To ensure companies are future-proof and successful in the long term, Strategic Foresight is essential. This is explained by Dr. Jan Oliver Schwarz, Professor of Strategic Foresight and Trend Analysis. He was recently a guest at the Market Intelligence Meeting of the Professional Academy in Warsaw, where participants from the MidGen Group learned how and why leading global companies become more successful through Strategic Foresight and why European family-owned companies in the packaging industry should follow suit.
Staying Focused on Opportunities Through Strategic Foresight
Numerous companies, successful for decades and even centuries, have failed due to "corporate arrogance" ("I have been in this industry for decades; I know best") and an inability to look strategically into the future. Examples like Nokia, Kodak, IBM, or Yahoo demonstrate that risk-averse business models and the lack of vision of entrepreneurs can quickly lead to their downfall. Just because companies were successful in the past, as Jan Oliver Schwarz states, does not mean they can continue on this course for many more years into the future. Past figures show this as well: Of the 500 largest companies traded on the American stock exchange in 1955, only 13% existed in 2013. Besides a few mergers, many of these companies simply did not survive.
One reason for this is VUCA. VUCA stands for volatility, uncertainty, complexity, and ambiguity and describes a dynamic world that changes quickly and unclearly. Companies must therefore learn to cope with this VUCA world. Strategic Foresight helps in this endeavor.
Understanding Strategic Foresight by Understanding the Future
Strategic Foresight is a way of looking into the future. It aims to help be prepared in a world characterized by uncertainty. However, we encounter a problem here: We cannot predict the future because there is not just one future. Rather, we should talk about various futures. This means considering various plausible scenarios that could occur.
What is Strategic Foresight?
Strategic Foresight is a tool designed to help companies proactively shape the future, making them more viable under uncertain conditions. However, the goal is not to predict the future. The objective is to identify various futures. This allows companies to be prepared for different plausible scenarios, make decisions accordingly, and quickly respond to changes.
Thinking About Different Futures
To identify these different scenarios, we take a look at the future cone. It divides the future into five overlapping areas:
Possible Future
Plausible Future
Probable Future
Projected Future
Preferable Future
How Does Strategic Foresight Work?
Strategic Foresight is based on two pillars: the present and the future.
Trend Analysis: Initially, weak signals in the present and trends must be recognized. If companies manage to observe and understand these signals, they are already better equipped to respond to changes.
Scenarios: This is followed by looking into the future and creating various scenarios. Tools that help in this process include Scenario Planning or Business Wargaming.
Exploration: In this phase, we ask ourselves: What do these scenarios mean and which ones do we desire? Methods like Design Thinking help in this process. Additionally, goals are set and visions are developed to clarify how the future should look.
Transformation: In the final step, concrete actions are derived and strategies are developed to proactively shape the future.
Benefits of Strategic Foresight
Strategic Foresight helps companies perceive trends and be prepared for different probable scenarios. This is achieved by envisioning different futures and creating a strategy in light of these possible scenarios. The effectiveness of this approach is demonstrated by research conducted by Dr. Jan Oliver with the Bavarian Foresight Institute and the Nuremberg Institute for Market Decisions. Executives from 400 companies with more than 10,000 employees were surveyed on the benefits they derive from working with Strategic Foresight.
Their top 5 responses were:
Identification of new competitors or partners in the market
Simplification of long-term strategy development
Maintenance of clarity about the purpose and vision of the company
Clarification of innovation directions
Expansion of understanding for new opportunities in the market
Executives worldwide recognize the positive impact of Strategic Foresight and use this approach for the long-term alignment of their companies. They recognize new market opportunities and manage to quickly respond to changes. Nonetheless, the adoption of Strategic Foresight has progressed faster in some industries, such as the automotive industry, than in others, such as finance and insurance.
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