens, then we’ll be behind, and we’re going to be managing something versus leading something. So, it’s the ability to be asking strategic, provocative questions to our business on where are we today and where are we trying to get to, and what capability is needed in order to get there.” - Fred, chief human resources officer, large textile manufacturer
This is the strategic arms-race that Martha, senior vice president at a large equipment supplier, describes: “The hardest work we have to do is to stay out ahead, in the front… [as leaders] you have to reinvent continually, and it’s not easy.” Future-proofing one’s organization is hard work, no doubt, but it doesn’t go without significant ROI, as Henry, vice president at a healthcare consulting firm, notes: “The winners are going to be the ones who can have that strategic foresight, because they can anticipate, and they know their market and what’s coming… there are all these things I think are critical to thriving and staying ahead of the curve: making sure that you understand where the industry is going, and really understanding that whole volatility of the marketplace.”
2. Strategic foresight requires a data-driven approach. Regardless of industry, leaders rely on data to fuel their strategic foresight efforts. For some leaders, such as Henry, they use in-house data science and predictive analytics capabilities to forecast trends and projections.
“Looking at past data enables you to have predictability for the future. We’ve talked about a lot of volatility in the market. There’s a lot of external pressures that impact the future that may be unforeseen, but at the same time, we use data and data science to develop future models.”
For others, like Trent, they use data-harvesting methods that are simpler but no less sophisticated, such as personally monitoring trends for customers, the media, and the industry at large. “We subscribe to an awful lot of things, a lot of media about all of these markets, and it’s very well documented,” he says. No matter the method, leaders use data (past, present, and projected future) to inform their strategic foresight efforts. Martha puts it simply: “We have to listen a lot.” Listening to emerging data is key.
3. Identifying industry-relevant external pressures is critical. The first step in strategizing for the future is determining which future factors are industry-relevant. Each leader I spoke with championed distinct factors that were relevant to their industry. For Henry, who consults in the healthcare sector, appropriate factors included “payment models, government regulations, cost pressure.” For Fred, who works in textiles, factors were more along the lines of “tariffs, excess capacity” and consumer demand. Within each industry, there were distinct factors, i.e., disruptors, that put businesses in flux.
Leader Approaches
Henry, vice president, healthcare consulting firm, leverages the wealth of past and current in-house data to form insights. “Looking at past data enables you to have predictability for the future. We’ve talked about a lot of volatility in the market. There’s a lot of external pressures that impact the future that may be unforeseen, but at the same time, we use data and data science to develop future models.” Henry goes on to describe this particular use of data as ‘predictive analytics,’ a capability that allows his firm to forecast future conditions for clients with only a small margin of error. “You’re not going to be 100% perfect, but you’re gonna be really close, and you’re going to be able to save money, and hopefully patient lives, and deliver better care.”
Fred, chief human resources officer, large textile manufacturer, outlines how future insights for Human Resources start with the business: “where is the business and where is it headed?” From the business’s goals, Human Resources extrapolates strategies to modify the workforce appropriately, expanding, shrinking, upskilling, and reskilling where/when necessary. “Generally, we talk about business and we talk about people,” says Fred. “Now we’re getting more comfortable with it being one conversation.” It’s this growing alliance between Human Resources and strategy that’s helping companies like Fred’s lead the way into the future.
Martha, senior vice president, large equipment supplier, mentions how she conducts planning meetings with her company’s brands to discuss long term goals and key external business drivers impacting their industry as a whole. “[Our company’s] individual brands do [strategic foresight] annually as part of their strategic planning process. We have a standardized process that each of those teams use. As part of that, they’re having to look at their competitive set--what are the pains and gains of our customers and how do we need to be aligning? How do our programs and services meet those needs?”
Trent, senior leader, materials design company, describes strategic foresight at his company as “a pretty sophisticated tracking system” wherein market managers (managers in charge of one of the company’s dozen key markets) gather trends for their market from three sources: [1] the media, [2] the customers, and [3] major trade organizations. Between these three sources, he surmises that they capture roughly 85% of the information they need. They also consult strategic partners on their findings as well.
3 Key Takeaways
Make strategic foresight habitual and operational: a structurally integrated practice within your organization. As we’ve seen, it takes many different forms depending on the nature of the industry and organizational structure, but the hard work of ‘staying ahead’ remains consistent across the board.
Listen to your customer/user segments. Their ever-changing needs are the key drivers that will steer future market demand. The companies that will win in the future are the ones who stay abreast of customer challenges and needs.
Be aware of all the dynamics at play within each market your company operates in. Some external factors may not be as relevant as they appear. Move beyond the obvious and question how you sort relevant versus irrelevant factors.